Fletcher Building, a leading construction company, announced that it would be making an additional provision of NZ$165 million (US$100 million) for the construction of the New Zealand International Convention Center. This provision will be recorded as a one-off item in the company's accounts for the first half of the 2024 fiscal year.
The decision to make this provision comes as the costs to complete the project have risen more than expected. Fletcher Building cited increased expenses for steel remediation, internal fit-out, and the installation of operating systems as the primary reasons for the higher costs. They also noted that a portion of their claims against the project Contract Works Insurance may not be recoverable.
The New Zealand International Convention Center, along with the Hobson Street hotel and the retail laneway in Auckland, was contracted to Fletcher Building in 2015. The completion of the project is still on track and is expected to be achieved by the end of this year.
In addition to the provision for the convention center, Fletcher Building also announced a NZ$15 million provision for remediation work on the WIAL Carpark.
Chief Executive Ross Taylor expressed confidence in completing all legacy projects by the end of 2024. However, he acknowledged that cost and revenue risks will persist until these projects are finalized. The company will actively pursue their claims for recoveries on the legacy projects, though this process may take until the 2025-2026 fiscal year to resolve.