Cost of upgrades to Bowral STP explained
It was noted in last week’s extraordinary meeting that the upgrades to the Bowral Sewerage Treatment Plant is considerably more expensive than that of Moss Vale and Mittagong. We have received a number of enquiries from the community about this and would therefore like further clarity as outlined in a previous report.
Due to the Bowral Sewerage Treatment Plant (STP) discharging treated effluent into sensitive waters namely the Wingecarribee River which flows into Lake Burragorang (being the source of Sydney’s drinking water) – the EPA has set stringent licence condition requirements for discharges from the STP (once the upgrade is completed).
With the stricter licence conditions, the treatment processes currently being utilised at the site will be unable to treat the future increased loads to the standards required. As such the upgrade works need to implement improved treatment processes (for primary, secondary and tertiary treatment of the sewage influent). Also due to its proximity to residential areas, odour control equipment needs to be installed at the inlet works; as well as dewatering equipment to enable sludge to be removed from the site (removing the need to retaining this material in on site sludge lagoons).
The improved processes and equipment necessary to meet EPA expectations and minimise the risk of odour impacts outside of the site has incurred higher capital costs (than was originally expected).
It is considered that the tender prices received for Bowral STP Upgrade works reflect the currently ‘overheated’ construction market (which has been widely reported as impacting on the pricing of larger scale projects in Australia). This volatility in construction industry pricing has been attributed to a number of factors including:
- COVID-19;
- global supply chain issues;
- inflation uncertainties;
- currency fluctuations;
- materials cost increases;
- fuel prices increases; and
- skilled labour shortages.
From discussions with State Government funding body representatives, their observations of recent tenders for similar projects is that it has not been uncommon for tender prices received to be in excess of the pre-tender estimate by a similar ratio that has eventuated for the Bowral STP Upgrade tender.
In evaluating the tenders received for the upgrade works, consideration was given to aspects of the project that could be descoped or delayed in order to potentially reduce the contract cost. Given the strict effluent discharge limits required to be achieved, there are few potential low risk items that could be realistically deferred if potential savings were to be pursued. If deferring works, constructing/installing such equipment at a later date would be more expensive, and difficult to undertake on an already constrained site. As such deferring such work may be seen as a false economy.
Given the scale of the project, during the construction phase there will be employment opportunities created, as well economic opportunities created for local suppliers and subcontractors. The commissioning of the upgraded STP will allow for further residential development in the catchment, which will have a role in supporting long term employment creation.
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