Frustration builds over project costs
SPIRALLING construction costs have put a hold on the development of a new head office for the Great Barrier Reef Marine Park Authority in Townsville.
Managing director of Gleeson Group Therese Smith confirmed the delay, saying they had little option but to wait and consider the construction market next year.
“The tender prices (we received) were far in advance of our quantity surveyor’s estimate. We were looking at at least a 40 per cent increase. We thought there would be cost escalation ... but not to the extent of tenders,” Ms Smith said.
Ms Smith believed a timing for a start to construction next year would be better.
“I think we will be looking at it in the first half of next year. We will probably go back to the preferred tenderer in the first instance. We really haven’t made a decision on re-tendering,” Ms Smith said.
Townsville-based federal MP Phillip Thompson announced in April last year the government’s approval of the agreement for the authority to lease space in the development.
The authority is to take two floors in a five-level building incorporating a mix of office, retail and service industry space.
The development was approved by the council last year with a floor area of 6472sq m. A shared pedestrian and vehicular laneway is to be constructed alongside the building providing access from The Strand through to Flinders St.
Colliers announced last week the marketing for sale of an adjoining holding, also held by the Gleeson Group, with approvals to demolish the Criterion Hotel and develop a residential and retail building of up to 20 storeys.
According to Rider Levett Bucknall’s latest construction market report, Townsville annual tender price index is forecast to rise 12.6 per cent this year compared with a 10.4 per cent increase last year.
A 5.5 per cent rise is forecast for 2023, falling to 3 per cent in 2024 and 2025.
According to the report, significant surges in tender pricing have been experienced in all states with head contractors reporting volatile pricing from the subcontract market, difficulty in pinning down pricing, and subcontractors being selective in committing to tenders, because many are at capacity or unable to secure appropriate labour.
The report says there has also been instability in supply chains.