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Gawler Place upgrade bill blows out yet again

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The trouble-plagued Gawler Place upgrade is facing a second cost blowout – this time to the tune of just under $1 million – after the Adelaide City Council failed to provide contingency funding in the project’s original budget.

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The redevelopment, originally priced at $7.85 million, is now costing the council about $17.8 million, with unexpected infrastructure setbacks hampering the council’s ability to rein in spending.

The project includes upgrades to the street’s footpaths, road surfaces, lighting and seating and is due for completion in December.

In July last year InDaily reported the council would be forced to stretch the original budget by up to $17 million after council staff discovered unexpected “complexities” in the underground infrastructure beneath Gawler Place.

At the time, former Lord Mayor Martin Haese foreshadowed that the revised cost would be “profoundly over-budget”, but said it would be “financial irresponsible” to proceed with the project on its original $7.85 million price tag.

At a special council meeting held just before the council’s caretaker period in September, the council approved a revised budget of $16.96 million, with that funding excluding any contingency allowance for unexpected risks or setbacks identified during construction.

But the council has since encountered several problems – including a water leak, “unsuitable material” underneath the pavement, and buried heritage footings – which has forced it to consider providing an additional $837,000 in contingency funding.

It has also recommended councillors approve spending a further $125,000 to upgrade the adjacent Featherstone Place.

At a meeting last night, the council’s acting director of place Klinton Devenish said the previous council was aware that the Gawler Place budget did not include contingency funding when it approved the spend in September.

“The report that went to council on the 15th of September 2018 did identify that the budget figures provided excluded contingency,” he said.

“When we are estimating project budgets based on maybe concept design plans, or design plans that aren’t fully detailed, inherent risks normally attract a particular percentage of the contract value at the time – that could be between five and ten per cent at the time.

“We have dealt with that risk on this particular budget, (but) what we haven’t dealt with is the contingent risk.”

An artist’s impression of the Gawler Place upgrade. Image: Adelaide City Council

Devenish said the $962,000 in additional funding would come from a fund previously set aside for footpath, kerb and road upgrades.

He said it was unlikely any road or footpath upgrades would be impacted by the budget shaft, as other projects were coming in under-budget.

“The current treatment we’re proposing is to put aside some of the road re-seals that we have currently allocated to complete this year into a holding fund so that we can fund this additional work for Gawler Place,” he said.

“What we’re finding is we’ve already produced savings that we believe we can use to then refund the road reseals that we’re currently putting on hold to deal with Gawler Place.”

But area councillor Robert Simms described the $962,000 figure as a “concerning” and “significant” investment.

He also criticised the council for approving the budget just before the caretaker period ahead of last year’s local government elections.

“I can’t help but feel the previous council has booby-trapped this council by approving this project at the eleventh hour so close to an election period,” he said.

“It’s not the fault of this council but I think we find ourselves in a difficult situation and I hope there aren’t further cost blowouts because it’s going to make it more and more difficult for us to spend money on other worthwhile infrastructure projects.”

North ward councillor Phil Martin, who also served as a councillor on the last term of council, said the decision to approve the revised budget for the Gawler Place upgrade came “at the dying moments of the last council, (which) bound this council to that expenditure”.

He told InDaily this morning that he walked out of the September meeting because he was “so appalled” by the way in which the project’s budget was handled.

“That caretaker eve meeting was, in my view, against the spirit of the caretaker rules,” he said.

“It was about utterly committing an incoming council to a huge expense it couldn’t get out of.”

First-time south ward councillor Alexander Hyde condemned the lack of foresight to include the contingency funding in the project’s original budget.

“This is the only infrastructure project – and I’ve worked on projects to the value of hundreds of millions – I have seen without any contingency budgeted,” he said.

“I think it’s fair to say that the five to ten per cent is the usual contingency and so if that contingency was in place then we actually wouldn’t be seeing the budget blow out.”

But Deputy Lord Mayor Houssam Abiad argued the project was “not a complete budget blowout”.

“You’re approving extra budget to complete resurfacing of Featherstone (Place), which wasn’t part of the original scope of work,” he said.

Devenish told InDaily works on the Gawler Place upgrade “have progressed well to the point that civil construction and paving are ahead of schedule”.

“The additional funding ensures there is a sufficient budget should there be any remaining unknown construction risks on the project,” he said.

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