what went wrong?

Red Gully
There has been much said about the Red Gully construction timeframe and the costings. EGO has stated construction took only eight months and they may technically be right but it took another four months to complete the commissioning of the plant.

Shareholders were originally quoted a cost of $20,000,000 with a spare $5,000,000 up the sleeve if needed. The final cost of $38 Mil was $18 or $13 Mil over budget partly made up of the cost to purchase the property and the $500,000 for spare parts.

So if we take it that the plant was $11,000,000 over budget for the 12 months from start to commissioning that means that the plant cost an unexpected $211,538 per week or - $30,219 per 7 days of the week. Given that the infrastructure should have been a tendered as a fixed cost the only extra cost is labour. If that cost was $100.00 per hour that’s an extra 300 hours a day, seven days a week or about an extra 40 staff per day. In the absence of any other detailed explanation it is hard to understand why. It is even more troubling that even though there was a newsletter we have never been told what went wrong! In Commercial Building there is usually a buffer for overruns of between 7 to 10% built into the contract with a profit margin of between 3 to 6%.

How is then that our plant went over budget by more than 40%?