Agenda item

Questions from Anne Brookes to the chair of the Audit Committee, Councillor Colin Hay

1.

It is the responsibility of the Borough Council, officers and elected members, to ensure that public money is safeguarded and properly accounted for, and the report to this committee regarding the overspend shows a complete failure of control throughout the project,  and that even when completed, the actual details of the overspend remain unknown.

If managed properly it would have been possible, at any time, to know why, where and how much the overspend was likely to be.  The committee, if properly undertaking its duty and responsibility, should question why it is being asked to spend more public money on further audits to identify what was spent. A public interest report following the legal case against the former Chief Executive made recommendations concerning managing risk, yet these have been ignored. We are again in the situation where evaluations are only made after the event, and it seems likely that the overspend on the Art Gallery will be close to or possible top £½ million of public money.

What will the committee do to ensure that there is a proper process in place to minimise, at the very least, the risk to the council and public funds, and stop just accepting these hindsight reports promising to identify ways to prevent this happening in the future?

Response from Councillor Colin Hay, Chairman Audit committee

The statement made by Ms Brooks relating to responsibility is correct and the Council has always recognised this by putting in place a series of financial rules and internal controls. In addition to this the council provided a project team, led by a qualified and experienced Project Manager who was supported by an external Construction Project Manager. The Project team was governed by the Council’s financial rules, controls and its Prince 2 based approach to project management, all of which are designed to ensure that public money is safeguarded and properly accounted for.

The Executive Sponsor for the project reported to Council in February 2014 that the outturn cost of the extension to the Art Gallery and Museum had exceeded the budget by £360,000.  As a result of this the Council agreed to commission Grant Thornton to carry out a review and to report back to Audit Committee on its findings.

Grant Thornton’s report was considered by the Executive Board and was tabled for consideration at the Audit Committee meeting on the 11th Dec 2014. However since then additional expenditure has been identified and the report has been put on hold until after a discussion by the Audit Committee this evening and to account for any additional work by our internal and external auditors.

The Grant Thornton draft report contained specific recommendations and the management response has been that they will all be accepted and acted upon.

When the work of the auditors is complete the Audit Committee will then be asked to consider how best to improve all of it policies procedures and working practices and to make recommendations to prevent this happening again. 

In a supplementary question, Anne Brookes asked how the Audit Committee would ensure that any measures were followed.   

The Chairman explained that Grant Thornton had been commissioned to look at this issue.  When Audit Committee considered the recommendations and management response, they would no doubt be asking questions regarding whether financial regulations and procedures had been adhered to and if not, why not.  The Audit Committee would then consider any lessons learnt and monitor implementation of any recommendations.   

2.

In a project such as this, financial control throughout is inextricably linked to the practical project management function.  It is not unusual for projects of this scale to go over schedule and over budget, but when public money is involved tight control is a duty and the committee should question the 'glib' statements made in the report about 'shared burden' and the overall success of the finished Art Gallery.

When visiting the Art Gallery, the clean 'modern' finish is entirely spoiled by a very obvious 'error' in project management, where patches are evident in the large flank wall in two places when accessing the upper galleries. It would appear that after the wall was 'finished' it was necessary to knock into this wall for (I assume) some incomplete services. (I have attached photographs of these for the Committee) There are also issues that could be raised about the finish on the floor in the entrance atrium, and the holes left in the wall after what appears to be more than one attempt to install the hand rail going up the stairs. This makes a mockery of the back-slapping 'awards' list for this building, and in view of the high cost this should not have been accepted. This is a risk to the reputation of the town.

Who was responsible for 'signing off' completion of this building, and why were the contractors not made to rectify this before the new building was opened and what measures are in place to make the contractors responsible, at their cost,  for any ongoing problems that may occur, and over what period?

Response from Councillor Colin Hay, Chairman Audit committee

The ‘signing-off’ on the completion of certain areas of the building was undertaken by the Senior User both before and after the re-opening, this was after discussions and approval by the Architects and Design Team. 

There are a few defect issues still outstanding that need to be rectified and agreed with the architect and the contractor, the markings on the wall are one of these.

It was not possible to rectify this issue prior to the opening of the AG&M, discussions over the identification of a possible solution are continuing.

In a supplementary question Anne Brookes asked, what assurances could be given that the holes in the walls would be resolved, if not completely redone, how long this would take and who would pay for it.

The Chairman asked that the Governance, Risk and Compliance Officer answer this supplementary question.  He advised that as with all projects of this nature, there came a time when the final payment needed to be agreed.  This often allowed 12 months, as a guide only, to rectify defects, a period known as the snagging period.  The Council’s property department had a list of snagging issues and discussions were ongoing with the contractor, whom would bear the cost.  It could be that the solution was to undertake extensive work or indeed to do nothing.  The Wilson was open to the public 7 days a week and disruption was a factor for consideration.  The marks that had been highlighted were only aesthetic and not structural.