Cost concerns for council projects; museum build included
"It is clear that the cost to build has risen from the time we budgeted the project and early thoughts of a basic build have been replaced with an iconic concept design that stakeholders endorse.”
Invercargill’s new museum project is “tracking well” in regard to time, and those that have had a sneak peek at the soon-to-be-released design suggest it has the wow factor.
However, it appears there are some concerns about whether the project’s current budget is sufficient on the back of rising costs.
Invercargill City Council staff will provide an update on Tuesday around its strategic capital projects at a finance and projects committee meeting.
Included is the Project 1225 museum build.
In a report prepared for the meeting by programme director Lee Butcher he confirms the project is tracking well “in terms of time commitment”, and “there was praise at the council workshop regarding the concept”.
“The sole concern has been the cost to build. It is clear that the cost to build has risen from the time we budgeted the project and early thoughts of a basic build have been replaced with an iconic concept design that stakeholders endorse.”
As part of the council’s long-term plan the Invercargill City Council agreed to invest $39.4 million to develop a 3550m2 museum at Queens Park.
With the quest for external funding the project budget at the moment is $54.5m.
“As we progress with concept designs on the 1225 programme and other projects, we are seeing a trend in ‘cost plans’ breaching or coming very close to our budgets,” Butcher’s report says.
“Value engineering is becoming the ‘norm’, not ‘if required’. When we interrogate this in detail, two big stand-outs that present themselves are “inflation on materials” and “cost of living increases (labour, fuel, preliminaries and general).”
Council staff have started to look at the rising costs in fine detail with suggestions that costing is 20-plus percent more in 2023 than in 2021.
“We are in a good position to pivot in design and be clear about costs and what levers can be pulled by the council to address cost risks,” Butcher’s report says.
Project 1225 is the only cost pressure on the council’s many capital projects as part of its current long-term plan.
The proposed upgrade of the council’s Civic Administration Building in Esk St has been paused because the “refurb project is not viable with the current budget”.
It requires further options brought to the council. All consultants have now been paused.