NBN Co's delicate construction balance

NBN Co's delicate construction balance

Summary: NBN Co appeared this morning to be reaping the rewards of the uncertainty around the National Broadband Network's (NBN) roll-out timetable.

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Since the publication of the AFR's article, NBN Co, Transfield and Silcar have said that Transfield and Silcar are committed to the project.

NBN Co appeared this morning to be reaping the rewards of the uncertainty around the National Broadband Network's (NBN) roll-out timetable.

Earlier today, the Australian Financial Review reported that some of the companies that had bid on and then won contracts for the first round of construction of the NBN were loathe to tender again next month, for a second round.

The report said that previous tender winners, Silcar and Transfield, had decided to hold back from the fray. Their reluctance was reportedly due to delays in the NBN roll-out, which meant that workers were tied up in the process without the project actually moving ahead. Having workers kicking their heels costs money, which cuts into the construction companies' profits. Finding that the company also received incorrect address data on houses that were to be connected, has also delayed work.

It seemed that for some companies, even getting chosen to work this project was just not worth the money.

This would have been a massive problem for NBN Co.

Transfield and Silcar have since said, however, that they are committed to the NBN.

Last year, NBN Co actually halted the construction tender process because it found the bids it had received to be too highly priced. It went down a different path: asking a particular construction group to provide it with better prices.

If companies do start holding themselves back from the bidding, the coming round could be a disaster. The government will have trouble exerting downward pressure on prices — fewer parties will mean less competition, which will mean higher prices for a project, where the threat of cost blowouts was never far away.

We've seen similar issues with the NSW Government, whose on-again, off-again rail and light rail expansion plans would make anyone tear their hair out. At some point, even the promise of a big wad of money can begin to lose its attraction.

So would this mean for NBN Co? It has put many of the delays in construction down to the delayed signing of the deal between NBN Co and Telstra. But this is a done deal now. NBN Co would need to convince construction bidders that it is really ready to ramp up the rate of construction, as promised. It would need to make itself an efficient partner that provides the right data. If this means putting big pressure on the external provider (PSMA) that is supplying that data,then so be it.

If it gets to the point where NBN Co only has one or two options for construction, the result could be one or two consortiums laughing all the way to the bank ... while NBN Co cries over empty coffers.

Updated at 4.30pm: added comment from Silcar and Transfield.

Topics: Government, Broadband, Government AU, NBN

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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Talkback

11 comments
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  • Slack and lazy reporting
    http://delimiter.com.au/2012/06/27/youre-flat-out-wrong-nbn-co-tells-afr/#comment-476370
    Try checking with Transfield, Silcar and the NBN
    Completely FALSE report.
    Why?
    Abel Adamski
    • Other gems in the link

      "NBN Co has, however, admitted that there have been delays in its rollout schedule. In April, NBN Co informed the Parliamentary Committee into the NBN that it would be revising its initial targets for its rollout as detailed in its previous corporate plan. The company has delivered a new corporate plan, including new targets, to the Government, but the plan has not yet been published publicly."

      I can't wait for the release.

      "In general, as is often the case with journalism, my impression with respect to this case is that things may be a bit murkier, a bit more ‘gray’, than the black and white narrative so far has suggested"

      Typically it is. Surprising number of people demanding the article be pulled.
      Richard Flude
  • In the interest of factual journalism, please update this article to reflect today's statements issued by NBN Co, Silcar and Transfield who have denied the claims made by the Australian Financial Review.
    geoffaaa6
    • Agree. Please remove or update this article.

      This is simply false reporting on behalf of the AFR and it is false reporting to re-post the same issues brought up.
      seven_tech
  • THE AFR has some problems, a financial publication falsely reporting on listed companies that could impact on share prices, and other publications foolishly take their article as gospel.
    Abel Adamski
  • Posts missing ???????
    Abel Adamski
    • Hi Abel, we are running their denials as a separate story and will update this post to reflect that they have denied it.

      Regards,

      Josh
      Josh Taylor
      • Thanks for the courtesy Josh
        Regards AA
        Abel Adamski
  • The AFR article was incorrect. This article is a poor copy. Please ZDnet, being an IT publication please check your sources before republishing proaganda! The readers deserve better than this.

    http://delimiter.com.au/2012/06/27/youre-flat-out-wrong-nbn-co-tells-afr/
    anonymous
  • Thanks everyone for keeping me to account. I have updated the piece with Silcar and Transfield's avowals of their commitment to the NBN. This is my blog, where I post my reaction to the news, rather than the news itself, but there is no doubt that I should have followed up those accusations before writing my piece. The fact that this is a blog is no excuse for not being thorough. Thank you for your comments.
    suzanne.tindal
    • One quick note Suzanne...it doesn't really say blog here that I can find. At the top it says "ZDNet / NBN / Story"...you may want to have a chat with ZDNet about that.
      The apology and correction are greatly appreciated...something that is rare in presnt-day journalism.
      viditor