Bunbury road project boosts ACCIONA

• Article from Business News, published 28 August 2020
• By Mark Beyer

The state government announcement last month that Southwest Connex consortium had been selected to design and build the Bunbury Outer Ring Road capped off a successful run for ACCIONA.

The global contracting group has become one of the major players in the local market, with the Bunbury project being its biggest win.

ACCIONA partnered with Western Australia-based contractors NRW Contracting and MACA, and national engineering firms AECOM and Aurecon to bid for the project.

With a budget of $852 million, the Bunbury Outer Ring Road ranks as the largest regional infrastructure project ever undertaken in WA.

The consortium is going through final negotiations with Main Roads WA, with the awarding of the formal contract anticipated next month.

Once that happens, ACCIONA will be the lead contractor on WA infrastructure projects with a combined value of $2.4 billion.

That’s a big change from four years ago, when regional manager Grant Smillie joined the business.

“I was the first employee and we’ve grown from one to more than 120 staff in four years,” Mr Smillie told Business News.

“We didn’t have any projects when we opened the doors, we had zero work in hand.” Mr Smillie said the group took a long view when it opened the Perth office.

“There was a concentrated effort to build a sustainable business with a proper corporate office and support for the projects,” he said.

ACCIONA's presence in WA is the result of two businesses coming together.

As a global contractor, ACCIONA had worked on a handful of very large projects across Australia since 2002.

This included the construction and operation of the Mundaring water treatment plant.

ACCIONA and Chinese-owned TRILITY continue to operate the Mundaring plant on behalf of the Water Corporation.

In 2017, ACCIONA substantially expanded its Australian presence when it bought Melbourne-based Geotech Group.

Geotech chief executive Bede Noonan and chief operating officer Andre Noonan have retained a minority shareholding and continue to lead the merged Australian business.

ACCIONA's Australian profile is about to get another boost, with the group close to completing the $160 million purchase of Lendlease’s engineering business.

That will add about 2,000 people to ACCIONA's Australian head count, though very few of those are in WA.

Nationally, it means ACCIONA will rank as one of the big contractors, alongside CIMIC Group subsidiary CPB Contractors and Chinese-owned John Holland.

It’s a different picture in WA, where CPB has been the longtime market leader, while John Holland has struggled after its problems at the Perth Children’s Hospital.

ACCIONA gained traction in the WA market by winning a number of small bridge construction projects, through its Coleman Rail brand.

This included the Ashton Avenue Bridge in Claremont, the Hamilton Street Bridge in West Leederville, and new bridges in the town of Williams.

“We pursued smaller projects to build credibility with partners, suppliers and clients and to onboard WA staff,”  Mr Smillie said.

ACCIONA also partnered with Perth-based Clough to win work on rail and bridge projects linked to Rio Tinto’s Koodaideri iron ore development.

It won two much larger contracts that drew on its global engineering expertise.

These were engineering procurement and construction (EPC) contracts for two waste-to-energy projects, in Kwinana and East Rockingham, worth a combined $1.2 billion.

Once complete, they will make WA a national leader in taking municipal waste away from landfill and using it to generate electricity that will feed into the grid.

It hasn’t all been plain sailing for ACCIONA in WA.

It was a short-listed bidder for the Forrestfield Airport Link and the extension of the Yanchep and Thornlie rail lines, but missed out.

The group has had more success this year, winning contracts to upgrade Bayswater train station and build the Kenwick freight facility.

Mr Smillie said the group was focused on sustainable growth.

“You might argue the growth has been fairly exponential this year, but there has been a lot of work and planning that has gone into that,” he said.

“We always worked towards 2020 as the year we would have a step-change in the business over here, now it’s about sustaining that.”

One element of this strategy was local employment.

“We’ve brought in a few specialists to work on the waste-to-energy project at Kwinana,” Mr Smillie said.

“Outside of that, every person we’ve taken on board has been recruited out of the WA market.”

That helps ACCIONA counter arguments from lobby group Australian-owned Contractors, which has been pushing the state government to favour companies such as Georgiou Group, Decmil, MACA and NRW Holdings.

Bunbury planning

ACCIONA's biggest focus is planning for the Bunbury Outer Ring Road project.

Mr Smillie said the consortium would have a team of about 100 white-collar engineers and other staff to finalise planning for the road.

“A large portion of those individuals are already within the business,” he said.

“There has been some significant investment from ACCIONA to onboard those individuals and have them in the business so we have a level of readiness.”

The consortium plans to ramp-up its blue-collar workforce next year when construction starts.

“The intent is to procure as much of this work as we can out of the South West and local industries,” Mr Smillie said.

The state government has set a target of $300 million for local procurement and Aboriginal participation on the project.

In pursuit of that goal, ACCIONA has been mapping the size and complexity of work packages to suit local and indigenous businesses. It has also appointed Bunbury firm IPS Management Consultants to engage with indigenous workers and businesses.

IPS director Damien Chalk acknowledged some challenges but was encouraged by the response from local businesses.

“The Aboriginal business sector in the South West is quite immature compared to the Pilbara,” Mr Chalk told Business News.

“This project is seen as a once-in-a-generation opportunity for South West businesses to secure more work and build their capability.

“The process we’re going through is uncovering a lot of capability and desire for Aboriginal businesses in the South West.”

A major initiative was the establishment last September of the South West Aboriginal Business Consortium.

IPS was one of seven businesses that founded the consortium, which now boasts 22 members.

One focus area is building the capability of the consortium’s members, including in areas such as HR and safety systems to help with pre-qualification.

Its members include maintenance contractor Pindari, which is based in the South West but has achieved considerable success winning work in the Pilbara.

Other members include Marrak Holdings, which is a 100 per cent indigenous owned and operated company with subsidiaries in recruitment, civil and mining, and cleaning.

Koormal Contracting is the largest indigenous plumbing business in Bunbury, while Kooyar Wongi is a consulting firm specialising in heritage and cultural awareness.

Another group aiming to secure opportunities on the Bunbury project is Breakaway Aboriginal Corporation, which provides rehabilitation and mentoring programs and work-readiness training.

Future growth

Mr Smillie said ACCIONA was still on the lookout for more projects.

“There is appetite to pursue more but on a far more strategic basis,” he said.

A likely target is the planned removal of level crossings on the Armadale rail line.

“We’re doing a very similar project in Melbourne that has been very successful. We are likely to pursue that.”

With the state government ramping up its infrastructure program, Mr Smillie said one concern was the tightening labour market.

“There is a serious constraint on labour,” he said.

“When you have hard borders, the pool of talent is constrained.”