Mr AH KIT - 1999-10-20
The upgrade to the sewerage system running along Tiger Brennan Drive has been dug up not once but twice. New pipelines in Palmerston also had to be dug up. There 1.6 km of pipeline was replaced. When questioned about this on ABC radio, the minister said: ‘The taxpayers should be appalled’. The minister has had almost 2 weeks to investigate.. Can he now explain who is responsible for this monumental stuff-up, who is wearing the bill for it, and how much will it cost Territory taxpayers?
ANSWER
Mr Speaker, in April 1995, consulting engineers commissioned by the Power and Water Authority reported that the use of ‘black brute’ high-density polyethylene (HDPE) pipe had become a well-established standard and had largely overtaken reinforced concrete pipe for the construction of large gravity sewers. The advantages of ‘black brute’ pipe were reported to be smooth internal surfaces, non-corrodible material, light weight, long links (hence fewer joints) and lower cost. It was noted, however, that due to their less rigid construction ‘black brute’ pipe installations required specialist advice in the initial stages of construction and particular care in the construction of bedding and pipe surround.
The report recommended the use of ‘black brute’ HDPE pipe for future extensions to the eastern trunk sewer at Palmerston, including the section through Bakewell. Stage 2 of the eastern trunk sewer was project-managed by the Department of Transport and Works Construction Agency and was designed by consulting engineers. This sewer was constructed between September 1995 and June 1996 with considerable difficulty, leading to the technical insolvency of the contractor, John Samarkos, who left as an absconding debtor. The sewer was taken into operation by the Power and Water Authority due to necessity, notwithstanding that the pipeline contained some incorrect levels and deflections. These problems were considered to stem from the contractor’s failure to obtain specialist advice from the pipe manufacturer, Hardie Iplex, and other unsatisfactory work processes.
In July 1997, a contract was awarded for stage 3 of the eastern trunk sewer, also using ‘black brute’ pipe, and based on design and engineering by the same consultant. The contractor, Henry Walker Contracting, also experienced difficulties installing the pipe and manholes, which proved to contain pinhole leaks and other defects. Henry Walker were not in default of any provisions in their contract for stage 3. The pipe specification selection by the design consultant was then considered to be the source of the problem. The contractor was relieved of its defects liability obligations, paid for additional work to make the line temporarily operational, and paid $50 000 in full settlement of all its claims for costs arising from design deficiencies.
In August 1997, a contract was awarded to Emerald Construction Pty Ltd to rectify the defects in the stage II eastern trunk sewer. This work cost $48 124. The cost was partially offset by the security deposit by Samarkos for due and proper performance under his contract. After rectification, the stage II sewer continued to deform and it became necessary to replace the ‘black brute’ pipe and determine liability.
Design and engineering of the Dinah Beach sewer by the Construction Agency’s engineers had proceeded concurrent with the design of stage 3 of the eastern trunk sewer by the consultants. A contract for construction of the Dinah Beach sewer was awarded to Adelaide Civil Pty Ltd, trading as Adciv, in September 1997. Adciv failed to comply with the technical specifications and its quality assurance obligations, failed to obtain adequate specialist advice from the pipe manufacturer during the initial stages of construction, and proved unable to deal effectively with the changes it had made to the manholes, pipe joining at manholes, the challenges posed by the depth of the sewer, groundwater, general pipe jointing and, in particular, the nature of the ground.
Adciv ceased work on their contract in November 1998 with only $0.85m worth of work satisfactory, completed and paid for. The security for due performance has been retained by the Territory. Adciv have declined to rectify non-conforming work, have suspended progress of the work until liabilities for alleged design deficiencies are determined, and have lodged claims relating to their costs incurred due to alleged deficiencies in respect of the design of the pipeline. Legal opinions were obtained as issues on each project arose.
The Construction Agency commissioned a consulting engineer to review the design of both the eastern trunk and Dinah Beach sewers. Since the designs for the various pipelines were completed, a new Australian standard for HDPE pipelines has been published. Based on both the original and revised standards, the engineering consultant’s design review has concluded that the design assumptions made by the various engineers on the strengths of the site soils when wet were too optimistic, leading to insufficient site support of the pipe bedding, with consequence deformation of the HDPE pipe.
In February 1999, Cabinet approved funding in the amount of $4m to replace the defective ‘black brute’ sewers. A further design review of the Dinah Beach sewer was necessitated by the rapid development of Cullen Bay, the CBD and Stuart Park, and resulted in a PAWA request to the Construction Agency to upgrade the whole Dinah Beach sewer system. Since the window of opportunity then existed, the Dinah Beach sewer has been upgraded in capacity. The removal and replacement of the Dinah Beach sewer is consequently now estimated to cost $ 2.2m.
Designs for the replacement of the eastern trunk and Dinah Beach sewers have been completed by the Construction Agency’s hydraulic engineers and are based on plastic-lined reinforced concrete pipe. Contracts for the reconstruction of the eastern trunk sewer stages 2 and 3 were let to CSR Humes Pipe Pty Ltd for pipe supply and RUB Pty Ltd for pipe installation for the amounts of $972 397 and $968 502 respectively. The installation contract was due for completion on 22 October 1999.
The CSR Humes pipe supply contract was varied to include the timely supply of pipe for the Dinah Beach sewer in the amount of $691 764, to enable completion before the onset of the Wet. A contract for the reconstruction of the Dinah Beach sewer was let to Emerald Constructions on 3 August 1999 in the amount of $1 155 184. This contract is due for completion on 21 December 1999.
The pipe supplier, CSR Humes, was contracted to provide jointing rings which did not contain natural rubber, because natural rubber is subject to biological degradation in these conditions. The supplier failed to do so, notwithstanding that its quality assurance documents claimed rings as specified were supplied. Testing of the rings has shown them to contain natural rubber and the supply contractor is liable for the cost of any corrective action, together with the costs of any consequent construction delays.
In respect of other liabilities, the engineering consultant’s design review has indicated that the design consultant’s design was inadequate. The design consultant and the Construction Agency both based their design on criteria and computer software design data provided by the pipe manufacturer, now Iplex Pipelines. Legal advice has indicated that the design consultant on the eastern trunk sewer is partially liable for the removal and replacement of the sewer, and that Adciv is partly liable for additional costs incurred in the reconstruction of the Dinah Beach sewer. Legal proceedings have not yet commenced. However, Adciv has referred the dispute to the Territory as principal under the contract.
It is not considered viable to sue the ‘black brute’ pipeline design data provider and pipe supplier, Hardie Iplex, who have now sold the business to Iplex Pipelines, under the ownership of the Crane group. Previous experience elsewhere in Australia indicates that the company and/or their product and general liability insurers will stall proceedings until more is lost than gained, in addition to the complexities of liability which might be assigned due to the ownership of the company changing hands.
It should be noted that a without-prejudice commercial offer by Iplex Pipelines, in settlement of the issue of ‘black brute’ pipe, has been made to provide a Hovis glass-reinforced pipe product to the direct value of approximately $0.25m for a future government project. This offer has not been accepted at this time.
Temporary arrangements have been made on both sewers to handle current demand by temporary bypass pumping arrangements on the eastern trunk sewer and diverting flow through the existing main along Tiger Brennan Drive. At present, the Construction Agency’s resources are focused on resolving the jointing ring dilemma, since a considerable quantity of pipeline has been installed for both the eastern trunk sewer and the Dinah Beach sewer and any delays caused by this problem will push construction into the Wet, causing other on-site difficulties and prolongation costs which would be recoverable from the pipe supplier, CSR Humes.
Given the potential litigation resulting from claims and counterclaims between government, contractors, pipe suppliers and design consultants, it is not possible nor wise, I think, to further pursue these matters in the public arena. A great deal of work needs to be done by the Department of Transport and Works to resolve these matters for the benefit of Territory taxpayers. I can assure members of this House and the public listening that we are doing all in our power to ensure that Territory taxpayers are not unreasonably out of pocket in relation to these projects.
ANSWER
Mr Speaker, in April 1995, consulting engineers commissioned by the Power and Water Authority reported that the use of ‘black brute’ high-density polyethylene (HDPE) pipe had become a well-established standard and had largely overtaken reinforced concrete pipe for the construction of large gravity sewers. The advantages of ‘black brute’ pipe were reported to be smooth internal surfaces, non-corrodible material, light weight, long links (hence fewer joints) and lower cost. It was noted, however, that due to their less rigid construction ‘black brute’ pipe installations required specialist advice in the initial stages of construction and particular care in the construction of bedding and pipe surround.
The report recommended the use of ‘black brute’ HDPE pipe for future extensions to the eastern trunk sewer at Palmerston, including the section through Bakewell. Stage 2 of the eastern trunk sewer was project-managed by the Department of Transport and Works Construction Agency and was designed by consulting engineers. This sewer was constructed between September 1995 and June 1996 with considerable difficulty, leading to the technical insolvency of the contractor, John Samarkos, who left as an absconding debtor. The sewer was taken into operation by the Power and Water Authority due to necessity, notwithstanding that the pipeline contained some incorrect levels and deflections. These problems were considered to stem from the contractor’s failure to obtain specialist advice from the pipe manufacturer, Hardie Iplex, and other unsatisfactory work processes.
In July 1997, a contract was awarded for stage 3 of the eastern trunk sewer, also using ‘black brute’ pipe, and based on design and engineering by the same consultant. The contractor, Henry Walker Contracting, also experienced difficulties installing the pipe and manholes, which proved to contain pinhole leaks and other defects. Henry Walker were not in default of any provisions in their contract for stage 3. The pipe specification selection by the design consultant was then considered to be the source of the problem. The contractor was relieved of its defects liability obligations, paid for additional work to make the line temporarily operational, and paid $50 000 in full settlement of all its claims for costs arising from design deficiencies.
In August 1997, a contract was awarded to Emerald Construction Pty Ltd to rectify the defects in the stage II eastern trunk sewer. This work cost $48 124. The cost was partially offset by the security deposit by Samarkos for due and proper performance under his contract. After rectification, the stage II sewer continued to deform and it became necessary to replace the ‘black brute’ pipe and determine liability.
Design and engineering of the Dinah Beach sewer by the Construction Agency’s engineers had proceeded concurrent with the design of stage 3 of the eastern trunk sewer by the consultants. A contract for construction of the Dinah Beach sewer was awarded to Adelaide Civil Pty Ltd, trading as Adciv, in September 1997. Adciv failed to comply with the technical specifications and its quality assurance obligations, failed to obtain adequate specialist advice from the pipe manufacturer during the initial stages of construction, and proved unable to deal effectively with the changes it had made to the manholes, pipe joining at manholes, the challenges posed by the depth of the sewer, groundwater, general pipe jointing and, in particular, the nature of the ground.
Adciv ceased work on their contract in November 1998 with only $0.85m worth of work satisfactory, completed and paid for. The security for due performance has been retained by the Territory. Adciv have declined to rectify non-conforming work, have suspended progress of the work until liabilities for alleged design deficiencies are determined, and have lodged claims relating to their costs incurred due to alleged deficiencies in respect of the design of the pipeline. Legal opinions were obtained as issues on each project arose.
The Construction Agency commissioned a consulting engineer to review the design of both the eastern trunk and Dinah Beach sewers. Since the designs for the various pipelines were completed, a new Australian standard for HDPE pipelines has been published. Based on both the original and revised standards, the engineering consultant’s design review has concluded that the design assumptions made by the various engineers on the strengths of the site soils when wet were too optimistic, leading to insufficient site support of the pipe bedding, with consequence deformation of the HDPE pipe.
In February 1999, Cabinet approved funding in the amount of $4m to replace the defective ‘black brute’ sewers. A further design review of the Dinah Beach sewer was necessitated by the rapid development of Cullen Bay, the CBD and Stuart Park, and resulted in a PAWA request to the Construction Agency to upgrade the whole Dinah Beach sewer system. Since the window of opportunity then existed, the Dinah Beach sewer has been upgraded in capacity. The removal and replacement of the Dinah Beach sewer is consequently now estimated to cost $ 2.2m.
Designs for the replacement of the eastern trunk and Dinah Beach sewers have been completed by the Construction Agency’s hydraulic engineers and are based on plastic-lined reinforced concrete pipe. Contracts for the reconstruction of the eastern trunk sewer stages 2 and 3 were let to CSR Humes Pipe Pty Ltd for pipe supply and RUB Pty Ltd for pipe installation for the amounts of $972 397 and $968 502 respectively. The installation contract was due for completion on 22 October 1999.
The CSR Humes pipe supply contract was varied to include the timely supply of pipe for the Dinah Beach sewer in the amount of $691 764, to enable completion before the onset of the Wet. A contract for the reconstruction of the Dinah Beach sewer was let to Emerald Constructions on 3 August 1999 in the amount of $1 155 184. This contract is due for completion on 21 December 1999.
The pipe supplier, CSR Humes, was contracted to provide jointing rings which did not contain natural rubber, because natural rubber is subject to biological degradation in these conditions. The supplier failed to do so, notwithstanding that its quality assurance documents claimed rings as specified were supplied. Testing of the rings has shown them to contain natural rubber and the supply contractor is liable for the cost of any corrective action, together with the costs of any consequent construction delays.
In respect of other liabilities, the engineering consultant’s design review has indicated that the design consultant’s design was inadequate. The design consultant and the Construction Agency both based their design on criteria and computer software design data provided by the pipe manufacturer, now Iplex Pipelines. Legal advice has indicated that the design consultant on the eastern trunk sewer is partially liable for the removal and replacement of the sewer, and that Adciv is partly liable for additional costs incurred in the reconstruction of the Dinah Beach sewer. Legal proceedings have not yet commenced. However, Adciv has referred the dispute to the Territory as principal under the contract.
It is not considered viable to sue the ‘black brute’ pipeline design data provider and pipe supplier, Hardie Iplex, who have now sold the business to Iplex Pipelines, under the ownership of the Crane group. Previous experience elsewhere in Australia indicates that the company and/or their product and general liability insurers will stall proceedings until more is lost than gained, in addition to the complexities of liability which might be assigned due to the ownership of the company changing hands.
It should be noted that a without-prejudice commercial offer by Iplex Pipelines, in settlement of the issue of ‘black brute’ pipe, has been made to provide a Hovis glass-reinforced pipe product to the direct value of approximately $0.25m for a future government project. This offer has not been accepted at this time.
Temporary arrangements have been made on both sewers to handle current demand by temporary bypass pumping arrangements on the eastern trunk sewer and diverting flow through the existing main along Tiger Brennan Drive. At present, the Construction Agency’s resources are focused on resolving the jointing ring dilemma, since a considerable quantity of pipeline has been installed for both the eastern trunk sewer and the Dinah Beach sewer and any delays caused by this problem will push construction into the Wet, causing other on-site difficulties and prolongation costs which would be recoverable from the pipe supplier, CSR Humes.
Given the potential litigation resulting from claims and counterclaims between government, contractors, pipe suppliers and design consultants, it is not possible nor wise, I think, to further pursue these matters in the public arena. A great deal of work needs to be done by the Department of Transport and Works to resolve these matters for the benefit of Territory taxpayers. I can assure members of this House and the public listening that we are doing all in our power to ensure that Territory taxpayers are not unreasonably out of pocket in relation to these projects.
Last updated: 09 Aug 2016