Brace for more Christchurch blowouts
Cost blowouts and delays are on the cards for other Christchurch rebuild “anchor” projects.
Christchurch Rebuild Minister Megan Woods yesterday announced the Crown had torn up its contract with the preferred contractor for the metro sports facility, after a cost blowout of $75 million was revealed.
Newsroom asked if other anchor projects were behind schedule and over budget. Woods responded: “Yes. It’s fair to say that I have concerns about other anchor projects as well and I am doing a full review. I have looked at some other anchor projects and made the assessment that they are too far down the track to make changes. When I looked at this anchor project I saw that we had a chance to do things differently.”
The anchor projects, totalling several billion dollars, were released in a blaze of publicity in 2012, and were meant to provide certainty for Christchurch people, encourage other developments around them and attract people back to the central city.
But the projects have become a source of frustration, especially because of the lack of progress on projects like a multi-purpose stadium, convention centre and 900 new townhouses and apartments.
Woods avoided the question of whether other anchor projects might need more Government money – and which projects were in the worst position.
“I think what I’m demonstrating today is that my first step isn’t just to go to Cabinet and ask for extra money; that I’m saying that we need to look at this from every angle and we need to look at what options we have available to us.”
Contract torn up
The board of Crown rebuild organisation Otakaro made the decision to tear up the contract with Leighs Cockram Joint Venture Ltd. The contract was suspended in July.
(Otakaro confirms $29 million has already been spent on the project – $22 million in professional fees, like design and technical expertise, and $7 million on land remediation.)
But the $75 million cost “blowout” might not be as simple as it seems.
Leighs Construction managing director Anthony Leighs says: “When you look at the figures that the Crown have indicated that the project’s over budget, only a small percentage of that is actually value attributable to the over-budget construction contract.”
The rest is a risk contingency, he says, adding: “That’s their risk contingency, not ours.”
Leighs says the company’s disappointed with Otakaro's decision and it hasn’t decided whether to bid for the build-only contract.
“We put a big effort into the metro sports project over a long period of time but we respect the Crown’s decision to take a different approach to the procurement of it.”
"I’ve never considered it to be an ideal process.”
The city council, which will contribute $147 million to the metro sports facility, will be part of a team looking at options for the site, including the possibility of also building a multi-purpose sports arena there. The team’s work has to be done by the time Otakaro has finished the detailed design of the facility.
The council signed a cost-sharing arrangement with the Government four months before Christchurch Mayor Lianne Dalziel was elected. She’s never been a fan of the anchor projects and says she’s delighted the minister wants to look at the bigger picture.
Dalziel thinks it’s worth seeing if ratepayers can get a “better deal”, by looking at the mix of big-ticket projects and see if they can be built more cost-effectively elsewhere.
She tells Newsroom: “These are questions we can quickly ask and have answered in a relatively short period of time. I don’t see any harm, and I don’t think it’s going to hold up anything, just to see whether that can be done.”
Asked if she’s been raising issues about anchor projects with the previous Christchurch rebuild minister, Dalziel takes a sharp intake of breath, sighs and laughs. Then pauses.
Clearly she’s had issues with the metro sports facility?
“Not this project,” Dalziel says. “Just the collection of anchor projects. The thing is I’ve never considered it to be an ideal process.”
Playing cute with figures
The National Party’s Christchurch rebuild spokesman Matt Doocey, the Waimakariri MP, accuses Woods of pulling a swift one regarding the $75 million figure, because much of it is contingency money. “With good contracting, that doesn’t necessarily need to be realised.”
He also takes issue with the idea of building the metro sports facility and a multipurpose arena on the same site. “There’s real risks that when you put the two together it’s only going to add more complexity and slow everything down.”
But aren’t we in this mess because of foot-dragging by the last government?
Doocey says he can “understand the thought of why people feel that things are taking time”. He says the number one priority of the people he’s talked to is not the speed of anchor projects but the quality. “They’re happy, if they’re going to get top-quality anchor projects, for that to take a bit of time.”
Time isn’t something Woods has a lot of. She says Otakaro will go out for build-only tenders in March/April. Those tenders should close in July, with a contractor appointed in September. Work should start in the last quarter of next year, with a completion date of 2021.
That’ll be five years late, based on the original estimate.
Woods is confident she’ll have enough information by the end of April to make the best decision for the site.
“We can make this a priority and it is a priority for me. We’ve simply got to get some answers and we’ve got to get on with getting the facilities for Canterbury.”
Labour’s message from the metro sports facility debacle seems aimed at critics of its financial credentials – that the Government won’t just throw money around like it has a bottomless pot. Of course, Woods’ best way of convincing Christchurch people Labour’s doing a good job is to take her own advice and pick up the pace of the anchor projects.
Woods used symbolism at her press conference yesterday to highlight the delays. She said she was standing on a giant open lot where a stadium should have been built, a year ago. But some unwanted symbolism might worry Cantabrians – that drilling work on the adjacent area had to stop while the TV cameras were rolling.
Any further significant delays will be frowned upon – including by the city council, it seems. Asked if a sports facility will be built on the site by 2021, Dalziel says: “I’m damned sure it will. It better be.”