Sunshine Coast Council city hall budget blowout explained

Sunshine Coast Council has explained what’s driven a $20m budget blowout to its $100m “signature” city hall building and what it’ll do with two extra floors it’s now taken on.

Sunshine Coast Council has explained why its city hall project in the new Maroochydore CBD has blown out by $20m and what it will do with two extra floors the organisation has taken on.

The much-touted 10-storey new civic building is due to be completed in November this year and will house about 600 council workers – some previously based in Caloundra and Nambour.

The project was announced in December, 2019 when McNab was appointed to build the $59.9m project.

After the announcement of the Sunshine Coast Council’s deal with Walker Corp to deliver the remainder of the city centre in November, 2020, it was revealed the city hall project would now cost $80m including fit-out.

In November, 2o21, council confirmed the city hall project budget had blown out to $100m.

Rising construction costs, fit-out allocations and furniture were among reasons cited for the blowout.

In November, 2021 the Sunshine Coast Daily reported funds could be reallocated from the Caloundra district library project to cover the gap.

A report tabled to the council showed the original funds had not included furniture in its “signature” Maroochydore CBD building and millions of dollars would be needed as a result of the council now taking up levels eight and nine.

Council officers also recommended almost $8m be allocated for mitigation against further construction cost increases through the fit-out stage.

In response to a series of questions put by the Sunshine Coast Daily in late-January this year a council spokeswoman explained the reasons for the project costs climbing.

The spokeswoman revealed fit-out had not been included in the December, 2019 contract signed with McNab.

“The Sunshine Coast City Hall base building is being delivered at the originally agreed fixed price contract of $59.6m,” the spokeswoman said.

“There has been no increase to the design concept and specifications.”

The spokeswoman said there was no relationship between the Walker Corp agreement and the city hall project’s construction and delivery and said city hall fit-out procurement had not been finalised by the November, 2020 Walker Corp announcement “so no contracts were in place”.

“The initial SCCH (city hall) budget comprised $60m for base build construction and $20m inclusive of fit-out, furniture, fittings, IT/AV and contingencies,” the spokeswoman said.

Council tender documents from May, 2021, had estimated the fit-out to be worth about $8m.

Several development industry sources queried the structure of the city hall deal and questioned why fit-out costs hadn’t been included initially.

They also noted the design and construct contracts were signed long before the well-publicised construction industry issues with rising costs and limited supplies through the pandemic emerged.

When asked why the latest $20m blowout was only picked up after the tender process the council spokeswoman said a “comprehensive project review” was undertaken in late-2021.

Renders of the future city centre.

She said that review had identified the need for an amendment to the total project budget “to ensure the successful delivery of the project, having regard to escalating construction costs, project contingency provisions, additional scope elements and other amendments required to accommodate fit-out”.

The spokeswoman said those measures had been independently reviewed and validated by an external specialist consultancy.

“Council, like the rest of the community working in construction projects at home or work, is not immune to market escalations,” the spokeswoman said.

The council decided in December, 2021, to retain levels eight and nine of its new Maroochydore headquarters.

The spokeswoman said that decision had followed a “comparative assessment of the risks, benefits, costs and timings” associated with commercial, council and/or community use of the two floors.

Level nine would now be used for “civic and community purposes” instead of leased out to a commercial operator.

“The top level of city hall provides opportunity to respond in part to the current shortfall in availability of a range of community spaces,” the spokeswoman said.

“Level nine will be available for use for council-sponsored and organised events, citizenship ceremonies and community engagement workshops and will be available for hire for specified community events.

“It will serve as an important, community accessible facility.”

The spokeswoman said Level nine would be an important asset for “the wide range of delegations, workshops and activities for many decades to come” including the lead-up to the 2032 Brisbane Olympic and Paralympic Games.

Displays and exhibitions on several themes could also be held on level nine while level eight had been retained for council operations.

Division 5 Councillor Winston Johnston.

Those included space for teams working on key projects like the new planning scheme and one to three-year “collaboration, start-up, innovation and project spaces” potentially in cooperation with community and business partners.

Councillors spoke about the latest increase to the project budget at a meeting in November, 2021, with Councillor Winston Johnston expressing his frustration with the blow-out.

Councillor Peter Cox said the new city hall was not a “Taj Mahal” type building and said some furniture in the council’s chambers dated back to the late-1990s with some chairs “held together with tape”.