Council adopts transparent and robust financial approach for rebuild of Naenae Pool

Hutt City Council has today released updated information about the rebuild of Naenae Pool, which reflects the cost of rebuilding the closed facility in the current market.

The information was commissioned by the Naenae Project Board and prepared by AECOM, who are providing overall project management services for the rebuild project. It outlines the cost of replacing the facility on a "like for like" basis.

Analysis completed using a quantitative risk assessment approach has shown the estimated cost of the project to be $68 million. This is higher than the $54 million which was estimated last year based on preliminary designs from 2019, and before detailed work had been completed. Undertaking a quantitative risk assessment is a first for Council, and follows best practice.

The new approach provides a more accurate and realistic project cost estimate. It factors in escalating costs in construction resulting from global supply chain disruption, increased demand for skilled labour, potential site issues that may be discovered during construction (including allowing for potential asbestos removal), and the inclusion of improved technology that would support Council’s sustainability objectives in reducing the operating costs of the new facility.

Councillors are expected to confirm the inclusion of the revised budget in the draft 10 year Long-term plan on 10 February 2021. Public consultation on the draft 10 year Long-term plan will commence in March 2021 and be open until May 2021.

Council funding for the Naenae Pool project is being supplemented with $27 million in co-funding from Crown Infrastructure Partners, as part of their COVID-19 response and recovery fund.

The cost of the Naenae Pool project, including the impact on Council borrowing and rates will be considered and reported at Council's Long Term Plan Subcommittee meeting on February 10.

Attributable to Mayor Campbell Barry

"In the past, Council has at times significantly underestimated the cost of large capital projects, which has come as a surprise to our community."

"As Mayor my priority is for ratepayers to have the most accurate and transparent financial information when they are asked to give feedback as part of the upcoming 10 year plan, particularly for key community infrastructure like Naenae Pool."

Attributable to Jo Miller, Chief Executive, Hutt City Council

"The Naenae Project Board has been working closely with our project management partner AECOM to evaluate the risks of rising cost during the rebuild."

"This is the first time Council has used the quantitative risk assessment approach, which is recommended by Treasury. It has allowed us to properly factor in the impact COVID-19 has had on supply costs and market pressures, and to manage the risk of unknown ground conditions and ground contamination."

Attributable to Ian Martin, Wellington Regional Manager, AECOM

"Previously the project was budgeted by estimating likely construction costs and materials on a "per square metre" basis and other add-ons.

"We have provided Hutt City Council with a quantitative risk assessment approach. This focuses on managing the risk of cost increasing during the course of a project, resulting in a more accurate and transparent cost of the project."

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The Naenae Project Board is made up of elected members and officers from Hutt City Council. It is chaired by Project Sponsor Andrea Blackshaw, Director of Neighbourhoods and Community. Other members include Mayor Campbell Barry, Deputy Mayor Tui Lewis, Cr Simon Edwards, Cr Deborah Hislop, Cr Josh Briggs and Chief Executive Jo Miller. Meetings are also attended by the Chief Financial and Legal Officers and the Sponsor of the Spatial Plan elements of the project Kara Puketapu-Dentice.

The quantitative risk assessment approach is becoming a more common approach for local and central government to estimate projects. The approach focuses on managing the risk of cost increasing during the course of a project. It involves a tool that calculates the probability of the project exceeding budget and gives the project owner the opportunity to choose the level of risk it wishes to budget for. The higher percentage you choose, the higher the cost, but the less chance you have of exceeding the budget.

The Naenae Pool rebuild project will be reported to the Hutt City Council Audit & Risk Subcommittee on a quarterly basis.

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