Wellington's Town Hall restoration budget has blown out to more than $112 million, with the potential to go even higher, and will now open two years later than first thought.
Councillors will vote next week on whether to approve $112.4m over four years for its strengthening project.
To cover near-certain cost increases over those years, councillors will be asked to approve a large contingency fund, the exact size of which will remain undisclosed until "risks have materialised".
Wellington City Council CEO Kevin Lavery announced the cost increase at a media briefing on Tuesday where he put the project's delays and cost hikes down to a mixture of turmoil in the construction centre, rising building costs, and the complicated nature of the project itself.
"This was never ever a project for the faint-hearted," he said.
"We are recommending councillors press the go button for the town hall. This will convert a much-loved heritage building into a world-class music centre."
Construction and strengthening, if approved, would begin in March and finish in 2023, two years later than the council initially planned.
"This is one of the most complex and risky projects undertaken in recent times in New Zealand," Lavery said.
THE VOTE
Wellington Mayor Justin Lester said there were now three options facing his council: do the work and secure the building’s long-term future, leave it there, or demolish it.
"The last two options are problematic," he said.
“My view currently is that Wellingtonians want us to get on with it. It will only become more expensive in the future and the town hall is an important part of our city.”
Lavery said the exit of key players in the building sector and the increasing competition for scarce construction resources had seen cost estimates rise rapidly.
Naylor Love, the chosen contractor for the work, was one of five bidders. The council's contract with them would not be for a fixed amount, and costs would continue to rise as work was being done, Lavery said.
The size of the project contingency being voted to cover those rising costs was "commercially sensitive" and would not be made public, he said.
"We don't want to be in a situation where, effectively, we let everybody know what the contingency is because that's a pretty sure way of ending up spending the full contingency."
COMPLEX WORK
Lavery said the riskiest work on the town hall would take place during the first two years, when most of the underground work will occur.
That included engineering work below the water table, which could be ridden with unforeseen complications.
The town hall was declared earthquake-prone in 2009. Rising costs have been a regular occurrence since the decision to strengthen it was made in 2013.
Work was initially budgeted at $46m in 2013 before that number blew out to $60m. Later, in June 2017, the council approved more than $90m on a new design.
Costs have escalated since then with the changing plans and investigations that have thrown other complications into the mix. Council officers also had to go back to the drawing board in 2016 after earlier plans from 2013 were scrapped.
The Town Hall is an earthquake risk because it sits on both ageing, un-reinforced concrete piles and reclaimed land. Strengthening work involves re-piling and setting the building up with base isolators.
The 114-year-old building will now re-open in 2023 as part of a $187m music hub project in partnership with Victoria University of Wellington and the New Zealand Symphony Orchestra (NZSO).
Victoria University vice-chancellor Professor Grant Guilford said the latest delay had not affected the university's plans.
"The University remains committed to supporting the strengthening and upgrade of this key heritage building."
The New Zealand Symphony Orchestra also remained behind the project, chief executive Christopher Blake said.
"The NZSO remains committed to the project and we continue to be very busy working to establish a world-class national music centre, which will be the new home for the orchestra and Victoria University's School of Music."
BLOWOUT 'PREDICTABLE'
Wellington Chamber of Commerce chief executive John Milford was not surprised by the increasing cost.
"That's the way major construction, and especially retro-fits on big, old buildings like this, tends to go these days," he said.
"It would be easy to simply say, 'go ahead' because it's a great building, but ratepayers do need to see what sort of return on such a big investment they might get from this $112m."
Former Wellington City councillor Ray Ahipene-Mercer, who held the council's arts portfolio from 2004 until 2016, said the latest cost blowout was predictable.
"The only time we will know the true cost of this project is when it's finished," he said.
"And I think it will blow out even further."