Access, complex roof, industrial issues, dogged acclaimed Southern Cross Station

Informa's Victorian transport infrastructure summit in late July in Melbourne, was timely for Leightons Holdings' executive general manager operations Ashley Mason, to talk about the company's difficulties and triumphs in building Melbourne's $700m Southern Cross Station.

Because the summit came at exactly the right time for Mason to call it “one of the most acclaimed buildings in Australia.” In May it was named Australia's most outstanding example of construction excellence with the presentation of the Australian Construction Achievement award. Then in June the project won the British Institute of Architects' award for the most outstanding new building outside the European Union. “It was probably just a coincidence that the architect was British,” Mason said. “But it actually beat 500 entries.”

In early July it won the Victorian Architecture medal and the William Wardell award for public architecture, and in mid July the Master Builder of the Year award.

Mason said complex contractual relationships were the key to the problems the government had with the project. Leighton was not party to some of the project's contracts and some of the other contracted parties were not privy to some Leighton contracts. But the fact that 900+ trains and 60,000 people a day had to continue using the station did not help either.

Overly optimistic

He said the company took “an overly optimistic approach to the risk at tender time and that was our fault. We weren't as mature about the risk allocation as we should have been. We probably thought we could handle the site access issue, we probably underestimated how complex the roof design and construction was, and there were large industrial issues of working in the Victorian CBD, which manifested themselves in poor site productivity.

“At least in the early days, we also had a poor project management focus. Our people had to weave their way through a web of many stakeholders, and in the course of doing that, they lost sight of the fact that they had to get on and build the project.”

The company had to refurbish all the platform decks, cover each with full roof cover, provide parking for 800 cars, build a 30-bay bus station, retail and office space, do commercial development at 664 Collins Street to podium level and establish links to Docklands and Collins and Spencer Streets.

Active platforms

He said they had to grapple with an extraordinarily complex roof across a very tight site. It covers 3.7ha which is double the grassed area of the MCG. There are 54 spine trusses and some of the sections weighed up to 26t which had to be lifted across active platforms.

“As well, many of the trains were privately owned and operated, and they didn't have any incentive to cooperate and we were an annoyance to their operations,” Mason said.

In the end all was resolved with the Victorian government, without legal dispute and within the contract. “Great thanks need to be given to Southern Cross Station Construction Authority CEO Tony Tanavan and James Cain, son of former state premier John Cain, on the government side. While they were extraordinarily tough to deal with, they did act reasonably and did try and help us clear impediments and build momentum, until we concluded a better way of going forward with the government.”

But the bad public private partnership experience at Southern Cross has not dissuaded the company from embarking on PPP projects.

TAFE has Southern Cross similarities

“We have about a dozen PPPs underway at the moment. And John Holland is doing a refurbishment of the South Bank TAFE in Brisbane, which has some similarities to Spencer Street in the sense that it's an operating environment. Students have to come in to study each day and we have to build the TAFE around them. But that has gone extraordinarily well,” Mason said.

Leightons too is building the first substantial PPP for the Federal government in the form of Defence Department headquarters outside Canberra and that is going well. “One bad experience doesn't mean we wander away from [PPPs] and say we're not going to touch that delivery method. We haven't shied away at all,” he said.

But not every project is suitable for a PPP. The contractual elements are more complex than traditional D&C jobs. There are a range of delivery methods and alliance contracts are becoming much more common. In those, the client and contractor sit down and try and work out the best way forward, rather than taking an adversarial contract position, he said.

“Across the Leighton group, about 40% of projects are alliance projects, which is completely different to five years ago when it would have been 5 or 10%. PPPs are a fairly small proportion.

Power imbalances

In talking about the pre requisites for successful PPPs, Mason said they were not called partnerships for nothing. “One side must not have more power than the other. In terms of risk transfer it has to be appropriate. So risk must be borne by the party best able to manage it,” he said.

“Above all the private sector needs a realistic timetable in a PPP because they require tremendous effort. In tendering for Melbourne's EastLink road project for example, we had 600 people working on it.”

Mason showed a graph derived from BIS Shrapnel data, that showed private sector value of work done each year in the Victorian construction industry, was estimated to increase by about 85% between 2001 and 2008, from $7bn to $13bn. The graph showed the average value of work done from 1990 to 2007 was well below the 2001 figure.

“If anyone had said six years ago that it would nearly double, most people would have said take a Bex and have a lie down.”

He cited projects like the underway Geelong Bypass, the Westgate Bridge expansion, up to $2bn to be spent on upgrading the underground City Loop, clearing congested passenger lines like Dandenong and Clifton Hill, the proposed Eastern Freeway extension and building the missing link between the Eastern and Tullamarine Freeway, as examples of needed infrastructure.

“Congestion costs are due to explode up until 2020 according to the Bureau of Transport Research Economics. In all major cities they are forecast to double over the next dozen years. So governments have to very active just to hold the line,” Mason said.