Huge cost of rotten school alters Govt views on tenders

Extensive work continues on leaky buildings at Macleans College in East Auckland. Photo / Greg Bowker

The horrendous cost of repairing a leaky Auckland school is changing the traditional Government view that the cheapest tender is the best tender.

The Ministry of Education has paid $19.5 million to repair Macleans College, which has had to remove 23 rotten buildings from its Bucklands Beach site.

The college is in Building and Construction Minister Maurice Williamson's Pakuranga electorate.

"It's a beautiful school on a stunning site overlooking the Waitemata Harbour," he said. "And there is building after building after building just rotting before your eyes."

Macleans was believed to be the worst-affected school in the leaky building crisis, but its remedial bill was only a fraction of the total cost to the ministry.

More than 300 schools and 800 buildings nationwide have been affected at a total cost of at least $1.5 billion.

The ministry has taken legal action against wall cladding manufacturers to recoup some of the money.

But Mr Williamson said the problem was also a symptom of getting the cheapest construction contracts possible.

He said the costly remedial work was the result of flawed tender processes in which the initial price of construction was prioritised over the whole-of-life cost of maintaining the buildings.

"(The ministry) went for least-price whips. They nickelled and dimed every bid, got the pencil as sharp as they could and then even took a bit of a margin off that, if they could.

"A few years later, the whole lot's turned to absolute crap and if you have to pull the whole lot down then it's not what you'd call the best deal."

These costs had prompted the Government to review how it chooses tenders for taxpayer projects.

"(Macleans) was the worst contract we've ever done and yet we got it for the cheapest price. 'Cheapest price wins' is a mentality that we're changing," he said.

Economic Development Minister Steven Joyce proposed new rules for Government procurement in April.

He said the emphasis would shift from who can deliver the lowest costs to who can deliver the best value for money and other direct financial benefits over the life of a contract.

The repair bill for Macleans was so large that Cabinet ministers had to give special approval to free up more money for remediation.

The known cost of the entire leaky building saga is $11.2 billion, but the true cost is believed to be at least twice that figure.

Leaky-building bills

• $19.5m - Cost of repairs to Macleans College
• $1.5b - Education Ministry bill to fix 300 schools and 800 buildings