Contractor seeking $75 million in damages and losses over alleged Transmission Gully design errors
Thursday, 9 September 2021
The construction company building Wellington's Transmission Gully motorway is seeking $75 million in losses and damages it claims were caused by errors in engineering design.
CPB Contractors, one of a consortium of entities behind the roading project, teamed up with engineering firm Aecom New Zealand to design and build the 27-kilometre motorway in 2014.
The Australasian company is claiming there were “material differences” between Aecom's initial tender design for the project, and the final detailed design it issued several months later.
CPB claims the errors led it to incorrectly forecast the project cost and profits, resulting in losses and damages of $75.2m.
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The dispute was revealed in a recent High Court ruling that showed Aecom was challenging the claim, arguing CPB had already been compensated for delays to the project and that any further payouts would amount to a “double recovery”.
According to the ruling, CPB had received payouts of more than $350m in the past two years from Waka Kotahi NZ Transport Agency, the government organisation that commissioned the project and owns the road.
It received $190m in December 2019 for delays to resource consenting work, and another $164m in December last year for disruption caused by the Covid-19 lockdown.
Aecom applied through the High Court for documents relating to those payouts to be released, in order for it to assess whether CPB had in fact suffered any financial loss on the project.
However, the High Court rejected the application, saying the Waka Kotahi payouts related to the construction phase of the motorway and were not relevant to the dispute over the tender designs.
“On [CPB’s] case, there is no double recovery between the tender phase claim against [Aecom], and the delivery phase claim against [Waka Kotahi],” the ruling said.
The flaws alleged by CPB in Aecom’s initial proposal include design errors associated with bridges, rock scouring, headwall structures, and drainage chutes.
Construction on the motorway began in 2014, when it became the first state highway in New Zealand to be built under a public-private partnership.
Under this agreement, the Wellington Gateway Partnership – a private group of financiers and contractors – is responsible for designing, building, and financing the road, as well as operating and maintaining it for 25 years after construction.
The road will remain in public ownership.
The four-lane motorway, between Linden in north Wellington and Mackays Crossing near Paekākāriki, has been affected by several delays.
The latest targeted completion date was September 27, but that will likely be delayed again following the most recent Covid-19 lockdown.
According to the ruling, CPB and Aecom agreed on a contract price for design and construction in 2014 of $776m. The road is now expected to cost $1.25 billion.
CPB was also the head contractor for the $525 million Christchurch Hospital building, Waipapa, which opened two years late in November last year and was plagued by errors during construction.
The construction company received a $13.8m settlement from the Ministry of Health in 2019 following a dispute over delays to the project.
The company also has the building contract for the delayed Christchurch Metro Sports Facility, due to open next year.
And it recently secured the contract to build the new $1.5 billion Dunedin Hospital.
CPB and Aecom could not be reached for comment.