Ministry gives view on Clyde costs

Press, 8 March 1984, Page 3

Ministry gives view on Clyde costs

PA Wellington Most of the cost escalations in the Clyde power project since main work began in 1980 can be justified by inflation, according to senior Ministry of Works and Development officials in Wellington. This comes after a report in the “New Zealand Times” that cost escalations on the project totalled 1151 million, and were rising. The Ministry officials said contract variations that have occurred, and which cannot be justified by inflation, have fallen well within the bounds of a “contingency” account included in the original project estimates. At this stage, while difficult foundation works have put the project about six months behind schedule, the contract is proceeding in accordance with 1980 financial estimates and is nothin danger of heading into cost overruns,-they said. ; The “New Zealand Times,” which obtained copies of documents stolen from the Clyde project office, also reported on construction, design and communication problems on the project.

In response to points

raised by the report, the Ministry’s chief power engineer, Mr Michael Williams, and chief operations engineer (power division), Mr Alan Howarth, said,

• The Clyde power scheme was approved on an estimate of $513 million in 1980 money terms, which included $435 million for civil engineering works — including the dam construction contract — and $7B million for machines, generators, and other plant under the control of the Ministry, of Energy’s Power Division.'

The M.O.W. is concerned only with the civil engineering details. • Ministry workers excavated two million cu m of material in the foundation preparations, leaving about 18,000 cu m in a half-metre thick line for the private contractors to remove. It was then learned that a further 100,000 would have to be removed from a section of the foundation works. This was a charge on the Ministry, as was the cost of the concrete used to fill the space opened. It was covered in a contingency sum marked “special foundation treatment,” which is part of an $11.5

million sum (in 1983 values) given in a table of costs. • Extra concrete needed to fill the gap left by the excavation of the extra 100,000 cu m was covered in the $11.5 million contingency figure. • Price variations to the private contract fell within the over-all contingency sum allowed for the project. • The project’s German contractors, Zublin, elected to use Austrian-made systems, while a British company with a New Zealandbased holding argued that its materials were the best. This led to “a hopeless bloody wrangle eventually.” • The Ministry denies there had been confusion over information flow.

• Zublin, used to European grouting methods, queried the Ministry’s specifications for work. The Ministry made it clear its specifications were to be followed, and this was considered not to be a dispute over which was right. • The design of the new main road is taking into account the nature of the broken material encountered as the contract proceeds. The Ministry denies that the road will fail to meet safety needs.