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Riddled with asbestos. Almost 290 per cent over budget. More than four years late.
Renovating the Reserve Bank of Australia's (RBA) headquarters is increasingly looking like a disastrous episode of home-building show Grand Designs.
The key difference? The budget for the horror reno is now north of $1 billion.
Documents obtained using the Freedom of Information (FOI) process detail the difficulty and unexpected expense of renovating the central bank's flagship office at 65 Martin Place in Sydney, built in 1964.
The project has become so complex and expensive, the central bank considered selling the iconic heritage-listed building and moving elsewhere.
Instead it has rented space for staff nearby and is wearing the extra costs.
As a previously unseen presentation dryly notes:
"Additional cost of $823.3M. New total costs of $1,089.9M. Extends delivery time by 4 years to November 2029."
Four-year delay
Cracks and water leakage are just the start.
With "failing infrastructure" and "non-compliances" — failure to be up to legal safety standards — in parts of the building, there had to be an upgrade or a move for the 1,439 staff of the bank who work from its headquarters.
The project to renovate the central bank's headquarters, called 65MP, looked at the different options:
- Option 1: Continue the renovation
- Option 2: Sell the property and lease it back
- Option 3: Sell and lease elsewhere in the Sydney central business district
- Option 4: Sell and buy elsewhere in Sydney's CBD
The bank has gone with the first option, with staff already at an office in nearby 8 Chifley Square.
The RBA's analysis, shown here, is that the renovation option was the best on the key criteria it set.
The original plan in 2020 was to have staff back at their desks by October 2025. Now they aren't expected back in Martin Place until November 2029.
As a note attached to a presentation puts it succinctly:
"So we have our challenges."
Dangerous material
The biggest one is killer dust.
There was a major asbestos removal project in the 1990s and recent reports described the building as having "minimal amounts of asbestos", which was reflected in the initial timelines and costs.
But construction workers quickly found a problem. A big one.
"Detailed investigations have uncovered significant asbestos and other latent conditions driving the need for significant project change," the internal project documents state.
"Friable asbestos … not the good kind…"
Asbestos was commonly used as a fire retardant building material when 65 Martin Place was constructed.
The builder must have got a good bulk deal on it, because the structure is riddled with the deadly material. So far it has been found:
- within the beams
- in supporting floors
- sprayed on the concrete soffits (underside of ceilings)
- between layers of concrete within work floor slabs
- throughout the facade
- within services panels
Most of it is loose, "not encapsulated and requires removal".
The asbestos is in so many areas that whole floors are "exclusion zones" and workers need to be wearing full hazardous material protection gear. The building will need to be stripped to its steel frame to get rid of the toxic substance.
Gets worse
Making things more difficult, the walls surrounding the fire escape stairs and the lift are not reinforced and are "non-compliant for fire resistance" — meaning they are less likely to be save people's lives in the event of a disaster.
In notes accompanying these pictures, the Reserve Bank's project team says the building simply doesn't meet modern safety standards.
"Important structural elements do not meet requirements for seismic and fire resistance."
Re-doing the existing slab flooring won't fix the problem.
"We can't necessarily just remove the topping slab as we are left with a very poor slab," the notes say.
"To bring these components to current code requires significant demolition and re‐build."
Not only...
Like a lot of renovations, it's never just one problem.
The building has a "modernist" design, protected by heritage laws and houses critical parts of what makes our financial system work, like a data centre, "operations and strongroom" for storing banknotes and 200 years of banking archives.
But the job has another element that will bring a knowing smile to people who have renovated before — they're so far in that it would be more expensive to stop.
Despite the extra expense, the bank's analysis of the different options has found that removing the asbestos and refurbishing the building is the most cost-effective option.
That's despite the office rental costing $108.8 million over six years and a further $86.3 million in "contingency" costs.
And there's some radical optimism too.
While doing nothing was not a viable option, even the blow-out cost of the renovation "is only $500 million more than what the Bank would have spent anyway over 30-years and we achieve a significantly enhanced building asset with an extended structural life".
Huge help
The RBA has some advantages over most renovators.
Firstly it is self-funded — it literally prints money.
(But its expenses do have an impact on taxpayers because they can change the size of the dividend it returns to the federal government).
Secondly, while most home owners and people who have borrowed cash for a renovation are sweating over high interest rates — the RBA is simply looking for a permanent room where it can set them.
Next week we'll learn more when the Public Works Committee — which has visited the site — tables a report with its findings.
But the RBA is independent of government and the project doesn't draw on the Commonwealth budget, so it is hard to see our central bank deviating from its renovation plan.
Because, as Grand Designs host Kevin McCloud once told a newspaper:
"Generally speaking, I think that if you do anything with commitment and passion, it will come good."