Our Office has previously reported on the costs and progress of the project, with a focus on the planning, procurement and early construction phases of the redevelopment. The key findings were as follows:
• The State initially determined a net present value (NPV) cost of $301 million if the redevelopment project was delivered by the private sector. This would generate savings to the State in the range of 15-20 per cent on capital and 5-10 per cent on operating costs over the life of the project. The concessionaire was awarded the contract for $286 million; $15 million below the identified NPV cost.
• An independent probity auditor concluded that the tender process was conducted fairly and impartially, and that all bidders were evaluated in accordance with the agreed selection criteria.
• Under the contract arrangements, the developer assumed all key risks and costs associated with the redevelopment, including construction costs, construction delays, design construction flaws, and operational risks such as occupancy utilisation of the commercial facilities.
• The State retains specific defined risks, including 50 per cent of the remediation costs associated with non-identified pre-existing contamination and any adverse financial impact resulting from changes to the interpretation of or application of the Land Tax Act 1958.
• The developer is liable for specified liquidated damages where construction progress milestones are not achieved and if final completion does not occur by the scheduled completion date.
• In November 2003, the State entered into a settlement deed with the developer, to settle a number of specific claims lodged by the developer. Under the settlement deed, the State agreed to pay $3.05 million for completion of certain works, and modified or cancelled progress milestones for the main interchange facility.
• In August 2004, the developer announced to the stock exchange, a forecast total loss on the redevelopment of $122.6 million and, at June 2005, had lodged $54.1 million in claims as part compensation for these losses, mainly related to construction delays attributable to access and pre-existing contamination issues.
• The SCSA engaged an independent reviewer to assess the designs and completed works against the requirements of the project brief and to resolve any disputes between the parties.