$DUR announced the award of two ECI Defence contracts at HMAS Stirling to its 50:50 JV with Ertec, with values of $10m ($1.9m and $8.1m).

While immaterial for FY25, the deliverie phases will be in FY26 and FY27, and will be more material for the ultimate winner.

Judging by the muted market reaction, I'd highlight a few points:

• For engineering and construction infrastructure projects, the design and planning phase is typically 5%-10% of the ultimate project cost. (Can be lower, can be higher, depending on scope and scale, and how detailed the design deliverables are.)
• So, in the success case we are talking about projects probably worth order of magnitude $100-$200m, or $50m-$100m net to $DUR.
• ECI involvement in design and planning gives the contractor a strong inside edge leading up to the bidding for the execution phase. Essentially, they are advantaged in being able to more precisely determine execution risk, leading to a better bid. This isn't always true, as a competitor could misprice risk on the downside (particularly if they were desperate for work!) However, with the market still pretty tight in infrastructure contractiing, that is less likely. Given this knowledge assymetry, clients often don't take ECI contracts to market, and instead have an independent advisor review the project proposal.
• To quantify, this potentially moves $DUR from a 25-30% CoS (without ECI) to a >70-80% CoS on ultimate award, with more certainty on the project margin ultimately achieved.
• $DUR are increasingly using their MEND capability to get better scope definition in early design. They'll no doubt be using it here, and it is a real edge over competitors who don't yet have the capability.

So, while not material for FY25, it is leading up to a potentially nice piece of work for 2026 and 2027.

$DUR has had a very strong SP run over the last 6 months, so anything other than a very material project award (>$100m) is probably unlikely to move the dial.

But good news, nonetheless.

Disc: Held