03 Dec 2009

Construction and Major Projects review 2009

Doug Jones discusses the infrastructure market in 2009, the major projects which have been completed and the challenges the industry has faced, particularly in relation to the impacts of the global financial crisis.

Construction and major projects review 2009
Doug Jones AM, Partner, Major Projects

2009 has been a challenging year for all of us in the projects space. Let me say a few words firstly about the public private partnership area.

The year started with issues arising out of the BrisConnections airport link project and the IPO issues surrounding that project. It moved through a period of re-evaluation of a number of projects which were at or close to market including the northern link project in Brisbane which has now gone to market as the year closes as a Design-Construct-Maintain-and-Operate contract rather than as a PPP.

Peninsula Link in Victoria has gone to market as the first of the state government road projects let on an availability basis. Sydney Metro is to market both as a traditional construction contract for the tunnels and as a PPP for the operating system and of course we have seen one of the largest PPP projects yet done in Australia, the Victorian Desalination project, close financially in circumstances which were to say the least challenging. It's been satisfying to see that the innovative financing approaches which were adopted by us for the consortium in relation to that project have led to the project financially closing without the degree of government support that was first thought necessary.

Turning secondly to traditional infrastructure, there is a significant amount of movement arising from government support for infrastructure in both the rail and road space, including funding for the business case of Brisbane Cross River Rail, work by ARTC on rail projects in a number of states, the commencement of the Perth Northbridge project, and of course the very major regional rail project in Victoria.

In the private sector area there are signs of very significant activity in the resources area. There we see very substantial projects such as the Gorgan LNG project in Western Australia and the Queensland LNG projects going to market as we close the year. There has been a change to the way in which delivery models have been used for traditional delivery. Alliancing is still very popular but there is significant pressure from government projects where it is used for the demonstration for the value of money. Hard dollar contracts have returned in some major areas.

Finally issue resolution has been a very significant part of infrastructure practice both nationally and internationally during the year.

I think one of the challenges for the coming year will be whether we have sufficient management and other resources in the Australian construction market to handle the work that is going to be presenting itself to industry. So resources which were not a problem so much during this past year will, I think, loom as an issue for the coming year. Effective dispute resolution nationally and internationally will present a challenge for all of us.

May I add at the conclusion of this year a thank you for your support during the year, and wish you all the very best for the festive season and a successful and prosperous new year.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.