No wriggle room on Gorgon costs

Both the WA Chamber of Commerce and Chevron's management must learn from contracting blunders at the Gorgon project.

The blow-out in Gorgon costs is a national disaster not only for the stakeholders in Gorgon but for the country. It showed the world just how dangerous it can be erecting large projects in Australia.

Let’s stop speaking half and quarter truths and face the facts. I set out the situation as I saw it in my commentaries (Miners must fess up on IR dirt, December 5), (Unmasking the Gorgon cost monster, December 6).

Naturally we are publishing in full the reply by The Chamber of Commerce and Industry of Western Australia, which appears alongside this commentary.

To help the WA chamber to remember, I now publish large extracts from its Wheatstone agreement in the attachment below. But actually I have never blamed the chamber for what happened at the Gorgon project. They were directly involved at Wheatstone LNG plant, but only doing what Gorgon management requested of them. Other parts of the WA industrial relations club did similar work on request.

It was the Gorgon management who are just as responsible for the blowout as the federal government and the unions. Gorgon management keep blaming the unions and the government (correctly), but refuse to accept their share if the blame.

The WA chamber-style agreement was widely used at in the Gorgon field contracts.

There are at least 74 enterprise agreements for Gorgon, each one involving a separate sub-contractor. Yet there are only two types of agreement. Marine, which are all the same, and onshore, which again are all the same.

I repeat: every marine sub contractor agreement was the same and every onshore agreement was the same, right down to the font. Yet this vast number of sub-contractors (I will not get into silly debates with the WA chamber about the number of sub-contractors) have a large number if employees with their own agreements. They gain their productivity via these agreements. But at Gorgon they had to sign a "fresh agreement” – an agreement which robbed the enterprise of productivity and made the cost blow-outs inevitable given what the federal government had done.

It is very important that Gorgon management admit their share of the blame and to the extent that the WA Chamber had a role in the Gorgon management mistakes they must learn from it.

To illustrate the absurdity of what happened at Gorgon let’s single out, CB&I, one of the world’s leading engineering, procurement and construction companies.

CB&I says that they draw upon the expertise of approximately 23,000 employees worldwide, but at Gorgon they had a special agreement. Of course CB&I would have been anxious not to allow the work practices agreed by Gorgon management to spread through the world.

And just to top it off in a so-called ‘effort to improve productivity at Gorgon’, Leighton Contractors has banned staff working on the project from using chairs and instructed them not to sit down during their shifts (Leighton's Gorgon staff told to ditch chairs, December 11).

Absolutely crazy. That’s what happens to staff goodwill when you fail to write agreements that meet the needs of your own circumstances and staff.

WA chamber Wheatstone extracts .docx