After protracted negotiations, Council and Hutchinson’s Builders have decided to part ways on the Hepburn Hub at The Rex project.
Neither party has any claims against the other with respect to the project and Council incurred no new costs arising from the decision to terminate the contract.
Council signed a contract for the required works in 2020 and gave the builder, Hutchinson’s, notice to proceed in January, 2021.
In March, the Hepburn Hub at the Rex Update presented to the regular meeting of Council stated that the builder had raised a number of queries regarding site conditions claiming that they varied significantly from those inspected during the tender period. As a consequence, the builder declined to proceed with the contracted works and negotiations ensued.
In response to public questions about the specific nature of the dispute, Council responded that the matter was confidential because it was the subject of sensitive, ongoing contractual negotiations. This narrative was repeated in the April and May updates to regular meetings of Council.
At the June meeting of Council, the Hepburn Hub at the Rex Update stated that the dispute involved rectification of a concrete structure behind the original Rex Theatre built in 2006 and additional items in the scope of works including roof replacement, re-tanking and resurfacing of the carpark, additional drainage, replacement of building seals, repair of walls and ceilings, upgrade of storm water, demolition and replacement of toilet amenities, sound proofing of offices and auditorium, management of lead paint and replacement of projector room cladding.
A Council spokesperson said, “The June update endeavoured to provide transparency with some greater detail of the items in dispute. Many of the items detailed in are considered to be within the existing building fabric as inspected during the tender period. However, there were also some additional scope items recommended by Hutchinson’s. We have worked through all of these matters professionally with Hutchinson’s and we have now agreed to terminate the contract.”
In announcing the decision, Council made no comment on the underlying cause of the protracted dispute between the builder and Council. Details of the dispute are covered by a confidentiality agreement signed by both parties as part of terminating the contract.
A report from the Local Government Inspectorate which inquired into cost over-runs in earlier stages of the project has not yet been released and the Inspectorate is unable to provide any timelines on completion of the report.
Without a clear understanding of the earlier problems which led to the cost blowout and the underlying causes of the failure of recent negotiations with the builder, the public can have little confidence that these errors will not be repeated on this or some other future project.
Hepburn Shire Council intends to complete the project with an alternate contractor following a fresh tender process. Council is now preparing updated documentation with the support of the architect and others in readiness for a new tender process to commence.
Mayor, Cr Lesley Hewitt, said that after best efforts to resolve issues around the scope of the building works, they were unable to come to a mutually satisfactory position. “We want to get on with delivering this project because we see the benefits for the community from consolidating staff into one building, relocating to a bigger and better library and providing some unique community spaces at The Rex. We will start a new tender process for the building works immediately and in the coming months will present to Council a report to appoint a new builder and get on with the build.”
“I understand that this isn’t the news anyone wanted to hear, but we have the opportunity now to move forward with the project,” said Cr Hewitt. “Council wishes to acknowledge Hutchinson’s as a quality builder and notes that we have been working in a collaborative manner. We appreciate their endeavours to identify and attempt to resolve a number of issues with the building prior to commencement and acknowledge this has taken some considerable time to work through.”
If Council moves quickly, it is possible that a new tender brief can be prepared and advertised, tenders evaluated, a successful tenderer identified and a new contract signed before the end of the year. Works are expected to take about six months. It seems possible that the project might be completed by the middle of 2022 if all goes well.
If Council waits for the Local Government Inspectorate report, completion of the project might take considerably longer.
The endorsed project expenditure is $7.130 million but further significant expenditure is likely to be required to rectify the existing structural problems and to incorporate additional items in the scope of works.