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Revised cost for transformational City Rail Link

Published: 17 April 2019

City Rail Link Ltd (CRL Ltd) has announced a revised cost envelope for completing the entire Auckland City Rail Link project totalling $4.419 billion, alongside naming its preferred bidder for its substantive C3 Contract to build the underground tunnels and stations and a $75 million Early Works Contract.

CRL Ltd’s Chief Executive, Dr Sean Sweeney, says after a rigorous and comprehensive review of project costs, a revised cost envelope has been submitted to the project’s sponsors – the Crown and Auckland Council – for approval. 

“The $1 billion cost increase on the previous $3.4 billion estimate made in 2014 reflects significant changes impacting the project in the past five years,” says Dr Sweeney.

“No one could have foreseen the competitive pressures that have occurred in the construction industry over the past few years and the impact that has on costs, particularly for a project the scale and complexity of the City Rail Link.   

“Eighteen months ago, the value of work in the infrastructure pipeline on both sides of the Tasman was $80 billion – the value of that work is now estimated at $230 billion.  

“Last year, a decision was made to increase the scope of the project to accommodate longer, nine-car trains at stations. Planning today for a city that will be much bigger in the future reinforces the benefits the City Rail Link will deliver to the way people travel, work and live in Auckland. 

Other factors contributing to the revised cost envelope are higher escalation, or construction inflation costs, and an increase in the contingency risk allowance for any future unplanned events.  

“Put together, they have all helped add costs to the project overall. Keeping a growing city moving is a serious challenge, but when we complete the City Rail Link it will double the number of Aucklanders within 30 minutes travel of the CBD.” 

Dr Sweeney says CRL Ltd’s own cost review underwent a rigorous examination by two international assessors to ensure the project delivers the best value for money for Aucklanders.   

Decisions by the Crown and Auckland Council regarding their endorsement of the revised cost envelope are expected in early May.

Preferred bidder and Early Works Contract announced

After an exhaustive competitive tender process, the Link Alliance (Vinci Construction Grands Projet S.A.S, Downer NZ Ltd, Soletanche Bachy International NZ Limited, WSP Opus (NZ) Limited, AECOM New Zealand Limited and Tonkin + Taylor Limited) has been announced as the preferred bidder for the C3 contract – the project’s largest package of work. 

The Link Alliance was one of two groups of New Zealand and international infrastructure companies that submitted what Dr Sweeney describes as “world-class and competitive bids” for the contract. The other group was a consortium of: CPB Contractors Pty Limited, UGL (NZ) Limited, Beca Limited, Jacobs New Zealand Limited and McMillen Jacobs Limited.

Dr Sweeney says that both of these joint ventures consist of outstanding contractors with a wealth of experience delivering major projects both here and overseas.

“The calibre of both the tenders was exceptional. Aucklanders can be confident that the project will be delivered to a high standard leaving behind an outstanding legacy for the city,” he says.

Dr Sweeney says progress on the project will still continue at pace as CRL Ltd starts negotiations with the Link Alliance to deliver the $75 million Early Works Contract over a three-month period. The contract includes work relating to design, consents, permitting, utilities and mobilisation.

“The project is already well underway at Lower Queen Street/Britomart, Albert Street and Mt Eden, and momentum will continue. CRL Ltd will now work with the preferred bidder to get the Early Works Contract underway as quickly as possible.

“This keeps us on track to have this transformational project in place and delivering significant benefits for Aucklanders at the end of 2024.

“Today’s announcements represent huge step forwards for a project that will create accessibility and development opportunities that will allow Auckland to remodel itself as a city that is proudly international,” Dr Sweeney says. 

Mayor Phil Goff: CRL critical for Auckland’s future

Auckland Mayor Phil Goff has said that tighter financial management will help fund an additional $500 million requested by City Rail Link Limited (CRLL) for construction of the transformational underground rail project.

The mayor’s comments are in response to CRLL requesting from the council and the government additional funding of $1 billion (split 50/50) after announcing that the Link Alliance is the preferred bidder to deliver the new stations, tunnels and rail systems.

Mayor Phil Goff said, “The City Rail Link is a critical part of the changes we are making to reduce congestion and ensure we can move around our city.

“The CRL doubles the capacity of rail through Britomart and in peak hour will have the capacity to carry up to 54,000 passengers.

“The CRL will significantly reduce travel time from the west and the south,” Phil Goff said.

“The cost of the tunnels and underground stations, two of the biggest parts of the project, was determined by a competitive tender process. The increased cost estimate reflects the increase in demand and costs for major construction projects across Australasia.

“A significant part of the cost increase, some $250 million, reflects the need to future proof the tunnels and stations. We won’t repeat the mistake of the Harbour Bridge which was built at half of the size it needed to be, and had to have major additions made to it within eight years.

“The additional cost to council will not involve higher rates for Aucklanders and it will be met without breaching the debt to revenue limit on council borrowing.

Funding of the CRL is met jointly by the council and government on a 50/50 basis.

Mayor Phil Goff says, “It is unfair for Aucklanders to meet half the cost of the CRL when no other part of the country has to do so and I’ve argued that case to government. The government has refused to revisit the deal saying that was what was agreed between the previous Auckland Council and National government.

“However, the government has agreed to phase the timing of the council’s contribution to enable it to work within the constraints of its budget.

“The council will make changes in financial management that will enable it to keep under its debt to revenue ratio. It will benefit from current lower market interest rates. The council will also dispose of some non-strategic assets including some parking buildings.

“The Governing Body of council has been advised of options to meet the increased costs and will consider those options before making a decision in May,” Phil Goff said.

“The CRL project is the biggest investment the council is making in transport infrastructure in the next few years.

“Providing additional funding to CRLL will require careful management of council spending. Council will continue to pursue efficiency and value for money initiatives, and take a conservative approach to new spending,” Phil Goff said.

More about the CRL

For key facts about the CRL visit the City Rail Link website or read the stories below:

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