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CRL Head: Political Bickering Is Increasing Infrastructure Costs
City Rail Link (CRL) chief executive Sean Sweeny claims political bickering and indecision have been costing the country’s infrastructure construction.
Speaking to Q+A, the outgoing head of New Zealand’s largest infrastructure project says the industry is facing the “expensive” impact of politicians’ frequently changing priorities.
Sweeny’s statement comes after the government decided to shut down the Auckland Light Rail Project. Instead, the project was changed to build over a dozen new motorways and highways across the country.
The Auckland Light Rail Project involved a public transportation system line that would have run 24km from the city centre to the airport through various residential neighbourhoods. However, Prime Minister Christopher Luxon called the project “wasteful and unfit for purpose,” claiming that if it had continued, it would have cost taxpayers at least $15 billion.
According to Sean Sweeny, scraping these projects was not without its own cost.
"The Link Alliance had to build a workforce to do this sort of work from scratch. Everything is set up as a one-off, and then it's decommissioned," Sweeney said.
"At the moment, when we do these projects, the country is paying an enormous premium because we're doing them as a series of one-offs."
Sweeny also commented on the fickle nature of infrastructure planning in politicians’ meeting rooms.
“I've sat in rooms where politicians have talked about the issue of an [infrastructure] pipeline. There's a view that they have a right to do that; they're elected on a mandate. I understand that view. What I don't think politicians or the public understand is how expensive that is making building in New Zealand," he said.
Earlier this year, Transport Minister Simeon Brown defended the government’s decision claiming that the Auckland Light Rail Project’s price tag was highly likely to rise if continued. He also criticised the former government’s handling of the project.
“The previous government committed to building light rail to Mt Roskill within four years of being elected. After six years and over $228 million spent on the project, not a single metre of track has been delivered and congestion has only worsened in the city,” Brown said.
“Commitment and discipline” needed
To prevent such scenarios from recurring, Sweeny says that politicians should be more committed and disciplined when planning infrastructure. They should also have an agreed-upon list of projects to proceed with.
"It's all doable, but political parties would then give up absolute freedom to pursue their agenda. And that's going to be the rub, is what's the issue of greater good here?"
"I'm an engineer, I'm a builder, I believe that infrastructure is a good thing for the country. I'd like New Zealand to have a really big conversation about, 'what do we want to build in the next 30 years and what sort of country do we want to be?' because infrastructure is a way of taking it there."
Sweeny continued that the one-off nature of government infrastructure projects is causing significant uncertainties for construction companies. However, proper planning and open communication from the government will go a long way in easing builders’ minds.
"If we have that debate in a big way, I think we'll have a big list, and that would enable people like me and the construction industry to stay and move forward… We need to have that big conversation as a country, not do sort of a series of one-offs.”
Construction companies in New Zealand are faced with a significant issue involving the pipeline of work. The lack of clarity on future projects, as well as the risk that a project might get cancelled, makes it difficult for companies to plan their work ahead. This cascades down to issues such as labour and material forecasting.
"Because at the moment, we're doing a series of one-offs, and they stop and they start, as we've seen recently; that's incredibly hard for the industry to approach them efficiently… We've lost what I'd call the tier-one construction industry in New Zealand in the last 20 years. It doesn't exist anymore,” Sweeny said.
CRL “almost impossible to price”
Speaking of the City Rail Link (CRL) project, Sweeny confirmed that the practical completion target was set for November 2025. Upon completion, the project would be given to Kiwi Rail and Auckland Transport.
The CRL project involved the construction of 11km of a new underground line. However, its budget overruns were well documented. In March 2023, it was reported that the project would cost an extra $1 billion to build and would finish a year later than expected.
Sweeny claims that pricing complex projects like the CRL is almost impossible.
"I've spoken to people in the industry, I've spoken to people in Australia, and they think projects of this size are actually almost impossible to price correctly, and that's a challenge for the industry,"
"When a construction firm prices one of these - if you can just imagine - they have to deconstruct the job into tens of thousands of elements. They have to make assumptions about productivity on every one of those elements,” he said.
Sweeny claims that disruptions such as weather, supply chain issues, labour, and the pandemic are uncontrollable and should be considered when pricing these projects.
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