Big builders on edge about risk of delays to Metro West contracts
The NSW government has been warned that construction companies cannot afford to keep large teams waiting for a year before the remaining contracts to build the $25 billion Metro West rail line are awarded.
An interim report into Sydney’s metro rail projects has raised the prospect of delaying work on Metro West that is yet to be contracted, to help pay for the extra $1.1 billion needed to finish work on a section of the T3 Bankstown line for the second stage of the city’s driverless train network.
Excavators at work on the site of a train station at Sydney Olympic Park for the Metro West line.Credit: Janie Barrett
It has prompted the peak body for major construction companies to raise its concerns about the 12-month delay when it meets next Monday with the team reviewing Sydney Metro, led by former federal transport bureaucrat Mike Mrdak.
Australian Contractors Association chief executive Jon Davies said companies had already assembled teams, and in numerous instances submitted bids for the majority of the remaining work on Metro West.
“Construction companies can’t afford to have high-value people sitting twiddling their thumbs waiting for an outcome on this. It’s not just the cost – it’s the lost opportunity,” he said. “The delay caused by this inquiry is already placing pressure on industry.”
Typically, it costs companies about 1 per cent of a contract’s value to bid for work, which equates to $10 million if a construction deal is worth $1 billion.
The peak body has also written to Premier Chris Minns, raising concerns about potential delays or a cancellation of Metro West, which is Australia’s largest public transport project. The premier has refused for the last week to quash speculation that Metro West could be shelved.
The Australian Contractors Association represents the majority of construction companies – including John Holland and Laing O’Rourke – that have bid for or won contracts for Metro West. Both John Holland and Laing O’Rourke declined to comment on Wednesday.
So far, about $9 billion worth of contracts for the $25 billion Metro West project have been awarded, which includes three separate deals for twin tunnels on the line between the CBD and Parramatta.
Premier Chris Minns and Transport Minister Jo Haylen board a new metro train undergoing testing on the main section of the City and Southwest line.Credit: Nick Moir
Davies said increases in the cost of materials had been a major problem over the past two years and, while this was easing, it was being replaced by an escalation in labour prices.
“Prices will continue to rise and budgets be placed under pressure the longer procurement is delayed,” he said. “Projects are not going to get any cheaper the longer you wait.”
The Mrdak team did flag in its interim report that any changes to the timing of contracts is “highly likely” to delay Metro West beyond the targeted opening in 2030 and push up costs. Sydney Metro has previously considered a range of scenarios that would delay Metro West until as late as 2034.
Coalition transport spokeswoman Natalie Ward said delaying the awarding of contracts for Metro West would increase the project’s costs and undermine industry confidence.
Metro West construction contractors
- Laing O’Rourke and Gamuda have $2.16 billion contract for 9km of tunnels between Westmead and Olympic Park, excavation of two station sites and a stabling and maintenance facility at Clyde
- Acciona and Ferrovial have $1.96 billion contract for 11km of twin tunnels between Olympic Park and Rozelle, and excavation of five station sites
- John Holland, CPB and Ghella have $1.63 billion contract for 3.5km of twin tunnels between Rozelle and the CBD, and excavation of two stations sites
“It appears now not only are the people of western Sydney are waiting for an answer – so too are the people who will build Metro West,” she said. “The construction industry as a partner of government relies on certainty and governments honouring their word.”
A spokesperson for Transport Minister Jo Haylen said no changes to the project timeline for Metro West had been announced by the government.
“We will receive the Sydney Metro review’s report on Metro West in October and consider the recommendations made by Mike Mrdak and Amanda Yeates,” he said.
Terry Lee-Williams, a former senior Transport for NSW executive who is now director of future transport for engineering consultant Aurecon, said a delay to Metro West may see large contractors diverting resources to the fast-growing renewable energy infrastructure sector.
“There is the potential that the cost of building Metro will escalate because resources are redirected,” he said.
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