presentation to the portfolio committee on sport and recreation – funding of 2010 stadia presented...

Presentation to the Portfolio

Committee on Sport and

Recreation – funding of 2010

stadia

Presented by: Mike Marsden,

Executive Director: Service Delivery Integration, City of Cape Town

Date: 20 April 2023

AgendaBasis for original stadium estimateTotal cost Green Point stadiumSecured fundingFunding shortfallStadium development processStadium design and cost-effectivenessPrice escalationReasons for price escalationMunicipal Finance Management Act constraintsSuggested 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 rates

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 (5%)

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 & Recreation

City of Cape Town

Provincial Government

Total

R1 960 000 000

R 400 000 000

R 112 000 000

R2 472 000 000

Cape Town’s other contributions include:

Electrical infrastructure R200 million

Reconfiguration of Common R120 million

Transport R165 million

IT & T R57 million

Operational expenditure

Funding shortfall

Provisional projected cost

Secured funding

Shortfall

R 3,730 billion

R 2,472 billion

R 1,258 billion

Stadium development processAppointment of professional teamConcept design and initial business planDetailed design and final business planFunding allocationPublic tender

Pre-qualification stagePriced tender

Appointment of preferred bidderNegotiation with preferred bidder (presently underway)Finalise costSecure funding (MFMA compliance)Award contract

Stadium design & cost-effectiveness 1

Design informed by:FIFA requirementsEnvironmental Impact Assessment/Record of DecisionFinancial sustainability

Functional, not iconic designValue engineering

Initial review and amendments madeR3,3 billion > R2,49 billion

Stadium design & cost-effectiveness 2

Secondary review underway

Roof design

Roof materials

Cladding materials

Construction technique

Escalation

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 funding

Delay costs = R20 million per month

Suggested way forward

Tender prices received by all host cities be scoped by Nat. TreasuryNat. Treasury consider possible interventions with construction industryHost cities negotiate with preferred biddersHost cities undertake second stage of value engineeringNat. Treasury convenes meeting of host cities to review national situationNat. Treasury reviews budgetary allocationsDemolition of existing stadium to proceed

Questions?

Enkosi

Thank You

Dankie