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Opinion by John MacDonald
John MacDonald is the Canterbury Mornings host on Newstalk ZB Christchurch
Something about this fixed-price contract for building the new Christchurch stadium, Te Kaha, just doesn't stack up for me.
In fact, the whole fixed-price thing doesn't stack up, as far as I'm concerned.
The gist of it all, is that the Board overseeing the project has managed to negotiatea deal which will make the Australian construction and civil engineering company that is the lead contractor for the project, responsible for the costs of labour and materials - as well as carrying the can for all other risks and cost overruns.
So it's put a fixed price of $683 million on the project. Sounds too good to be true? I think it does.
Te Kaha Christchurch multi-use arena stadium. Photo / Christchurch City Council
And this is my predicament. I'm all for the stadium. But I'm afraid I can't get excited about this big fixed-price announcement because I simply don't think it can be done.
Of course, a lot of people are excited about it - including mayoral candidates Phil Mauger and David Meates who are saying today that it gives us all certainty. Other city councillors are saying the same.
But, unless I'm missing something here, do you really think the cost of a major construction project - which hasn't even begun yet and isn't expected to be open for business until April 2026 - do you really think you can set the cost now and think nothing's going to change? Really?
If you can, then there must be a massive amount of contingency in the price - which is something Phil Mauger suspected when the $150 million cost blow-out was announced last month.
Back then, he wanted to press pause on the whole thing to see if costs might come down a bit. But, of course, he's changed his tune the closer we've got to October's local body elections.
City councillor Sam MacDonald is saying that, when councillors were briefed on the fixed-price contract yesterday morning, he told the stadium board not to come back to the Council looking for more ratepayer money.
"This is a full and final get on and do it," is what he's saying about the fixed-price arrangement.
So there's a lot of bluster, but I'm not convinced it can be done. And, essentially, this is what city councillors are going to have to decide for themselves between now and tomorrow morning when they'll get together to make the big decision whether to invest another $150 million into the project - and sign the dotted line on a $683 million contract.
If I was a city councillor, even if I wanted the stadium - like I do - I couldn't vote "yes" tomorrow because - like I said before - I think this fixed price is too good to be true.
And I don't think I'm going to be the only person who thinks that.
I see Graham Burke from the Construction Industry Council is also scratching his head about it.
He's saying that he's (quote) "very surprised that they've managed to tie somebody down to a fixed-price contract.
He goes on to say: "We've got costs going up across the board, we've got interest rates rising, we've got shortage of skills, hold-ups and shortages across the supply chain internationally."
That's what Graham Burke from the Construction Industry Council is saying - and he'll know what he's talking about. And I was interested in his comments because I already had my doubts about this fixed-price thing before I saw what he was saying.
He's in the construction sector - so he knows what he's on about. But he seems to be a bit of a lone voice when you compare what he's saying with the likes of Phil Mauger and David Meates, city councillor Sam MacDonald and even Colin Mansbridge from the Crusaders.
But how many of them are in the construction industry? None of them - so you could say they've got no idea what they're talking about. You could say the same thing about me, because I'm not in the construction sector either.
But Graham Burke from the Construction Industry Council does know what he's on about, and if he thinks it looks too good to be true - then I'm happy to go with my gut instinct, because that's exactly how I feel about it too.
I was talking at the weekend with someone pretty high up at one of the big construction companies, and he was saying that even they're having issues getting supplies - just like the smaller operators.
And he doesn't see it improving any time soon. Which just makes the whole idea of a fixed-price on building something like a stadium over the next three years seem nuts - to me anyway.
I want the stadium - don't get me wrong. But I'm with the Construction Industry Council which is saying it's very surprised a fixed-priced deal's been done, given all the challenges facing the sector at the moment
