The NSW government now faces more than $2 billion in claims from contractors on crucial Sydney infrastructure projects

Hugh Peterswald/Getty ImagesThe WestConnex project is facing claims worth hundreds of millions of dollars from its builders
  • Two of the biggest infrastructure projects in Sydney are facing compensation claims from contractors against the NSW Government.
  • The Australian claims the builders of Stage 2 of the WestConnex toll road are seeking an additional $1 billion over planning delays
  • The government claims the $17 billion WestConnex project is still ‘on time and on budget’.

New South Wales taxpayers are facing a potential $1 billion bill from the builders of Sydney’s controversial WestConnex toll road over approval delays in the $17 billion project.

The latest claim leaves taxpayers facing additional costs of up to $2.5 billion on just three infrastructure projects instigated by the Coalition government and currently under way in Sydney.

The Australian’s Andrew Clennell reports today that CPB Contractors (previously Leightons) is seeking an extra $1 billion for “variations” in building the second stage of WestConnex due to planning approval delays.

In response to The Australian’s report, minister for WestConnex Stuart Ayres told ABC Radio Sydney he’d “not seen any indication of a claim in the vicinity of $1 billion”, adding that the government has “a very good relationship with the contractor”.

Ayres confirmed the $700 million claim revealed in leaked documents earlier this month, which could delay the project’s 2020 completion date by up to a year.

The minister says WestConnex is “on time and on budget” but Fairfax Media reported that the CPB Dragados Samsung joint venture, building the new M5 from Beverly Hills to St Peters, was seeking $79.7 million in “change costs” to the design and construction, as well as more than $625 million in “contractor delays costs”.

Speaking to ABC Sydney, Ayres said “we work through claims all the time” and that often they are for “hundreds of millions of dollars that have often been settled for single digits”.

The WestConnex Consortium claim was detailed in legal letters between the contractors and the state-owned Sydney Motorway Corporation, which the government is looking to sell a 51% stake in, yesterday raising concerns from the competition watchdog the ACCC.

One letter from May 2017, obtained by Fairfax, said “unforseen planning approval requirements” in stage two of WestConnex would delay the opening of the new M5 by 400 days to January 2021.

Earlier this week, The Australian revealed that the NSW government had to compensate the operators of the $8.3 billion North West Metro project’s Skytrain, North West Rapid Transit, between $400 million and $500 million over delays due to cracked spans during the construction by Italian contractors Salini Impregilo.

Yesterday Ayres announced that CPB Contactors and Salini Impregilo were part of rival bids shortlisted for the construction of the critical M4-M5 Link, between the WestConnex Rozelle Interchange and Iron Cove Link of WestConnex.

JCL Joint Venture (John Holland CPB Contractors Lend Lease) and SCS Joint Venture (Salini Impregilo Clough Projects Samsung C&T) have been shortlisted “after a rigorous evaluation process”.

“The M4-M5 Link is the most critical section of WestConnex,” the minister said.

“The Stage 3A mainline tunnels will run for 7.5 kilometres between Haberfield and the New M5 in St Peters with four lanes of traffic in each direction, connecting to the Rozelle Interchange and Iron Cove Link (Stage 3B).”

Construction of the M4-M5 Link tunnels is expected to start this year, opening in late 2022 with the Rozelle Interchange and Iron Cove Link operational about 12 months later.

On top of the $400 million-plus payment North West Rapid Transit, the NSW government is currently at loggerheads with Acciona, the Spanish sub-contractors building the Sydney Light Rail project, over a $1.2 billion claim for additional costs.

Acciona launched Supreme Court legal action against Transport for NSW claiming it was misled by the government over the complexity of preparatory work involving utilities under the 12km line, which threatens to nearly double the $2.1 billion cost.

The case is due back in the NSW Supreme Court for a directions hearing on May 25.

Acciona has reportedly been on a “go-slow” on the project, which is now believed to be at least 12 months behind schedule with a potential opening date of March 2020.

Yesterday NSW minister for transport and infrastructure Andrew Constance announced Transport for NSW will continue to offer financial assistance to small businesses (with up to 50 employees) damaged by the delayed CBD and South East Light Rail for the duration of construction.

“To date, we have provided rent assistance to 57 small businesses along the light rail route of up to $100,000 in some cases where construction has taken longer than expected,” Constance said.

Meanwhile, the NSW government returns to court today having lost its case to compulsorily acquire a 5274sq metre site in Sydney’s inner west owned by ASX-listed residential developer Desane for the WestConnex project.

In a landmark decision earlier this month, NSW Supreme Court sided with the developer because in seeking to buy the Rozelle site for WestConnex, NSW Roads and Maritime Services and Sydney Motorway Corporation failed to cite specifically why they needed the land, as required by law.

It was the first time in Australian legal history that a compulsory acquisition was overturned. The government is challenging the verdict.

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