Hopkins Correctional Centre.ARARAT – The Department of Justice has criticised the performance of the consortium overseeing the construction of the new prison at the Hopkins Correctional Centre following damning revelations in The Saturday Age last week that claimed the project ‘may be more than $100 million short of capital and, without government intervention, in danger of collapse’.
The Saturday Age stated documents it had obtained revealed that the prison was ‘in financial trouble, with builders unable to pay contractors this (last) week’.
‘A memo to contractors revealed the Aegis consortium, which includes project manager Bilfinger Berger, the Commonwealth Bank and builders St Hilliers and Hawkins, is in negotiation with the government over a rescue strategy for the project, which unions believe will now not be completed until Christmas 2014,’ The Saturday Age stated in the report.
Many local contractors and sub contractors are employed on the site.
Yesterday The Age stated that the joint venture building the $400 million prison told sub-contractors at a Melbourne meeting on Wednesday not to bother invoicing for work because there was no money.
According to The Age unions were to meet yesterday to discuss their response to the crisis.
Claims that workers had walked off the job this week were denied by the Department of Justice.
A spokesperson from the Department of Justice told The Ararat Advertiser that as with other infrastructure projects, the Department will continue to put taxpayers’ interests first in relation to the Ararat prison project.
“Although the project will be completed later than planned, responsibility and risk remains with the private sector consortia who are obliged to deliver the project and manage the financial impacts of delay under their contract with the state. As a PPP (public private partnership), completion risk including time and cost is the responsibility of the consortia.
“The department is disappointed with the performance of the consortia, the extent of delays and the challenges they have advised that they face to complete the project.
“Under the contract the department is under no obligation to make payments to the consortia until the services phase of the project and does not intend to relieve the private sector of its substantive obligations under the contract.
“All construction projects have issues to resolve, and the Ararat Prison Project is especially complex as construction encompasses an existing prison.
“This situation confirms that a PPP arrangement is appropriate given that cost risks due to delay and mismanagement remain within the private sector.”
The spokesperson said the Departments of Justice and Treasury and Finance have allocated senior officers and technical specialists to monitor and manage the government’s obligations under the contract.
“Corrections Victoria is undertaking contingency planning as a result of delays to the project. Further details are commercial in confidence,” the spokesperson said.
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