1. Presentation to the Portfolio Committee on Sport and Recreation – funding of 2010 stadia Presented by: Mike Marsden, Executive Director: Service Delivery Integration, City of Cape Town Date: 22 November 2015

2. Agenda Basis for original stadium estimate Total cost Green Point stadium Secured funding Funding shortfall Stadium development process Stadium design and cost-effectiveness Price escalation Reasons for price escalation Municipal Finance Management Act constraints Suggested way forward

3. Basis for original stadium estimate Detailed design to state of being able to extract quantities Value engineering - cost reductions International and local Quantity Surveyors with current industry rates Final engagement with OC Technical Team Estimate included in Business Plan

4. Cost analysis (excluding VAT) ItemBus. Plan estimateTender Tender price1 842 601 0002 630 000 000 QualificationsNIL116 665 000 Escalation (10%)184 260 000274 667 000 Contingencies (5%) 101 344 000151 067 000 Prof. fees361 795 000517 736 000 Insurance10 000 000 FIFA overlay30 000 000 Total2 490 000 0003 730 135 000

5. Secured funding for stadium Nat. Dept. of Sport & Recreation City of Cape Town Provincial Government Total R1 960 000 000 R 400 000 000 R 112 000 000 R2 472 000 000

6. Cape Town’s other contributions include: Electrical infrastructure R200 million Reconfiguration of Common R120 million TransportR165 million IT & TR57 million Operational expenditure

7. Funding shortfall Provisional projected cost Secured funding Shortfall R 3,730 billion R 2,472 billion R 1,258 billion

8. Stadium development process Appointment of professional team Concept design and initial business plan Detailed design and final business plan Funding allocation Public tender Pre-qualification stage Priced tender Appointment of preferred bidder Negotiation with preferred bidder (presently underway) Finalise cost Secure funding (MFMA compliance) Award contract

9. Stadium design & cost-effectiveness 1 Design informed by: FIFA requirements Environmental Impact Assessment/Record of Decision Financial sustainability Functional, not iconic design Value engineering Initial review and amendments made R3,3 billion > R2,49 billion

10. Stadium design & cost-effectiveness 2 Secondary review underway Roof design Roof materials Cladding materials Construction technique

11. Escalation National Treasury requested to underwrite Awaiting response

12. Reasons for increase in tender prices National, not Cape Town specific challenge South African construction industry capacity Skills shortage Material shortage Plant shortage Supply and demand Very tight timeframes

13. MFMA constraints Supply chain management process Construction contracts cannot be awarded without secured funding Delay costs = R20 million per month

14. Suggested way forward Tender prices received by all host cities be scoped by Nat. Treasury Nat. Treasury consider possible interventions with construction industry Host cities negotiate with preferred bidders Host cities undertake second stage of value engineering Nat. Treasury convenes meeting of host cities to review national situation Nat. Treasury reviews budgetary allocations Demolition of existing stadium to proceed

15. Questions? Enkosi Thank You Dankie