For over a million Auckland residents, upgrading the city’s southern motorway between Manukau and Papakura created years of traffic disruption and continual frustration. Construction is now in the courts, with Canadian-owned Opus International ordered to pay Australian-managed head contractor CPB Contractors $5.3 million for cost overruns resulting from Opus’ failure to properly model project requirements for motorway paving and subsurface.
The High Court was told CPB and Opus worked hand-in-hand preparing a tender for the project even before Waka Kotahi officially called for tenders in 2015. Contractors were well aware of the intended motorway upgrade; Waka Kotahi holds regular ‘workshops’ with the main players, signalling what work is in prospect.
As is common practice, Waka Kotahi entertained requests for variations to the motorway upgrade as part of its tender process, variations which may or may not be approved, provided they do not depart from the main purpose of the contract.
A request by Opus for a variation to pavement design and depth on the southern motorway project was not approved. Evidence was given that a failure in communication between Opus and CPB meant that part of CPB’s contract pricing was calculated on what was Opus’ unapproved variation but was submitted as pricing for pavement design and depth as specified by Waka Kotahi.
After winning the tender, CPB learnt its $192 million price came in $67.5 million below the next lowest tender. It lost some $42 million on the project. Extra paving costs to satisfy contract requirements amounted to about fifteen per cent of total costs.
Opus and CPB locked horns in court arguing over who should shoulder costs incurred laying paving to contract specification when this work had been priced on a different basis.
Justice Johnstone ruled Opus was liable for both breach of contract and negligence. Damages were calculated at what should have been the increased tender price: $5.3 million.
CPB Contractors Pty Ltd v. WSP New Zealand Ltd – High Court (22.03.24)
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