Auckland project cost blowout of up to $100 million

This week the New Zealand Herald reported that an Auckland Council IT project called NewCore faces a massive budget blowout, possibly up to a total cost of $140 – $170 million. This is up to $100 million higher than the $71 million budget approved two years ago.

NewCore is intended to consolidate the operating systems of the 8 local bodies that merged to become the Auckland Council. The idea behind NewCore is that it is to be a ‘one stop shop’ for what are currently several step processes, such as lodging a resource consent. The Council has confirmed a delay of 12 months, to which chief operating officer Dean Kimpton says ‘There is a delay and it will cost more. But we’ll also be delivering much more.’

A budget blowout of 100% – 140% is unheard of in the construction industry. This indicates that there are issues around the project definition, timing and scope that were not appropriate when the cost was set. We consider that a number of principles from construction law, and particularly the standard contracts, could assist in delivering successful IT projects.

 

 

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