The Assembly’s Public Accounts Committee published its first report today – on the “very significant overspend and late delivery” on the upgrade to the Belfast to Bangor railway line, was budgeted at £15million for completion by December 2001, final cost £34million in September 2002 – press release here – and the full report is here [Don’t they know how to use links from the index? – Ed]. But with the NI Audit Office report already in the public domain, 20th March this year – pdf file here – and the PAC recommendations focussing on future practice, the question now is does the PAC actually have any teeth?The extracted recommendations of the PAC
7. In future, where legitimate, evidence-based concerns regarding the accuracy of cost estimates are highlighted to senior management, the Committee recommends that the Department exerts a more robust challenge, insists on independent validation of key cost estimates, and does not accept unsupported assertions from Translink.
13. The Committee recommends that the C&AG review the implementation of the Gateway Review process in DRD and its sponsored bodies and report back to the Committee.
16. The Committee recommends that, in future, all economic appraisals clearly stipulate the timescale for undertaking the associated post project evaluation, that these are undertaken promptly and that this is centrally monitored and the results disseminated by the Department. The Committee requests that the Treasury Officer of Accounts reissues guidance on this matter.
22. The Committee recommends that the Department seeks further assurance that the new procedures introduced in Translink following the Currie and Brown report, are in place and operating effectively.
24. The Department should issue a copy of the Internal Audit Review report on the operation of its own new oversight controls to the Committee.
29. The Committee recommends that, where there are major capital overspends such as the Belfast-Bangor project, there is a need for greater budgetary transparency so that the public and elected representatives can more clearly identify from where the additional money is sourced, and what other projects are losing out as a consequence. The Committee further recommends that the Department of Finance and Personnel ensures that this is the case.
31. The Committee recommends that if there is no significant improvement in Translink’s and NITHCo’s performance the Department should undertake a fundamental review of the structures.
35. The Committee never wants to see a case again where a major contract is entered into without a proper contract variation procedure in operation. The Committee would like the Department of Finance and Personnel to ensure that public bodies are alert to this.
42. The Committee recommends that the Department of Finance and Personnel makes it clear throughout the public sector that in future situations where a public body is terminating the appointment of a consultant in this way, it ensures that full rights of redress are retained and does not succumb to the expediency of washing its hands of a problem rather than effectively dealing with the issue.
45. The Committee was told that Translink has improved its contract management and purchasing procedures. However, the Committee would like a specific explanation of how they propose to ensure that this kind of costly confusion cannot recur.
51. The Committee recommends that future Departmental representatives on Translink project boards are alert to any recurrence of additional works being added to the project after the economic appraisal and that the Department of Finance and Personnel revisits the investment appraisal guidelines to ensure that this is absolutely clear.
56. The Committee recommends that Translink establishes a formal action plan for this project with key milestones set to ensure that it is implemented without further delay and that progress is formally monitored and recorded at monthly review meetings with the Department.
58. The Committee recommends that in future, all management decisions are fully documented and comprehensive, clear and accurate minutes are maintained of all Board business.
64. To ensure that potential issues of fraud are addressed appropriately in future, the Committee recommends that the Department assures itself Translink has a Fraud Response Plan in place in line with those adopted by central Government Departments and that this plan is operating effectively.
67. In future, all exceptional payments of this kind to individuals anywhere in the public sector should require not just Departmental approval, but DFP approval. The Committee wants to see such payments made transparent in the accounts and would like the C&AG to draw these to the Committee’s attention as a matter of course.
69. The Committee understands that the normal practice within the public sector is that retirement functions for staff held in high standing are funded by donations from their colleagues. The Committee recommends that Translink and every other public sector body conforms to this practice.
73. Where highly respected individuals are prepared to give time to public boards, the Committee expects Accounting Officers to ensure that their contribution is effectively deployed. In this particular case however, the Committee insists on an assurance from the Chairperson of the Northern Ireland Transport Holding Company that her Board is completely satisfied that it currently receives all of the information relevant to its important oversight role.
From the NIAO summary
The Comptroller and Auditor General’s Report showed:
Part 1: There was a very significant overspend on the project:
The project was approved with a budget of some £15 million and was scheduled for completion by December 2001. However the project experienced a number of difficulties, resulting in a very significant overspend and late delivery.
The final cost of the project was almost £34 million and it was completed nine months later than planned in September 2002.
Part 2: The overspend was the result of failures in several key areas:
There were serious deficiencies in the economic appraisal which under-estimated the cost of the project. The Department accepted Translink’s assurances on the accuracy of these estimates and allowed the project to proceed even when it became apparent that projected costs were well in excess of the budget. [added emphasis]
Maunsell Rail, Translink’s lead engineering consultants, did not specify the contract properly and failed to deliver track designs. These failures contributed to multi-million pound claims from the construction contractor (Mowlem Rail). Translink’s ability to control these cost increases was severely prejudiced by omissions in the tender documentation prepared by Maunsell and the absence of effective contract variation procedures.
Translink terminated Maunsell’s appointment by agreement in November 2001. Even though much of the increased cost resulted from Maunsell’s failures, no damages can be recovered because the Termination Agreement effectively waived Translink’s right to claim. It is difficult to be exact about the quantum of any loss to the public purse. However we estimate the potential loss is in the region of £8 million to £13 million.
In addition to the increased cost of the project, there is uncertainty as to whether it has delivered all of its intended benefits. The original specification of a 90 mph speed limit was reduced to 70 mph and other works on bridges and sea defences were removed from the contract to reduce costs.
Part 3: Action is required to improve future performance:
Many of the problems which arose on the project could have been avoided or their effects lessened if Translink had managed the project properly. Translink had no procedures for project management or the management of consultants and there were shortcomings in procurement practices.
Translink’s documented record was very poor; key decisions were not recorded and documents were destroyed by a senior official.
There were indications of excessive generosity to Translink staff and the Board failed to provide effective oversight on decisions which put public funds at risk.
Translink has made progress with plans to improve project management but implementation in some areas has been slow.
The Department stated that significant lessons have been learned and that action has been taken to improve its control of Translink capital projects.