24/08/2015 - 15:05

PPP process proves a costly proposition

24/08/2015 - 15:05

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Construction contractor Badge has raised questions over the onerous process of bidding for public private partnerships, saying the cost of tendering for the contracts are often disproportionate to the benefit of winning the works.

PPP process proves a costly proposition
CONCERN: Rob McLaughlin (left) and Jim Whiting welcomed the work, but have questioned the bidding process for public works. Photo: Attila Csaszar

Construction contractor Badge has raised questions over the onerous process of bidding for public private partnerships, saying the cost of tendering for the contracts are often disproportionate to the benefit of winning the works.

While Badge managing director Jim Whiting said the company was extremely happy to have been part of the winning consortium for a $370 million schools deal unveiled earlier this month, he said PPPs were an interesting proposition.

“They are sweet and sour for builders, because they cost so much to bid on,” Mr Whiting told Business News.

“If we hadn’t won this one, I would have said we’d never bid on another one again, because the cost of bidding is disproportionate.

“Having said that, we were approached by Macquarie to get together with Perkins to put in a joint bid.

“We were still a bit sceptical, but it was one of those things – you can’t be too choosy with turning down opportunities.”

Under the $370 million deal with the state government, Badge and its partners, Perkins Builders, Macquarie Capital and Spotless Facilities, will construct four primary schools by the end of next year, as well as an additional four secondary schools by 2022.

Mr Whiting said Badge and Perkins would add around 40 new staff in the first year of the deal, trimming that back to about 20 for the remainder of the contract.

The schools will all be located in Perth development hotspots, providing education options in the rapidly growing outer suburbs as far north as Alkimos and Ellenbrook, to Baldivis and Landsdale in the south, and through the eastern growth corridor areas of Byford and Harrisdale.

The Badge consortium was selected ahead of a Decmil-led group, which included Programmed Maintenance Services and Cockram Construction, and an alliance between Pindan, Compass Group and Plenary Origination.

Badge WA state manager Rob McLaughlin said he estimated the builder spent around $1.5 million since registering its interest in bidding for the works in October last year.

“It will be interesting to see what happens with future developments like this, and whether the industry will engage with it,” he said.

Notwithstanding the costs of bidding, Mr Whiting said the contract would provide a significant benefit to the South Australia-based builder, in particular boosting its profile in Western Australia and demonstrating its capabilities to the local market.

“People in this space realise how capable you have to be to win one of these,” he said.

“We’re not in it to get profile, we’re in it to make money; but it does get you to another level of acceptance in the market.

“We’ve been in Perth for the best part of 20 years now, but it’s fair to say that this is perhaps a quantum leap in both profile and setting ourselves in stone over here.”

Mr Whiting said the works fed into the builder’s strategy of ensuring it had an equal amount of work in its three key markets of WA, SA and Queensland.

“We’re not looking to do all of our work out of one state, just as we’re not looking to do jobs that are too big for us,” he said.

“We’re run out of Adelaide but our business plan is to have three even-sized offices out of Brisbane, Adelaide and Perth.

“But there is more opportunity over here – it’s still a fast-growing state.”

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