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Pre-Covid Construction Contracts Unworkable as Costs Surge, Webuild Says

  • Australian hydro builder says A$5.1 billion deal is too low
  • Project highlights challenges of completing projects on budget

Infrastructure construction contracts signed before the pandemic have become widely unworkable because of the surging cost of labor and materials, supply-chain blockages and difficulties in securing manpower, according to builder Webuild SpA.

Milan-based Webuild is wrestling with a 2019 agreement with the Australian government to construct the country’s largest hydroelectric power station for A$5.1 billion ($3.2 billion). It’s meant to be completed by 2026. The Snowy 2.0 project, in the Snowy mountains about six hours’ drive south of Sydney, has come to highlight the challenges of completing large-scale projects on terms that were struck before Covid-19, and before Russia invaded Ukraine.