Watpac Australia: Melbourne Park Redevelopment Tender Analysis

This report analyzes Watpac Australia's tender for the Melbourne Park Redevelopment Stage 3 project. It begins with an executive summary and then provides an overview of the project's background, including its objectives and the facilities to be developed, like an arena and a central terrace. The report details the tender structure, contract benefits, and design plans, including the project's five-stage implementation. It highlights the benefits to Melbourne, such as job creation and urban renewal, and provides information on Watpac Australia, including its history, management, and competitive advantages. The report assesses the rationale of the tender, evaluating the financial viability and risks involved, recommending that Watpac should consider rejecting the tender unless the project cost is increased to approximately $300 million. The report also considers the potential for increased revenue and profitability, and the project's strategic importance for Watpac Australia's market dominance. The report concludes with a discussion of the tender's implications and recommendations.

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WATPAC AUSTRALIA
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Watpac Australia
Executive Summary
The report has traced the project development back to 1988 when the first phase was
successfully completed. The 5,000 seat capacity recreational complex will include different
modern facilities and amenities such as an arena and a central terrace which all aim at attracting
tourists and sporting personalities to the city of Melbourne. During and upon completion, the
complex will provide numerous benefits to the city residents that will include increased job
opportunities and subsequent increase in living standards. Therefore, based on the company’s
history of performance and rich experience, awarding Watpac the tender to oversee the
redevelopment of the park is a great decision. Watpac is a construction and civil engineering
company that is based in Brisbane, Australia. The company was established and currently
managed by a group of experienced individuals whose primary objective is to sustain the
company’s competitive advantage in an industry that is faced with huge global competition.
Therefore, before accepting the tender, Watpac must explore the rationale of the project
to ascertain whether it is economically viable both in the long and short run. From the estimated
figures, it's recommended that Watpac should consider rejecting the tender on the grounds that
the company will be able to comfortably breakeven. However, the project further recommends
that Watpac can consult with the city of Melbourne officials to inquire whether the aggregate
project cost can be increased to approximately $300m. Unquestioningly, Watpac is a business
entity whose primary objective is to remain competitive by maximizing profits and minimizing
possible losses. If the city can subscribe to Watpac’s conditions, then the project recommends
that the can continue with the implementation of the tender.

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Information on the Project
Project background
Melbourne Park was a sports complex that was initiated by the Melbourne Sports and
Entertainment departments to help the city regain its lost image. The projected facilities include
an open grand slam, tennis courts, theatres, and football pitches among other important social
facilities that could be used to host various events. The project can be traced back to 1988 when
the initial phases of construction were completed. Originally referred to as the Flinders Park, the
project was touted to maximize the sporting potentials in the country and to help in preserving
the unique cultural aspects of the citizens. Initially, the development of the park was initiated to
support the growing popularity of the Australian Open and to secure the future of Melbourne as
the city of choice to host major events in Australia.
The redevelopment work placed significant emphasis on the comfort of the revelers
making it one of the best entertainment facilities in the whole world. The Melbourne Park
redevelopment project is currently in its third stage and is estimated to cost around $271 million
according to the city’s estimated figures. The new redeveloped multi-purpose 5,000 seat capacity
complex will also include an arena, a central terrace, a state-of-the-art elevated outdoor public
lounge, and an exceptional center. The complex will also include various broadcast studios and
logistics hub among other important improvements.
Tender structure
The description of the project under tender by Watpac Company is subsequently
stipulated. Currently, the company plans to tender the Melbourne Park Redevelopment Stage 3
project. The project will be conducted in Batman Avenue & Olympic Boulevard and is projected
to cost approximately $200m according to Watpac’s tender documents. However, this cost may

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significantly change depending on various market dynamics (Tunstall 2006). Melbourne Park
will function as a media center for the city of Melbourne upon completion. Some of the functions
that will define the company will include a central logistics hub that will also include a unique
central loading dock and a public café. The center will also include an Arena with a sitting
capacity of approximately 5000 people. In addition, the facility will incorporate a public
concourse area, broadcast compound, a tennis façade, and a big car park. The development of
Southern Precinct entries and the re-landscaping of the backyards are other important facelifts
that will be conducted at the facility. The present tubular bridge linking the new central terrace
will also undergo serious redevelopment and facelifts.
Contract benefits, plan, and design
If awarded the tender, the company has a distinctive plan that clearly details the plan and
design of the project. In particular, the project will be completed in 5 different stages with each
stage taking approximately 2 months (Afzal and Lim 2013). For instance, the first stage of the
project will involve the demolition of unwanted structures, scabbing and collection of relevant
materials for the project. Subsequently, there will be a thorough landscaping of the Garden
Square, development of a new Function and Media Centre among other minor improvements.
Remarkably, the repair of the North Access Road will further facilitate a two-way traffic and
pedestrian movements, especially during rush-hours. However, to successfully complete the
project, the company will demolish certain structures that may significantly hinder the
construction activities that will be conducted at the facility.
Furthermore, it is envisaged that this project will provide the company with the much-
needed market dominance in Australia upon successful completion (Austin, Baldwin and
Newton, 2006). Likewise, the project will significantly boost the city of Melbourne’s social and

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economic activities given the company’s the ability to target and attract party-goers. According
to the Melbourne city’s officials, once completed, the redeveloped facility will make it easier for
fans to find their way out and to enjoy their stay in the city. Specifically, the project will provide
numerous benefits to the city that will range from the expansion of the city’s oldest social
infrastructure to the creation of new job opportunities that will subsequently upsurge the inflow
of various economic activities. Moreover, the city estimates that the project will create
approximately new 600 job opportunities during the construction processes.
The project will also stimulate Melbourne city’s urban renewal and the enhancement of
livability of the city’s residents. Additionally, the Melbourne Park Redevelopment Stage 3 will
attract new investment opportunities, increase the town’s ability to hold major social concerts
and attract more international and domestic tourists. Increased inflow of tourists into the city will
also strengthen the country’s tourism and hospitality industry with more people expected to flock
the city to view one of the best sporting facility in the world. Correspondingly, the city will also
experience an influx of sporting heroes and musicians who are likely to visit the city to
participate in various events hosted at the redeveloped facility (Levin, Arthurson and Ziersch
2014).
Information on the organization
Undoubtedly, Watpac Australia is one of the leading national and civil construction and
mining company in Australia and is currently based in Brisbane (WATPAC, 2018). The
company which was established in 1983 has since grown both in size and scope with numerous
successful projects already completed under their supervision. Watpac’s management is made up
of a board of directors who are primarily responsible for the development of the company’s
strategic directions and driving the company’s sustainable customer value. The management also

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comprises of individuals who have extensive experience and knowledge in various fields ranging
from finance to construction and property development. Other members of the management team
include a non-executive director who boasts of extensive experience in construction and
engineering activities among other middle-level management teams.
The company currently deals with various construction and property development
activities in Australia and in other parts of the world. Other services that the company specializes
I include mining services, civil infrastructure, and landscaping (WATPAC 2018). With a rich
history of quality performance that spans more over three decades of positive growth and market
success, Watpac Australia is currently employing over 1,000 people throughout Australia.
Watpac Australia prides in its competitive advantage that it derives from operating diversified
businesses and employing efficient market strategies. Moreover, the company primary objective
is to deploy its prowess and unique skills towards delivering customer value and utility (Afzal,
Lim and Prasad 2015).
Watpac’s success story began immediately it was established and after a few years o
massive growth, the company expanded both in scope and size. Watpac’s market growth strategy
has majorly been revolving around strategic acquisitions making it possible for the company to
expand its services in other parts of Australia (WATPAC 2018). For instance, in April 2013,
Watpac entered into a major acquisition agreement with BESIX Group further enabling the
company to expand its market dominance. Such strategic alliances and market strategies have
enabled Watpac Australia to retain its unique Australian and global market dominance. The
company has also been able to forge new investment networks, expertise and expanded reach to
other relevant stakeholders. Indeed, the company’s rich construction capabilities and core
competencies can be accredited to the quality and efficiency of its services. The firm also boasts

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of the depth of its local expertise and networks that have to strengthen its national and global
outlook. Watpac’s key focus is on enhancing customer relationship and loyalty by facilitating the
deployment of skills and ensuring delivery of value to its consumers.
The company has an impressive list of experiences and project completion rate that
makes it one of the best in the industry. Westpac Australia has a rich list of experience that
includes the construction of sporting complexes such as Suncorp Stadium and the Riverway
Cultural Precinct located in Townsville. The company also boasts of having successfully
completed the redevelopment of Gold Coast Aquatic Centre. Moreover, Watpac Australia has
also successfully delivered major construction projects in other parts of the world such as the
development of accommodation facilities in Singapore.
One of Watpac Australia’s major construction breakthroughs was the development of a
34-story office tower that is located at 180 Ann Street in Brisbane. The building consists of an A-
Grade commercial space and basement parking among other unique features further proving
Watpac’s ability to undertake complex projects (WATPAC 2018). Today, Watpac Australia is
celebrating its 30 years of successful market growth and varied achievements. The company’s
primary market objective is to remain relevant and focused through effective consolidation of its
activities and maximizing profits. In the long-run, the company hopes to enhance its competitive
positioning and create sustainable customer value (Smith 2002). In this specific project, the
company will provide a diverse building construction and supervision services during the
implementation phase (WATPAC 2018).
The rationale of the Tender
This section comprises an excellent analysis of whether the company should undertake
the final implementation of the particular tender for a project (Hsieh, Lu, and Tzeng 2004). The

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section presents succinct explanations of the projected profitability of the company coupled with
the associated risks and rewards related to the proposed project tender. The primary objective is
to ascertain the market viability of the tender and whether the company will profit from such
engagements (Markus 2009). Watpac Construction Company has applied to oversee the
redevelopment of Melbourne City Park. To accurately establish the rationale for taking this
tender, the company must assess the associated financial liability that will include a
comprehensive evaluation of the risks and benefit (Hackett and Statham 2016). Such analyses
will enable the company to ascertain whether they can successfully deliver the specified project
and whether they can fulfill the strict timelines ad guaranteed stipulated under the contract and
tender documents (Brook 2016).
The company established that this a high-risk project that required comparatively high
strategic plans based on the level of complexity. Moreover, the project has a mandatory delivery
timeframe implying that it is a high value and sensitive case that will require the company to
direct massive manpower towards the successful completion of the project (Oakley and Johnson
2011). Moreover, the company has provided a rough estimate of the net profit ratio (net profit
divided by the aggregate revenue) to further ascertain the financial viability of this particular
tender. The Goss profit margins and the return on the company assets will further help the
company to establish the financial feasibility of this project. As such, the company will provide
approximate estimates of the costs of conducting this project (Mees 2010).
The table below shows the estimated cost of successfully conducting this project. The
facility is estimated to cost approximately $271. However, Watpac estimates that they can use
approximately $200m to successfully complete this project. Therefore, the stipulated estimates
are rough figures that the company believes are feasible.

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Project overhead Cost in $
Minor demolitions 1, 950,000
Landscaping and Bondek 1, 500,000
Waterproofing and joinery 1,400,000
Purchase of structural steel and flag poles 11, 400,000
Acoustic walls and render 1, 700,000
Purchase of carpet and tactile 3, 400,000
Construction of operable walls and kitchen
equipment
53,000,000
Purchase of sanitary hardware and signage 14,000,000
Outsourcing mechanical and plumber services 3,000,000
Construction of bicycle racks and sport surface 5,000,000
Metalwork and blinds construction 8,000,000
Construction of concreter and blinds 15,000,000
Construction of metal deck roofing and rubber
flooring
21,000,000
Construction of plaster walls and ceiling and
windows
9,800,000
Construction of roller doors and toilet
partitions
8,700,000
Construction of ceiling hoists and mirror
glazing
6,500,000

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Enhancing fire protection equipment and
glazing film
17,000,000
Construction of perimeter fence and precast
concrete
7,500,000
Carpentry and timber flooring services 1,000,000
Filling roof safety systems 14,000,000
Fitting ceramic and access floors 8,900,000
Fitting seats in the theatre 3,500,000
Improving the facility’s electrical and lift
services
10,000,000
Improving access roads and redevelopment of
the road safety system around the facility
22,000,000
Purchase of quality timer doors, glass
balustrades, and pilling
1,100,000
Masonry and painting services at the facility 1,000,000
Other expenses 4,000,000
Total projected costs 266,850,000
From the above estimates, it’s clear that while Watpac believes that this project is
economically viable and that they can complete it within their stipulated budget constraint, the
actual estimates are contradicted. While the city budgeted for approximately $271m to efficiently
execute the project, the actual estimates stand about $266m. Therefore, Watpac’s tender estimate
of over $200m will only be feasible if the city can agree to increase the funding for the project.

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Moreover, on environmental sustainability, this project will include certain serious impacts of the
environment which will also be included as part of the overall cost of the anticipated project
(Wong et al. 2015).
While the company’s tender meets the city’s requirements and budget estimates for the
maximization of available capital and human resources, serious considerations should be directed
to the estimated costs and economic viability of the project. Indeed, Watpac has an excellent
experience and prowess in the construction industry and deserves this project. Therefore, the
company can engage the government to increase funding for the project to ensure a win-win
scenario. The primary objective of any business outfit is to maximize profits and minimize loss
(Bertolini, Braglia and Carmignani 2006). If Watpac will accept the tender at the current estimate
of $200m, then their inherent ability to break-even will be reduced. Being in a relatively
competitive business setting, the company must strive to maintain its market position and
competitive advantage. Therefore, the company can convince the city’s management to consider
quality above cost and to award them the contract at an approximated figure of $300m. This will
enable Watpac to successfully conduct most of the above-stipulated projects and successfully
break-even.
Conclusion
The report has provided a clear and concise analysis of varied information pertaining to
the project. For instance, the report has provided a detailed background of the project using well-
demonstrated and solid justifications of this proposal. The provided project information further
includes a verifiable plan, design and contract structure of the project. Moreover, the project has
given specific information on the tendering company Watpac and includes a detailed history of
the firm, core competencies and capabilities. For instance, the project has established that

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Watpac has immense experience in the construction and civil engineering industry and this
makes them uniquely qualified to successfully complete this project. In addition to the
company’s capabilities and experience in undertaking large infrastructure projects, Watpac is
undoubtedly qualified to execute this complex project. The report has further provided an
exceptional analysis of the tender that includes costs estimates. The stipulated analysis aims at
presenting a clear rationale on why Watpac should continue with the implementation of the
tender. The rationale is also supported by various calculations ascertaining whether the
companies will break-even among other associated risks and rewards.

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