21 April 2023
By Grahame Lynch
An independent report into costly delays impacting the refurbishment of North Sydney Olympic Pool has raised more questions than answers, with mystery surrounding what accounts for nearly all of a 500 day delay in its predicted completion date.
The report by PricewaterhouseCoopers was commissioned last November and was shared with councillors the following month. However, report findings have only been partially revealed this month so that councillors can act on some of its budgetary implications at their next meeting.
The pool refurbishment commenced in March 2021 and was scheduled to be completed in November last year. But according to a version of the findings of the report tabled by council officers, PWC now believes the pool cannot be completed before April 2024. The council’s own website was still forecasting a reopening in August this year, as we went to press.
The full reasons for what would be a 500 day delay have not been quantified in what has been revealed of the PWC study. The council report says: “To date the project has experienced 22 days in delay due to Covid, 88 due to wet weather, and 38 days due to the removal of hazardous material.”
This does not explain what is behind the remaining 350 or so days of anticipated delay. The only explanation is hinted at by the following observation: “The external environment at the time of contract execution was one experiencing an unprecedented pandemic and a multi-year La Nina weather event. These external factors were not factored into contingency planning nor was the risk shared through contract negotiations.”
“The detailed independent review has been obtained under legal privilege and for commercial and contractual reasons remains confidential,” the report by council officers to councillors says.
At this stage, the pool’s costs have blown out by around $7.7m, on top of a $64m approved budget. The extra costs are mainly accounted for by variations to the contract as well as design and consultancy.
But as of April, there are currently an astonishing 93 pending variations to be considered, including 22 delay related claims and 19 early works/latent conditions claims. “Council is currently working through an assessment and resolution process to address these claims. Council has engaged a quantity surveyor to assess these claims in accordance with contract entitlements,” the report says.
Ultimately, the PWC report forecasts that costs may rise by $25 million or more over what was originally budgeted.
Nearly half of the current $64 million budget for the pool comes from $31 million of loans. $10 million comes from the federal government and $5 million from state government.
The remainder and any cost overrun will be funded by the annual council budget.
A draft budget across North Sydney Council that has also been released ahead of the late April meeting of councillors allocates $43.5 million for the pool budget and completion.
$11.8 million worth of capital works have been deferred to later to partially fund the increased costs of the pool, according to the draft. This will see delays in projects such as the planned expansion of playing fields at Primrose Park.
The council report says: “while Councils have a role in providing infrastructure, undertaking large scale or complex infrastructure projects is not our core business. Entering separate design and construct contracts creates further complexity requiring high-level industry knowledge and experience to coordinate the process between design consultants, contractors and Council, and resolve issues as they arise.”
It also says that PWC noted “that the North Sydney Olympic Pool redevelopment is the largest project to be delivered by North Sydney Council in recent times and includes a mix of high-risk construction factors including heritage, archaeological, contaminated ground, high water table, brownfield and more.”
“Late identification of latent conditions on site led to rework, additional scope and cost to the project. Access to undertake survey and testing across the full site was limited until the pool was closed,” PWC also found.
The estimated $25 million extra costs for the pool include allocations for consultants, contract works, works outside original scope such as fit outs and technology and costs associated with establishing operations for the pools, gym, creche, and kiosk. “This additional funding requirement should be considered as an additional contingency until a final forecast cost is estimated,” council officers state.
North Sydney Sun understands that the original plan was to tender out some of the commercial parts of the project such as the gym to private operators, who would have borne these costs. At some point, a decision was made to take this in-house, adding to Council costs.
Mayor Zoe Baker issued a letter to ratepayers this month, explaining the issues and promising transparency on their progress.
“PwC noted that a primary driver of decisions during the planning phase was the desire to control the project budget. This resulted in decisions creating false economies such as removing the external project managers, deciding to proceed with separate design and construct contracts, and not allowing a contingency that took into consideration the risks relevant to the project,” she said in her letter.
“Costs such as the fit out of the gym and creche, required repairs to the Aqua Dining building and eastern stair tower were not included in the project, nor was sufficient funding for internal project management costs and consultancy,” she added.
Baker said: “I know the delayed completion date is incredibly disappointing and frustrating for regular swimmers and parents seeking a learn-to-swim class.”
“I can assure you that council’s finances are sound, and the additional cost can be managed without reducing service levels. I have visited the site twice this year and can see the steady progress that had been made between my visits. The council team is working closely with the contractors and will do everything possible to keep to the revised schedule,” Baker added.
“This council cannot change the past or alter previous decisions. This council is taking responsibility for the project and is committed to sustainably managing the financial burden and delivering an exceptional experience for pool users. Please be patient a little longer – the pool you know and love will be back next year to serve our community for the next 80 years.”
The revamped pool plans will see existing 50m and 25m pools upgraded and art deco features maintained, including the harbourside wall, sundeck and heritage stair tower; a kids waterplay area with a splash pad and water spray feature; a new warm water pool suitable for gentle exercise and other programs; an expanded gym with harbour views as well as separate spin and exercise rooms.
There will also be a larger creche with private indoor and outdoor spaces; a new 970-person grandstand with permanent shade for sun-safe swimming carnivals and ramp access to pools and accessible change rooms.