❓ A parliamentary question regarding the fixed-price contract for a rail tunnel project, focusing on risk allocation and potential cost blowouts. The Minister defends the government's decision to pursue a fixed-price contract to protect taxpayers.
AnsweredQoN 1200Legislative Assembly
QuestionView source ↗
I refer the minister to the comments in the Sunday Times of Mr Richard Mann, Director of the Public Transport Authority, that the cost of the rail tunnel will not blow out because “All the major contracts, including the tunnelling contract in the city, are lump-sum, fixed-price contracts . . .”. (1) Can the minister confirm that at least one tenderer has expressed concern about the signing of a fixed price contract given the number of unknown risks and factors associated with tunnelling under the central business district? (2) Will the minister also confirm that even a fixed price contract would be open to legal challenge if the Government’s specifications of conditions are not 100 per cent accurate? (3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN
AnswerView source ↗
(1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(1) Can the minister confirm that at least one tenderer has expressed concern about the signing of a fixed price contract given the number of unknown risks and factors associated with tunnelling under the central business district? (2) Will the minister also confirm that even a fixed price contract would be open to legal challenge if the Government’s specifications of conditions are not 100 per cent accurate? (3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(2) Will the minister also confirm that even a fixed price contract would be open to legal challenge if the Government’s specifications of conditions are not 100 per cent accurate? (3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(1) Can the minister confirm that at least one tenderer has expressed concern about the signing of a fixed price contract given the number of unknown risks and factors associated with tunnelling under the central business district? (2) Will the minister also confirm that even a fixed price contract would be open to legal challenge if the Government’s specifications of conditions are not 100 per cent accurate? (3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(2) Will the minister also confirm that even a fixed price contract would be open to legal challenge if the Government’s specifications of conditions are not 100 per cent accurate? (3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(3) Will the minister concede that she is in no position to guarantee Western Australian taxpayers that the cost of this highly risky and poorly managed project will not blow out even further? The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
The SPEAKER: Part of the second question seeks a legal opinion. I therefore ask that the minister answer only those parts of the question that do not refer to a legal opinion. Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
Ms A.J. MacTIERNAN replied: (1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
(1)-(3) I can only presume that the research capacities of the member for Carine do not extend to reading the statements formally issued by one of the tenderers. I think the tenderer to which she referred and the discussions the tenderer had on the Paul Murray radio program made it very clear that he was prepared to enter into a fixed price contract. That is the term under which the contract is being offered. It may well be the case that various groups in the community would prefer not to have a fixed-price contract. It is easy to imagine that some companies would prefer the Government to take the risk rather than the contractors. They are entitled to that view. However, at the end of the day it is the Government’s job to look after taxpayers’ interests. It is our assessment that, for a contract of this scale and complexity, it was in the best interests of the taxpayers to insist on a fixed price contract, as we have done. However, I will make one other observation. This is a design and construct contract so both the construction and design risks clearly lie with the contractor. The Government has gone one step further with this contract. As part of the tender documents - it will be part of the contract the Government will ultimately sign - the contractor will be responsible for 100 per cent of the latent condition risk. We provide all of the information that we have collected on the geotechnical nature of the land through which the tunnel is to be constructed, but at the end of the day a contractor buying into this project takes on and accepts 100 per cent of the latent risk. It is true that a UFO might land on the site, in which case we would probably be liable. It is also possible that there may be an earthquake or some other act of God, but with this contract, the construction risk, design risk and latent condition risk rests 100 per cent with the contractor. There is absolutely no way that we could get a contract price that was any clearer and any less open to variation than that.
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