Hear Ye!

This comment deserves an escalation:

Phil 2010/02/22 at 11:17am

Some people will wave around the $130 million GMP contract as evidence of the cost for construction. It’s already been established that the published contract excluded several significant cost items, estimated at around $30+ million. All P&G costs, the contractor’s contingency sum and, best of all, the contractor’s profit margin, were all specifically excluded from the published price. There’s been mention that those items were later added in, with no adjustment to the original price. Suggesting that Hawkins Construction are doing this contract for free. As, of course, we all believe. However, unlike the original “exclusion” contract, this apparent revised contract seems to be missing from public view. Even the ODT tried, and failed, to get an answer to the question of contract exclusions.

In the current atmosphere of silence, draw your own conclusions.

Preliminary and General (P and G) costs relate to both a contractor’s on site and off site costs.

On site costs can be for site sheds, canteen, telephones, vehicles, tools and plant, management, insurance, surveying set-out costs, scaffolding, hoardings etc.

Off site costs typically relate to head office costs such as rent, staff salaries, insurances, ACC, and accounts.

Phil probably has a better working description of “P&G”.

Posted by Elizabeth Kerr

2 Comments

Filed under Construction, Politics, Project management, Stadiums

2 responses to “Hear Ye!

  1. Phil

    I’ve given up on the prospect of an official response to that, Elizabeth. But I enjoy hauling it out every now and then and poking it with a stick. Just so it doesn’t get forgotten.

    Good description of P&G, by the way. It’s basically for any item that isn’t directly linked to a specific construction task. Toilets, water, electricity, supervision, project management, crane hire, and so forth. And, as you say, the cost for Hawkins to run their company during the duration of the contract. P&G typically sits at AROUND 7% of the constract value. Ditto for Hawkins contingency sum. For their estimating errors, cost over runs, and the like. Different to the DCC contingency sum.

    The profit margin is hard to pin down. A lot of subcontractor work and material purchasing, so there might be a low profit margin of, say, 10% on those items. Because their value is so high, and the risk is relatively low. Profit margin on their own direct work will be higher, as they have to carry a personal risk.

    Doesn’t take much adding up to get to an easy $30 million. A sum that, even with Hawkin’s size, no company can afford to give away for free. So, I’m sorry, but I will never buy that there was no price adjustment.

  2. Phil;
    as you say, no contractor works for nothing, at least not intentionally. The exclusions you say could easily come to $30 million. That is only the construction hardware. The most interesting parts are the financials. What they might add up to in the fullness of time, one could only speculate. I wonder if Richard, who has his finger so firmly on the pulse, and would surely therefore know, would care to comment.

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