Firms pack up as $90m boom ends
Christchurch's post-earthquake demolition boom appears over but not before companies pocketed nearly $90 million from Government-managed contracts, figures reveal.
At its peak, an estimated 150 demolition companies vied for business in the city but as demolition is slowly replaced by construction, many are leaving or diversifying to pursue other projects.
Figures from the latest financial review of the Canterbury Earthquake Recovery Authority (Cera) show it signed off 482 demolition contracts worth $89.15m in the last four financial periods. That figure does not include private demolitions or the clearance of red-zoned residential properties.
A breakdown revealed Cera-sanctioned demolitions peaked in the 2011-12 financial year when more than half (276) of its contracts were awarded. That year, more than $43.1m of work was done.
One of the biggest contracts - $11.65m - was awarded to Fletcher Construction to demolish the Hotel Grand Chancellor in Cashel St.
Cera confirmed it, or Civil Defence in the early emergency response, had handled 1497 full or partial demolitions. There are another 167 full or partial jobs scheduled.
Southern Demolition owner Alan Edge, whose company figured prominently in the list of awarded contracts, said he prospered for a time but other companies fared worse. Some fell into liquidation as increased competition made tendering harder.
"We moved into a fairly hectic patch for about four or five months, then it slowed before it gained momentum again," he said.
His company and a few others were the "mainstay" of demolition companies before the earthquakes but other companies, eyeing a slice of the lucrative demolition pie, set up business.
Edge cited "a big crash in the competitiveness of pricing" as the catalyst for many leaving the city or changing their operations. "Because, all of a sudden, there was not enough work to go around all these people."
Some larger companies, which received some lucrative Cera-endorsed contracts, had now taken a lot of their plant and equipment out of the city.
Edge's company ventured south to help clear the old Carisbrook rugby stadium in Dunedin as demolition work dried up in Christchurch.
"The boom's over, well and truly," he said.
A Cera spokesman said ensuring value for money was an important part of the tendering process.
"When the demolition work is tendered, best estimates are made from the information available at the time but in some cases, further information will be uncovered in the course of a demolition that imposes additional costs."
Many of the contracts were completed for the estimated cost and some were done for less than originally budgeted while others cost more, in some cases, tens of thousands of dollars more.
"While we would always like to see things move faster, we are happy with the progress of demolitions to date when you consider the volume of work, the issues that have had to be worked through and complexities posed by many of these demolitions," he said.
Cera-managed demolitions are expected to be finished by August.