North Sydney Council’s cost cutting measures revealed due to budget blowout on pool rebuild

Millions of dollars in roadworks, stormwater upgrades and town centre upgrades are set to be impacted by cost cutting measures due to budget blowouts on the North Sydney Olympic Pool redevelopment.

The pool is not expected to open until 18 months after the original estimated completion date.

Millions of dollars in roadworks, stormwater upgrades and town centre upgrades are set to be impacted by cost cutting measures fuelled by a budget blowout on the redevelopment of North Sydney Olympic Pool.

North Sydney Council has revealed the cost of completing the pool rebuild is set to soar by $25 to $30m more than the original $64m budget – making it one of the most expensive council-led pool redevelopments ever to be undertaken in Sydney.

The project is also months behind schedule and is not expected to open until April 2024 – a year and a half after the original November 2022 completion date.

An independent review of the project by PricewaterhouseCoopers made public on Friday has found factors contributing to rising costs and delays includes inflation pressures driving up the cost of materials, the discovery of hazardous material at the site, poor weather and Covid-19 impacts which delayed the project during early construction periods.

The review was critical of the council’s budget process for the project which did not give consideration to all costs associated with the redevelopment, including internal project management, equipment, fit-outs, and business development.

A photo of the pool during early construction periods.

The business case for the project also failed to include all necessary information to assess the viability of the project over its whole life, and a steering committee established during early planning stages did not include an experienced technical expert.

The cost blowout will have ramifications for a long list of infrastructure and community projects that were due to commence in the coming financial year.

A photo of the pool prior to the commencement of redevelopment work.

A council report – due to be considered by councillors next week – has recommended cutting funding or deferring for more than $11m worth of community projects to help fund the pool redevelopment.

The list of projects due to be deferred include long-planned town centre upgrades for Neutral Bay, Cremorne and North Sydney.

There is also a $700,000 reduction in local road restoration works, a $1.2m reduction in footpath works and similar cuts for stormwater and road safety works.

Scheduled kerb and gutter reconstruction works will meanwhile be reduced from $1.6m to just $200,000 and funding from streetscape lighting will also be slashed from $827,600 to $100,000.

A photo of the town centre upgrade in Cremorne which is set to be deferred.

Neutral Bay Chamber of Commerce president Richard O’Grady said he was disappointed by delays to promised upgrades for the town centre.

“I can understand why the pool gets more attention but to delay the upgrades (at Neutral Bay) is a great concern to local businesses,” he said. “The pool doesn’t have any direct positive impact on Neutral Bay and from our point of view we’d rather the money allocated to Neutral Bay was spent here. There’s a need for upgrades to try to attract more people into the area.”

Town centre upgrades of the North Sydney CBD are expected to be deferred.

The pool is being built by contractor Icon SI which won the tender to carry out the redevelopment back in 2021.

The company is owned by Kajima Corporation – a Japanese multinational construction group which also owns Icon NSW – the developer behind Sydney’s cracked Opal Tower.

An Icon SI spokesman declined to comment on the budget increase, but said the company was “working closely with the council to ensure the successful redevelopment” of the project.

Mayor Zoe Baker blamed the budget blowout on poor decisions made during the previous term of council – resulting in difficult decisions having to be made.

“The review illuminated what you shouldn’t be doing when you approach large scale infrastructure projects like this,” she said. “The scope of the project wasn’t included in the budget and unfortunately this council is now faced with this situation where we have to responsibly manage it.

North Sydney mayor Zoe Baker.

“We’ve already adopted some of the recommendations made in the review to ensure there will be checks and balances in place going forward.”

A report by North Sydney Council states the deferral of infrastructure works will have a “negative impact on council’s asset renewal ratios” and will likely result in “capital works projects having to be prioritised in future budgets”.

The council is unlikely to take out further loans to fund the project, partly due to rising interest rates which would result in initial payments of up to $1.3m a year.

Other projects recommended for funding cuts include streetscape lighting in local town centres and upgrades of the toilet block at Berry Island and the playground at Greene Park in Cammeray.

The savings would be directly allocated to the pool rebuild budget along with an additional $12.4m in council reserves for future capital works.