This week it was revealed the Alliance want another $16.65million from council coffers to chuck at the stage 1 arterial road because they don’t have enough money to finish it off.
Without the council funding, it’s possible the Melbourne-Henry St link will remain unfinished and unusable, and Beetham, Ballarat and Malaghan Sts all incomplete and closed, even to rubbish trucks.
It’s the second request the Alliance has made for more money in less than a year.
If agreed by councillors at today’s meeting, the total budget for the project, which is receiving $50m from Crown Infrastructure Partners, will increase to $128.02m.
Initially pegged to cost $49.5m, that jumped to $88.23m in October, 2021, and then to $108.84m last April following a public-excluded council meeting.
Council’s ‘owner interface manager’ Geoff Mayman says there was a second lift last year, to $110.37m, through the "annual process".
Queenstown mayor Glyn Lewers says he’s not surprised the Alliance has come back to ask for more "because they did forewarn us".
He does have questions, though, which will be covered in the "Alliance review".
They include how often and how they monitored the cost to complete.
Given the road’s due to be open and operational by Christmas Eve, and fully finished by March 31 next year, is Lewers confident this will be the last time the Alliance knocks on the door with its hand out?
"I certainly hope so.
"I am hopeful this is the last time, and those questions will certainly be asked.
"We will have members of the Alliance at the table [today] as well ...
"I’m sure councillors will have questions for them."
He’s less hopeful the proposed second and third stages — ultimately creating a ring road around the CBD, terminating at the existing Fernhill roundabout — will progress in the next five or 10 years.
While there may be some "alternative funding arrangements" which arise, "they could probably understand council might be a little bit gun-shy engaging with those, given the experience we’ve had with this project".
Lewers, though, believes the Alliance model was "probably the best procurement method available to us with regards to a project of this scale".
The arterial came with a lot of unknowns, largely around underground services, which had resulted in extra complexity and cost.
Costs also increased due to sharp increases in the cost of civil materials and labour, spawned largely by Covid.
He notes, too, due to the way the contract works, the profit margin on the project is a "win-win, lose-lose" for the Alliance and its partners, council and NZ Transport Agency Waka Kotahi.
Because the project had gone over the estimated total base cost, the profit margin had disappeared, meaning the Alliance has "lost all their profit".
"This idea they’re on charge-up and they’ve got incentives to go slow ... that’s incorrect," he says.
"It’s all just on a cost basis with no profit margin for the Alliance.
"There is no win for them.
"There is an incentive to go faster, because they’re chewing up resource for other stuff, opportunity cost projects.
"They’re just getting money to complete the job, there is no profit for them."
