The City of Cape Town's Role in Creating a Better Life for All by xumiaomaio


									Presentation to the Portfolio
Committee on Sport and
Recreation – funding of 2010

Presented by: Mike Marsden,
Executive Director:
Service Delivery Integration, City of Cape Town
Date: 05 June 2011
 Basis for original stadium estimate
 Total cost Green Point stadium
 Secured funding
 Funding shortfall
 Stadium development process
 Stadium design and cost-effectiveness
 Price escalation
 Reasons for price escalation
 Municipal Finance Management Act constraints
 Suggested way forward
Basis for original stadium estimate
 Detailed design to state of being able to extract quantities
 Value engineering - cost reductions
 International and local Quantity Surveyors with current industry
 Final engagement with OC Technical Team
 Estimate included in Business Plan
Cost analysis (excluding VAT)
Item               Bus. Plan estimate   Tender
Tender price       1 842 601 000        2 630 000 000
Qualifications     NIL                  116 665 000
Escalation (10%)   184 260 000          274 667 000
Contingencies      101 344 000          151 067 000
Prof. fees         361 795 000          517 736 000
Insurance                               10 000 000
FIFA overlay                            30 000 000
Total              2 490 000 000        3 730 135 000
Secured funding for stadium

 Nat. Dept. of Sport &   R1 960 000 000
 City of Cape Town       R 400 000 000
 Provincial Government   R 112 000 000

 Total                   R2 472 000 000
Cape Town’s other contributions
 Electrical infrastructure   R200 million
 Reconfiguration of Common   R120 million
 Transport                   R165 million
 IT & T                      R57 million
 Operational expenditure
Funding shortfall

 Provisional projected cost   R 3,730 billion
 Secured funding              R 2,472 billion
 Shortfall                    R 1,258 billion
Stadium development process
 Appointment of professional team
 Concept design and initial business plan
 Detailed design and final business plan
 Funding allocation
 Public tender
     Pre-qualification stage
     Priced tender
 Appointment of preferred bidder
 Negotiation with preferred bidder (presently underway)
 Finalise cost
 Secure funding (MFMA compliance)
 Award contract
Stadium design & cost-effectiveness 1
 Design informed by:
     FIFA requirements
     Environmental Impact Assessment/Record of Decision
     Financial sustainability
 Functional, not iconic design
 Value engineering
     Initial review and amendments made
          R3,3 billion > R2,49 billion
Stadium design & cost-effectiveness 2
 Secondary review underway
    Roof design
    Roof materials
    Cladding materials
    Construction technique

 National Treasury requested to underwrite
     Awaiting response
Reasons for increase in tender prices

 National, not Cape Town specific challenge
 South African construction industry capacity
 Skills shortage
 Material shortage
 Plant shortage
 Supply and demand
 Very tight timeframes
MFMA constraints

Supply chain management process
Construction contracts cannot be awarded without secured
    Delay costs = R20 million per month
Suggested way forward
 Tender prices received by all host cities be scoped by Nat.
 Nat. Treasury consider possible interventions with construction
 Host cities negotiate with preferred bidders
 Host cities undertake second stage of value engineering
 Nat. Treasury convenes meeting of host cities to review
 national situation
 Nat. Treasury reviews budgetary allocations
 Demolition of existing stadium to proceed

Thank You

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