Quote Originally Posted by whatsup View Post
xaf, show me one project in the last 30 years that has come in on time and on budget, CRL, Marsden Point, Clyde, Sky City, the BNZ building in Wellington, N Z Steel, CH CH rebuild, Waterview Tunnel, Mangere Bridge , Dunedin Hospital, Wellington Museum, the Puhoi to Warkworth motorway to name a few, the Lake Onslow pipe dream will cost $30 Billion minimum, the only way any builder on shore or off shore will build a contract of this nature would be on a cost plus ( charge up ) contract, the very very low productivity of N Z workers is something else.
Just today the CEO of Wellington Water resigned as she forgot to submit a $51 million costing item to her employer.

It just goes on and on.
You said the estimated cost was $30B. This is incorrect, the last estimated cost was $16B

Cost overrun is a separate issue, and you suggested this was additive to your $30B, which was misleading

Cost overrun can be eliminated with a fixed price contract. This is basic procurement. The penalty is a higher initial quoted price as the supplier/contractor must factor in future price movements. The effect is a lower IRR so fewer projects will proceed to construction, but those that do will come in on-budget (and generally at lower total cost than when the purchaser agrees to cover cost escalations)

The idea that the purchaser should cover future price movements was introduced to stop supplier/contractor including fat allowances which killed projects through low financial returns. Now the suppliers/contractors are gaming the system by providing unrealistically low quotes (which get projects approved) and passing any and all cost escalations back to the purchaser. The risk should sit with the supplier/contractor as they know their market much much better than the purchaser

Incumbency breeds contempt. NZ should invite the Chinese to tender a few projects (materials and imported labour), under their belt & Road program. Sharp Chinese pricing will quickly bring the NZ suppliers/contractors back into line. The Chinese quotes don't need to be accepted to have a beneficial effect, but accepting one or two would show its not a bluff

I have 25 years procurement experience. I used this disruptive technique many times, bringing in a new vendor to shake up the incumbent. Easily 25% cost reduction every time, and improved service to boot