SA locals alarmed as government contracts head east

South Australian civil contractors are concerned that recent big government contracts awarded to interstate companies will leave them in the cold, even threaten their viability.

Adelaide's The Independent Weekly recently devoted the front page and all of page 3 to the issue. Four big-ticket items are at the heart of the matter:

The Port River Bridge project involves a four-lane opening road bridge and a separate opening rail bridge across the Port River between Docks 1 and 2. Worth about $130m it has been awarded to Abigroup of Melbourne, a wholly owned subsidiary of Germany's second largest construction group, Bilfinger Berger.

The Bakewell Bridge underpass replacement project, worth $30m, has gone to McConnell Dowell Constructors (Aust) p/l, the Melbourne-based Australian subsidiary of a South African engineering group.

The South Road/Anzac Highway underpass contract worth $65m is currently being negotiated with Sydney-based Thiess, a subsidiary of Leighton Holdings, an ASX listed company 53% owned by Hochtief of Germany.

A contract for the extension of the Glenelg tramline to North Terrace has yet to be awarded but two interstate companies, John Holland and Coleman Rail, are shortlisted at this stage.

Tony Baulderstone, state president of the Civil Contractors Federation and a director of Bardavcol, SA's largest civil contractor, is adamant that the local civil construction industry “has the capability and capacity for doing all of these projects”.

Baulderstone supports a statement issued to Earthmover by Tolmer Earthmovers (SA) p/l. The company says that in line with trends across Australia, the Department for Transport, Energy and Infrastructure has embarked upon the use of non-traditional methods, such as alliance contracts and early contractor involvement (ECI) contracts for the delivery of major infrastructure projects. It adds:

“This has already been demonstrated with the ECI model for the Bakewell Bridge upgrade project and we understand that these models are to be used for the underpass at the South Road/Anzac Hwy intersection and the proposed tunnel under the Grange Road and Port Road intersections.

“Generally speaking, these models involve the collaboration of owners and non-owners where all participants win or lose depending upon the success of the project. Local contractors are concerned that this trend will result in the appointment of large multinational and national companies at the expense of locals, a trend that has already been demonstrated by the success of an interstate company securing one of the major infrastructure projects.

“We believe that this has occurred because of the company's experience, expertise and marketing strategies relating to these models. Additionally it appears that Treasury funding has been allocated to these few major infrastructure projects within a short time-frame leaving minimal funding for other roadworks, such as overtaking lanes and shoulder constructions and general upgrading of country roads etc., thus severely curtailing opportunities for local contractors.

“Should this trend continue, local contractors will be forced to downsize, with the inevitable result that the industry will be ill-prepared for future works. It is the opinion of local contractors that major infrastructure works delivery be staggered over several budgetary periods to lower the impact on funding and indeed project construction capability. Given local contractors possess the necessary expertise in large infrastructure construction, that there is preference (given) for their expertise in delivery of these new project models.”

State Infrastructure Minister Patrick Conlon responds: “It's just flat earth economics to suggest that we should close our contracts to interstate companies. Not only would it affect local companies in interstate work, but also it would be contrary to every agreement in Australia. SA won the Air Warfare Destroyer contract by competing on a national and international stage and I doubt major companies like Hansen & Yuncken would appreciate a situation where they were disadvantaged interstate.”