The German construction sector is undergoing scrutiny from a government reform commission set up to examine why high-profile publicly funded projects have resulted in major over-runs and budget hikes.
The 35-strong Reformkommission Bau von Grossprojekten, or Reform Commission for Major Projects, was convened in 2013 and is due to deliver its final report by the end of 2015.
The German government has said it is responding to the fact that its citizens “increasingly doubt the capability of politicians, authorities and the economy to successfully deliver major projects” and are angry about “construction price estimates that are obviously pitched too low”.
The commission is to develop “concrete proposals” to improve cost accuracy, cost transparency, and programme certainty and to “strengthen the trust of citizens in the public sector’s ability as a client.”
But the composition of the 35-strong commission has been criticised as being too close to the German construction establishment, with representatives from contractors Hochtief and Max Boegl.
Another member is Klaus Grewe, currently a senior programme manager for Jacobs, who was formerly head of integration at Olympic delivery partner CLM and has also worked at Laing O’Rourke.
The problem projects that have prompted national soul-searching include Berlin’s €6.8bn Brandenburg airport, where delays, design problems and a budget hikes forced the resignation of Berlin’s mayor Klaus Wowereit last year. It was due to open in 2012, but so far no aircraft have ever taken off or landed.
Problems on Herzog & de Meuron’s Elbphilharmonie concert hall in Hamburg have also been well publicised, with the latest reports suggesting that the project will open in January 2017 after a 10-year construction programme.
Under scrutiny: (clockwise from top left) Brandenburg airport, the Bundesnachrichtendienst, Hochmosel road bridge, Stuttgart 21, Schleuse Brunsbuttel, Elbphilharmonie
The budget for the Hochtief-built project has risen from an initial estimate of €77m to a projected outturn cost of €789m.
A less high profile project is the new headquarters of Germany’s Federal Intelligence Service, the Bundesnachrichtendienst, or BND. The project has been delayed by around two years, and its budget has apparently swollen by a third to hit €1bn. It is being project managed by civil servants on a construction management basis.
The vast Stuttgart 21 project to give the city a new railway station, bury train lines and release land for development is said to be €2bn over budget at €6.8bn. The client for the project is Deutsche Bahn, the German state railway company.
The construction programme for the €270m Hochmosel road bridge, which began in 2011 with an original completion date of 2016, was frozen after claims of structural problems and failure to follow due process on environmental issues. Construction on the 1.7km long bridge has now restarted.
The commission is also investigating problems with the Brunsbuttel locks at one end of the Kiel canal, although here the problem was not overspend but failure to invest in maintenance and upgrades – until the locks failed in 2013. Although a decision had been made to invest in 2010, it took three years to prepare the tender documents.
The commission consists of 35 experts from industry, academia and public authorities, and has been given a detailed brief by German ministers. It has been supported by research provided by KPMG and Arup.
It is common in most countries, be they developed or developing, where cost of public funded projects tend to escalate substantially. The reasons are simple:
[a] Construction Projects are awarded by politicians on the advice of their experts who generally are perceived to have little knowledge relevant to pricing strategies and frequent changes due to poor planning.
[b] Those responsible are rarely held liable for their poor financial performance and may even be rewarded with promotions.
[c] A common perception that public funded projects are awarded and priced where there could be elements of corruption and frauds followed by mismanagement.
[d] If the high cost becomes public then it is perceived to be ‘covered-up’ be establishment of committees who rarely finish their reports and the findings if ever given, ever implemented as those responsible may have resigned or removed or may have died.
Government do not have ‘Budgets’ but only PAYMENTS AND RECEIPTS and are not subject to any standards.