State loses $142m to project management

Sourced from The Australian

HIGH project management fees paid by some states for Building the Education Revolution projects are slicing millions of dollars off funds available for new school buildings.

And while NSW pays project managers the maximum fees allowed under federal guidelines, Tasmania and South Australia use government officers to manage their projects and pay no fees.

Federal Education Minister Julia Gillard has capped management fees at 4 per cent of the $14.7 billion available for projects, “which, for the purposes of the BER, has been identified as an industry standard for project management”.

NSW was paying an average 2.7 per cent in fees to managing contractors and another 1.3 per cent to monitor project expenses and ensure safety requirements were met.

A NSW Department of Education and Training spokesman said this was within the limit set by the federal government.
The spokesman said NSW schools would have 96 per cent on average of their Primary Schools for the 21st Century allocation spent on construction projects. But this meant $142million would be spent on project management fees out of the more than $3.5bn the state had so far received in BER funding.

By contrast, in South Australia and Tasmania, which have so far received more than $1bn and $300m respectively, none of their funding will go to private sector project management fees. In Tasmania, Department of Education project officers co-ordinate project management, tenders, council and community consultation and other advertising costs. “These costs do not need to be met from school project entitlements,” the department’s Greg Glass said.

Rather, the cost of paying these project officers’ salaries comes out of the $220m in funding the federal government has paid the states and territories to administer Ms Gillard’s education revolution. This funding, which equals 1.5 per cent of total BER funding, was set as a commonwealth obligation in the program’s bilateral agreements with the states. It was provided in addition to the individual project funding each school received.

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