Costs of Helsinki's new Music House likely to increase as contractors' bids are rejected

Only legitimate tender received was twice the anticipated cost

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The completion of the new music centre planned for downtown Helsinki will be delayed until the spring of 2010.
      On Wednesday the board of the real estate company behind the venture rejected all three tenders received for the main construction contract, as two of them were not in compliance with the invitation to tender and one was too expensive compared with the estimated costs.
      The main contract includes for example the foundations and facade of the building.
     
The board of the Music House real estate company is to propose to the general meeting, which convenes in mid-May, that the entire implementation of the project should be changed.
      The first round of bidding invited tenders for traditional lump-sum contracts, while a new process will be arranged for project management contracts, says Tuomo Hahl from Senate Properties, the government-owned enterprise responsible for managing, developing, and letting the property assets of the Finnish state.
      Hahl notes that the contractors are not willing to sign contracts at a fixed price, as there are shortages of labour and materials, and as the prices are expected to rise.
     
The new bidding process
for the main contract will include more accurate construction plans, and the prospective contractor will also have an opportunity to comment on the implementation schedule.
      The new round will delay the completion of the music complex by up to six months. In practice the Music House will not be completed at the end of 2009 as planned, but in the spring of 2010.
      The three contractors bidding for the main contract were the leading construction groups NCC, Skanska, and Peab Seicon.
      Contrary to the terms of the invitation to tender, NCC and Skanska were tendering for project management contracts, while neither of them quoted any price.
      Peab Seicon’s fixed-price quotation for the main contract was about double what had been estimated. The proportion of the main contract is about one half of the entire project.
      Currently, the estimated costs of the music complex are EUR 106 million. The quotation of Peab Seicon appears to imply that using a lump-sum contract, the house would cost up to one and a half times as much as estimated.
     
The shareholders in the company developing the music centre are Senate Properties, with just under 50%, and the City of Helsinki and the Finnish Broadcasting Company (YLE), who have just over 50% between them.
      The main end-users will be the Sibelius Academy, the Radio Symphony Orchestra, and the Helsinki Philharmonic Orchestra. The principal auditorium will seat around 1,700 and there will be five smaller halls (seating 200-500 people), a restaurant, and a music library.


Previously in HS International Edition:
  Construction of new Music House to begin in summer (13.4.2007)

Helsingin Sanomat