Agreed to by councillors at a public-excluded session last month, the overrun was blamed primarily on labour shortages, inflation increases and ongoing global supply chain pressures.
The Arterial Stage 1 budget now stands at $108.84 million, up from $88.23 million agreed by council in October 2021, and massively up from a provisional budget in the original 10-year plan of $49.50 million.
However, the estimated net cost was $58.84 million, after accounting for $50 million from the government’s infrastructure reference group fund - plus offsets from the eventual transfer and/or sale of properties acquired through the project.
Council chief executive Mike Theelen said the previous forecast was based on price data from June 2021, when only 30% of the design had been completed.
"This is not uncommon for a project of this scale, duration and scope.
"With significant progress since then, we are now able to provide this latest forecast based on design 100% completed and procurement of subcontractors and materials at 75%.
"At the same time, the ongoing challenges of managing such projects since the pandemic remain."
Though cost increases, labour shortages, shipping delays and capacity issues had been factored into the latest forecast and contingencies were in place, it was "impossible to rule out further increases given the state of the global economy and sometimes unforeseen conditions below street level", Mr Theelen said.
A portion of the cost increases would be offset by council’s delivery partners in Kā Huanui a Tāhuna (Whakatipu Transport Programme Alliance) - Waka Kotahi NZ Transport Agency, design and construction companies Beca, Downer, Fulton Hogan and WSP, along with council, he said.
"The alliance is actively looking at ways to mitigate cost increases as it works to deliver this significant infrastructure project that [by late next year] will ultimately remove traffic from Stanley St to enable more public transport and more open spaces in the town centre for people to enjoy."
However, the Government had not been asked for additional funding at this stage.
Meanwhile, the council said stage one was on track to be completed by the end of next year.
Asked to comment on the budget blowout, councillor Craig Ferguson said: "It’s extremely frustrating to go back to the table and have to contribute more money.
"I suspect it’s not the last time we go back for top-ups on projects."
