Beware of dam-builders cost estimates … coming our way soon.
Even though the numbers will come neatly wrapped up in shiny paper with bows from expensive financial consultants in very nice suits flown in from Auckland or Sydney to bless the numbers and impress the rubes.
Consider this headline regarding the ‘poster child’ of large dams – the Waimea Dam down in the Tasman District, as reported by Stuff:
“Waimea dam project faces another blowout, cost forecast rises to $185m”
Here’s the bottom line of the story …
“The new $185m estimate is more than twice the forecast cost of $75.9m that Tasman District Council put out for public consultation in October 2017, and $80m higher than the $104.5m total at the time the decision to proceed with the dam was finalised in 2018. It comes almost a year to the day a $29m blowout was announced, taking the then expected cost to $158m.”
Repeat … a doubling of cost. And no end in sight.
Efforts are underway to resurrect the failed CHB’s Ruataniwha Dam scheme – call it Dam II.
The first expert analysis has been completed, concluding that only such a dam can meet CHB’s water (i.e., irrigator) needs. Before long, HB’s political decision-makers will be treated to a fresh case for such a venture, with cost estimates and a funding model.
The CHB Dam I was priced at $300m (plus an equal amount for on-farm infrastructure). Imagine a doubling of the cost of that project! At least the proponents of Dam I could argue that they had negotiated a fixed-price construction contract to protect against overruns. But even their deal provided for circumstances where cost increases would be allowed. Putting those escapes in today’s context … perhaps because of a pandemic causing ‘act of god’ labour or supply chain issues.
However, the expert report now making the rounds for Dam II specifically notes that no construction firm would be willing to enter such a contract today – the risk would fall to the sponsors of the project. That’s what Tasman District ratepayers are facing.
Perhaps Dam II, wrapped in plenty of environmental rhetoric and heaps of Te Reo, is a brilliant remake of Dam I. And somehow affordable, without a huge dollop of concessionary Government funding or the ‘environment’ being asked to buy back a hefty chunk of its own water (‘environmental flows’, financed by you the ratepayer). In some circles that’s called ‘protection money’.
I’m trying my best to keep my mind open on Dam II … I can’t wait for the first public presentation by the suits.