2010 Soccer World Cup: Sub-contractors' tender pricesovershoot the mark

Hosting the 2010 Soccer World Cup has come at a massive cost for South Africa, with some stadiums running over the initial budgets more than R1-billion.

The Gautrain budget of R7-billion has rocketed to R25.4-billion and more funding is needed for it to be ready by the June 11 kick-off.

It emerged at the Barometer SA session that, according to the transport ministry, an extra R300-million would be needed by the contractors to accelerate the first phase for completion by March 27.

The first phase, linking OR Tambo International Airport and Sandton, was originally scheduled for completion halfway through the tournament.

The second phase, connecting Sandton to Johannesburg Park Station and Midrand to Hatfield in Tshwane, is scheduled for completion in 2011.

The transport ministry said the national Treasury was still considering releasing the R300-million to fast-track the project.

It was pointed out from the audience, which included corporate executives, the 2010 Local Organising Committee, and government representatives,that the Gautrain and 2010 stadiums were unique projects.

During a panel discussion featuring Ndebele, Byrom and Neil Cloete, managing director of Grinaker-LTA, it was emphasised that the problem with the projects earmarked for 2010 was that nothing like them, or on their scale, had previously been done in SA. This meant that there was no experience for contractors to draw on.

Cloete, who was involved in the building of Soccer City, the Nelson Mandela Stadium and Orlando Stadium in Soweto, said that despite these challenges, the companies had done "extremely well" to complete the stadiums on schedule.

Of the 10 stadiums, six are new or have required substantial upgrading, while four have had to be refurbished.

"The risk of building a stadium is incredibly high ... the risk is too great to give such a project to a company that does not have a track record," he said.

Cloete illustrated his point by highlighting the problems experienced building London's 90000-seater Wembley Stadium - the second-largest in Europe.

Construction of the stadium, which boasts a 6350-ton roof and a 317-metre overhead arch, began in 2002 and was scheduled for completion and to host the FA Cup final in 2006.

But the contractor, an Australian company, only finished the project in March 2007 at a cost of £1-billion (R12.5-billion), which far outstripped the original £757-million (about R9.4-billion) price tag.

"The eventual £1-billion total cost is the combined total price of Soccer City, Green Point Stadium and the Moses Mabhida stadium in Durban," said Cloete.

And despite the 32% increase in cost although it was a fixed-price contract, Cloete said Wembley Stadium faced major infrastructure problems such as the underground sewer buckling under pressure.

"Hence there is only one contractor for 2012 Olympic Stadium in London (which is under construction and expected to be the third-largest stadium in Britain behind Wembley and Twickenham)," said Cloete.

He added that stadium construction was complex. "All our stadiums (for 2010) will be finished significantly in advance ... months ahead of the opening game."

Cloete said the last stadium built in SA, before the projects now under construction, was the original Soccer City in 1987.

"The bottom line is that we didn't have the skills to build these (2010 World Cup soccer) stadiums."

He said there were concerns in the industry about the future of the stadiums after the final whistle on July 11.

He has conducted extensive research into stadiums around the world and said the reality was that they do not make money.

"Instead, stadiums lose money ... they are not sustainable financially," he said.

As early as 2007, there were concerns that the operational and maintenance costs of the stadiums after 2010 would have to be subsidised by the national Treasury as they would not earn enough to cover capital and maintenance improvements.

"There has not been one event staged at the ($423-million) Beijing National Stadium since the closing ceremony (of the 2008 Olympic Games) in August last year," said Cloete.

Earlier this year, its owners announced that the stadium, which costs about $9-million a year to maintain, would be turned into a shopping and entertainment complex in three to five years.

Cloete said there had to be a concerted effort by SA authorities and sporting bodies to ensure the 2010 World Cup stadiums had a future.