Precinct Properties announces more delays to completion of Commercial Bay saying Fletcher Construction behind schedule
Wednesday, 29 May 2019
Big property investor Precinct Properties has pushed back the opening of its huge Commercial Bay development in downtown Auckland due to delays in construction progress by main contractor Fletcher Construction.
Precinct said the opening of the retail centre had been put back six months to March 2020 from September 2019 and the opening of the PwC Tower would be delayed until April 2020 from a previous scheduled December 2019 opening.
Precinct chief executive Scott Pritchard said the delays could cost the company up to another $10 million taking the total office and retail development to $700m.
Fletcher Construction had brought claims against Precinct for extensions of time and additional costs and more were expected, but they had not been granted, he said.
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'The revised targeted opening dates are due to observed delays in construction progress by the main contractor, Fletcher Construction, across both the Tower and retail centre components.'
'Due to this revision the forecasted total project cost is now expected to be between $690m and $700m with the potential increase of up to $10m reflecting the cost of delays to opening,' he said.
Precinct announced in February it had withheld $15.4m of payments - liquidated damages - to Fletchers for delays in construction between July and December 2018 and was likely to withhold more.
The construction programme review was carried out by Precinct's project manager, RCP.
The March 2020 opening date for the retail centre took into account expert advice that base building works were unlikely to be completed before December this year.
More than 92 per cent of the retail centre was leased and 80 per cent of the office space.
Retailers already announced include big names like international clothing giant H&M, and fashion brands Kate Spade New York, Hugo Boss, and cosmetic and beauty brands like MECCA and Christian Dior.
The review was commissioned because Fletcher had not kept Precinct informed of the programme for completion of the base build works.
'The main contractor has brought a number of claims against Precinct under the construction contract seeking extensions of time and/or additional cost and further claims are anticipated,' Pritchard said.
'To date these claims have not resulted in material additional costs or extensions of time being awarded and Precinct remains confident that the provisions of the construction contract appropriately protect Precinct from losses due to contractor delay and/or breach of contractor obligations.
'Liquidated damages are expected to largely mitigate the impact on Precinct from losses of income and other prolongation costs over the delayed period, however liquidated damages will cease to apply following completion of base build works.'
Now the company's priority was that retailers could plan their opening at Commercial Bay and office occupiers their shift to new premises.
'While we are very disappointed that the opening of Commercial Bay has been further delayed, we remain steadfastly focused on the successful delivery of the overall project to the highest quality standards. We are committed to what we set out to deliver - creating a world-class waterfront destination on par with other gateway cities,' Pritchard said.
He was not prepared to make further comments other than those in the statement to the New Zealand Stock Exchange.