Project ‘on budget’, says Murray Irrigation
Murray Irrigation has again denied its modernisation project has experienced a ‘‘cost blow-out’’.
The project’s budget concerns have surfaced again after the company announced the final stages of its second round of modernisation would begin this month.
However, it has acknowledged the cost will be an additional $17.3 million compared to the original budget.
Company chairman Bruce Simpson maintains the project is being delivered ‘‘on time and on budget’’.
He admitted the investment is larger than the originally estimated cost first discussed in the early 2000s, but still matches the official budget adopted by the company in 2014.
‘‘The Private Irrigation Infrastructure Operators Program (PIIOP) aims to modernise the irrigation infrastructure and supply system for the benefit of all our irrigation customers, and to provide improved water efficiency and productivity for our customers’ farm businesses,’’ he said.
Mr Simpson said it includes replacing the traditional Dethridge wheel method of delivering and measuring water, which he said has a known element of inaccuracy, with fully automated gates.
He said as the project progressed, it became evident the original budgetary estimates would not meet the scale of the project.
‘‘The company is required by law to meet the new metering standards by 2021 (originally in the National Water Initiative and now incorporated into the Murray Darling Basin Plan) and that shaped the original scope of the project,’’ Mr Simpson said.
‘‘The original scope included $169 million from the Federal Government, which has not changed, and $20 million from Murray Irrigation’s capital account. The capital required was based on the assumptions of the number of replacements of both meters and regulators required as part of the original scope approved but the board, with the information they had at the time.
‘‘As the project progressed, it became clear that the original assumptions, which were based on the pilot project at Blighty, were wrong and that the project would fall short of the original assumptions.
‘‘The board resolved to stop and review the program, and readjust the assumptions and change the scope to reflect the fact that more units needed to go in compared to the original scope.
‘‘It needs to be recognised that every additional unit that goes in, generates additional revenue.’’
Mr Simpson said in June 2014 the board agreed on a new cost estimate, which became the official budget, that would require an addition $17.3 million investment from Murray Irrigation.
‘‘Management presented the new scope, and the board and management agreed that no redundant assets would be installed creating further savings to the budget.
‘‘The Board set a minimum usage benchmark to ensure we wouldn’t be installing stranded or redundant assets.
‘‘The additional capital requirement was not a cost blow-out, but recognition of the fact we had to increase the number of units that had to be replaced.
‘‘So it is this revised scope the board signed off on three years ago that we refer to when we say we are delivering the program on time and on budget.’’
PIIOP round two is due for completion by October and over the next six months the project will complete the final construction stages for both the regulator and outlet programs.
The major projects team is preparing to deliver the biggest winter works program yet, with more than 260 regulators and more than 300 outlets to be upgraded.
This works program involves upgrading regulators along the channels and upgrading dated farm outlets with modern and efficient outlets.
Part of this involves upgrading Dethridge outlets with the new FlumeGate and SlipMeter outlets, which will accurately meter and more effectively deliver water on farm.
Regulator sites are upgraded to remote control. being