Of the total £14.9m budget for the A52 Improvement project, £9m was allocated for the main construction works, contracted to Galliford Try. Galliford was appointed in October 2017 with a view to project completion by December 2018 – a 15 month contract.
By January 2018, Galliford had invoiced £5.17m (~ 60% of its budget) in just 4 months (~ 25% of the project timescale). Whilst there may be perfectly valid reasons that the cost profile may not be linear, it should be cause for a cross-check. Subsequent events now confirm that this was an issue and the project management checks seem not to have taken place ; had these been done, then, there would have been more of an opportunity for the overspend to have been contained.
This situation was inevitable as it is clear that the £14.9m funding was based either on what was available, or a very questionable cost estimate derived by the Derby City Council team significantly in advance of any detailed design work, or the appointment of the main contractor.
When Galliford Try came on board for the main works contract in October 2017 ( AFTER the budget was set), the total value of £9m could only have been based on the level of unallocated funding. The question outstanding is how this was reconciled to the cost of the work actually required to be completed.
On 28 July 2017 main funder D2N2 confirmed that the total funding for the whole project was £14.906m.
- By this date £2.1m had already been spent
- £1.8m identified for land purchases
- £0.8m for advance works
When the main works contract was signed in October 2017, there was just £10.2m left to spend. This would have been the maximum, assuming no other identified project costs.
The public facing rationale for the overspend was due to the fact that that the improvements have now proved to be more complex than originally envisaged. That may be the case – but this will be due to bad planning not complexities that were inherently incapable of being assessed during detailed design/survey.
If the project had been properly managed this would have been recognised promptly and corrective actions implemented quickly.
It would not have sent the Council into a “tail spin”, 3 months after the problem was evident, resulting in “darkness” for 4 months…and counting.