I’m sure UTAS’ refurbished Foresty Bulding is a very fine building, which will impress some politicians and journalists. It will probably also win Architects’ awards.
It just isn’t a functional university building, as Emeritus Professor Michael Bennett’s withering critique made clear.
UTAS is variously on the record as saying the cost of the Forestry Building is $131 million or $154 million.
Both figures could be construed to be correct, but yeah….nope.
UTAS has paid or incurred known cash costs of over $226.6 million on the Forestry Building and the associated move from Sandy Bay, with some costs still unknown, below the line or unquantifiable.
This cost blow-out is all too typical of UTAS’ inability to manage building costs, contrary to claims by the likes of Craig Barling, and Nicholas Farrelly with his $500m for a new STEM bunk (and the rest!).
This table sets out the costs, with sources and assumptions provided in the Appendix.
If I have made any mistakes in my table, I would welcome corrections from UTAS.
Appendix – The cost of the redevelopment of the Forestry Building
The Forestry Building redevelopment has in fact occurred over two sites – The Forestry Building and the old Freedom Furniture site (also known as the Timberyards).
This table is entirely sourced from UTAS documents.
Even with several cost elements missing, the cost adds up to $226.6 million.
There are also a number of unquantifiable costs, such as the cost of the (entirely avoidable) greenhouse emissions associated with this unnecessary project, and opportunity cost.
Where I have had to make estimates, as detailed in Notes below, these have favoured UTAS (that is, they have been at the lower end of possible cost ranges).
Notes: Sources and assumptions
1. www.parliament.tas.gov.au/__data/assets/pdf_file/0027/75807/230630-UTAS-QON-Response.pdf, p6.
2. www.parliament.tas.gov.au/__data/assets/pdf_file/0027/75807/230630-UTAS-QON-Response.pdf, p3.
3. This is a figure that UTAS has regularly cited as the cost of redevelopment works. See, for example: https://www.utas.edu.au/about/news-and-stories/articles/2023/university-helps-unlock-a-new-industry-for-tasmania
4. UTAS’ presentation to the Public Accounts Committee on 22 August 2024, indicated that the cost of the Forestry Building was $154 million; see: https://www.parliament.tas.gov.au/__data/assets/pdf_file/0027/84375/Parliamentary-Inquiry_August-2024.pdf, slide 43. UTAS has not fully or definitively explained the difference between this figure and the redevelopment cost of $131 million. Comments by UTAS officer Phil Leersen quoted in the media indicate that the difference may be explained by some unforeseen construction costs and fitout costs of the Forestry Building: https://theutaspapers.com/wp-content/uploads/2024/10/2024-20-January-Forestry-cost-blowout-Mercury.pdf I have also assumed that the difference includes other redevelopment project costs and the costs of moving staff from Sandy Bay, but this is by no means clear.
5. In March 2022, UTAS borrowed $350 million through its Green Bond issue for its “Southern Infrastructure Project”, with one debt tranche of $280 million with a 3.97% interest rate expiring in March 2032; and the other of $70 million with a 4.45% interest rate expiring in March 2042. For information on the Green Bond, see: https://www.utas.edu.au/__data/assets/pdf_file/0010/1817029/RTI-Green-Bonds-released-documents.pdf. I have assumed that the $280 million tranche of the Green Bond has been used to fund redevelopment of the Forestry Building, but – I believe generously to UTAS – I have not assumed that it has been used to fund any of the other costs associated with the Foresty Building. The total interest cost on $131 million over the 10 year life of the $280 million tranche of the Green Bond is over $52 million, but I have assumed that UTAS initially had a large portion of Green Bond funds invested, providing offsetting revenue, and therefore – again generously – I have used a lower cost estimate of $40 million.
6. In 2022, UTAS relocated the College of Business and Economics (COBE) to the Hobart CBD. This has never been satisfactorily explained and was not approved by the UTAS Council. However, the move is best seen as furthering UTAS management’s agenda to relocate to the CBD and to create a ‘need’ for the Forestry Building. I have discussed this issue at length in my blog post: https://theutaspapers.com/vc-blacks-coup-complete-chancellor-watkins-abrogates-the-utas-councils-authority/. To accommodate COBE prior to the Forestry Building becoming available, UTAS entered into lease agreements with KPMG and Vodafone. The lease agreements commenced in 2021 at the latest, see: https://theutaspapers.com/wp-content/uploads/2024/06/Attachment-B-Letter-to-Chancellor-Watkins.pdf, p4. UTAS provided some information on the cost of the leases to the Public Accounts Committee last year, stating that;
“The lease on the KPMG building cost $971,542.53 including GST in 2024 and will cost approximately $995,524.09 including GST in 2025. The lease on the Vodaphone building cost $906,948.32 including GST in 2024 and will expire at the end of 2024.” https://www.parliament.tas.gov.au/__data/assets/pdf_file/0024/90555/ed458f3c6de0a710b5dc724c47761a6ca8b8bdaf.pdf, p5.
The lease costs appear to have escalated from year to year. Therefore I have – again generously to UTAS – assumed an average lease cost of $900,000 a year for six years for the KPMG lease and $800,000 a year for four years for the Vodafone lease.
7. As far as I know, UTAS’ fitout costs for the rented spaces in the KPMG and Vodafone buildings is not available in the public domain. I have seen parts of the KPMG fitout and believe the cost for this may have been in the low millions of dollars.
8. UTAS will have spent a considerable amount on staff costs on all the tasks relating to the redevelopment of the Forestry Building, particularly if UTAS had a full-time project manager for the redevelopment. As far as I know, staff costs are unavailable in the public domain.