WA builders steer clear of BER rorts

THE Master Builders Association has backed Western Australian builders’ handling of the $16.2 billion Building the Education Revolution schools program, following claims of price gouging by builders in other states.

There has been widespread criticism of the BER scheme, including that schools had to hastily commit to projects of questionable merit and that taxpayers have ended up paying inflated prices to contractors.

Most of the complaints have related to government school projects in New South Wales.

It was revealed earlier this month that managing contractors in NSW had charged fees of between 12.5 and 16.5 per cent on BER projects – about 3.5 times the amounts suggested by the federal government.

Master Builders WA director Michael McLean said in WA a traditional tender method was used to distribute building contracts and set prices, whereas in NSW a construction management arrangement was applied.

“The criticism is not well founded in WA because the procurement method was a tendered arrangement and the prices were extremely competitive,” Mr McLean told WA Business News.

The successful tenderers in WA included national construction giant John Holland, which won 40 per cent of the $342 million of new school tenders last July, 88 contracts valued at $140.4 million.

Belmont-based Pindan Constructions was awarded $37.6 million in tenders, while Claremont builders Arccon Design and Construction won $27.2 million worth of work.

“Builders have been copping stick from clients, subcontractors and the like saying ‘you guys must be making a fortune with this BER stuff’ and it’s just not true.

“In fact, builders put in prices, and in some cases the government said ‘no, there’s not enough money to go around, we want you to do it at this price,’ which was lower than the tendered prices.

“Some builders weren’t happy with that and walked away, while others were prepared to compromise.”

The two-tiered tender process drew widespread criticism from industry in August, after construction giant BGC pulled out upon receiving a letter signed by the Department of Building Management and Works’ program director Steven Luce, asking the company to reduce its prices if it wanted to be considered for work.

Mr McLean said the MBA was asked to take it up with the department the fact that builders were asked to drop their prices after a tendering round.

“That is very unconventional, in fact we would argue it is in breach of the code of tendering,” he said.

“However the government said ‘please understand this is an extraordinary type situation, it’s a one-off type arrangement asking builders to drop their prices further, otherwise the dollars aren’t going to go around to all of the schools that we need them to.’”

Perkins Builders business development manager Rod Sproule said he was surprised to read of rorts and gouging of sub-contractors in NSW after going through the traditional tender process in WA.

Perkins Builders won $53 million worth of tenders across the Bunbury school district, which takes in 44 schools from Harvey to Manjimup.

Mr Sproule said the NSW government was the “first cab off the rank” when it came to distributing the BER funds, and may have entered into construction management arrangements in haste.

“If they had have tendered them in a traditional and conventional manner you wouldn’t have issues of inappropriate costs, ” Mr Sproule said.

The federal government announced early this month it would establish a taskforce to investigate complaints.