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Last Updated: Tuesday, 29 June, 2004, 11:08 GMT 12:08 UK
Auditor General's Holyrood report
Scotland's auditor general, Robert Black, has produced a report into the management of the project to provide the new Scottish Parliament building.

In the report, Mr Black examines why the project has more than doubled in cost and been delayed by almost two years since his previous evaluation in September 2000.

His conclusions can be summarised as:

  • 1. The Holyrood project was an extremely difficult and complex building project. The estimated cost increased by 220m and slipped by 20 months in the four years since his last report. Mr Black said it was important to take account of the quality of the building, which seems likely to satisfy the high standards specified in 1998.

  • 2. The difficulties of delivering the Holyrood building using the 'construction management' method of procurement lie at the heart of the problems that arose. Mr Black said that this method means most of the risks stay with the client rather than transferring to the contractors.

    SLIPPAGE

  • 3. The main cause of the delay to the project was the production of detailed design variations and the late supply of information during the construction process.

  • 4. There were difficulties associated with the construction of a very complex, densely developed, unusual building against very tight deadlines. Both the architects and some trade contractors did not deliver on time some critical elements of the design work.

  • 5. Project management required a very demanding timetable for completion. The construction manager and project management should have recognised earlier that its targets were unlikely to be achieved.

  • 6. Project management should have done more to address the root causes of problems, which were adversely affecting the cost and programme. The construction manager repeatedly prepared construction programmes, which included assumptions and commitments by the design team and contractors that were subsequently not achieved.

    COST INCREASES

  • 7. The client did not significantly alter its requirements after the middle of 2000. The size and layout of the building were not materially altered. But the cost of realising this design escalated enormously.

  • 8. The main reasons for construction cost increases after 2000 were design development and delay in the construction process.

  • 9. Detailed development of the approved design added 80m to construction costs. For this project, design development became a process of costing a developing design rather than developing the design within a cost limit.

  • 10. Because many of the works packages were let when there was uncertainly about the work involved, it was difficult to achieve good competition and deliver value for money. This restricted price competition led to much more negotiation with the contractors than was desirable.

  • 11. The decisions to award contracts with a large degree of uncertainty were the result of the client's programme requirements. By awarding contracts for work with uncertain scope and design the client was in a weak position to resist subsequent claims from contractors for extra time-related costs. In cases where the performance of trade contractors might not have been satisfactory there was little opportunity to attribute delays to these individual contractors because of delays occurring elsewhere in the overall programme.

  • 12. The uncompetitive procurement of works packages has allowed contractors' claims for prolongation (ie, the extra costs of doing work over a longer period), disruption and delay, which have added 86m to the construction costs. It is not possible to say how much more it has cost to procure work priced mainly by negotiation with single contractors rather than work obtained through competitive pricing of work. The costs for disruption and delay are not for improvements in the design specified by the client or extra features that added value to the project. These extra costs are the consequence of not fully preplanning the construction works.

    PROJECT MANAGEMENT AND CONTROL

  • 13. Project management and control - Although it is likely that a high quality building is being delivered, the time and cost objectives have not been met. The same quality could have been achieved for less if the whole design and construction process had been better executed.

  • 14. The organisation of the Holyrood project should have had a single point of leadership and control where decisions could be taken about how to balance time, cost and quality as part of the client decision-making process.

  • 15. The parties leading the project did not fully agree a cost plan.

  • 16. In June 2001 the parliament approved a motion that can be interpreted as removing the previous overall budget constraint of 195m. After this decision by the parliament, project management did not establish an alternative overall budget or approved cost ceiling that would allow the costs of the project to be properly managed.
  • 17. There should have been better cost reporting and financial control. Regular reporting to the parliament's Finance Committee of the total estimated costs of the project did not start until July 2003.

  • 18. Risk management for the Holyrood project was not good practice. Because there was no agreed budget limit after June 2001, there is little evidence that forceful action was taken to prevent or reduce the increases in cost.

  • 19. Project management could have taken more action at an earlier stage to control expenditure on consultants.

  • 20. Project management did not seek to convert its construction manager's fee to a fixed lump sum before July 2003 although a clear opportunity to pursue this was available from 2000.

  • 21. Although project management raised some significant questions about some aspects of some of its consultants' work, it should have systematically assessed their performance.

  • 22. Construction management is an unusual method of procuring construction projects in the public sector and it has not been used before for a major public building project in Scotland. The experience and expertise in construction management was not present in the early stages of the Holyrood project and therefore the risks and challenges were not fully appreciated by the client and project management.




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