City Rail Link cost blows out by $500m — and it might get worse
Bernard Orsman
The cost of Auckland’s City Rail Link — New Zealand’s largest ever transport project — has blown out by $500 million, according to sources.
A senior council officer told the Weekend Herald that revised estimates for the $3.4 billion project have increased by $500m and “there are fears it is going to be over $1b” by the time the main contracts are awarded this year.
Two other sources confirmed the $500m figure.
Mayor Phil Goff said he had not received anything about a revised cost in writing from City Rail Link Ltd — the council/Government joint venture company managing the project — but refused to say if he had been given a verbal update.
It’s very important that appropriate sensitivity is recognised and confidentiality respected. Phil Goff
A source said Goff was aware of the blowout.
The rising cost of the multibilliondollar project is not surprising given the $3.4b estimate is based on 2014 figures, construction costs have been rising by 7 per cent to 8 per cent a year, and the project was expanded last year to lengthen station platforms to take longer trains and build a second entry at Karangahape station.
The additional work has been put in the “low hundreds of millions”.
Senior politicians and officials want to keep the revised estimates under wraps until tenders are opened for the main contracts to build the underground tunnels, two new stations below Albert St and Karangahape Rd, a new station at Mt Eden and the rail systems.
The CRL is a 3.4km underground tunnel running from Britomart to Mt Eden that will double capacity on Auckland’s rail network for up to
54,000 passengers an hour.
It is the largest transport project in New Zealand history, funded equally between council and the Government. It is due to be completed in
2024.
A second council source said the cost blowout was a “nightmare” for Goff with the council right up against its debt ceiling, which, if breached, could lead to a credit rating downgrade and higher borrowing costs.
It is understood council finance officers have started preparing options to pay for the extra cost, including selling assets, staff cuts and a novel idea of moving the cost of a $1.2b sewer tunnel off Watercare’s books to free up debt for other projects.
Goff was tight-lipped, saying it would be inappropriate to speculate about the cost when the two shortlisted tenderers were finalising bids.
“There has been speculation around the fact that given the increase in the construction cost index that the bids may be higher than what is provided for, but we won’t know that until CRL Ltd have opened the tender envelopes. It’s very important that appropriate sensitivity is recognised and confidentiality respected,” he said.
The two shortlisted tenderers are joint ventures of Downer, Vinci Grands Projects, Soletanche Bachy, AECOM, Tonkin and Taylor and WSP Opus; and CPB Contractors, UGL, Beca, McMillan Jacob and Jacobs.
In a statement, CRL Ltd chief executive Sean Sweeney said it would be months before the tender process was completed and the successful bidder named. He said the additional work, the value of the dollar and domestic market conditions could all have a bearing on the final cost.
Work is nearly finished on the first stage of the project — a cut and cover tunnel between Britomart and up Albert St as far as Wyndham St.