Infrastructure report: A billion-dollar business

1:33 PM Tuesday August 19, 2014 Bill Bennet

MIT campus at Manukau.

Hawkins Group CEO Geoff Hunt expects to see revenues of around $700 million this year and says the figure should hit $1 billion within three years. That's on the back of a market rich with opportunity, with $1.7 billion worth of construction projects in Auckland and Christchurch out for bids between now and year end.

Hawkins Group started life as a construction business and today Hawkins Construction accounts for the bulk of group revenue and is NZ's second largest construction firm behind Fletcher.

Hunt says Hawkins deliberately focuses on maintaining a balanced work portfolio with a mix of small, medium and large projects. The smaller projects are largely in provincial New Zealand, particularly in the central North Island.

The construction division's more complex projects include Christchurch Airport, earthquake damage remediation at Canterbury University, Middlemore Hospital and Waikato Hospital. Hawkins will shortly begin building the new theatre for the Auckland Theatre Company and is currently constructing the $60 million Gemini data centre for Spark (formerly Telecom) at Takanini.

Among standout projects are two state schools at Hobsonville Point.

Hobsonville Point Primary and Hobsonville Point Secondary schools are Public Private Partnerships (PPPs) between Learning Infrastructure Partners (LIP) and the Ministry of Education. Hawkins is part of Learning Infrastructure Partners along with HRL Morrison and PFM Project Facilities Management. The PPP is structured so the school buildings are constructed, maintained and managed separately from the school management.

Hunt says this means the teaching staff and school board can focus on educational goals, rather than the day-to-day management of the site. LIP is paid a monthly lease covering all costs, including energy, on the basis of specified outputs. The deal is for 25 years; after that time the buildings will be handed over to the schools.

Hunt says one of the advantages of the PPP is the way it changes building economics. He says normally, clients look to contractors to focus on the lowest possible construction cost. This might make short-term sense, but generally leads to the highest costs when spread over the entire life of a building.

When the builder has to maintain the site for an extended period, there's an incentive to ensure a long life and that means designing from the ground up. Among other things, the Hobsonville Point schools have exceptional energy efficiency. The design also makes it easy to quickly and cheaply replace things that tend to wear out, such as carpets.

 

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Geoff Hunt

Hunt says the focus is on delivering long-term value and the schools are full of the latest technology. The Hobsonville Point schools have proved so successful Hawkins is on the short list for a $200 million project to build four more schools -- the Aranui community school and Rolleston secondary school in greater Christchurch, Wakatipu High School in Queenstown and a new school in Auckland that has yet to be announced.

Hawkins Infrastructure is about to wrap up work electrifying Auckland's rail network and is now looking to work on the city rail expansion. The division has built the Grafton Gully cycleway running alongside the motorway and is responsible for the land remediation on the open spaces in Auckland's Wynyard Quarter.

There's a strong focus on water projects including the Wanganui Waste Water Treatment Plant and Hawkins is the preferred bidder as a joint venture partner for the Ruataniwha Water Storage project in Hawke's Bay.

Internationally Hawkins has worked on a $70 million flyover in Port Moresby, Papua New Guinea that is due to open next year. In Fiji Hawkins has worked on a huge modernisation project at Nandi airport.