ARE GOVERNMENTS RIPPED OFF BY CAPITAL WORKS?

CAPITAL WORKS COSTS TO GOVERNMENT

Can someone please help me understand what has been an ongoing and quite everlasting conundrum to my thinking. There are a couple of components to my query.

1. Why are capital works programs for the construction of school become almost exponentially inflated in cost terms. Only 10 – 15 years ago, a new school could be supplied and fitted out for no more than $10 – $ 12 million. Now, a few short years later, that cost has doubled and then some. Construction costs for government funded projects like schools have increased exponentially

Why? Do unreasonable profit margins play a part in this cost escalation?

2. Why in a capital works context are there seemingly two sets of quotes, one for government and another for private supply?

A number of years ago, a quote for a school building was accepted by government for $250,000. At the same time at the same school the school council sought a quote for a support services building. That was supplied by a different firm for a building that was of approximately the same dimension as the building quoted to government.

That quote was for $75,000.

When I queried the difference with a senior government minister, I was told that in effect, “that’s just the way it is”.

Why? Can this change?re

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