PROJECT UPDATE

Pier Replacement

The pontoons, which were constructed in 1992, were originally designed with an estimated lifespan of 30 years. As the pontoons near the end of their design life, the need for a comprehensive plan to replace them became increasingly evident. Moreover, the sub-optimal construction practices employed during their initial construction exacerbated the situation, despite some settlement and repairs agreed upon in 2000/2006.

[Recapping 2022]

Revised Cost Estimate

When the cost estimate of $3.88 million was initially announced during the 2019 Long-Term Plan, it was based on a comprehensive evaluation of the project’s requirements, resources, and expected expenses at that time. However, the emergence and subsequent impact of the COVID-19 pandemic have significantly altered the economic landscape and introduced unprecedented challenges.

The COVID-19 era has caused widespread disruptions across industries, including construction. Taking into account the challenges posed by the COVID-19 disruptions and the inflationary trends indicated by the Reserve Bank of New Zealand (RBNZ) data, a reassessment of the project’s cost estimate was necessary.

By analyzing the impact of these factors, the revised cost estimate for the project has been estimated to be around $4.5 million at the time of the Annual General Meeting (AGM).

Tender Process

Last year, Chaffers Marina Limited sought proposals from interested parties for the Pier Replacement Project. As a result, three bidders submitted their proposals, all of which met the technical requirements of the project. However, there were notable differences among the bidders in terms of pricing, delivery time, and financing.

None of the bidders were willing to assume the risk of inflation and provide a long-term fixed price for the project. This posed a challenge, as it meant that the costs of the project could potentially increase over time due to inflation.

The project was planned to be delivered in phases back in 2019 and expected to be complete by 2034. Considering the circumstances, opting for a faster replacement of the pier could mitigate the risk of inflation and potentially minimize the impact of rising costs.

Furthermore, it’s important to note that a significant portion (70%) of the project’s costs were planned to be financed through income generated over time. With the revised cost estimate of the project amounting to $4.5 million and being paid for earlier, additional funds would need to be secured sooner to cover the increased expenses.

The outcome of the tender sees Bidder 3 as the “Preferred Contractor” with a cost nearest to the revised cost estimate and the possibility of obtaining Supplier-Related Financing.

LTAMP