Chch stadium costs rising while city council works on delayed business case

Sunday, 27 October 2019

A possible design for Christchurch’s new stadium.

The cost of building Christchurch a new stadium is rising by up to $1 million a month while the city council looks for ways to save money on the project.

The council had hoped to have an investment case for the project ready by July for the Government to approve its contribution in time for construction to start next year.

The stadium will sit between Madras, Barbadoes, Hereford and Tuam streets.

One industry insider suggested the delay was costing the stadium about 45 seats per month, or the equivalent of 5000 seats since the project was confirmed in 2017, assuming a cost per seat of $20,000.

Mayor Lianne Dalziel has said the case, which the council has been working on for 18 months, would now be ready to go before Cabinet before Christmas.

The Christchurch City Council has been working on a business case for the new stadium for 18 months.

Delays have been blamed on the March mosque shootings and then this month's council elections.

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The finished investment case must be approved by the new council, sworn in last week, before it can go to Cabinet for approval.

A roofed stadium is preferred with permanent seating for 25,000 spectators for concerts, sports matches and other events. Initial cost estimates range from $460m to $520m, with ongoing running costs of $14m to $18m a year to be at least partially offset by revenue.

Various stadium designs have been proposed but a roofed model is preferred.

With non-residential construction tender prices rising 2.3 per cent in the past year, costs for a $520m project would be escalating by $11.9m a year, or $1m a month.

A total of $473m is earmarked to build the stadium on land mostly bought, with $220m to come from the Crown and $253m committed by council.

Once funding is approved, detailed design work can be done and construction, expected to take at least three years, can start.

The stadium was originally intended to be completed by 2017, a date delayed several times before the project was put on hold, then re-started.

Figures from construction analysts Rider Levett Bucknall show Christchurch's non-residential construction inflation was stable at 2.3 per cent in the past year, after peaking at 6 per cent at the height of the rebuild.

City council general manager of citizens and community, Mary Richardson, said Crown officials had been shown a draft review of the business case 'to avoid the significant decision being made in the election period and to fast-track the process.'

Staff were now working on 'affordability issues' that had been identified, she said.

'We're now refining the concept designs to give more certainty about construction costs and to ensure that it fits within the budget.

'We've known from the beginning that the budget was tight and, as we progressed the investment case, it became apparent more work was needed around affordability.'

Richardson said they were also 'exploring what other work can be done concurrently to maintain momentum on the project'.

The business case will be judged on criteria including the strategy for the project, whether it is value for money, how it will be built and managed, and what it will cost and earn, based on events it will attract.

Asked what feedback it had received from Government on the investment case, the council said releasing that would 'run counter to the public interest' by risking damage to negotiations with the Crown.

The draft case was not yet completed and the process was being conducted 'under a clear obligation of confidence between both parties'.

The managing director of Christchurch-based quantity surveying firm Construction Cost Consultants, Andy Thomson, said thorough early planning on such a major project would keep costs down in the long run.

'People want to change stuff once it starts, and that's when costs start to blow out. If you spend enough time designing it and get it right at the start, the price that's put in is likely to be right.'

Thomson said spending time on ground preparation was also the key to preventing cost escalations.

Construction costs were not expected to escalate in Christchurch beyond current construction inflation levels, and major cost items for the stadium - concrete and labour - were not items likely to spike, he said.