Wednesday, November 07, 2007

More expensive bets

Well, news that Genting International will incur a cost overrun of S$800m for its casino resort (Pix source: Genting International Proposal listed by Wikipedia) on Singapore's Sentosa Island due partly to higher construction expenses has not come as a surprise.

Genting International, a unit of the late Malaysian tycoon Lim Goh Tong's Genting Bhd, now expects to spend as much as S$6 billion to build the Sentosa casino, up 15 per cent from an earlier estimate of S$5.2 billion.

The Reuters report said the new budget for the casino, which includes a contingency provision of S$250 million, also covers the cost of six new attractions as well as improvements to transportation and access infrastructure.

Singapore is undergoing a construction boom due to the award of several large projects such as a new financial centre, the two casino resorts, several shopping malls and a slew of redevelopments of private apartments known as en-bloc deals in Singapore.

Similarly, Sophie's World reckons that cost overrun is expected for the other casino project -- Las Vegas Sands' 20.6-hectare piece of waterfront land at Marina Bay.

Apart from the tight construction market, Singapore is facing a higher import bill for sand and other building materials due to the ban on the sale of sand by neighbours Malaysia and Indonesia.

In addition, the construction job for the Marina Bay Sands project on the reclaimed land is likely to be way more complex than Genting's project. According to an engineer, a lot of big boulders were used in the reclamation of the land in the 1980s. This makes it more difficult to extricate the boulders for the foundation work. By the way, Sophie's World has never seen so many construction cranes on a single site!

So, will the two casino resort developers be able to complete the mammoth projects -- each resort will cost as much as the Circle Line subway system in Singapore -- by 2010 as planned?

Don't bet on it!

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