Thursday, August 11, 2022

Arena build suffers further setbacks

The company tasked with delivering Christchurch’s multi-use arena, Te Kaha, has advised Christchurch City Council that the cost of the project could increase by up to $150 million, with the completion date also blowing out to April 2026.

“We have advised the Mayor and Councillors that we have received the final Design and Construct submission from our lead contractor, BESIX Watpac, and we now project the price of the arena at $673 million,’’ says Te Kaha Project Delivery Limited Chair, Barry Bragg.

“Also, at this stage BESIX Watpac are unwilling to provide a fixed price for some materials because of the volatility in the commodity market, so unfortunately that means there is still a risk of further cost escalations, which we have estimated at $10 million.”

This means that the total cost of the project could potentially reach $683 million.

“We have asked BESIX Watpac to bring the costs down and to provide a fixed price to eliminate any risk to the Council of further escalation. We have expectations that they will do this over the next week.”

“We are very concerned that the overheated construction market has driven this project so far over budget,’’ Mr Bragg says.

He said Council had been open about the high risk that the cost of building the arena could escalate beyond the forecast $533 million, given the impacts of the pandemic and the war in Ukraine on the global commodity market and supply chains.

“However, we did not expect the cost to escalate to this level.” 

Council Chief Executive, Dawn Baxendale says the significantly increased costs for the arena were “very worrying”.

She said that if Te Kaha Project Delivery Limited cannot bring the project more in line with the budget, the Council will need to decide whether it wants to:

  • Increase the budget and take on the risks of further cost escalations in order to ensure Christchurch gets a multi-use arena.
  • Scale back the project.
  • Halt the project.

“The Council is going to have to make some very difficult choices because it is clear that building the city a multi-use arena will be far more expensive than ever envisaged,’’ Mrs Baxendale says.

The Council may choose to complete the detailed design and then reprice the project in the market, at a later date, when prices may have come down.

“We will need to consult with the community about the additional funding and will continue to work closely with our Crown partners,’’ Mrs Baxendale says.

A report recommending the Council begin consulting the public will be presented to the Thursday 9 June Council meeting. If the Council gives its approval, the consultation will start on Friday 10 June.

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