Rail officials in Australia thought they had an innovative design-build type of contract for a section of railroad tunnel through Perth. But with claims on the job now equal to 60% of the contract's $240-million price, and with politicians lambasting the contractor, the approach seems to have gone awry.

The City Rail Project, sponsored by the Public Transport Authority (PTA), covers the urban underground section of a $1.2-billion suburban railroad from downtown Perth to Mandurah 70 kilometers south. City work involves 1.3 km of tunnels, half being done with a boring machine, and half using cut-and-cover technique.

Breakthrough Belies Perth Program Troubles.

PTA’s contract, awarded in February 2004, is with Australia’s Leighton Contractors Pty Ltd. Its parent holding firm acts as a guarantor.  Leighton and Japan’s Kumagai Gumi Co. Ltd.  are the construction joint venture subcontractor.

The authority based the agreement on a design-build form of contract used for 10 state highways. The document was adapted to recognize additional complexity.  Among innovations are a performance bonus and a 10-year maintenance agreement coinciding with the warranty period. The fixed-price, lump-sum contract has provisions for inflation and change orders.

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Even so, $39 million in contractor claims were received by year-end 2005. An additional contractor demand for $104 million came in early this year. The latest claim was “cobbled together in haste,”  says state Planning and Infrastructure Minister Alannah MacTiernan. “We are not going to agree to a change in the risk profile...or use taxpayer funds to release Leighton from its contractual obligations.”

Leighton acknowledges undisclosed losses on the job. But with more than two- thirds of work complete,  “we don't see any additional material exposure going forward,”  says group CEO Wal King.  Substantial completion is due this December, several months late.

But last month, crews did celebrate when the job’s earth-pressure-balance TBM made its first breakthrough after being launched last October.

Road Is a Tough Haul

Singapore viaduct nears completion after second contractor picked up the job, rebuilding nine segments.

After dismissing one contractor and hiring another, Singapore’s Land Transport Authority may soon take delivery of a new 2.6-kilometer-long road viaduct. Gammon Pte. Ltd. took over last August with a $10.3-million contract to complete the two-year late job.

Gammon has erected, in balanced cantilever, the last 133 segments of up to 80 tonnes, casting 30 of them. It also had to take down and re-erect nine badly made segments. LTA first awarded the $36-million job along Pasir Panjang Road to a firm that ran into financial difficulties in 2002.

Fast-Track in Ireland

The Irish Republic’s roadbuilding agency chose publicly financed construction to speed procurement of a $140-million project to widen the most heavily congested 5 kilometers of the M50 Dublin beltway. But to widen its remaining 25 km, the agency will continue government private financing.

The first $140-million upgrade is starting under a design-build contract with Spain’s Ferrovial Agroman S.A and local partner SIAC Construction Ltd. Design-build ensured a prompt start to work, says roads official Michael Kenne-  dy.  Global teams will soon bid for the estimated $280-million second phase.  The likely 30-year contract will include highway financing, operation and electronic tolling. The M50 is one of seven BOT contracts launched by the agency.