Council officials are warning Wellington's Town Hall project could come in at up to 9 per cent over budget, which is the equivalent of about $10 million.
It's the latest in a string of budget blowouts for the refurbishment and earthquake strengthening project.
Since the Town Hall was closed in 2013, the cost of the work has grown from $43m, to $60m, to $90m, and most recently to $112m in 2019.
At that point it was signalled the cost could escalate even further and councillors considered an undisclosed contingency fund behind closed doors, due to commercial sensitivity reasons.
Former mayor Justin Lester said at the time the cost was the cost.
"I'm not going to put a figure on how much is too much, we will as a council address that in the future if new information comes to hand."
Former mayor Justin Lester at the Wellington Town Hall when the 2019 budget blowout was announced. Photo / Mark Mitchell
More than two years on and Andy Foster is now the mayor and dealing with the same risks the project has always faced, but on top of the Covid-19 pandemic.
The main risks to the Town Hall relate to the scale and complexity of strengthening a heritage building that's more than a century old.
The building sits on ageing unreinforced concrete piles on reclaimed land, making it unstable in an earthquake.
Agenda documents for a council Infrastructure Committee meeting next week said Covid-19 supply chain issues were particularly affecting scaffolding and non-indented steel.
"The Wellington construction market is extremely stretched and this is being seen in the availability of consultants and subcontractors and is feeding through into escalation of material and labour costs", the documents said.
The project is broadly on budget at this stage, but cost escalation is predicted to be an issue going forward.
Current forecasts through to the project's completion date are for a potential overspend between about 2 and 9 per cent.
That's the same as up to about $10 million.
"These outcomes are very dependent on delivering on programme and where cost escalation lands over the next three years", the documents said.
Chief Infrastructure Officer Tom Williams said the potential cost escalation was based on a trend of price increases in the market.
"We're competing for a finite amount of bandwidth within the industry."
Wellington Mayor Andy Foster. Photo / Mark Mitchell
The Town Hall is being retrofitted with base isolators and new foundations.
Much of the groundwork will be below sea-level, which is considered a significant engineering feat and one of the most complex projects in New Zealand in recent years.
Foster said the council was well and truly committed to the programme.
Good progress was being made and the project was being well managed, he said.
"Obviously the less that we end up having to pay the better, but these things are driven more by the escalations caused by a very hot market than they do by anything else at this stage."
The Town Hall project is scheduled to be completed in 2024.
