Private partner to manage Western Sydney Airport build due to labour shortages

The federal government will outsource management of its $5.3 billion Western Sydney Airport project to a “delivery partner” due to “capability shortages” at construction firms and limited availability of skilled labour, confidential procurement documents have revealed.

“Due to Australia’s strong infrastructure pipeline, a key risk for WSA Co is the availability of suitably qualified individuals and contractors with relevant skills, knowledge and experience to support WSA Co in relation to the construction of the airport,” says the WSA’s procurement plan, a copy of which has been obtained by The Australian Financial Review.

“As a result of the constrained resourcing market, WSA Co is seeking to engage a ‘delivery partner’ that will manage and deliver key aspects of the project on its behalf, rather than undertake the difficult and time-intensive process of engaging the relevant resources in house.”

The new airport at Badgerys Creek, which is due to be operating by December 2026, is being built and paid for by the federal government, even though other airport developers, such as Brisbane’s John Wagner, have expressed interest in building it.

Sydney Airport last year knocked back an option to build the airport because the federal government refused to give it any funding and it was reluctant to take all the financial risk.

Urban Infrastructure Minister Paul Fletcher said use of a delivery partner would “augment WSA Co’s internal capabilities” and help it deliver the airport “on time and on budget”. The company expects to have a partner in place by mid-year.

Use of delivery partners to build projects is not common in Australia, although NSW’s Roads and Maritime Services hired a partner (Laing O’Rourke and Parsons Brinckerhoff) when it upgraded part of the Pacific Highway from Woolgoolga to Ballina.

PwC infrastructure lawyer Owen Hayford said there was “a lot of interest” from industry in the delivery partner model, which was used in the UK during the 2012 London Olympics and has also been used on London’s Crossrail project, but that there had been some issues with its implementation.

One issue has been the need for the delivery partner, whose profit margins depend on delivering the project efficiently, to get approval from the client whenever they make any changes to the project.

Another issue has been the difficulty of forecasting how much each stage of work on the project will cost, because it all needs to be tendered to other contractors. “The delivery partner is not allowed to self-perform the work, they have to sub-contract it all,” Mr Hayford said.

The WSA’s procurement plan said the delivery partner will “take accountability” for managing the procurement, construction management and commissioning of the airport works, as well as for “cost management.”

The plan says the Australian infrastructure market was going through “a period of very high demand” across all construction sectors, creating shortages of skilled people such as designers, quantity surveyors and project managers.

The plan stresses that work packages, the procurement model and “underlying commercial principles” need to attract competitors to “ensure sufficient competitive tension” as well as making sure that specialist advisers are available at all key project stages.

Early market engagement processes have however indicated “strong interest” in the airport, the plan says. Early work on the airport is already underway with Veris chosen to provide surveying services and JK Geotechnics undertaking geotechnical investigations.

WSA Co expects to sign contracts worth at least $300 million for design and construction works by the end of July, and expects to have spent at least $2.5 billion on design and construction by May 2025.

The airport project includes a passenger terminal, cargo and general freight facilities and aviation support facilities. It does not currently include a rail track into the Sydney CBD but contractors have been told that they must make provisions for rail links to and from the airport.

Source: AFR