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Christchurch ‘very concerned’ over major cost increases for new stadium project

Christchurch City Council has announced the cost of the New Zealand city’s new stadium project, ‘Te Kaha’, could increase by up to NZ$150m (£77.6m/€91.1m/$97.7m), warning that the venture may be shelved if the financial issues aren’t addressed.

BESIX Watpac, which is leading the Kōtui consortium behind the project, has delivered its latest report on the project, which also includes its completion date slipping to April 2026. In April, it was announced that work was set to commence on the 30,000-seat new multi-purpose stadium, with officials admitting that international market pressures would make its targeted mid-2025 delivery “challenging” to meet.

This was underlined today (Wednesday), as it was revealed that the previously declared NZ$533m cost could shoot up to as high as NZ$683m. Te Kaha Project Delivery Limited chair, Barry Bragg, conceded that with the price last month projected at NZ$75m, the latest figures represent a move from a “price rise to a price shock”.

“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 NZ$673m,” said 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 NZ$10m.

“This means that the increase could push the total cost of the project to NZ$683m. 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. We have been open about the fact there was a high risk that the cost of building the arena could escalate beyond the NZ$533m budgeted, 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.”

In an FAQ document, the Council stressed that the stadium cannot be built for NZ$533m without significantly compromising on size, functionality and design. With NZ$40m already spent on the project, the Council said the actual budget available for a scaled-back stadium would be less than NZ$500m.

The Council said that whilst it has not planned for this scenario, its cost consultant has advised that, based on BESIX Watpac’s design and construct tender, it could only afford to build a facility with around 17,000 permanent seats and 3,000 temporary seats. This option would mean the stadium would not be completed until the beginning of 2027.

The Council said it has investigated the option of removing the centre oculus of the roof, which would save about NZ$35m. If this occurred it would leave the option of building a roof at some future date.

It was reiterated that no further Crown funding will be made available beyond the NZ$220m allocated from the Christchurch Regeneration Acceleration Facility to the stadium project. Council chief executive, Dawn Baxendale, admitted the significantly increased costs for the stadium are very worrying.

If Te Kaha Project Delivery Limited cannot bring the project more in line with the budget, the Council will need to decide on three options:

  • Increase the budget and take on the risks of further cost escalations in order to ensure Christchurch gets a multi-use stadium.
  • 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,” said Baxendale.

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,” Baxendale added.

A report recommending the Council begin consulting the public will be presented on June 9. If approved, the consultation will start the following day.

The covered stadium is due to be constructed on a large tract of land in the centre of Christchurch. Te Kaha, a shortened version of Te Kaharoa (meaning ‘enduring strength’), will feature 23 corporate suites, 250m of food and beverage outlets, a 1,150-square metre function lounge that’s capable of hosting a wide range of events, and 80 open corporate reserve seated areas.

Christchurch City Council in January approved preliminary designs for its planned multi-purpose stadium, while it also announced the new name for the facility. In August, the council voted to restore the seating capacity of the stadium to 30,000 after its decision to approve a concept for a smaller design was criticised by locals.

Image: Christchurch City Council