“Very recently, it has come to light that there has been a significant difference between budgeted costs, and the cost of work to date, and it is forecast that there will be further cost increases before the project is complete next year”
She went on to say that they are:
“…working hard to find out what has gone wrong”
“At this point, I am not in a position to provide an exact figure of revised costs. We are currently forecasting a shortfall of around £8m that we will fund from Reserves.
There is no question that these improvement works are required.
The original budget was set at £10m – this was increased to £14.9m in March 2017. By July 2017, the project was fully funded with the majority being covered by a range of external sources.
£6.7m D2N2’s Local Growth Fund
£1.7m Derby City Council
£2.6m Highways England Growth and Housing Fund
£2.6m “Derby Triangle” agreement
£0.7m National Productivity Investment Fund
£0.3m Developer contributions
£0.2m Local Transport Plan
Work on site started in October 2017 with a completion date of around early 2019.
£3.5m of the D2N2 funding was authorised for spend in 2016/17
£6.8m of the project costs were spent in 2017/18
This left £4.6m of the funded budget left to be spent in 2018/19. The year when the majority of the construction work would happen. This should have raised concerns months ago!
In January 2018, a figure of £14.1m was included in the budget for 2018/19. This implied a total cost of £24.4m, against the original funding of £14.9m.
A plan to overspend a further £9.5m – without any clear position on how it would be funded.
This £9.5m overspend was proposed by Officers, agreed by the Cabinet and approved at Full Council.
A project of this nature should be professionally project managed; the cost status against budget should have been closely monitored on a monthly basis. The main contractor is Galliford Try who has experience of many complex developments significantly bigger than the A52 improvements.
It is implausible that no one knew about the overspend. The only mitigation is incompetence. A dereliction of duty that no one had kept sight of the total costs charged against the project.
In May 2018, Pulse Associates were appointed as project managers. In their press release, they referred to the project as
“…The £20m A52 Wyvern Transport Improvement Scheme”.
Clearly, they had been informed that it was planned to spend £5m more than budget….yet no one in the Council knew??
There will be an investigation, the results of which should be made public regardless of who it embarrasses – this is about competent governance over public money. Those given that responsibility over this project have failed, and should be held to account.
…and why wait until just a few days after a new Council is elected to reveal the overspend?
Categories: Derby City Council