R167m Hull Street housing project stalls again amid funding crisis

THE R167 million Hull Street Social Housing project in Kimberley has hit another snag, with the site once again abandoned and work grinding to a halt due to insufficient funding.

The keys for the first 100 houses were scheduled to be handed over in August this year, while all 372 units were supposed to have been completed by October. However, this was not possible due to escalating costs and additional geotechnical remedial work that is required.

Construction was previously placed on hold for eight months in 2024 due to administrative problems.

In June, the MEC for Co-operative Governance, Human Settlements and Traditional Affairs (Coghsta), Bentley Vass, indicated that the drainage problems – where the soil became flooded during heavy rainfall – had been resolved.

Indefinite completion date

Coghsta head of communications, Babalwa Mzambo, explained that a realistic revised completion date could only be determined once additional funding had been secured.

“A scope of remedial geotechnical works must also first be priced and scheduled. A new or existing contractor will have to provide a revised programme, and a new cashflow must be confirmed.”

She added that the earlier expected completion date of October 31 had already been pushed back due to delays and contractor changes.

Mzambo indicated that the project had exceeded its original budget.

“The original grant quantum priced at R271,867 per unit was insufficient, given price escalations and unforeseen geohydrological/geotechnical variations. The Consolidated Capital Grant (CCG) utilisation stands at 90 percent, and the Development Bank of Southern Africa debt facility will not be enough to carry works to completion.”

She stated that a recommendation had been made to adjust the grant quantum from R271,867 to R426,308 per unit to make the project viable.

“Currently, the CCG is already largely utilised. Whether or not additional funding will be granted is a decision for the Social Housing Regulatory Authority/Coghsta, and potentially National Treasury/Presidential Strategic Integrated Projects (SIP) oversight.”

Mzambo explained that the main reasons the grant funding was exhausted before completion included:

• Underestimation of ground conditions – shallow groundwater required additional drainage and groundwater control measures (costly variations).
• Contract price adjustments and escalation – contract sum increased (documents cite increases from R144.6 million to R167.5 million).
• Delay and contractor disputes over payments and contract adjustments, causing suspension and re-procurement costs.
• Time gap between grant award (2020) and construction (2022/2024) – prices and input costs escalated.

She added that these combined factors exhausted the originally allocated grant and highlighted the need for an additional grant top-up.

Mzambo said the contract value of R167.4 million, including VAT, was insufficient to complete the project.

“The old CCG grant quantum of R271,867 per unit means the Hull Street Social Housing project is underfunded, and there is a strong possibility that it might be left incomplete by the current contractor.”

Past contractors and progress on site

She indicated that while construction started on July 5, 2022, the principal contractor, Amandla Building and Construction (Pty) Ltd, suspended civil works on February 6, 2023, due to contractual disputes pertaining to SHRA payments and contract price adjustments.

“During November 2024, Moago Construction (Pty) Ltd was appointed as the new principal contractor.”

Work resumed in January this year.

Mzambo indicated that, out of the total 372 housing units, 144 units had been completed so far.

“Brickwork is nearing completion, with only four out of the 17 blocks remaining,” she added.