Final settlement reached with BGC Construction on major contractual claims
All claims now settled relate to design changes caused by previous Labor government and changes to the Arena contract agreed by the previous Labor government which made the State liable for design changes
Liberal-National Government has previously warned the final cost would be more than $500million to allow for the settlement of Labor’s contractual changes
The Perth Arena budget has been increased from $483million to now settle at $548.7million ($37.5million has already been budgeted for, meaning an additional $28.2million being appropriated in the 2011-12 mid-year review)
The State Government has now reached agreement with BGC Construction on settlement of major contractual claims related to the design of the Perth Arena.
Treasurer Christian Porter said the long standing claims were directly related to an irresponsible and costly decision by the previous Labor government to change the contract with BGC to make the State liable for design changes and at the same time also make major changes to the design, including the decision to move the arena car park to the basement during the middle of the tender process.
“Inexplicable and incompetent decisions taken by Labor at the time of tender to fundamentally change the contract to make the State liable for design changes and at the same time change the design of the car park have resulted in the State being exposed to significant design risk and now contract costs,” Mr Porter said.
“Combined with the other Labor design changes relating to the structural steel design, the result of Labor’s decisions has been to give rise to substantial claims from BGC for extension of time and related delay damages.
“After an exhaustive negotiation process, the State Government has reached agreement on settlement of all delay claims linked to any cause occurring up to the end of July 2011.
“The recent settlement figure for BGCs claims of $27.5million represents a significantly lower amount than the $65.4million originally sought by BGC and in all the circumstances represents the best outcome for the State.
“Importantly, BGC has given a clear commitment to complete construction by the current target of August 2012.
“While the project has suffered due to poor planning and terrible contract decisions by the previous Labor government, the Liberal-National Government is committed to delivering an outstanding, world-class venue to the people of Western Australia next year.”
Settlement terms are contained in a legally binding Deed, confidential to the State and BGC.
Perth Arena is a multi-purpose, re-configurable indoor stadium for sporting and entertainment events, capable of seating up to 15,500
Treasurer’s office - 9222 8800