Half-million Pipiriki Road costs over-run explained

Ruapehu Bulletin, Volume 15, Issue 694, 8 July 1997, Page 3

Half-million Pipiriki Road costs over-run explained

Cost over-runs have added a further $550,000 to the Pipiriki Road upgrading programme, lead ing to the Ruapehu District Council approving a further loan for that amount. Some of the reasons why one contract fell apart are not yet public, because a dispute between the council and the original contractor is before the courts. Acting chief executive Chris Ryan was asked by Cr Graeme Cosford at the council's normal meeting in June, if there was any possibility of being able to claim compensation for a huge increase in costs of one contract. Mr Ryan said he could not comment because the case between the council and the contractor was before the courts. The council has discussed the dispute in-committee but the outcome of those discussions is still under wraps. Contract 380, for some of the seal extension.work, was awarded to Pratt Contractors in November 1995 for $769,340. "This contract was, from the beginning, a problematic contract. The performance of the contractor was unsatisfactory and eventually ended in a dispute. Following the dispute it went through the process of mediation and is now tied up in a lengthy arbitration process, which is still not resolved," reported roading asset manager Gerard Eckard to the council. He explained that the contract was subsequently re-as-' signed in December 19% to Byfords Contractors who was the second-lowest tenderer. The value of the contract was $778,025. They have successfully completed this contract and the road was sealed in April 1 997. The expected completion cost is $950,000. The reason for these extra costs were given as being: • The increase in cut-to-fill volume by 26,000m3. • The increase in cut-to-waste volume by 25,000m3. The period between the stopping of the work and the recommencing by Byfords caused the opened subgrade to become saturated and unsuitable to use as 'subgrade lay work'. There was no option but to cut it out to waste. • Additional 'Rl' material was encountered in the cuttings as well as 'R2' that needed blasting. • Additional 'AP75 subbase' was needed to support the wider carriageway. The other seal extension work, Contract 424, is expected

to be finished within budget. Other over-runs The rehabilitation of part of the road, being done under two contracts - Contract 379 and Contract 423, is expected to also cost more. Contract 379, awarded to Byfords Contractors in December 1995 at a value of $840,825 was for work on the five most critical sections. The contract is expected to cost $950,000 in total. Contract 423, for the rest of the rehabilitation work, was awarded to Fulton Hogan in October 1996 for a value of $996,679. Work started off very well but progress "became disappointingly slow", reports Mr Eckard. He states that the majority of the work is now completed but there is still a 700m section that will be completed after winter, with a final cost of $1,302,000. The reasons for the $425,000 extra are given as: • Very weak subgrade conditions that were worse than expected, causing much more cut-to-waste material. • Additional cut-to-fill material to bring the undercut areas up to level. • To comply with the resource consent conditions more topsoil and grassing were needed. • Due to the realignment of the road to move it onto firmer ground, more fencing was necessary. • More hard base material was encountered in the cuttings than anticipated. • Additional subbase material was needed to strengthen the pavement over the swampy areas. • Frequent slips and additional pavement repairs. Funding The benefit-cost ratio is negatively affected by the increased cost and the council was concerned that it may jeopardise the funding of the project by Transfund. Councillors were told at the meeting that the ratio would be 4:2, which still qualified for Transfund subsidy. If they left out some sealing as suggested, saving up to $80,000, the ratio would drop to 2:7 which could mean no subsidy. Winstone Pulp International, which is contributing to the cost as the main user of the road, has been informed of the increase in cost and was seriously concerned by the developments, said Mr Eckard. WPI had asked the council to look at ways to cut costs on the project.