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back to article Turnbull to NBN contractors: Dance, baby, dance!

Australia's communications minister Malcolm Turnbull has pulled out a pistol and started pinging bullets at the feet of national broadband network (NBN) contractor Visionstream. The philosopher prince of the new government has popped out a blog post titled “It takes two to tango - NBN rollout in Tasmania” in which he writes “The …

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I hope there are penalty clauses

Not that any of this is unique or even surprising, but let me get this straight:

1. Visionstream quoted $X to perform the work

2. Contracts were signed specifying Visionstream would do the work for $X

3. Visionstream cannot do the work for $X

4. Visionstream are complaining that $X is too low

Governments allowing this kind of malarky is why almost every government contract blows out in both time an budget.; the contractor quotes unrealistically low costs and short time frames to win the contract and then extorts more money from TAX PAYERS.

I have a word for these contractors and it's not a nice one.

I hope Turnbull makes a big deal of this to send a message that this way of doing business is not acceptable.

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Re: I hope there are penalty clauses

You've not had anything to do with running big long term projects, have you?

In Real Life(tm), costs can change over the life of the project. If costs go up such that the contractor makes a loss they, being in business after all, will make the call based on whether its cheaper to finish the job or cut their losses and bail out. This happens frequently. If you play hardball with the contractor, they walk away and you have to contract someone else to finish the job, baring in mind that you are now over a metaphorical barrel with your pants around your metaphorical ankles and a metaphorical sign inviting buggery. You can threaten to sue all you like but that takes time and costs more money.

In this case, Turnbull is playing to the peanut gallery.

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Re: I hope there are penalty clauses

There needs to be balance here.

There's almost no contingency costs factored into the original quote, e.g. to allow for hazardous waste pumping of pits which is required when a pit is full of water and Telstra's funky toxic water resistant gloop.

While splicing contractors are being given ~$35AUD per splice, a couple of pit drains at $5000AUD each, can send a job deep into the red rather quickly. Asbestos filled pits shouldn't cost anything except a delay, as Telstra should bear the cost of fixing up their decision on pit materials.

Contractors (and subcontractors) are not happy, the original Visionstream quote had no contingencies, the government didn't specify work rates or responsibilities, and all three groups should fire their lawyers...

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Re: I hope there are penalty clauses

@Cpt Blue Bear

I agree, costs can most certainly go up. And that is why any contractor that has "had anything to do with running big long term projects" will make their best efforts to account for reasonable cost increases and potential issues.

A project like the NBN is of course a very involved one and the business of laying fibre and copper both in new trenches and through existing Telstra conduits and pits is sure to be full of nasty surprises. HOWEVER, this is what Visionstream does; this is how they make money. It is not as though laying fibre is new to them and I find it unlikely that there is any circumstance of that job that they have not seen before. It is their responsibility to ensure that they correctly estimate their costs and that their bid accurately reflects those estimates.

Of course, the Government should also be responsible for assessing the details of the bid and deciding if it represents a reasonable accounting of the likely costs.

I may not run projects quite this large but anyone who has been involved in bidding for contracts will know what it is like to lose out to a competing bidder that you know is significantly underestimating its costs (either deliberately or through incompetence/inexperience). We know our costs and we are experienced enough to identify potential issues that might increase those costs.

I have also been involved in assessing bids that have been submitted and advising the project leaders, from a technical standpoint, whether the bid seems reasonable.

Any project (at any scale, really) can be beset by bad luck - either in unpredictable events/circumstances or predictable events being of significantly greater magnitude or concurrency. These types of risk will always exist and it is up to the contractor to assess the risk and to either increase their price to cover it or take that risk on themselves in order to offer a lower, and thus more attractive, bid.

Sometimes, of course, it is simply down to inexperience and I certainly have been involved in projects that ran not insignificantly over budget due to issues that, in hindsight, should have been foreseen and accounted for. That is a learning process and more likely to happen in smaller companies. Visionstream is not a small company, nor are they contracting for work outside of their area of expertise.

That's not to say, of course, that Turnbull isn't playing it up. He is a politician so we must assume that he is, but that doesn't mean he doesn't have a point.

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can't calculate price

I've worked with some NBN contractors in SE Queensland and they couldn't really calculate a tender price, not knowing what they are going to hit underground. They have to quote way high to cover the crap under the ground in our streets.

Services are anywhere, any depth, any condition, in service or ancient. Pulling through Telstra conduit is a real hit and miss, usually miss. And we have heard about asbestos, it is everywhere.

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Bronze badge

Re: can't calculate price

Here in Penrith, NSW NBN has just finished my Block, in a new conduit around flats, to front doors, strange how all other services enter at rear of building where peoples loungrooms are ... ? I suppose that being that they layed 2 conduits for each floor, instead off 1 at rear connecting up & down to flats along slab, I suppose they thought it important to make sure our bathrooms & kitchens have easy internet access, when asked about the conduit path, was shut down by "the boss", but grumberly workers murmered it was about more materials, more labour, more costs, bigger bill for NBN ....

So looking @ plans my neighbours ask me, why their adsl2/ Unlimited download + phone $69 a month, changes to a $100 a month 100 GB + phone plan if they use NBN, still thinking about that ....

Still my fridge could have superfast internet fibre to it's door, if I had a intenet capable fridge, mine just keeps things cold .......

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Re: can't calculate price

>So looking @ plans my neighbours ask me, why their adsl2/ Unlimited download + phone $69 a month,

>changes to a $100 a month 100 GB + phone plan if they use NBN, still thinking about that ....

I recommend they shop around, for example Internode will do a 25Mbit connection with 300 GB quota for $80/month and I'm sure you could get a deal for under $70/month from someone out there.

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Contract bullshit.

I previously worked for the government, in IT, and sat in on some tender negotiations.

I now work for an IT company that does contract with various Government and semi-government agencies. So we do a lot of tender, sometimes for very big projects. We offer two kinds of pricing: Fixed cost/time and variable. Yes, our tenders are higher than some of our competitors; which sometimes costs us the contract. But I assure you that if you opted for the Fixed cost/time, the damn thing will have been calculated to an inch of its life.

Thus, I have sat on both sides of the tender table.

So no, I don't feel sorry for the contracting company - if they cut corners in order to present an unrealistically low bid then they deserve all they get.

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FAIL

Who remembers Conroy delaying the start of the NBN construction because he thought the contractors were asking for too much money? It might just be that thecontractors were closer to the mark.

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