The City of Cape Town is not alone in attempts to bring down the costs of its new 2010 World Cup stadium, according to the local organising committee, but it is definitely the most successful.
Five new stadiums are to be built and five upgraded for 2010. The treasury announced that the stadiums were expected to cost R9,5-billion, when announcing its medium-term budget. The total contribution from the fiscus is expected to be R14,9-billion.
Cape Town mayor Helen Zille announced this week that the city and the preferred consortium had managed to reduce construction costs for the Green Point stadium from R3,7-billion to R2,68-billion.
The local organising committee technical team head, Moira Tlhagale, says negotiations to reduce the costs of all five new stadiums to be built in the country are ongoing.
She said some of the negotiations are at a delicate stage so savings could not be announced, but there had been agreements struck and they were just waiting for sign-off.
Officials told the parliamentary sport committee recently that stadium costs have increased owing to inflation, exchange-rate fluctuations and rising input costs linked to shortages of skilled manpower and building materials.
Tlhagale says there was a shortfall of about R3-billion across all six stadiums and negotiations have so far managed to reduce this shortfall to about R1-billion.
The lion’s share of this is a result of the Cape Town negotiating team, who managed to knock 27% off the construction costs of the Green Point stadium, a whopping R1,02-billion.
“I couldn’t believe it,” says Zille. “Why was it so high in the first place?”
Zille said 40% of the initial cost was the construction consortium pricing in risks for the project.
“When we unpacked the cost, our negotiating team managed to explain that the risks were not as bad as they thought,” says Zille.
She said her negotiating team also made other adjustments to the stadium design, such as reducing the height and simplifying it.
The Green Point stadium is being funded by the national government (R1,9-billion), Western Cape provincial government (R112-million) and the City of Cape Town (R400-million).
The government is budgeting R5,6-billion for new stadiums, just short of R2-billion to upgrade existing stadiums, R5,5-billion for support infrastructure and R600-million for bulk services, Finance Minister Trevor Manuel announced when delivering his medium-term budget.
Tlhagale says that most of the stadiums had risk built into their costs, which needed to be negotiated.
The King Senzangokhona stadium in eThekweni is reported to be 18% over budget, which has created a shortfall of R600-million.
The city’s 2010 programme head Julie-May Ellingson, says the input costs have grown because of shortages of construction staff and large building cranes. Ellingson announced this week that national treasury had refused to provide any more funding and negotiations were currently taking place with provincial government.
KwaZulu-Natal Premier S’bu Ndebele has formed a provincial task team that is currently involved in negotiations with the Group Five building consortium, which was announced as the preferred bidder.
Group Five MD Craig Jessop says negotiations to bring down the cost of the stadium are ongoing, but are far from being finalised.
“The price has not been reduced as yet,” says Jessop. “We are working on it.” Negotiations have been complicated by the court action of Mavundla Constructions, who are disputing the tender.
The Nelson Mandela stadium in Port Elizabeth is reported to be 19,5% over budget, which is a shortfall of R262-million, while Nelspruit’s Mbombela stadium is R97-million over budget.