Derby City Council

Council’s cross-party Scrutiny Board vote down recommendation for an Independent External Review of A52 Project

At a meeting, this evening, of the Council’s cross-party Executive Scrutiny Board, the Deputy Chief Executive and Chief Finance Officer were given the opportunity to provide some insight into why the A52 improvement project was overspent, how much the whole project is likely to cost, and when it would be completed. No answers were given!

The Executive Scrutiny Board meets to examine all of the papers being presented to the Cabinet the following day. It has the power to make recommendations which the Cabinet can choose to follow. The Board consists of 6 Labour Cllrs, 5 Conservative, 1 Lib Dem, and 1 UKIP [Chair]

The Officers were proposing that a further £7.65m should be approved by the Cabinet tomorrow night but were unable to give a consistent story as to what it represented. It changed from :

  • The total of the costs incurred by the contractors, to date, but which remained unpaid, to;
  • the above, including expected costs for the next 3 months
  • Initially there was a statement that it included £1m as a contingency, and then:
  • the £1m was included for the costs of a complete design review of the project.

The Deputy Chief Executive conceded that they did have a breakdown of the £7.65m but that it might only be made available to the Cabinet in confidential papers ( not for public viewing).

No assurances could be given as to when the project would finish.

It was stated by another officer in the meeting that, at 31 March 2018, the project was on-plan and was considered “green”.

It was confirmed that the main contractor  was on a “target cost” contract (normal for infrastructure projects). That is, a quote would have been provided, at the outset, ( ~ £9m) based on a given design / bill of works. As, and when, there were variations to this base position then this would trigger a “compensation event” which, typically, would result in additional payments.

The Senior Officers could give no re-assurance that they had any idea of why the overspend had arisen, and what had gone wrong within the project governance process. Their answer was to get an internal team to spend 3 months examining all aspects of the project. There were no statements that further deviations had been contained, and that it wouldn’t get worse over the summer.

The Labour Group on the Board, led by Cllr Eldret, provided the only robust challenge to the Officers’ proposals. Eldret’s primary ‘suggested recommendation’ was that there should be an Independent external review, and not an internal one. This was put to a vote which was split along party lines – Labour supported the idea, the other parties against – the casting vote was made by Alan Graves (UKIP) – the Chair.

A major opportunity was missed.

Comment.

The fact that the contract is over-budget is not, in itself, the issue, neither is the fact that it is behind schedule; there can be perfectly valid reasons for that if they arise in a managed way. It is solely to do with the concern that the Senior Officers have no idea why it’s gone wrong, no idea how to stop it getting worse, and that the only solution is an intensive 3 month review to provide the answers…with no clarity in the meantime.

This is indicative of a management team which has no competence in project management.

Why was no one, anywhere in the Council, whether they be Officers, or Cabinet Members, asking some basic, obvious questions about status?

There is no reason why this failure should not be repeated on other projects in the capital plan. In 2017/18 the spend on projects was £65m, this will jump to £135m in 2018/19. All to be overseen by a governance structure that does not have the basic capability to spot a 100% over-run before it is too late.

An Independent External Review would have given answers to what went wrong, historically, on the A52 project. It should be able to make recommendations for change to ensure that projects could be managed more robustly in the future. Asking an Internal Audit team, which should have been part of the process, to report on how they and their colleagues could not establish a simple project management structure that would highlight problems more dynamically, is pure folly.

 

 

Categories: Derby City Council

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