Freo civic centre budget balloons

A City of Fremantle report has revealed construction costs for its new civic centre have blown out by $16 million.

The city's business plan budgeted $44.75 million to build a new civic centre on William Street in 2013, but a recent report compiled for its audit and risk management committee showed the actual construction costs as $61.2 million.

The Walyalup Civic Centre development is part of the $270 million Kings Square Renewal project, led by Sirona Capital and the city.

According to the committee report, the city estimated an increase of costs to $50 million in 2017 and would need to increase the shortfall loan to $20 million to cover the price hike. 

A costs analysis in 2019 showed the worst case scenario for the construction of the civic centre, which was for costs to escalate to $58.9 million.

However, the city's chief executive Glen Dougall said the $44.7 million price tag estimated in 2013 would be $56 million today, when adjusted for inflation.

“In February 2019, at the point the city was in the process of developing its final contracts for the project, a review of project costs put the likely scenario at $54.4 million,” he said.

“With the construction phase now substantially complete, the indicative actual cost of the elements of the original business plan as at June 2022 is $61.2 million."

Mr Dougall told Business News that the Walyalup Civic Centre could be considered a success.

“The project has delivered outcomes in both the public and private space which contributed to improving the level of confidence for further private investment in Fremantle," he said.

Fremantle councillors voted for a comprehensive update of the Walyalup Civic Centre, including costs and funding, during a meeting in June.

"There's been a bit of confusion in recent times about the status of the building and where it's at," councillor Fedele Camarda said at the June meeting.

"I believe it is vital to understand where we stand now that the project is all but complete to enable us to make future decisions.

Councillor Marija Vujcic flagged her concerns about the costs blowout earlier this year, suggesting the costs would be closer to $67 million during a meeting in April.

The committee report said the city awarded a fixed contract, at $43.05 million, to Pindan for the construction of the civic building in 2018.

The builder went into administration and construction works ceased in 2021.

Mr Dougall said the city was able to ensure all subcontractors on the project were paid for their work when Pindan collapsed as protections were written in the contract.

“This also meant that the City could continue to complete the build with minimal disruption to the program and only needed to appoint a new head contractor to oversee the completion,” he said.

“The City also required Pindan to take out insurance bonds against their ability to complete certain parts of the project as part of the initial contract negotiations.

“As a result, when Pindan collapsed, the City was able to access these insurance bonds to the value of $3.7 million.

“This cash was used to complete the build with minimal disruption and resulted in no additional City funds being required to complete the construction as a consequence of the Pindan collapse.”

According to the report, the cost difference between the 2022 review and 2019 estimates were architecture fees and additional building costs incurred after Pindan went into liquidation.

“[A]lbeit these building costs were contained within the insurance bonds received as a result of Pindan’s collapse,” the report said.

“Internal fit-out costs for IT and audio visual infrastructure also added to the variances as they were not fully considered in the original business plan.”

The committee report said the council awarded a $4.2 million contract to Kerry Hill Architects in 2013.

There was an implementation period of 24 months but time extensions were requested after the delays to the projects start and building.

The final architectural contract was $2.4 million more than the original contract value, according to the report.