In the revised national budget, the government comes with several gloomy warnings: This year, NOK 350 million more is needed than previously assumed for the project. The government requests that the cost framework be increased by NOK 1 billion. (497 million is due to expected price growth). It may be necessary to increase the limit by NOK 2 billion, beyond normal price growth. The reason for the crack is above all the higher price of industrial goods such as lumber, concrete and steel. High construction activity in Norway, limited supply as a result of infection control measures and bottlenecks in international supply chains are important reasons for the price increases. PRICE RUN: Minister of Local Government Sigbjørn Gjelsvik (left) and Minister of Finance Trygve Slagsvold Vedum must state that construction phase 1 in the government quarter will be more expensive than expected. Photo: Kristian Skårdalsmo / NRK Gjelsvik: – Becoming more expensive The war in Ukraine has worsened the situation, because it has driven up energy prices. Then it will be more expensive to both produce and transport building materials. – What we have said now in connection with the revision, is that construction phase 1 will be somewhat more expensive than originally planned, simply because the construction costs are galloping high, says Minister of Local Government Sigbjørn Gjelsvik (Sp) to NRK. Construction phase 1 is in the implementation phase. Choices have already been made which means that the construction phase has come a long way. Gjelsvik can not answer what is now the assumed final sum for the entire government quarter. But in the revised national budget, the government announces that it is in the process of cutting the giant project. – We cut out two planned buildings and can thereby save 4-5 billion kroner, compared to what was originally planned. Uncertain The reason why 350 new million must be set aside in this year’s budget is that several contracts have been entered into with contractors. But in addition, there will be price increases later in the year. The government is already requesting that the cost framework – the expected total sum for construction phase 1 – be increased, from NOK 20.9 billion to NOK 21.9 billion. Half of the increase is due to price growth, which is adjusted automatically according to a fixed index. But half a billion is due to the fact that building materials have become more expensive. “The extraordinary price increase in the construction industry has led to significantly increased costs in the project,” it says. Facts about a new government quarter Shall house the ministries and the Prime Minister’s office. Construction started in January 2021. Will be completed in 2030. Cost framework is NOK 20.9 billion for construction phase 1 (price index adjusted, July-2022). The Storting will later decide on construction stages 2 and 3 – and in this connection the cost framework for these construction stages will be determined. So far, the plan has been to build five new buildings: Blocks A, B, C, D and E, as well as the rehabilitation of two buildings: blocks G and H. The government now proposes to drop the new buildings B and E, which are planned in construction phase 3. ( Sources: Statsbygg, Ministry of Finance) Warns of greater need But in the budget, the government goes to great lengths to suggest that the price will be even higher. It is pointed out that Statsbygg and the Forecast Center estimate that the input factors in the project “have increased more” than what is captured in the index for inflation. MORE EXPENSIVE: Minister of Local Government Sigbjørn Gjelsvik (left) and Trygve Slagsvold Vedum. Photo: Kristian Skårdalsmo / NRK “In isolation, this indicates a need to increase the cost framework by NOK 2 billion in addition to what is captured by the index,” it says. The government will find out whether the framework must be expanded even further by conducting a new check of the project. “A cost and uncertainty analysis has not yet been carried out, and there is therefore no updated estimate of the overall uncertainty in the project now,” it says. The government will return to a possible need for more money in the new aging of the 2022 budget later this year. Expensive energy solution One year ago, NRK was able to report that the energy solution in the new government quarter will be about twice as expensive as planned. Seawater from the Oslo Fjord will provide cooling and heating in the new government quarter. The revised national budget confirms that the final sum for the energy solution appears to be NOK 2.3 billion – “which is more than double the original estimate from 2019”. The project is expected to be completed in 2025. The government does not have a majority in the Storting and has now begun negotiations with SV on a revised national budget. In the budget, Minister of Finance Trygve Slagsvold Vedum (Sp) announces that he will cut the government quarter. He will now scrap the entire construction phase 3, which includes two planned buildings, and in addition cut the costs of rehabilitation of the Ministry of Finance. The goal is to save NOK 4-5 billion in the long run. This week, Vedum also went out strongly and claimed that the government quarter is becoming a monument to irresponsible, state construction projects. “We are cutting what I would call decadent and jealous projects,” he told NRK. Conservative deputy leader Henrik Asheim defends the Solberg government’s spending. – We prioritized investments when we were in government. Both in roads, hospitals and buildings we need to educate the students of the future and a new government quarter.
ttn-69
New billion dollar bill for the government quarter – NRK Norway – Overview of news from different parts of the country
