The construction of the controversial 2010 Fifa World Cup stadium in Green Point, Cape Town, moved a step closer on Monday after a consortium led by Murray & Roberts was named the preferred bidder.
The project team heading the construction of the 68000-seater stadium will start negotiations immediately with the consortium in a bid to bring down the price of the tender, which has exceeded budget by more than R1,2 billion.
The stadium is expected to host nine matches, including a semifinal match.
The consortium, involving SA's second-largest construction company, Murray & Roberts, and Wilson Bayly Holmes-Ovcon (M&R-WHBO), quoted a projected price of R3,7bn to build the stadium, more than 30% above the R2,48 billion the city budgeted for.
A price overrun is not a problem for Cape Town alone; similar situations have been experienced by other host cities such as Port Elizabeth and Durban.
The move to build the stadium on Green Point common has been mired in controversy, with residents in the area opposing it.
It has led to a row between the Western Cape provincial government and the city over rezoning and consent use.
The Cape Town council is expected to complete the process granting the development consent use of the area at a council meeting on Tuesday, following a decision last week by provincial planning MEC Tasneem Essop (pictured) rezoning the land from "public open space" to "community facilities use".
The rezoning conditions include that no further commercial development take place on the common.
The naming of the consortium as preferred bidder does not mean that they have been awarded the tender yet, and as one official put it, "talking turkey" about money will now begin.
Dave Hugo, head of the council's Green Point stadium project, said obn Monday talks would now start with the consortium to bring down the price.
He said no timeframe had been set for the negotiations but it was expected that they would be concluded "within weeks" and that the council's negotiation strategy would kick in immediately.
He said the negotiations would not only concentrate on price, but would be aimed at getting an understanding of how the bidders had priced their tender and whether they had built in risk factors, "which they should not have done".
"We will go through their pricing rates and their risks with the aim of reaching a final form of contract at the end of the day," said Hugo.
"We are confident that we will conclude negotiations within weeks. We are not saying we're going to close the (money) gap completely, but will do everything in our power to lessen the gap," Hugo said.
He said the M&R-WBHO consortium was "well ahead" of the other two tenderers in the scoring system used to evaluate the tender.
At the opening of tenders last month, M&R-WBHO quoted R2,9 billion.
The other two bidders were Group 5 Construction (R3,07bn) and a consortium of Stafanutti & Bressan Civils and a Portuguese company (R3,14 billion).
The final projected R3,73 billion cost by M&R-WBHO includes 10% escalation and 5% contingency clauses, as well as insurance, professional fees and a Fifa "overlay" of R30 million to provide broadcasting facilities, hospitality areas, and media and information technology facilities.
The bid-adjudicating committee, comprising only council officials and technical experts and on which councillors are barred from sitting, recommended to the city manager that he accept M&R-WBHO as the preferred bidder.
This, said Hugo, was the catalyst needed for negotiations to start with the consortium.
Once negotiations with the preferred bidder have been concluded, a further report will be submitted to the bid-adjudication committee recommending the award of the contract.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
