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