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Underground rail project in New Zealand announces $1bn cost hike

Nz rail link

The project promoter behind the largest infrastructure project in New Zealand has announced a NZ$1bn (£520M) cost increase.

City Rail Link Ltd (CRL Ltd) has announced the revised delivery cost of NZ$4.4bn (£2.7bn) for the Auckland City Rail Link project, up from the £1.7bn cost set out in 2014.

The Auckland City Rail Link will be a new underground railway line to be built in two 3.4km-long, twin tunnels up to 42m below the city centre.

CRL Ltd is delivering the City Rail Link on behalf of New Zealand Government and Auckland Council which are jointly funding the project. The City Rail Link is due for completion in 2024.

CRL Ltd chief executive Dean Sweeney said that the revised cost has been submitted to the government for approval.

Sweeney added that the cost hike is a result of the construction sector overheating since the original cost was set in 2014.

“The NZ$1bn cost increase on the previous NZ$3.4bn estimate made in 2014 reflects significant changes impacting the project in the past five years,” Sweeney said.

“No-one could have foreseen the competitive pressures that have occurred in the construction industry over the past few years and the impact that has on costs, particularly for a project the scale and complexity of the City Rail Link.

“Eighteen months ago, the value of work in the infrastructure pipeline on both sides of the Tasman [Sea] was NZ$80bn – the value of that work is now estimated at NZ$230bn.”

He added: “Last year, a decision was made to increase the scope of the project to accommodate longer, nine-car trains at stations. Planning today for a city that will be much bigger in the future reinforces the benefits the City Rail Link City will deliver to the way people travel, work and live in Auckland.

“Other factors contributing to the revised cost envelope are higher escalation, or construction inflation costs, and an increase in the contingency risk allowance for any future unplanned events.”

The revised cost envelope reflects higher costs in four key areas:

  • Contingency and escalation costs (NZ$310M)
  • Construction costs (NZ$327M)
  • Accommodating longer, nine-car trains (NZ$250M)
  • Non-direct cost (NZ$152M)

An alliance including Vinci, Aecom, WSP, Downer NZ, Tomkin & Taylor and Solentanche Bachy has also been named as preferred bidder for the project’s tunnelling & stations contracts.

The contract includes construction of twin rail tunnels, construction of two underground stations and rebuilding Mount Eden station.

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