The downturn in commodity and resources investment will open the floodgates to tides of multi-billion dollar liquefied natural gas construction disputes as investors try to retrieve funds. These disputes will spur a ‘land grab’ to acquire the best and brightest forensic accountants, dispute lawyers, barristers and arbiter panels to gear up and deal with the fall out.
The dispute revelations come at a bad time. Overseas executives already point to Australia as having the world’s most expensive construction costs; huge investment is needed for projects to even get off the ground. Experts draw attention to the strained construction market during Australia’s resources boom as contributing to the current situation.
"It was aggressive contracting in the boom times, then a focus on trying to deliver projects and get the thing done, average contract management, and then a scenario at the back end where there were overruns and contractors trying to get even more out of it because their workflow going forward was looking worse and worse," states a lawyer working on 3 separate disputes.
A plethora of disputes relating to liability for cost blowouts and delays will play out between producers and contractors once the wheels start turning. Some projects have been pushed billions of dollars over budget. On the whole, the disputes relate to placing responsibility for contract variations which have affected the whole supply chain.
Matt Fehon, Partner at McGrath Nicol (specialising in forensic accounting) says contractors and project principals are first and foremost seeking to keep a lid on costs and secondly, at how to recover any money if any non-compliance, scope creep, or overcharges are discovered.
"That has led to a large number of matters that have been either litigated or arbitrated in the arbitration courts”, relays Mr Fehon.
Some construction companies also have forensic accountants working with integrated data analytics to trawl for errors in contracts.
Projects in Dispute
- Chevron's over budget $US54 billion ($71.8 billion)
- Gorgon LNG venture
- Santos' $US18.5 billion GLNG project
- Inpex Corporation's $US34 billion Ichthys project in Darwin