The State Government has reached a final settlement with builder BGC over the troubled Perth Arena project – meaning the final cost of the venue will be a staggering $548.7 million.

The settlement appears to end one of the biggest blowouts in a public works project in WA's history.

The former Labor Government initially committed $160 million to the stadium project in 2005 before doubling the budget to $320 million after design modifications and escalations.

Labor also decided to add an underground car park during the middle of the tender process, which added more to the cost.

Under the contract signed by Labor, the State was responsible for claims made as a result of changes to the stadium's design.

Treasurer Christian Porter said BCG had sought an extra $65 million for the job under this provision.

However, after negotiations, the Government agreed to pay an extra $26 million for the claims, which he said represented “the best outcome for the State” in the circumstances.

The Government's most recent published budget figure was $483 million for the 15,000 seat sport and concert venue.

The updated budget figure is contained in today's mid-year economic review, which will be released by Mr Porter this morning.

The Treasurer tried to pin the blame firmly on the former Labor Government.

"Inexplicable and incompetent decisions taken by Labor at the time of tender to fundamentally change the contract to make the State liable for design changes and at the same time change the design of the car park have resulted in the State being exposed to significant design risk and now contract costs,” Mr Porter said.

“Combined with the other Labor design changes relating to the structural steel design, the result of Labor’s decisions has been to give rise to substantial claims from BGC for extension of time and related delay damages.

“After an exhaustive negotiation process, the State Government has reached agreement on settlement of all delay claims linked to any cause occurring up to the end of July 2011.

"The recent settlement figure for BGCs claims of $25.7million represents a significantly lower amount than the $65.4million originally sought by BGC and in all the circumstances represents the best outcome for the State.

“Importantly, BGC has given a clear commitment to complete construction by the current target of August 2012.

“While the project has suffered due to poor planning and terrible contract decisions by the previous Labor government, the Liberal-National Government is committed to delivering an outstanding, world-class venue to the people of Western Australia next year.”

The West Australian

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