Construction site ranking: This is what Karlsruhe spends the most money on

by Nov 2, 2022

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With a population of just under 300,000, Karlsruhe is the second largest city in Baden-Württemberg, the most bicycle-friendly city in Germany and a pioneer as a technology location. The city is also far ahead in finances, in the negative sense: according to the financial budget for 2022/23 approved by the municipal council, the annual deficit is now 103.8 million euros.

In addition to the Corona pandemic and mismanagement by Karlsruhe’s city council, Karlsruhe’s financial crisis results not insignificantly from deliberately accepted debts for major construction projects. But what has caused the mountain of debt to keep growing? Here follows a critical look at the five largest and most controversial construction projects in Karlsruhe in a ranking.

Comparison of all major projects
Construction site

1st Baden State Theater

The new Baden State Theater is to become the cultural center of the city. Planning has been underway since 2014 for the redevelopment of the multi-branch building, which opened in 1975. The theater is home not only to drama and popular theater, but also concert, ballet, Young State Theater and opera. The refurbishment was originally budgeted at 125 million euros. Construction is scheduled to continue until 2032 – a full 12 years.[1]

But the project is not free of political opacity and construction problems. Cost increases were announced one slice at a time, forcing the major project to be repeatedly discussed by the city’s council. In 2015, in response to a question from the voters’ association FÜR Karlsruhe (then GfK), the city confirmed that the 125 million euro construction costs could be maintained and that there was binding cost control.[2] The city administration’s response stated:

“the total costs of 125 million euros were determined on the basis of a test design using cost parameters and agreed as the upper cost limit between the state and the city. They were the basis for the competition and are also binding in the further planning […].”[3]

A new price calculation in 2017 then caused a stir. After long delays, the public was informed about the increase in construction costs up to 325 million euros. Compared to the 125 million euros budgeted by the city, a price increase of 160%.[4]

In 2021, the construction project reached its cost peak. The new price tag was now 580 million euros, which led to some discussion in the municipal council: Together with Lord Mayor Frank Mentrup, the cultural institutions in Karlsruhe and especially the SPD parliamentary group and the Green Party also lobbied for the costly renovation. The CDU, FDP, AfD and the parliamentary group of Freie Wähler and FÜR Karlsruhe were skeptical.

Cost increase in the construction of the Baden State Theater

In response to a question from Councilwoman Lorenz in the municipal council, Mayor Mentrup replied that the 2014 price would have been political in nature.[5] In order to keep the costs in line, some parliamentary groups even advocated in the meantime for a complete new construction of the State Theater, which would have undercut the costs of the renovation from 2017. Many people now doubt that the end of the price increase has been reached:

“From various conversations, we have learned that many are already expecting 700 million euros. No one believes that it will remain at 580 million euros. The past has shown us that you can’t rely on the costs quoted.”

says city councilor Friedemann Kalmbach (FW|FÜR).

By way of comparison, the Elbe Philharmonic Hall in Hamburg, a major political issue in recent years and a construction project that has increased its construction costs tenfold, ultimately cost 800 million euros. According to the calculations of the parliamentary group Freie Wähler | FÜR Karlsruhe, this means only 100 million euros more than the Badisches Staatstheater.[6]

An “economic solution,” as stated as a goal of the city administration, will fall far short. Paying off the state theater will cost the city about 20 million euros a year over a period of more than 20 years. With a current construction price increase of 460%, this makes it the clear #1 major construction project in the city.

2. the Karlsruhe combined solution: subway and car tunnel for the city center

The newly inaugurated Karlsruhe subway, whose network is one of the shortest in Germany and cost almost 1.5 billion euros, took a similar amount of time to build as the Baden State Theater. As with the construction planning of the Baden State Theater, the cost budget could not be kept. In order to create more space in the city center and to enable a pedestrian zone in Kaiserstraße, the project was approved in a referendum in 2002 with 55% approval. [7] The target for the combined solution consisting of an underground tramway and a car tunnel under Kriegsstrasse was around 500 million euros.

In the following years, however, Karlsruhe endured an odyssey of new costs: In 2004, the building application showed a sum of 495 million euros, which was even lower than the budgeted costs.[8] After the tendering process was completed, the costs settled at 647 million euros. Despite major financial concerns, the construction project went ahead. In 2014, by which time the tunnel had already taken shape, additional costs of 44 million euros were added.[9]

Then, in 2015, there is the big cost bang: the highway tunnel and the subway were now supposed to cost 905 million euros. It is also becoming clear that the construction end date of 2016 will be missed and the opening postponed to 2021. Nevertheless, enormous construction progress is recorded during this period: Construction sites at various locations are completed and work shifts further inside the tunnel.[10]

Then in 2019, there are problems with the construction company. Due to the sharp rise in prices for building materials and inflation, a further 100 million euros will be due, bringing the total price tag to over one billion euros. At the same time, it is announced that the opening will be postponed until the summer of 2021.[11]

In 2020, the ever-increasing construction costs are calling the Federal Audit Office into action. The latter observed the project closely and questioned whether the project was still economically viable:

“The previous […] audit results of the Federal Audit Office as well as the decisions related to the project, which are now pending, lead the Federal Audit Office to the assessment that the economic efficiency of the overall project Stadtbahn Karlsruhe Innenstadterschließung is no longer likely to be given.”

was the admonishing assessment of the Court of Audit in a public letter.[12]

For a short time, even the withdrawal of funding was under discussion. Federal grants, as much as 60% of the construction costs, could have been withdrawn due to the concerns of the Federal Audit Office. Baden-Württemberg and Karlsruhe, which each bear 20% of the costs, would then have had to pay for everything.[13]

On December 11, 2021, the time has finally come: After doubling the construction time and tripling the construction costs to 1.5 billion euros, the Karlsruhe subway will be inaugurated to the applause of the first passengers. With the words “This is the beginning of the new Karlsruhe”, Lord Mayor Mentrup opened the seven subway stations. The feedback from Karlsruhe residents about the completed large-scale construction project is also overwhelmingly positive.[14]

Cost development of the combined solution

The second part of the combined solution – the car tunnel – has already been completed, but the opening is still a long time coming. According to a report by SWR, the tunnel’s materials and technology are currently under scrutiny. The report states that a bird got caught in a turbine, whereupon “the rotor blades flew around.”[15] As with the Baden State Theater, the follow-up costs of the combined solution will continue to place a heavy burden on Karlsruhe’s financial budget in the future: costs of up to 50 million euros must be expected.

A life-threatening car tunnel with flying rotor blades, a 200% cost increase, and doubled construction time earns second place in the rankings.

3. Karlsruhe City Hall: Refurbishment with pitfalls

Next to the gigantic figures of the 1.5 billion combined solution or the 700 million state theater, the city hall with its calculated 76.41 million seems like a small construction project. However, the problem with the Stadthalle, whose renovation was urgently needed, lies primarily in the construction process, which is likely to increase costs to 134 million euros.[19] [20]

“We can do everything – except build,” is how city councilor Petra Lorenz of the Free Voters and FOR Karlsruhe parliamentary group sums it up in her 2021 budget speech. The Munich planning office, which was responsible for the construction process, failed to deliver the city hall and the construction project had to be reassigned. While Lord Mayor Mentrup defends the construction project, the municipal council is appalled by the planning of the building project: “The fact that we are putting our town hall in the hands of a company that is not up to the construction project is an indictment,” remarks councilor Jürgen Wenzel. Now the construction period is postponed until 2025, so that the town hall will then be closed for 7 years. Nevertheless, the municipal council felt compelled to proceed with the project:

“Given the enormous costs of the State Theater, a completely new building would have paid off from a financial perspective, but we have to bite the bullet with the City Hall. In any case, a completely new building would be much more expensive than continuing to build the project according to plan. But Karlsruhe’s city finances will be additionally burdened by the doubled construction costs.”

said Councillor Wenzel.

With probably the most flawed planning and the failure of the general planner, the City Hall secures 3rd place in the construction project ranking.

4. BBBank Wildpark: the new KSC stadium

In 2018, the Karlsruhe City Council voted to rebuild the KSC stadium with a cost budget of 122 million euros. The stadium on Adenauerring receives a completely new building and a new name: BBBank Wildpark. According to the city’s plans, construction should be completed in the summer of 2022 in time for the new season and provide space for more than 34,000 fans.[16] However, things did not go smoothly on the construction site and in the cooperation between the city and the club: the KSC’s top management did not find itself sufficiently involved in the planning of the renovation work. In addition, re-adjustment of the roof structure and the rearranged Birch parking lot prevented a timely completion in May 2022. Now, construction will continue into the summer of 2023 and this season will have to be played on a construction site. As a result, a legal dispute arose between the association and the city of Karlsruhe before the regional court.[17]

“Unfortunately, we did not pull together on this project. The fact that the city administration could not reach an out-of-court agreement with our association does not speak for good cooperation in our city. We know all about problems with large construction projects. But to fall out with the people in charge is a different level.”

finds city councillor Friedemann Kalmbach, parliamentary group chairman of the FW|FÜR Karlsruhe.

At the same time, construction costs rose from 122 million to 155 million euros. With the war in Ukraine, high costs for building materials and rising inflation, further cost increases beyond the current amount cannot be ruled out. However, if you compare the 27% price increase of the Wildpark stadium with the average price increase of public construction projects in Germany of 44%, Karlsruhe’s stadium is almost a showcase project again.[18]

You can see that Karlsruhe will get a nice stadium. The fact that KSC are playing on a construction site this season and that the city administration has fallen out with those responsible puts the Wildparkstadion on a shaky
Place 4
of the construction projects in Karlsruhe that have become expensive.

5. tower mountain railroad or sports halls?

Will the Turmbergbahn and sports halls soon make up the fifth place in the ranking? In April 2022, the Karlsruhe City Council voted in favor of modernizing the Turmbergbahn. The historic funicular railroad in Karlsruhe Durlach is undergoing a complete refurbishment at a cost of a whole 21 million euros, is to be extended and, once refurbished, will be connected to the KVV fare network.[21] However, the Karlsruhe public transport company, which will bear the estimated costs, will be financed by city funds. As a result, the expenses incurred for the Turmbergbahn will be borne by Karlsruhe’s already struggling financial budget. Concerns about the financial burden came from the group FW|FÜR:

“We see it as impossible to agree to the proposal of the city administration in view of the desolate budget situation. The Turmbergbahn is a nice visitor destination in the Karlsruhe area, but we have a responsibility to use the citizens’ money wisely. The experience from the other large construction projects shows that the costs will increase even more. According to an external report, the final sum will be 40 to 50 million euros – we cannot agree to new costs”

says councilwoman Petra Lorenz in the local council.

Further renovations are also urgently needed for some of Karlsruhe’s sports halls. Many sports facilities are no longer suitable for physical education or recreational activities due to their poor condition. Due to the major renovation work in the sports halls, there is usually no space left for regular sports lessons: the situation is getting so bad that parents felt compelled to write a public letter to the city. There it is pointed out that 62 classes from all over Karlsruhe are affected by sports cancellation. It is difficult to move to another hall due to long travel times. Meanwhile, some schools are foregoing physical education classes to allow others to have indoor space.[22]

The new renovation of the Turmberg railroad and the maintenance of sports halls throughout Karlsruhe would further increase spending on construction projects, making them fifth in Karlsruhe’s construction ranking.

Major construction site Karlsruhe finances

Indebtedness of the City of Karlsruhe

Karlsruhe’s debt burden has grown enormously in recent years. Whereas in 2018, the average debt per inhabitant in Baden-Württemberg was still 2,869 euros, in 2021 it will already be 4735 euros. By comparison, the state capital Stuttgart with its major construction site Stuttgart 21 has a per capita debt of 2,314 euros.[23]

Karlsruhe’s dark red figures have not been a secret for a long time, but that did not stop the city administration and the municipal council with a majority of SPD and Greens from approving further spending. Finance Mayor Gabriele Luczak-Schwarz (CDU) warns of difficult years ahead:

“If we don’t correct our course, we’ll slide into debt in the next few years that won’t be approvable as it is.”[24]

As a result, the city’s budgetary authority would have to be turned over to the state government. This means that with oppressive debts, only the most necessary investments would be approved by the state administration and there would no longer be any financial leeway for the city.

The main cause of the high-deficit finances is not a lack of revenue. Thanks to many companies and good living conditions, the city’s tax revenues and profitability are right. City finances are failing because too much money is being spent. In recent years, for example, many new positions have been created in the municipal service, but this does not protect against staff shortages in relevant city offices such as the Citizens’ Registration Office, where a processing backlog has prevailed for months. Additionally, many of the municipal corporations are not profitable:

“Many of our companies, such as VBK or KVV, live on enormous deficit offsets from the city. If the deficits could be mitigated in these places, then this would help to ease the financial situation. There is work to be done there. However, the fact that local companies have to compensate for the city’s mismanagement with very high trade tax levies makes us doubt for the future whether Karlsruhe can remain a technology location with many up-and-coming companies. In any case, this is not business-friendly.”

said councilwoman and deputy President of the North Baden Trade Association Petra Lorenz.

Thus, it can be seen that Karlsruhe’s finances suffer from many things: Too many municipal staff, a spend-happy city council and a series of major construction projects that went wrong in terms of construction costs, construction time and construction planning. Large cities such as Hamburg and Stuttgart also afford such risky construction projects, and Karlsruhe has five of them.

View from the visitors' gallery into the municipal council

3 ideas how to avoid such construction problems in the future

What can Karlsruhe do to avoid problems with major construction projects in the future? The parliamentary group that accompanied Karlsruhe’s construction projects as they developed in the city council has three ideas for making the city’s construction projects more transparent, clear and coordinated in the future.

A clear construction analysis / needs assessment / feasibility study by an external body.

The costs and construction plans of Karlsruhe’s major construction projects changed frequently during the construction process: construction times were extended, costs had to be adjusted and contractors changed. With a comprehensive feasibility study before the construction process begins, deadlines and costs could be met. In a feasibility study, major projects are examined to determine whether the estimated costs and planned construction time are feasible or need to be corrected. Such a study is prepared in cooperation between the city, construction companies and an external panel of experts. This would involve all stakeholders in the planning process and illuminate all perspectives. An external group of experts or a staff unit for project control, staffed with civil engineers, architects, financial and economic experts, mediates between the city administration and the construction company and an independent opinion can be brought in. It would also be conceivable to have partnership contracts with offices and construction companies and to offer fee bonuses for planners and executors in the event of cost savings. In addition, politicians from the local council and the city administration can call in an independent expert opinion, and the construction company can receive support from other experts. However, a feasibility study can also be used during the construction process to evaluate the benefits of unplanned construction changes.

Modern IT-supported planning methods such as Building Information Modeling (BIM)

To make planning more structured, Building Information Modeling (BIM) can be incorporated in the future. BIM digitally visualizes the construction project in the planning phase and thus fundamentally changes the preparations for construction. The information of the individual construction phases is entered into the modeling software by all construction participants, so that costs and construction time can be calculated concretely.

This requires precise coordination of the parties involved in the construction, and the information – such as the building materials required, the planned size of the structure or the number of doors – must be exact so that the BIM program can determine accurate values. Field reports on BIM show that the risk of procrastination in design and construction are significantly reduced, the workload is made more efficient, and costs can be determined more transparently and accurately.[25] These costs must be reflected in the medium and long-term financial planning.

Municipal council: Provide public money only when clear planning has been done.

Karlsruhe’s city council has spent 2.5 billion euros on construction projects over the past 20 years. All the more fatal: The budget for all construction projects was around 850 million euros. Uncoordinated construction planning and adjustments led to a financial burden for the Karlsruhe, state and federal budgets that was more than twice as high as anticipated.

Construction contracts should not be awarded until the detailed design has been completed.

“In the future, it should apply: First the planning, then the money. We had to learn that there is no point in overzealously approving the citizens’ money, which may then be used incorrectly. In the future, we should set ourselves a clear framework and stick to it – in the construction period, as well as in the construction costs.”

so city councillor Friedemann Kalmbach (FOR Karlsruhe).

Often money was released in the local council because without more money the construction project would have stalled. In order to avoid hopeless construction situations in the future, the local council must limit itself and be more responsible with public money. This can be done by setting a cost cap through which service reductions must be accepted.

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