Hobart stadium facing 'cost pressures' as price tag remains unclear

In short:

The final cost of Hobart's new AFL stadium is still unclear, with the current estimate more than a year old.

Tasmania's premier would not commit to limiting the state's contribution to $875 million.

What's next?

An updated price tag is expected to be released before the end of the year.

The head of the government body tasked with delivering a new stadium in Hobart has acknowledged that "cost pressures" could impact the final price tag of the project.

The construction of a 23,000-seat, roofed stadium is a key requirement for the entry of the Tasmania Devils into the AFL and AFLW competitions in 2028.

The project is currently budgeted at $1.13 billion, but that estimate is now more than a year old.

Since then, construction costs have increased significantly because of the war in the Middle East.

Macquarie Point Development Corporation chief executive Anne Beach said further work would now be done to finalise the cost before the contract is signed by the end of the year.

"Through this next stage an important part of that is moving from the target construction sum to actually locking down the lump sum that will go into the contract," Ms Beach said.

"The stage two process will end in around mid-November.

"We'll then go through an assessment, and that's when we'll be coming back to government to discuss that cost."

On Thursday, BESIX Watpac was announced as the preferred builder of the stadium.

Ms Beach said "cost pressures" would play a part in the outcome.

"We'll need to consider, as we go through this process, cost pressures that are in the market and the cost to build as at today.

"We'll be continuing to analyse that, and we'll provide an update once we can after stage two."

Premier Jeremy Rockliff said the final cost would be publicly revealed shortly before the contract is signed.

But when asked whether he could promise the state's input would be limited to $875 million, as previously flagged, he repeatedly skirted the question.

"We're working through a very rigorous process," Mr Rockliff said.

"We're at stage one, and we're working through and continuing that to get to stage two and, of course, signing the contract.

"And I'm not going to detail costs — they are being, they continue to be, worked through."

Cost will be 'quite north' of $1.13b, MLC says

The state government's $875 million funding cap was part of its agreement with independent MLC Bec Thomas, who voted in favour of the development in December last year.

As part of that agreement, any further funds required to build the stadium would either be clawed back via "value management", a reduction in scope, or be sought from either the federal government, AFL or Cricket Australia.

The Greens remain sceptical the stadium can be built within the current funding envelope.

"We don't trust the premier and his commitment to stick to $875 million," Greens MP Vica Bayley said.

"That's why it's incumbent upon him to be transparent about where the additional money is going to come from and how parliament is going to be involved."

Independent MLC Meg Webb said it would be "naïve" to think the cost of building the stadium won't be more than envisaged last year.

"I think all of us can look at the world's events since then, can look at other costs that have clearly gone up and imagine that now we're looking at a full cost for this stadium that's somewhere quite north of $1.13 billion."

She urged the government to disclose the cost to parliament before the contract is signed.

"We know that Tasmanians would like there to be transparency around that cost and now that a builder has been announced, there's no reason for the state government not to come clean and be really open and transparent and give us the expected full cost of the stadium."

Expert says Middle East conflict likely 'having impacts'

Kirr Parr is a construction industry advocate and senior fellow at the University of Melbourne Law School who lectures in the delivery of major projects.

She said it was common for large-scale construction projects to go over budget because of external factors and long timeframes that can significantly affect costs.

"An external war that drives up prices that's happened since you did your budget won't have been factored into that original budget," Ms Parr said.

"So, it's exactly the kind of external factor that major projects are exposed to and it likely is having impacts on the budget.

"The exact nature of how it all plays out over the next three or four years is unknown."

Ms Parr saidthe key was to limit the scale of any potential cost overruns through good management.

"It's the importance of working very, very hard on your projects to resolve problems as early as possible and not allowing them to escalate," she said.

"The importance of experts, people who have experience on major projects."

The stadium is due for completion by the end of 2030.