Sydney Modern art gallery extension in doubt as builders walk away from another NSW Government project

The NSW Government has been forced to reopen another major tender process to build the $344 million Art Gallery of NSW expansion after another dispute over costs with builder Lendlease.

One week after the construction giant was removed from the rebuilding of the Sydney Football Stadium, Lendlease has resubmitted its bid for the massive Sydney Modern project after a disagreement with the NSW Government over its initial tender application.

Now, six years after the $344 million project was announced, and eight months after construction was due to commence, the NSW Government is to commence a new search for a company to build it.

Sydney Modern is billed as a public asset of "enormous cultural and economic benefit to Sydney" and promoted as an integral extension of the existing Art Gallery of NSW (AGNSW) that will deliver "more art to more people".

Infrastructure NSW last year invited three companies to tender for the expansion from six that were interested.

As reported by the ABC, Australian firm Probuild and a joint-venture between Japanese firm Obayashi and Australia's Built both abandoned the tender process late last year.

The NSW Government pledged $244 million to support Sydney Modern in its 2017/18 budget with the other $100 million being raissed through private philanthropy from donors such as Gretel Packer, gaming machine millionaires the Ainsworth family, Westfield's Lowy family and notable philanthropist Kerr Neilson.

In addition, Susan Wakil and Isaac Wakil's Wakil Foundation contibuted $20 million - the biggest single cash donation in the Gallery's history.

As reported by the ABC, Art Gallery of NSW  Director Michael Brand said he had been advised the process was "well advanced" and expected a contract to be awarded "in the near future".

When announced, Sydney Modern was promoted as a way of doubling the gallery's size by adding function space and more floor room to accommodate temporary exhibitions, similar to exhibition spaces in Melbourne and Brisbane.

The plan was announced in 2013 as a $400 million project. A year later it was revised up to $450 million.

Japanese architecture firm SAANA won an international competition to design to the new gallery with its plan for a series of glass boxes arranged in a cascading fashion down the green space, north of the original building.

However, the budget for the project was later adjusted down to a $344 million to fit the funds available.

In November last year, the Gallery welcomed planning consent for its expansion, which it said paved the way "for construction to commence in early 2019".

Images: Architectural renders of the Sydney Modern plan.