Saving of $3 million on Settlers Museum

The cost of completing the Otago Settlers Museum upgrade has nearly halved, with Dunedin ratepayers set to benefit from loan cost savings worth about $6 million as a result, Mayor Dave Cull says.

Lund South was yesterday named as the successful tenderer for work on stage 4 of the museum's upgrade, which was due to be completed by late next year.

Mr Cull told the Otago Daily Times the company's bid had come in well below expectations, which together with other savings meant the project's overall cost had reduced by $3 million.

The work had been expected to cost $7.5 million, but that had now reduced to about $4.5 million.

The council's share of the work would now be about $2 million to $2.5 million, with the remainder coming from the Ministry for Culture and Heritage and Otago Settlers Association fundraising, Mr Cull said.

The additional $3 million pruned from the project's cost would have been funded by a council loan, costing ratepayers about $300,000 a year in loan costs.

That could have amounted to about $6 million over the 20-year term of the loan's repayment, and was "not insignificant" given the council's multimillion-dollar annual budget shortfall, Mr Cull said.

"In fact, it's very significant ... It's a great deal."

The decision to proceed with stage 4 at the reduced price had come despite previous opposition by some councillors, including Cr Lee Vandervis, who was vocal in his concern about the cost.

The stage was among capital projects and operating costs under review by the council as it sought ways to save money.

The project, with its potential $3 million saving, had been discussed at last month's council finance, strategy and development committee meeting, but a decision deferred while council chief executive Paul Orders negotiated an extension of the tender offer with Lund South.

That extension was needed to allow councillors to take a final vote on proceeding with stage 4 at the following full council meeting on October 31.

Mr Cull said the decision to proceed had been confirmed by councillors with a "robust majority" in the non-public part of the meeting.

Stage 4 would see construction of a new museum entrance, foyer and shop and housing for the steam locomotive Josephine as part of the wider museum upgrade.

Mr Cull said some of the $3 million savings identified came from the completion of elements originally part of stage 4 - such as new toilets - in earlier stages of the upgrade, within their existing budgets.

"They're effectively a saving ... they had already done them, so there were bits that didn't need to be done twice."

The rest of the savings came from the reduced tender price itself, although he was not sure what the exact mix was when asked.

The original budgets had been prepared based on advice from quantity surveyors, but the Lund South quote had been "substantially below" expectations, he said.

The ministry's $1.5 million contribution towards the project had already been received, while fundraising of up to $1 million by the association had not, but Mr Cull was "pretty confident" it would be achieved.

"If it all turned pear-shaped, we might be half a million out or something, but from previous experience we're confident that that's what we'll get."

Earlier plans to build a viewing tower as a fifth stage of the upgrade had not been given a budget by councillors, although initial work - including a call for tenders - had been carried out despite that.

Mr Cull said that part of the project had now been "completely put on hold", with some councillors considering it "folly".

Council community life general manager Graeme Hall said stage 5 would remain on hold in the meantime, and any further progress would require a decision by councillors to proceed and fund it.

The exact cost of the proposed tower was not available yesterday, but would have been several million dollars, he said.

chris.morris@odt.co.nz