Anne Gibson

Anne Gibson is the Property editor of the NZ Herald

Hundreds toil on rival bids for nation's biggest roading job

The $1 billion-plus Transmission Gully project site north of Wellington.
The $1 billion-plus Transmission Gully project site north of Wellington.

More than 300 people are working on two rival bids for the country's biggest new roading infrastructure contract, with documents due in early next month.

Teams of designers, specialist engineers, financiers and debt-equity partners are preparing to submit contracts on the $1 billion-plus Transmission Gully north of Wellington, vying to score the country's biggest new public private partnership roading job.

Robert Jones, Fulton Hogan NZ's infrastructure chief operating officer, said around 120 people were working for the Positive Connection consortium, preparing documents due on October 7.

Andrew Stevens, Leighton Contractors NZ's general manager, said around the same number were working on the Wellington Gateway Partnership consortium team, with headquarters at 15 Hopetoun St, alongside Leighton's Hereford St headquarters in Auckland.

The winning consortium will be announced in early February.

Fulton Hogan, the Australasian civil engineering, contracting and resources business, joined John Laing Investments, Fletcher Construction and others to try to win the job due to start next year.

"The cost of submitting the bid alone is enormous, in the region of $20 million," Jones said, "and we have had a team working on this for nine months, with 150 designers and construction people."

Stevens of Leighton said the job was the country's most desirable.

"It's the biggest thing on the radar at the moment. It's a fantastic new procurement model which the New Zealand Transport Agency and the Government has entered into," he said of the PPP model.

Fulton Hogan, New Zealand's biggest roading contractor with 3600 staff here and an annual turnover of $1.2 billion, will announce its annual result for the year to June 30 on October 2.

Last year, the business won work here and in Australia worth $3.7 billion, three times the size of Fletcher's order book at the time. In the year to June 30, 2012, Fulton Hogan made revenue of $2.7 billion (previously $2.4 billion), earnings before interest, tax, depreciation and amortisation of $130 million ($246 million) and net profit after tax of $7.9 million ($73.9 million).

Jones said Transmission Gully presented a number of difficulties. "The biggest challenges of the job are seismic and weather issues. You take a fair size of the risk on a seismic event, operating the road over 25 years and the cost of replacing it if there is an earthquake."

The sheer scale of the job posed challenges because six million cubic metres of earth had to be shifted. Jones said a truck could carry around 40cu m, so the total job required about 150,000 truckload journeys.

Weather posed problems in terms of simply getting such a big workforce into the area, then keeping them working, Jones said. "The other challenge is the logistics around moving people in and out of the area. There's not a lot of big jobs on in Wellington."

In April, the New Zealand Transport Agency shortlisted two consortium bidders and in June the Government gave the agency approval to borrow the funds needed to build and operate the new highway using the public-private partnership procurement model.

Transmission Gully will link MacKays Crossing in the north with Linden and construction should begin late next year.

Stevens said the challenges included coping with landslips, climate change and working in an area of heavy rainfall. "This is about providing a world-class road as part of NZTA's Roads of National Significance, and providing resilient infrastructure that can withstand primarily seismic events but others as well."

Jones said his sector was buoyed by the size and scale of new work. "There's a lot more confidence around the market with the Puhoi to Warkworth Motorway being confirmed, Waikato Expressway extension planned and the Central Rail Link proposed in Auckland."

Other big Fulton Hogan jobs include repair of McKenzie Country hydro canals for Genesis Energy, work for Watercare Services, housing at Silverdale, north of Auckland, where Fulton Hogan has a 50 per cent stake in the Millwater project, the Tauranga Eastern Link, Christchurch earthquake infrastructure work and the upgrade to the Lincoln Rd onramp in Auckland.

Rival bidders

Transmission Gully shortlist:
Positive Connection
* John Laing Investments
* Fulton Hogan
* * The Fletcher Construction
* Macquarie Group Holdings
* Woodward Infrastructure

Wellington Gateway Partnership

* Leighton Contractors
* HEB Construction
* InfraRed Infrastructure General Partner
* Bank of Tokyo-Mitsubishi
* ACC

New Zealand Transport Agency.

- NZ Herald

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