Money-Growing: Bolshoi Redevelopment

That is, of course, unless the ongoing conflicts between the parties involved in the Bolshoi’s redevelopment do not disrupt the process. Moreover, there are many who nurse a grudge feeling they have been denied a slice of the pie in the form of budget funds allocated for the reconstruction.

The story began in the early 1990s when the Russian government moved to renovate the country’s landmark theater renowned across the globe. The work is to be carried out in two stages.

At first, a complex of buildings of the State Academic Bolshoi Theater was to undergo reconstruction, including a sister theater built within the Teatralnaya Square ensemble, the engineering building, the theater museum and a number of auxiliary properties; the second stage would focus on the redevelopment of the historic theater building itself with a view to increasing its size, among other things, through the development of underground facilities.

Task Assigned to Moscow

Moscow city hall was hired as a general contractor to oversee the conceptual and design stages of the project. For its part, the city government named Mospromstroi the general contractor and Mosprojekt-2 as the chief designer for the Bolshoi’s redevelopment. But with the Budget Code adopted in 1998, the federal government was given the sole right to oversee projects financed from the federal budget.

It took the Russian government 12 months to choose between the Ministry of Culture and Gosstroi, the State Committee for Construction and Housing. Eventually, on Oct. 12, 2000 the government decreed in Gosstroi’s favor. Under its guidance the development of the Bolshoi’s sister theater continued and was completed in late 2002.

Two years earlier, in late 2000, the government hoped to launch the redevelopment of the historic theater building as soon as the New Stage was commissioned.

But as they spoke of deadlines the federal officials had still not chosen a contractor for the second phase of development. The candidates were the Culture Ministry and Gosstroi. Admittedly, in April 1999 the government had already held a bid for the conceptual design of the Bolshoi’s renovation, won by JSC Kurortproekt. An alternative plan submitted by the Central Research Restoration Design Studios was rejected by the Culture Ministry and Gosstroi.

Fight for the Helm

The Culture Ministry was not placed in charge of the redevelopment of the Bolshoi’s historic theater building until 2003. It was then that the ministry was invested with the legal power to select a management company that would carry out the most important preliminary work, namely, hold the tender to select a general contractor.

The ministry opted for the company Vneshstroiimport. But before Vneshstroiimport had time to take up their duties the Culture Ministry received a letter from the Ministry for Economic Development and Trade stating that a management company could not be appointed but had to be hired through a tender.

Pursuant to the Economic Ministry’s recommendations, in July of 2004, the federally-owned company Directorate for Construction, Reconstruction and Restoration of the Bolshoi Theater, established by the Federal Agency for Culture and Mass Communications to oversee the project, held a tender to select a management company. The tender was won by Tekhnointorg.

Then, in October 2004, Vneshstroiimport asked the Moscow Arbitration Court to invalidate the tender results. The plaintiff claimed the tender had been held with procedural violations. The claim was rejected only to be upheld later on by the 9th court of appeal.

In early February 2005, the court pronounced an agreement between the Directorate and Tekhnointorg invalid in a move that threw the project into jeopardy again. Moscow was faced with a threat with yet another protracted development, commonly referred to as a ‘dolgostroi’, Tekhnointorg’s chief executive Alexei Zhidakov told Vedomosti.

The point is that by the time the 9th court of appeal gathered to hear Vneshstroiimport’s claim, Tekhnointorg had already held tenders to hire two general contractors. The winners of those tenders had already signed agreements with the Directorate for Construction, Reconstruction and Restoration. Under one of the deals, worth 190 million euros, Bosch Rexroth undertook to supply theater equipment. Bosch Rexroth had been named the winner in the tender where two other companies took part, Austria’s Waagner Biro and Korea’s Jass Tech.

Another deal, worth 12 billion rubles, was signed with an affiliate of SUIholding, SUIprojekt, contracted to carry out the reconstruction of the theater building after it won the bid against Serbia’s Napred, SU-155 and the state-run company FGUP No.5 under the Federal Special Construction Service of Russia. Bolshoi officials made an announcement to the effect at a news conference in March.

At that time, market participants assumed that if the court ruling on the culture agency were upheld, the agreements with the general contractors that had already been signed would have to be severed. That is why the Directorate filed a complaint to the Federal Arbitration Court of the Moscow Region, and in April the case was closed.

Meanwhile, Bolshoi began preparations for reconstruction work and in early July the theater was closed with a view to reopening three years later, in 2008.

But six weeks after that happened the project again caught the attention of certain government agencies. Speaking at a government session focusing on the Bolshoi’s redevelopment, Russian Economy Minister German Gref said he believed the cost of the project was overstated. To recap, the reconstruction had been estimated to be worth 25 billion rubles, or nearly $1 billion.

Following Gref’s statement the Federal Agency for Culture and Cinematography ordered an examination of the estimate of expenditure by the Central Research Institute of Economy and Management in Construction (TsNIIEUS).

Officials at the Main State Expert Examination Committee who had prepared the feasibility study of the project explained that the amount of 25 billion rubles included the cost of reconstructing the theater’s storage facility on Plekhanov Street, requiring 6 billion rubles. Reconstruction of the main building would cost 19 billion rubles of which 7 billion would go to Bosch Rexroth and 12 billion to SUIprojekt, says Yuri Melnikov, deputy head of the expert committee.

Natalia Uvarova, chief spokesperson of the Federal Agency for Culture and Cinematography, told Vedomosti that her agency was as interested in the results of the examination as the Economy Ministry. “We need to put an end to speculation on the discrepancy of costs and to get on with the work,” Uvarova maintains.

Vedomosti’s sources, versed in the developments surrounding the Bolshoi’s reconstruction, believe that the issue of overstated costs was raised after the construction firm Mabetex began to lobby its interests in the government.

Mabetex had previously been contracted by the presidential property management directorate of Russia to carry out the renovation of the Grand Kremlin Palace. A government official who attended the session hosted by Gref told Vedomosti that Mabetex had received active support from the Culture Ministry. A Mabetex official assured the same session that his firm could rebuild the theater for 9 billion rubles.

Gref’s press service refuted that report. “The Ministry for Economic Development and Trade does not view Mabetex as a contender and does not plan to revise the results of the tenders already held,” Alla Borisenkova, a spokeswoman for Gref told Vedomosti. Borisenkova said the ministry had never insisted on the examination of the costs but had more than once urged the parties involved to optimize the reconstruction costs.

For their part, the parties who took part in preparing the theater for reconstruction tend to see politics behind the ongoing developments. In their opinion, the budget should have been discussed before the project was endorsed. “After all, this is a cosmic project,” says one of them.

The reconstruction plan envisages the restoration of the auditorium and the reinforcement of the load-bearing structures of the building. The size of the theater will be enlarged through the development of 5-level underground facilities over 20 meters under Teatralnaya Square.

The underground facilities will house not only state-of-the-art stage equipment that will replace the obsolete machinery dating back to the 19th century, but also a concert hall and a cloakroom.

“We cannot build additional stories or expand the space as [the building] is an architectural monument,” Melnikov explains. The cost of the project could be reduced, but only by dropping some of the plans. For example, abandoning the plan to develop the concert hall under Teatralnaya Square could save 15-20% of the costs, or some 3 billion rubles, he says.

SUIprojekt believes that even such a move would result in poorer quality engineering and communication lines and less space for underground stage facilities.

For the time being, the parties involved fear that should the costs be reduced the results of the work will be of a poorer quality. Meanwhile, the Federal Agency for Culture and Cinematography is continuing to probe all the financial and technical operations in connection with the Bolshoi’s redevelopment.

In early September, the agency’s chief, Mikhail Shvydkoi, officially instructed the Russian Academy for Architecture and Construction Sciences (RAASN) to carry out a technical assessment of all the reconstruction projects of the Bolshoi Theater proposed since 1999 and to evaluate their viability.

10 Years or 200?

In doing so, SUIholding’s CEO Azari Lapidus is convinced that Shvydkoi wants to prove that the project that is eventually adopted is the only possible option if we are to preserve the historic appearance of Bolshoi. “Any other project would imply a superfluous reconstruction, and 10 or 15 years after it is completed the theater will need repairing again,” he says.

Built on a subterranean riverbed the Bolshoi Theater faces the serious risk of sagging, he explains. “The lion’s share of the funds will be spent on preserving the theater in a good state for the next 150 to 200 years,” Lapidus goes on.

But, regardless of all the issues around the Bolshoi, the reconstruction of Russia’s landmark stage is underway. “Some 2 billion rubles out of the total amount allocated have already been spent,” adds Zhidakov of Tekhnointorg.

Obsolete equipment is being taken out, and repairs have already been launched. SUIprojekt says the building is in urgent need of restoration, as all the walls are covered with cracks. “I think the load-bearing capacity of the building has dropped below 50%,” Lapidus said.

He is convinced that reason will prevail and the ongoing expert examinations will not result in the suspension of work. The results are to be published in mid-October. Uvarova said that the examination of the estimated costs has already been completed, but refused to elaborate.

“The results will be announced after the technical examination is completed, too,” she said, adding that TsNIIEUS had found no faults in the budget, and therefore, the redevelopment will proceed as planned. Melnikov believes that the architects, too, will approve of the project.