Sensational-Adelaide.com

stumpjumper wrote:I reckon there's a fair chance that in looking at priorities for spending money, Rann and his pals would have agreed that there were electoral advantages of going ahead with AO and NRAH, despite the timing and even necessity of those projects being arguable.

Meanwhile spending on less visible but essential work with less electoral advantage is cancelled or postponed.

Leighton vows no Airport Link repeat

15/06/2011
Page: 53
By: Jenny Wiggins
Section: Companies

Leighton Holdings is confident its newest construction project, the $1.85 billion new Royal Adelaide Hospital, will not be beset by the same pitfalls as Brisbane's Airport Link, which cost the company hundreds of millions of dollars in lost profits after turning out to be more complicated than expected.

Peter Hicks, executive general manager of investment and facility management at Leighton Contractors, told The Australian Financial Review the hospital, the largest ever to be built in Australia, was a more "normal" project than the $4.1 billion Airport Link road, which Leighton has described as more complex than the Snowy Mountains Scheme.

"It's not underground," Mr Hicks said. "And there's no interface risks." As well as running into unexpectedly difficult conditions while drilling 5.1 kilometres of underground tunnels to create the road, Leighton had problems co-ordinating with local government and communities to get access to roads connecting with Airport Link, such as the Clem Jones Tunnel.

Analysts agree that the South Australian hospital should be a relatively straightforward project for Leighton, which is building the road as part of the SA Health Partnership consortium along with construction group Hansen Yuncken, Macquarie Capital and facilities management group Spotless. The hospital's long construction schedule it is not due to be completed until 2016 does not force Leighton to comply with a tight timetable, which compounded design and engineering difficulties on Airport Link, and JP Morgan estimates Leighton could make between $15 million and $30 million in after-tax profits over the life of the project.

Leighton is also one of five equity investors in the project, putting in $68.1 million. The biggest equity investor is London-based investment group InfraRed Capital Partners, which is investing more than $100 million. InfraRed has also invested equity in Leighton's Victorian desalination project.

Although some of Leighton's previous equity investments, such as its stake in the Clem Jones tunnel, have had to be written down after the projects were less profitable than forecast, analysts said the equity stake it has taken in the hospital was relatively safe because it did not expose the company to "patronage" risk.

The new Royal Adelaide Hospital, a public-private partnership between the South Australian government and the SA Health Partnership, is being built under the socalled "availability" model. Instead of making money out of how many people use the hospital, the consortium will make money from building and maintaining the hospital to a high standard. But the consortium is working on a fixed price contract and will bear the costs of any delays affecting construction. The government has estimated there are some $303 million of risks associated with the projects, such as weather-related delays, material shortages, and labour issues.

The successful completion of the hospital project could put Leighton in good stead to win other hospital construction contracts. Other hospitals on the drawing board include Sunshine Coast University Hospital and the new Bendigo Hospital.

"The future of health projects in Australia is significant because of the need [for hospitals]," Mr Hicks said. Analysts expect Leighton to take
a more cautious approach to bidding for future projects following the Airport Link write-downs. At an investor visit to Airport Link last week, Leighton told analysts it would pay greater attention to tender accuracy, risk identification, time allowances and pricing of risk, according to Deutsche Bank.

Jenny Wiggins wrote:From the Fin Review today:

Analysts agree that the South Australian hospital should be a relatively straightforward project for Leighton, which is building the road as part of the SA Health Partnership consortium along with construction group Hansen Yuncken, Macquarie Capital and facilities management group Spotless. The hospital's long construction schedule it is not due to be completed until 2016 does not force Leighton to comply with a tight timetable, which compounded design and engineering difficulties on Airport Link, and JP Morgan estimates Leighton could make between $15 million and $30 million in after-tax profits over the life of the project.

[Shuz] wrote:Shouldn't thread title now read $2.1b?

[Shuz] wrote:Shouldn't thread title now read $2.1b?

[Jenny Wiggins (Fin Review)] wrote:Leighton Holdings is confident its newest construction project, the $1.85 billion new Royal Adelaide Hospital ...

rhino wrote:

[Shuz] wrote:Shouldn't thread title now read $2.1b?

[Jenny Wiggins (Fin Review)] wrote:Leighton Holdings is confident its newest construction project, the $1.85 billion new Royal Adelaide Hospital ...

Who really knows?

Will wrote:
SJ, do you have private health insurance?

Complying Development
Application Number: DA/477/2011
Lodgement Date: 14/06/2011
Location: Australian Central Credit Union, Level 3 18 North Terrace, ADELAIDE SA 5000
Description: Internal office fit-out (Level 3 - RAH Construction Site Office)

Type Application Assessed on Merit
Application Number: DA/1010/2010/1
Lodgement Date: 25/08/2011
Location: RAH Development Site, North Terrace, ADELAIDE SA 5000
Description: Construction of the New Royal Adelaide Hospital with allied services, car parking and landscaping - STAGE 1 - REMOVAL OF TREES (SIGNIFICANT) AND BULK EARTHWORKS EXCAVATION ONLY
Applicant Name: HYLC JOINT VENTURE Level 3 18 North Tce, ADELAIDE SA 5000