Local News

Construction Costs Rising On Raleigh's New Convention Center

Posted October 27, 2005

— Raleigh leaders learned Wednesday that with just 50 percent of the construction bid out, Raleigh's new convention center is already $4.5 million over budget and could be over even further by the time the project is complete.

But officials said most of the cost overrun has nothing to do with their planning process.

Because of Hurricanes Katrina and Rita, as well as the rising cost of construction materials and fuel costs, the project will come in over budget by an estimated 10 percent more than the original $192 million allotted. The rising cost of concrete, which increased by 31 percent as a result of Hurricane Katrina, is to blame for most of the additional 3 percent being spent to build the 500,000-square-foot facility.

"Clearly, the project is over budget, but it's over budget through things that are out of our control," Wake County Commission Chairman Joe Bryan said.

One option to make up for the rising costs would be to take a higher percentage of the money from the county's hotel/motel and prepared food taxes. But adding more money to the project may not be a popular choice.

"I think anyone concerned about the price will still be concerned about the price," Raleigh Mayor Charles Meeker said.

The city and county could consider cutting back on some of the center's finishing touches, such as some of the materials that would be used inside the convention center. Some City Council members, however, believe the project cannot go forward without those details.

"I think we have to be very, very careful that we don't build a substandard convention center that doesn't get any business," Councilwoman Jessie Taliaferro said.

The initial $192 million budget included $13 million for unexpected expenses, but with less than 10 percent of the project complete, almost all of the $13 million has been designated, including $1.3 million for asbestos cleanup at the old convention center.

But there have been some savings. For example, crews saved $3 million by dumping more than 32,000 truckloads of dirt from the construction site at the Dorothea Dix campus.

The construction team tried to ease the concerns of City Council members and Wake County commissioners with a conservative budget formula that could make an additional $20 million available for the project.

"Fortunately, interest income and hotel/motel tax are going up by like amounts, so they should balance out," Meeker said.

The construction team also pointed out that because of rising costs, the trend in cost overruns nationally has been about 25 percent.

Both boards will have a much better idea on cost overruns in this project by January. By then, 98 percent of the project will have been bidded out.

The convention center is slated to open in 2008.


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