infrastructure

Early costings on infrastructure projects leading to inaccuracy: Grattan report

Governments and project authorities need to improve costings on transport infrastructure, and megaprojects in particular, a new report highlights.

The Grattan Institute’s The rise of megaprojects: counting the costs report found that Australian transport infrastructure projects over the past two decades cost $34 billion more than initially expected. Read more

Striving for certainty

Donald Cant Watts Corke infrastructure lead Peter Gill tells Rail Express about his biggest concern during the rail sector’s growth phase, and how governments and the private sector can improve their approach.

Peter Gill doesn’t mind being the bearer of bad news. In fact, he makes it his business. As managing director of the infrastructure division at Donald Cant Watts Corke (DCWC), Gill says the most valuable thing he can provide is certainty.

Like many working in and around the rail sector, Gill is aware of the level of rail spending proposed, planned or underway by state and federal governments in Australia and New Zealand. But he is also aware of the frequency with which such projects overrun their budgets and the public damage which can be caused.

He says as spending goes up, accuracy and accountability will be critical to ensuring governments continue to commit to such projects in the future.

“We have some real concerns in the infrastructure sector about cost overruns which can be easily overcome by abiding by the guidelines of Treasury and Finance in Victoria, New South Wales and other states,” he tells Rail Express.

Gill says too often in Australia guidelines are being ignored, and sign-off on the final budget has, on several key projects, resulted in a figure far higher than the original. “The problem of underestimated budgets is created when advisors to governments do not abide by these guidelines,” he says.

“It’s essential that engineering and quantity surveying firms become acquainted with relative guidelines and be required to sign off that they have complied with these requirements. With the lack of assurance currently, some in our industry are hiding behind the inadequacies of others. This is causing governments to lose faith in professional services firms, leaving a bad taste, and it is hurting our industry as far as reputation goes.”

Gill believes that the professional sector needs to work closely with governments to establish a workable set of assurance criteria making it mandatory for design engineering firms and quantity surveyors to sign off when they have completed services to the required guidelines. This means that they can be held accountable when there are significant cost overruns to the original budget.

“We need to stop repeating the mistakes of the past, perpetuating the same mistakes over and over again. Somewhere we need to draw a line and put an end to this – we can’t just keep having cost blowouts because of bad advice with no fear of retribution.”

Work carried out by DCWC on Victoria’s Suburban Roads Upgrade Project meant that the works required were more expensive than previously advised to government and additional funding was sought from Treasury and Finance. DCWC believes that future related advice from the market will prove that this initiative was the correct one.

“Providing appropriate design and cost advice can be done, and it should be done in the very early stages,” Gill said.

“We aim to provide an integrated quantity surveying team, not just to provide cost advice, but to actually challenge the design, and where it is lacking, provide design assumptions and practical construction solutions. We are raising the bar by abiding by well thought out guidelines, and we are happy to sign off that we have done so.

“If I were asked to sign off on the services provided to recent government projects, I would have no hesitation whatsoever,” he says. “The advice that is coming back from the market is in line with what we prepared for these projects.”

A white paper presented by Gill in 2019 suggested transport infrastructure projects too often suffer from a lack of flexible cost options and proper benchmarking and market testing. He told the conference the total outturn cost for major transport- related projects is often underestimated by as much as 15-20 per cent due to these factors.

When asked what it’s like to essentially break bad news to a project proponent – ‘This project is going to cost more than you thought’ – Gill says providing such a reality check is an interesting part of what he does.

“We approach each project by challenging the design and constructability issues based on our experience with past projects,” he says. “We don’t just look at the estimate of costs, we actually take the design itself and provide additional advice based on how we think that design will actually be constructed. And that’s grown our reputation significantly.”

BRINGING TOGETHER DESIGN AND COST

Gill believes that the best way to provide end-to-end support and to ensure a project is properly budgeted throughout design and delivery, is to have better- integrated management teams.

“Fully integrated project teams – rather than a separate design and a separate cost team – we think are the answer to saving time and cost blowouts in the future,” Gill says.

“We advocate that our clients focus very heavily on the constructability and operational requirements prior to projects going to the market. We’re trying to encourage governments now to do that work upfront, before they go to market.”

DCWC has eight divisions in its Group, including Infrastructure, Project Management, Advisory, MEP Services and four Quantity Surveying divisions, and Gill says a diverse talent pool like this is critical to performing such an integrated role.

“We can’t claim all of the success on these major projects for our Division, we share this success with the other divisions. In our experience, such integrated project teams can provide assurance of documentation and cost impact by up to 20 per cent.”

To find out more, visit dcwc.com.au.