Committee
Audit Committee, 29 Jun 2004
29 Jun 2004 · S2 · Audit Committee
Item of business
“Management of the Holyrood building project”
Mr Black:
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The answer to that question relates to my answer to the previous question. Design development was taking place at the same time as contracts were being let, and quite a number of the big contracts were for very large fixed sums that could not crystallise until the design development had taken place. That is related to the slippage issue: not only were the projects not fully specified, but they were slipping. As a result, two risks arose. One was that competition was not fully achieved because the contracts were not tendered in any meaningful way; and the other was that, because of the slippage, and because the interrelationship between the different contracts was not working, people found—for reasons sometimes beyond their control—that the delivery of their individual contract was taking much longer than expected. People were therefore incurring costs that were—they would claim—outwith their control. That, in essence, is what was happening.To help to explain how the £68 million design development figure comes about, I ask members to look at exhibit 32 on page 57 of the report. The exhibit attempts to lay out the information as clearly as we can. The top line shows the approved construction budget—not the cost of the whole project—in 2000. The figure given is £108 million, which is the figure from the November 2000 cost plan. To that, we can add a figure for inflation. The figure shown has been calculated from construction inflation indices, which is a perfectly appropriate thing to do. The next figure of £1 million has been rounded up from the £600,000 that I mentioned and relates to the changes that the client made at the margins of its brief. An estimate of £73 million for prolongation, disruption and delay is shown; that has been calculated from the cost consultant's records. A figure of £4 million is shown for the demise of Flour City.The current estimated construction cost, including risk, is shown as £273 million. That is a recognised figure. We asked ourselves where design development fitted into the calculations and we have treated it as a balancing item, because nothing else is left to explain it. I hope that exhibit 32 gives members an idea of what was going on. Design development includes the whole issue of blast protection. I do not say a huge amount about that in the report because it has not been possible to quantify separately the effects of designing in blast protection—certainly not in time for this report. However, it is a significant element of the design development.
In the same item of business
The Convener:
Con
I welcome everyone back to the 14th meeting of the Scottish Parliament's Audit Committee this year. Agenda item 3 is a briefing from the Auditor General for ...
Mr Robert Black (Auditor General for Scotland):
Thank you. On my left is Arwel Roberts, the director of performance audit, who led the team that did the work on the Holyrood building project. On his left i...
The Convener:
Con
Thank you. I invite you to address the committee. After you have done so I will explain the procedure for questions.
Mr Black:
Members should have a copy of my briefing statement and it might help them to follow the text, but I welcome the opportunity to introduce what is quite a lon...
The Convener:
Con
Thank you. Before I invite members to put questions to the Auditor General, I have a number of simple housekeeping duties to perform. I welcome to the commit...
Mr Black:
The cost plan was in preparation for a number of months and was eventually concluded in November 2002. As I understand it, the risk management workshops proc...
The Convener:
Con
From your comments, it appears that the word "separate" is not a mistake—the exercises were entirely separate, in that one plan was prepared without the othe...
Dick Gill (Audit Scotland):
To be clear about the timing, I point out that the risk workshop took place in October 2002 and the cost of the risk was quantified in November 2002, which i...
The Convener:
Con
So the information was available, but it was not incorporated.
Dick Gill:
Precisely.
The Convener:
Con
Page 14 of the Auditor General's briefing states:"Although I recommended in my 2000 report that project management should report project costs on a monthly b...
Mr Black:
On a matter of fact, the client did not change but remained the corporate body throughout. The personalities changed—most notably, there was a new Presiding ...
The Convener:
Con
I might come back later with other questions.
George Lyon (Argyll and Bute) (LD):
LD
I will go back to the 2000 report "The new Scottish Parliament building". Paragraph 27 on page 9 lists a number of recommendations that you suggested should ...
Mr Black:
At the time of the 2000 report, it seemed that all those elements were put in place. The issue is whether the follow-through on some of them was as comprehen...
George Lyon:
LD
Paragraph 20 on page 7 of the report that you published today states:"The Accountable Officer advised the Audit Committee in October 2000 that he had impleme...
Mr Black:
I do not think that the committee was misled. In my opinion, it was reasonable to expect the Finance Committee to have been given full and consistent informa...
George Lyon:
LD
The point that I am driving at is that you recommended to the client monthly reporting on a comprehensive and systematic basis and the Audit Committee was ad...
Mr Black:
Strictly speaking, that recommendation was not satisfied at that time—it was not fulfilled until 2003.
George Lyon:
LD
Paragraph 9 on page 6 of your current report states:"The construction manager repeatedly prepared construction programmes, which included assumptions and com...
Mr Black:
I refer you to the rest of the text that I prepared for that paragraph. As you said, repeated construction programmes were prepared that proved unrealistic, ...
George Lyon:
LD
What were the underlying reasons for the parties' failure to achieve the programmes? Was it because the programmes were unrealistic in the first place or wer...
Mr Black:
The project is such a complex one that I felt obliged to give you quite a long report and to make quite a lengthy statement. Therefore, in answering those qu...
George Lyon:
LD
I understand that.
Mr Black:
Essentially, the client, quite properly, was requiring the earliest possible completion of the project; the construction manager, quite properly, was doing i...
George Lyon:
LD
Okay. I want to touch on another issue just before I let others have a shot. Paragraph 15 on page 7 of the current report states:"The uncompetitive procureme...
Mr Black:
The answer to that question relates to my answer to the previous question. Design development was taking place at the same time as contracts were being let, ...
George Lyon:
LD
How many of the works packages that you looked into were negotiated rather than agreed by competitive tender?
Dick Gill:
Exhibit 34 on page 58 shows the 20 works contracts that the team reviewed. Towards the bottom of the table, members will see that three of the contracts were...
Susan Deacon (Edinburgh East and Musselburgh) (Lab):
Lab
Auditor General, in your report and in your comments this morning, you have made it clear that you regard as fundamental the selection of construction manage...