Helsinki Music Centre may be delayed by lack of interest from construction companies

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The construction of Helsinki’s new Music Centre may be delayed, as the new bidding process only resulted in one single tender being received.
      The only tender for a project management contract was made by the SRV Group, the same company that built Helsinki’s Kamppi commercial centre. Somewhat surprisingly, all other construction companies failed to submit their tenders.
      The situation came as a shock to the shareholders in the company developing the music centre, namely Senate Properties, the City of Helsinki, and the Finnish Broadcasting Company (YLE).
     
"The construction of the music centre could be postponed by one year", proposed Ilpo Jalasjoki, the President of YIT Construction. "There could be more resources available in the sector then", he argued.
      Harri Kauppinen from the City of Helsinki says that as a result of economic fluctuations, similar projects have sometimes been postponed before. For example the construction of the National Opera building and that of the state office building in Helsinki’s district of Itä-Pasila were both put off for a while.
     
The construction committee of the Music Centre and some consultants will examine the bid made by SRV before deciding whether or not it is acceptable. The board of the real estate company behind the venture will handle the matter next Friday, November 2nd.
      Eero Heliövaara, the President and CEO of the SRV Group, says that the company has been working seriously in order to calculate the potential costs of the project and to compile a feasible contract.
      At this point, Heliövaara is not willing to disclose the contract price SRV quoted, while the construction committeee has announced that the estimated construction costs of the music complex are to be EUR 105 million.
      "We believe that the project is feasible, and the contract will be perfect for us", commented Heliövaara. "SRV is competent to carry out project management contracts such as this", he added.
     
Last spring, 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 three contractors bidding for the main contract were the leading construction groups NCC, Skanska, and Peab Seicon. None of them were willing to participate in the new bidding process.
      NCC explained their withdrawal by lack of key personnel, while Skanska believed that they would not be able to meet the budget restraints.
     
If the costs of the complex are not in compliance with the budget, one of the shareholders, the Finnish Broadcasting Company (YLE), would not be able to increase its financing endlessly. YLE is expected to cover 27 per cent of the costs.
      Mikael Jungner, the Director-General of YLE, announced already last spring that YLE’s share of the construction costs must not exceed EUR 35 million.
      The company has reserved the right to withdraw from the venture if the construction costs start to spiral out of control.


Previously in HS International Edition:
  EUR 6 million shaved off price of Helsinki Music Centre (3.10.2007)
  Costs of Helsinki´s new Music House likely to increase as contractors´ bids are rejected (3.5.2007)
  YLE gives approval for funding of new Music House (17.11.2004)

Links:
  SRV Group

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