Millions of dollars are at stake in a contract bunfight over Queenstown’s Five Mile shopping centre.
There was general excitement over last week’s opening of the Countdown supermarket, Rebel Sport, Briscoes, Warehouse Stationery and other shops at the Frankton site.
But behind the scenes there is a dispute over the cost of the project between the developer and the building company Naylor Love.
Mountain Scene’s been told that they’re at loggerheads over the contract price.
Naylor Love committed to building the Frankton complex, including a Countdown supermarket and Briscoes store, for a ‘guaranteed maximum price’.
We’re told that price is about $38 million. An industry source, who doesn’t want to be named, says the 20-month project cost the builder several million dollars more.
The extra costs have been debated at two adjudication hearings, at least.
The dispute, however, is likely to be resolved by an arbitrator sometime next year.
Five Mile developer Tony Gapes won’t discuss the dispute but says: “We’re really happy with the job Naylor Love’s done.”
The source says the problem is Naylor Love signed up for the job when major building projects in Queenstown and Christchurch were scarce.
Since then, the Christchurch post-quake rebuild has begun, Queenstown development has taken off again and the price of labour and materials has risen.
“It’s the old supply and demand thing - I think it’s caught them on the hop.”
But because the Five Mile contract is for a guaranteed maximum price, the developer’s unlikely to want to make up the difference, the source says.
In addition, the developer didn’t make any major variations to the original building plans.
Local Naylor Love manager Justin Calder says: “There are variations to any contract and we’re still negotiating those, it’s as simple as that. We’re confident of reaching agreement on the variation content.”
Calder admits it’s been a tricky job. Building a supermarket over a suspended basement is difficult, he says, “but we didn’t have any issue with it, it went together very well”.