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2015-08-28

COSTS

nbn plan projects increased costs

The NBN will cost another $5-$15 billion more than was estimated less than two years ago, according to the company’s recently released 2016 corporate plan.

The new figures highlight the ongoing uncertainty that surrounds the project.

With the government’s funding capped at $29.5 billion, nbn may need to raise as much as $26.5 billion from other sources, with the borrowing need expected to kick in by June 2017. Given the darkening global economic and financial picture, raising such funds may be no easy task.

But this is only one of a number of problems still facing the NBN.

The plan also projects a sharp rise in the number of ready-for-service (RFS) premises that nbn will achieve over the next three years, with a target total of 9.06 million by FY18.

That’s almost 8 times the total number of RFS premises – 1.21 million – that existed at the end of this financial year.

CEO Bill Morrow has already flagged the need for a large increase in the labour resources available to the project and for a related training programme. But it remains to be seen whether the army of splicers and cable jointers Morrow wants can be created in time to meet nbn’s ambitious targets.

If not, we can expect more cost increases. Time means money, even in a period of low inflation and the challenge nbn faces in meeting its revised financial and construction targets cannot be overstated.

 

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