No rates increase from pool cost
18 October 2018
Waipa District Council has confirmed that cost increases for the Cambridge pool project will be covered from property sales and will not increase rates.
Council has entered into a $17.6 million fixed-price contract to build the long-awaited pool complex - an increase of $1.6 million on the construction works forecast 18 months ago. Material and fuel price increases, a stretched sub-contractor market and an unwillingness to take on risk have pushed the price up.
The total project budget is now $20.7 million, this includes all professional services, planning and consent costs, fit-out (furniture, equipment) and solar power for the building. Of this, $2 million will come from external fundraising.
Mayor Jim Mylchreest is reassuring the community that council won't be turning to ratepayers for help. The extra money needed will come from planned property sales in Cambridge which have already returned $2.7 million more than expected, he said.
Let me be very clear. We won't be coming back to ratepayers and asking for more money to fund the pool.
Waipā had been caught up in construction challenges being felt nationwide across both the commercial and residential sectors, he said. More than 29 packages of work for the pool were tendered, involving more than 200 sub-contractors. More than half of the contractors declined to even quote, advising there was plenty of work elsewhere without the same levels of risk or complexity.
A shortage of skilled labour and high demand for tradespeople meant 13 packages of work were quoted on by two or less contractors. In all instances, prices quoted were far higher than what they were 18 months ago.
The advice we've had, and we've tested it, is that the market won't soften in the short to medium term and that if anything, prices will go up and not down, Mylchreest said. Given that, and given the very clear message from the community to get on with it', we've pushed the go button but locked the price down via a fixed price contract. It means the price cannot change - that's it.
Council did consider re-tendering the project, hoping for better prices. Another option was a formal peer review of the project budget.
Both would have added at least six months to the construction timetable and the independent advice we've had is that prices are likely to go up, not down. We could have waited and ended up in a worse position.
Council also considered rescoping the project and removing components like the hydrotherapy pool or pulling the plug and putting the entire project on hold.
I don't think either of those would have been remotely acceptable to our community which has already been waiting a long time, Mylchreest said.
After considering all options, we've chosen to bite the bullet knowing that we still have Cambridge property in our back pocket to sell, with the proceeds already earmarked for the pool project.
Mylchreest said re-testing the sub-contractor market meant the project was now three months behind schedule.
We will be going as hard as we can to try and make up that time but we'll also need to be patient. Given the market, there's not much we can do about it.
