Train wreck

$1 billion rail blowout

The cost of Auckland’s City Rail Link project has soared by more than $1 billion. The new cost “envelope” of $4.419b was unveiled yesterday along with the announcement of the successful bidder to build the bulk of the 3.4km underground railway, which will run from Britomart Station to Mt Eden Station by 2024.

The successful bidder is a consortium comprising Sydney-based Downer, two subsidiaries of the Paris-based Vinci Group, the global Los Angeles-based Aecom engineering group and Aucklandbased Tonkin and Taylor.

CRL Ltd (CRLL) chief executive Sean Sweeney said that after a rigorous and comprehensive review of project costs, a revised cost envelope had been submitted to the project’s sponsors — the Crown and Auckland Council — for approval.

“The $1 billion cost increase on the previous $3.4 billion estimate made in 2014 reflects significant changes impacting the project in the past five years.

“No one could have foreseen the competitive pressures that have occurred in the construction industry over the past few years and the impact that has on costs, particularly for a project the scale and complexity of the City Rail Link.

“Other factors contributing to the revised cost envelope are higher escalation, or construction inflation costs, and an increase in the contingency risk allowance for any future unplanned events”.

Sweeney would not guarantee the project would be completed on time by 2024.

He said nine out of 10 major infrastructure projects now under way around New Zealand were “in delay”.

“The industry is struggling to deal with that workload,” he said.

CRLL had asked that the additional $1b cost be split 50/50 between Auckland Council and the Government.

Mayor Phil Goff said tighter financial management would help fund the additional $500 million requested by CRLL from the council for construction of the transformational

underground rail project. The project was critical to reducing congestion and ensuring people could move around the city.

“A significant part of the cost increase, some $250 million, reflects the need to future proof the tunnels and stations. We won’t repeat the mistake of the Harbour Bridge which was built at half of the size it needed to be, and had to have major additions made to it within eight years.

“The additional cost to council will not involve higher rates for Aucklanders and it will be met without breaching the debt to revenue limit on council borrowing.”

National Party transport spokesman Paul Goldsmith said the blowout “raises serious questions about the Government’s ability to manage major infrastructure projects”.