Mayor Zoë Baker gives an important update about the North Sydney Olympic Pool redevelopment.
As a long-term councillor and now Mayor of North Sydney, I am committed to integrity and transparency in local government. I believe the best results are achieved when communities are consulted and councils work openly with residents and ratepayers to determine their future.
Last year, when it was clear that the redevelopment of the North Sydney Olympic Pool was running over time and over budget, I called for an independent review of the project and promised that I would keep you informed of the outcome.
This Council (elected December 2021) inherited the North Sydney Olympic Pool redevelopment project in the design, form, governance structure and financing model established and adopted by the former Council. The purpose of the independent review was not to revisit the scope or direction of the project, but to understand the causes for the time and cost over-runs so that we could take measures to put the project back on track and keep it there.
The review was conducted by respected consultants PricewaterhouseCoopers (PwC).
Some of the delays and costs can be attributed to external factors such as La Nina and the COVID-19 pandemic. However, taking into consideration the findings of the PwC report, it is clear that better project planning and governance in the pre-construction phase would have created a stronger foundation for this project and importantly, anticipated some of the risks that have now been realised.
In all, PwC identified 16 findings and made 33 recommendations. These are discussed in a report to Council for its meeting on 26 April.
I will highlight some of the issues identified in the recent review so that you can understand the decisions this Council is now facing.
There is no doubt that works were required to the North Sydney Olympic Pool, with the facility having reached the end of its useful life. The key decision for the last term of Council was the scale of those works. Given the high levels of funding and prioritisation required, this decision should have been made in full consultation with the community.
Consultation was undertaken in the early stages of the project planning, resulting in a decision to adopt what was called Option 2, an upgrade of the existing centre. However, as identified by PwC, the previous Council’s decision to increase the scope of works from Option 2, a $28 million project to Option 2b, a $63.9 million project did not fully align with the feedback from community consultation. Rather than undertake additional consultation, Council relied on the standard formal exhibition requirements of the Development Application.
Governance is critical to a project of this size, yet the PwC review found the Steering Committee established by the previous Council did not include an experienced technical expert. The business case prepared did not include all the information necessary to assess the viability of the project over its whole life. The business model for the facility wasn’t decided prior to construction. In addition, the risk assessment did not identify some risks and some of the mitigation strategies that had been identified were not implemented.
Upon approval of the Development Application, the Council moved ahead with construction tenders and negotiations of contracts at pace. The review findings noted the expedited nature of negotiations substantially increased Council’s risk exposure. The time allowed for each stage of the planning phase was simply not sufficient. The construction contract was signed on 31 December 2020 although finished designs were not available until February 2021.
Taking into consideration all the findings of the PwC review, it was clear the budget for the project was not sufficient in the first place, considering the risks that had been accepted.
PwC noted that a primary driver of decisions during the planning phase was the desire to control the project budget. This resulted in decisions creating false economies such as removing the external project managers, deciding to proceed with separate design and construct contracts, and not allowing a contingency that took into consideration the risks relevant to the project. Costs such as the fit out of the gym and creche, required repairs to the Aqua Dining building and eastern stair tower were not included in the project, nor was sufficient funding for internal project management costs and consultancy.
Despite concerns regarding the decision to undertake in house project management, PwC did not recommend contracting out project management at this stage. PwC expressed a confidence in the current project team’s significant knowledge and skill regarding the project, best placing them to finalise the work with the added support of the new Steering Committee.
This Council has accepted all the findings and is implementing all PwC recommendations.
This Council has established a new Steering Committee including an independent advisor. APP Corporation Pty Ltd represented by Ron Aquilina was appointed as the Independent Advisor to the Steering Committee in February 2023. Mr Aquilina is well respected in the project management industry and his advice has been invaluable to date.
A programmer has also been engaged to support the project team and provide expertise in assessing any future claims for extension of time.
A more comprehensive business case will be undertaken by Council’s newly appointed pool manager who has experience bringing pools online. The new manager will prepare a demand analysis and budget estimates to ensure the pool will be financially sustainable when it opens.
To address concerns in relation to risk management of the project, Council has undertaken a risk workshop and the risk register is now a living document that is reviewed regularly and implemented.
Current estimates suggest an additional $25 million to $30 million will be required to complete the redevelopment project and ensure the facility is ready to open.
The completion date, originally estimated to be November 2022, is now expected to be April 2024. I know the delayed completion date is incredibly disappointing and frustrating for regular swimmers and parents seeking a learn-to-swim class.
At the Council meeting to be held on 26 April 2023, Council will consider a staff recommendation to fund the additional cost through a significant reduction in capital works budgets for the 2023/24 year and a depletion of the capital works reserve, a reserve which provides for future works.
Combined, these measures provide $24.2 million towards the pool project budget, with the remaining funding recommended to be sourced as estimates are firmed. These staff recommendations require Council to make difficult decisions, however, I can assure you that Council’s finances are sound, and the additional cost can be managed without reducing service levels.
I have visited the site twice this year and can see the steady progress that had been made between my visits. The Council team is working closely with the contractors and will do everything possible to keep to the revised schedule.
Whilst Council is in a position to manage the cost overrun, this Council understands that it comes at an opportunity and social cost to residents and ratepayers who will not get upgrades to other facilities they regularly use. When Council’s operational plan and budget for the 2023/24 financial year go on public exhibition in May, I encourage you take a look at the projects proposed to be deferred and take the time to share your views.
This Council cannot change the past or alter previous decisions. This Council is taking responsibility for the project and is committed to sustainably managing the financial burden and delivering an exceptional experience for pool users.
Please be patient a little longer - the pool you know and love will be back next year to serve our community for the next 80 years.
Zoë Baker
Mayor of North Sydney