Seymour Whyte chief executive David McAdam has called on governments to stop thinking "big is better" and carve up massive infrastructure projects such as Melbourne's $8 billion East West Link motorway into smaller chunks.
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Mr McAdam, who ran the Queensland construction operations of Thiess before joining Brisbane engineering group Seymour Whyte in 2012, said large projects such as the East West Link pushed too much risk onto the private sector.
"Does it make sense to bundle them up in one job?" Mr McAdam said to The Australian Financial Review.
The Victorian government last week awarded the contract for the first stage of the East West Link to a consortium consisting of construction and design groups Lend Lease, Bouygues and Acciona, all of which will take undisclosed equity stakes in the project.
Although East West Link is being undertaken as a so-called "availability" public-private partnership in which the Victorian government will take the risk that the motorway's traffic does not meet forecasts, the contractors must absorb any costs arising from unexpected geotechnical problems or labour shortages.
The contractors, who have spent millions of dollars on bid costs, have also taken the risk that the East West Link does not proceed at all, with Victoria's Labor Party this week saying it would scrap the motorway if it is elected in November.
Mr McAdam said it made more sense for large infrastructure projects to be broken up into smaller, separate contracts, as the NSW government is doing on its $8.3 billion North-West Rail Link project to reduce risks for contractors.
The government is awarding three separate contracts on the North-West Rail Link: tunnels and station civil works; surface and viaduct civil works (a skytrain); and operations, trains and systems.
Mr McAdam also hit back at UGL chief executive Richard Leupen's recent claims that engineering companies with market capitalisations of less than $300 million should be merged. Mr Leupen, who will leave UGL on November 21 after almost 14 years as chief executive, last month said that there was not enough work to go around in the engineering sector following the resources slump.
But Mr McAdam said that there were plenty of smaller "good, highly intelligent" companies producing "great results".
"The bigger a company is, the harder it is on average for it to stay smarter than it used to be ... smaller companies are nimble and they innovate because they have to do that to survive and compete."
Mr McAdam claimed Seymour Whyte, which has a market capitalisation of $147 million, had "out-engineered" Lend Lease to win a $50 million contract in January to upgrade Queensland's Smith Street Motorway, which links the Pacific Motorway to the Gold Coast. "We came up with a leaner and more effective design ... just because they're big doesn't make them the best."
Australian engineers had a tendency to produce overly conservative designs for projects, using excessive amounts of material – such as reinforcing steel – rather than thinking about using materials more effectively, Mr McAdam said.
"There is a trend towards conservative designs, and it costs the country more money to do projects without adding any value in some cases."