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Public Accounts Committee PUBLIC ACCOUNTS COMMITTEE INFRASTRUCTURE PROJECT FOLLOW-UP INQUIRY TRANSCRIPT OF EVIDENCE TAKEN AT PERTH WEDNESDAY, 17 OCTOBER 2012 SESSION ONE Members Mr J.C. Kobelke (Chairman) Mr A. Krsticevic (Deputy Chairman) Dr E. Constable Mr C.J. Tallentire Ms R. Saffioti __________ Public Accounts Wednesday, 17 October 2012 — Session One Page 1 <001> I/4 Hearing commenced at 9.36 am WALDOCK, MR REECE ALLAN Chief Executive Officer, Public Transport Authority, Level 9, 140 William Street, Perth 6000; examined: BURGESS, MR MARK Managing Director, Public Transport Authority West Parade, East Perth 6004; examined: HAMILTON, MR ROSS Executive Director, Major Projects, Public Transport Authority, West Parade, East Perth 6004; examined: The CHAIRMAN: On behalf of the Public Accounts Committee, I would like to thank you for your attendance before us today. You will be aware that the committee has previously examined the procurement of the Perth City Link project. The purpose of this hearing is to assist the committee as it continues to oversee the delivery of major projects. I would like to introduce myself as the chair, John Kobelke, along with Rita Saffioti and Chris Tallentire. I think Dr Constable was involved in another committee and may be a little late getting here. The Public Accounts Committee is a committee of the Legislative Assembly of the Parliament of Western Australia. This hearing is a formal procedure of the Parliament and therefore commands the same respect given to proceedings in the house itself. Even though the committee is not asking witnesses to provide evidence on oath or affirmation, it is important that you understand that any deliberate misleading of the committee may be regarded as a contempt of Parliament. This is a public hearing and Hansard will be making a transcript of the proceedings for the public record. If you refer to any documents during your evidence, it would assist Hansard if you could provide the full title for the record. If during the course of the day’s hearing you feel that information being requested by the committee breaches a commercial confidentiality requirement, please let us know and it may be possible that we could then move into a closed session. Before we proceed with the questions we have for you today, I need to ask you a series of questions. Have you completed the “Details of Witness” form? The Witnesses: Yes. The CHAIRMAN: Do you understand the notes at the bottom of the form about giving evidence to a parliamentary committee? The Witnesses: Yes. The CHAIRMAN: Did you receive and read the information for witnesses briefing sheet provided with the “Details of Witness” form today? The Witnesses: Yes. The CHAIRMAN: Do you have any questions in relation to being a witness at today’s hearing? Uncorrected Proof - Not to be Quoted Public Accounts Wednesday, 17 October 2012 — Session One Page 2 The Witnesses: No. The CHAIRMAN: I appreciate you appearing before us today. We are looking for an update on this project, having previously been briefed on it. I would like to start by getting an update on costs involved with the construction of the rail component and how the alliance is going. The rail sinking component was estimated to cost $360 million. We wondered how you are going with that, both in relation to cost and time. [9.40 am] Mr Waldock: At this stage the total project expenditure for the rail project is $184.196 million, so $18 million expenditure to date. It might be best if I go a bit slower and break it down. If we look at the rail project, we have carried out forward works of $23 million in roundabout terms. We have our own internal costs—the budget costs—of $21 million and we have the alliance costs of $16 million. That is the budget we are working to in terms of the rail project. If we then look at what we have spent to date, at this stage the total project expenditure is $184 million, as I mentioned. The majority of that expenditure is in the rail alliance, as you might expect, because it is the largest part. It is $139 million to date. We also have $18 million for PTA costs and $23 million for forward works costs. Perhaps I will talk in a general sense. We are about halfway through the project. In terms of how I see the project, we are travelling very well. It is half finished. If I look at the many projects that I have been involved in and that I am involved in, in terms of budgets and timing, I must say that this is one of the better projects to date. I will talk about the future in a second. We would have to say that this project is travelling extremely well, about halfway through. In terms of budget and timing, there are no surprises. That is not to say that we do not have some significant risks in front of us. We always have risks in projects. I think when we spoke last time we indicated that the biggest risk for this project was to do with the die structure coming up to Perth station. The die structure is to be very close to the Mandurah underground rail tunnels, and that is still the issue. We have done some redesign—again, this is where the alliance is working extremely well—and we have managed to separate the floor of the die structure from the top of the tunnels by about 1.2 metres. That has reduced the risk profile. In the next two months we would like to tell you just how that went because we are moving into that stage in the next few months. The CHAIRMAN: When you talk about that separation, that is in your detailed planning but you are not into the construction stage at the moment. <002> N/4 9:42:59 AM Mr Waldock: No. We have done what we call the diaphragm walls and we are now moving in the next two months to put the floor in. The floor will be, I guess, the one where we will be travelling very closely to the tunnels. We have reduced the risk, as I say; we have actually separated it—I think before it was only about 400 millimetres — Mr Hamilton: About 700 millimetres, that was the closest. Mr Waldock: So now it is 1.2 metres. We are still very confident and we are working through it; it has been done very well and we will get more detailed questions and answers. If I can perhaps say that we have had two incidents, which we will pick up later. But, overall, in terms of the project itself and timing and budget I think what has happened is we have a very good governance structure in this project. We have actually picked up our governance structure from the Mandurah railway line and we will be using it for the Gateway project. I think we have up a very good alliance partner. We are delighted, as I say other than the two incidents, with how the project is going and the work they are doing. But I think if there is any message for me in this, being involved in a number of large projects, is the enormous preplanning and pre-engineering work we did before. It means pretty much we had a very good understanding of how we were going to stage the project. It was always going to be a complex project in terms of operations still continuing. But there have been no Uncorrected Proof - Not to be Quoted Public Accounts Wednesday, 17 October 2012 — Session One Page 3 surprises in that part of it, and I must say the shuts—there have been three shuts—pretty much have gone as we would have expected. Tentatively—I am always a bit nervous about this—I have come to you today with the sense that it is going as well as could be expected, if you separate the two incidents which we will pick up later. The CHAIRMAN: How much of the $360 million, which was your indicative budget, was for contingencies? Mr Waldock: There are contingencies at different levels. But, Ross, do you want to pick up both the project contingencies in terms of the overheads and all the detailed line item ones? Mr Hamilton: The detailed planning when we prepared the budget—I would have to go back and check the exact figure that we had in the budget allowance, but I think it was something in the order of 10 per cent in contingencies for the overall rail alliance work and rail works and then also the bus station work. The CHAIRMAN: Is it 10 per cent of the $360 million or 10 per cent of some other amount? Mr Hamilton: It is 10 per cent of the $360 million, which was what was identified for the rail. I will have to check that exact amount. The CHAIRMAN: That 10 per cent is within the $360 million or on top of it? Mr Hamilton: No; within the $360 million. So the $360 million, plus the $248.8 million, I think it is, gives us $609 million project budget. The CHAIRMAN: We will come to the bus station later; we will just concentrate on the rail at the moment. In terms of some of these events that have happened—the fire and the shutdown; is that all caught in contingencies or is that extra cost? Mr Hamilton: The shutdowns are all planned as part of those project works — The CHAIRMAN: Or the unplanned shutdowns in terms of the fire? Mr Hamilton: Basically, the direct costs associated with the fire have gone to our alliance partners; they have been picked up outside of the project budget in that regard.
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