Sisk warns 'avoid Poland'

Dannyboy83

Not sure which particular forum this should be located in....

This piece concerns Sisk's trouble in Poland:

Road works in Poland lead to dead end for Siac and Sisk
http://www.irishtimes.com/business/sectors/commercial-property/road-works-in-poland-lead-to-dead-end-for-siac-and-sisk-1.1572124?page=1

The Irish Times piece appeared to only tell half the story, so I checked a few Polish sources.

The gist of what I've understood from reading both sides of the argument is that
1) Poland have a policy of going with the cheapest bidder for a contract
2) Consequently, Sisk submitted the lowest bid to win the contract
3) Sisk, after being awarded the contract, could not complete the contract within the terms specified
4) The Polish authority refused to "alter the terms"

“If . . . a necessity arises to execute additional works, there is no possibility to apply for additional payment,” wrote Mr Piechocinski.
The Polish practice of awarding contracts “on the lowest price criterion”, he wrote, “causes more damage . . . than it generates . . . savings” because of inflexible contracts.

“Problems solved amicably cost less than terminated contracts or long-term legal action,” wrote the Polish deputy prime minister.

5) Sisk called in the lawyers


In the Irish Times article, the Polish Deputy Prime Minister comments that Poland needs to change it's model of fixed price contracts and even cites Ireland as a model for Poland to follow. That is the policy which has been roundly criticized in Ireland of throwing increasing amounts of money until a project is completed.

Aptly dubbed ‘the money pit’, the exposé found the average cost overrun for 30 road-building projects here came to a whopping 86%. However, according to an international study, this compares to an average cost overrun of 20% for road projects in 20 nations on five continents.

Ireland’s record is the worst in the world.

Even taking into account some of the claims which Sisk raised concerning failure on behalf of the Polish Road Authority to adequately prepare sites,
I assume Sisk understood the Polish procedure of fixed price contracts for the lowest bidder before entering the market.

Now that Ireland is entering into a period where we may be capable of increasing our Capital Expenditure again, should we not be following a model similar to Poland, and not vice-versa?

http://www.irishexaminer.com/archives/2004/1101/opinion/state-projects--cost-overruns-poor-value-for-taxpayers-432221152.html
It is fortunate that the Department of Transport recently introduced fixed pricing and the "design and build" concept which saw the Cashel and Ballincollig bypasses delivered on time and within budget.

Sheldons Brain

This has been discussed in the roads forum. A design and build contract requires the contractor to design the thing in a way that it can be built. A fixed contract runs into problems when there is something that needs to be changed.

Pete_Cavan

Dannyboy83 wrote: »

Not sure which particular forum this should be located in....

This piece concerns Sisk's trouble in Poland:


The Irish Times piece appeared to only tell half the story, so I checked a few Polish sources.

The gist of what I've understood from reading both sides of the argument is that
1) Poland have a policy of going with the cheapest bidder for a contract
2) Consequently, Sisk submitted the lowest bid to win the contract
3) Sisk, after being awarded the contract, could not complete the contract within the terms specified
4) The Polish authority refused to "alter the terms"


5) Sisk called in the lawyers


In the Irish Times article, the Polish Deputy Prime Minister comments that Poland needs to change it's model of fixed price contracts and even cites Ireland as a model for Poland to follow. That is the policy which has been roundly criticized in Ireland of throwing increasing amounts of money until a project is completed.


Even taking into account some of the claims which Sisk raised concerning failure on behalf of the Polish Road Authority to adequately prepare sites,
I assume Sisk understood the Polish procedure of fixed price contracts for the lowest bidder before entering the market.

Now that Ireland is entering into a period where we may be capable of increasing our Capital Expenditure again, should we not be following a model similar to Poland, and not vice-versa?

Your post is a bit all over the place. The quote regarding cost overruns on projects is from a 2005 article and relates to a type of contract no longer used. It was replaced by the GCCC suite of contracts which were developed to avoid such cost overruns. The other quote references the Cashel and Ballincollig bypasses which were another contract which was also replaced by GCCC. I am sure when they cite Ireland as a model for Poland to follow they mean the GCCC contracts.

GCCC contracts are fixed price but that does not mean additional costs cannot be paid under certain circumstances. The contracting authority has a number of options as to what will or wont be considered a compensation event.

The Polish contracts sound rediculous, what if a perfectly legitimate reason arises for needing additional work, should the contractor on site do the work as per their contract and then the contracting authority should look for a new contractor to do the additional work which could involve undoing some of the work that the previous contractor did!

I hear Sisks problem in Poland also had a lot to do with geology, you need a lot of stone to build roads, that is not a problem here because you are never far from a quarry in this country, but this is not the case in Poland. Sisk didnt do their homework and only realised they would have to transport stone far greater distances then they had budgeted for when it was too late.

Sand

Pete_Cavan wrote: »

The Polish contracts sound rediculous, what if a perfectly legitimate reason arises for needing additional work, should the contractor on site do the work as per their contract and then the contracting authority should look for a new contractor to do the additional work which could involve undoing some of the work that the previous contractor did!

I hear Sisks problem in Poland also had a lot to do with geology, you need a lot of stone to build roads, that is not a problem here because you are never far from a quarry in this country, but this is not the case in Poland. Sisk didnt do their homework and only realised they would have to transport stone far greater distances then they had budgeted for when it was too late.

It sounds like the Polish contracts protected the Polish taxpayer from some reckless underbidding by an uninformed company that didn't do its homework. It doesn't sound ridiculous to me at all. There is more for the Irish to learn from the Polish in this regard than vice-versa.

From the article Sisk seems offended that the Polish state wasn't looking out for its interests, same as they were used to back in good old Ireland.

“The NRA in Ireland sees that what is good for the contractor and good for job is good for the NRA and the country,” he said.
“Here, they think that what is bad for you is good for them. They don’t seem to see the issue of reputational damage.”

I think it is a best debatable if what is best for the contractor is indeed what is best for the country.

Dannyboy83

It's clear both parties were at fault here, but obviously Sisk share the larger portion of fault. Ultimately, the onus is on Sisk to know the environment they're operating in - both legally and geographically.

The allegations I've heard locally of Polish corruption are disappointing, considering the issue actually arose because the Poles followed their procedures to the letter, and weren't corrupt at all. Ironic considering the onslaught of malfeasance revealed among the upper echelons of Irish society on a weekly basis for the last several years.
The sheer bias of the Irish Times article and the poor journalism are embarrassing.

But in particular, the comments by Sisk are completely unprofessional.

This week, Mr Sullivan was in a dark mood. “I would definitely not recommend companies [to] bid on public contracts in Poland but avoid them like the plague. You’ll be screwed,” he said. “I sometimes think they actively try to bankrupt companies.”
“In all our years, in all the countries where we've worked, we've never came across a client as awkward and unprofessional as the Polish roads authority,” said Mr Sullivan, director of Sisk’s Polish operations.

Mr Sullivan’s parting words on Poland? “It is a real swamp.”

Dannyboy83

Sand wrote: »

It sounds like the Polish contracts protected the Polish taxpayer from some reckless underbidding by an uninformed company that didn't do its homework. It doesn't sound ridiculous to me at all. There is more for the Irish to learn from the Polish in this regard than vice-versa.

The Greystones development would appear to be a very relevant illustration of that point:
http://www.thejournal.ie/greystones-harbour-sisk-building-site-1136058-Oct2013/

Last month, local resident groups and local councillors presented their interim plan for what could be done with the site. Independent Councillor Tom Fortune gave a presentation of their community plan that he said would have a net cost of €300,000.
Following the meeting in which the community put forward plans for tidying up the derelict harbour area, Fortune expressed astonishment at the reply sent to Greystones Town council.
Representatives of Sisk attended the meeting and agreed to take a look at the community proposals, he said.
However, a letter seen by Councillor Fortune states that they have not costed the development and have instead offered to carry out their own works on the site, which he said are not satisfactory.
Fortune said he was disappointed that the developer had not costed their plans, despite promising to at the last meeting.

Councillor Grainne McLoughlin said that the Sisk plans gives no timeframe as to when they plan to develop the site, leaving the residents in limbo once again. She said: “SISK agreed to come on board for the strategic plan for Greystones, to do that they cannot string everyone along with maybe this and perhaps that promises.”

Reads almost like a hostage situation.