Lack of money was the reason Hawkins Construction stopped working at the A$405 million ($517 million) Australian prison construction site where 35 staff were let go yesterday.

David McConnell, interim Hawkins Construction chief executive after Chris Hunter's resignation in late May, said 35 Hawkins Ararat staff had left and only a skeleton crew of about 12 would stay in the meantime.

"Many of them were on a fixed term contract arrangement until the end of June and this is the completion of that term," he said of the 35 workers.

McConnell has issued a series of statements lately, first saying Hunter had left, then that the prison issues were being resolved and that Hawkins was working with project financiers, receivers for the AEGIS consortium behind the project and the Victorian State Government, and hoped to reach a solution.


But yesterday he said the money had dried up.

"Until we get a funding solution, we can't continue to absorb costs on the project," he said.

Although articles in Australian media criticised the job and said it had turned sour, McConnell had initially maintained that problems were being resolved and indicated he hoped for a good solution.

Hawkins remained committed to completing the Ararat project, despite the recent challenges, he said.

"We continue to work with the remaining project stakeholders to finalise a completion plan, and are confident the issues can be resolved and the project completed," he said on June 14.

But after talk circulated about workers being told not to return to the site, McConnell issued a statement saying the job had come to a halt.

Hawkins was "extremely disappointed" that negotiations between the project's principal stakeholders had not sufficiently progressed.

The Grafton Gully-headquartered builder owned by the McConnell family was in the consortium to extend the prison but that turned sour when fellow member St Hilliers Construction, a subsidiary of Sydney-based property investment group St Hilliers, entered voluntary administration in May.

The parties had won the contract to design, build, finance and maintain the 350-bed expansion over a 25-year term.

McConnell said money had run dry.

"Interim funding which would allow the project to continue under the current commercial arrangements has not eventuated," McConnell said.

"Given the project's funding situation, Hawkins has been left with no other option but to stand down all project staff, effective, except for a core team so the site is not abandoned," he said.

Hawkins was committed to the negotiations for a revised completion plan and is not ruling out a resolution in the long term and McConnell said he expected discussions with the state government, AEGIS' receivers and other stakeholders to continue.

McConnell said he had visited the site late last year but denied Australian media reports about Chinese-made doors and windows not fitting.

"We know there are some locally manufactured doors that had to go back," he said.

"We did import some security gear from China. But the non-fitting doors and windows - that's a non-event.

"It came up from someone in the union and we don't think it's right," he said.

The project was around half finished with walls up, he said.

Australian reports say subcontractors are owed hundreds of thousands of dollars and the entire project is A$100 million short of cash.

Ararat prison job
* Expansion of existing jail, 240km northwest of Melbourne.
* Construction of new 358-bed men's medium-security prison.
* Job was a public-private partnership arrangement.
* AEGIS, consortium behind project, now in receivership.