Link maker

Herefordshire Council branded ‘inadequate’ for Hereford Link Road project in damning report

A special inquiry into the funding and planning for the Hereford Town Center Transport Project (HCCTP) found that Herefordshire Council had no original cost records as spending on the project soared. The resulting report says the project’s budget tracking processes were inadequate across the board’s governance structure, including limited financial information in reporting that resulted in decisions being made without broader consideration. the impact of overall costs.

Auditors say there is “limited assurance” about the increased and additional costs of the project. A series of recommendations are made on how the board can – and should – improve project management processes. Work is currently underway to determine the full extent of overspending.

The scope of the investigation covered reports on project budget and expenditures, purchase of additional land and land cost increases and causes of cost escalation. There was also a review of how project information was provided to the key funding partner, the Local Enterprise Partnership.

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This inquiry looked at events between January 2012, when Cabinet approved £27m of expenditure on the Town Link Road project and the present day. The findings are presented in six reports and the key findings are as follows:

  • Budget monitoring throughout the project demonstrated control weaknesses
  • Governance decisions are made in silos with limited financial information
  • Information presented within the Project Monitoring Group (PCG) and Major Infrastructure Delivery Board (MIDB) regarding the financial situation is limited
  • Controls are needed to manage governance around contract management and increase in spend from contract award price

Auditors found “limited references” in minutes relating to land cost increases prior to May 2019. “Where there are references to certain land cost increases, the minutes do not provide an understanding how these issues developed, why these costs were not budgeted for, and there is a limited audit trail of how they were tracked and escalated in a timely manner,” the report states.

Advisors from the current and previous administrations were interviewed by the auditors. Current cabinet member for transport Cllr John Harrington said he did not receive a detailed briefing about the HCCTP when he was newly elected and does not recall regular briefings.

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It is mentioned that he recalls “certain conversations” with a council officer – identified in the report only as Officer A – about funding and rising land costs about six months after the council was elected. 2019, as project expenditure and budget position information was only provided in January last year. . Cllr Harrington said that while he was aware the budget was “not perfect”, he was unaware of any other financial threats.

Cllr Liz Harvey, the current cabinet member responsible for finance, said advisers had been told there were cost pressures associated with the HCCTP, which meant there was ‘no clarity’ on how much of the rest of the program could be executed within the budget.

Key advisers from the previous Conservative administration told auditors they had not been made aware of any budget pressures over the project’s financial situation. The audit report says the increase in the link road contract was “significant” and the wider impact on the budget was apparently not taken into account.

Also identified are:

  • Significant weaknesses in recording minutes, tracking actions from minutes, integrating relevant documents, and ensuring that copies of minutes were provided to relevant parties
  • Improvements are needed to the board’s contract management processes
  • A need for more in-depth review of projects by the council’s contract compliance team
  • A need to ensure that project decision makers are kept “clearly and fully” informed
  • Project issues were not reported promptly
  • Progress on each of the project objectives has often been reported in isolation without considering the impact on the achievement of the other objectives

“The entire investigation identified key control weaknesses, which prevented the HCCTP project from completing the business case deliverables within the original budget. There were missed opportunities and sometimes what would appear to be a briefing by omission throughout the reporting, monitoring and governance processes over the life of the project, which would have provided an earlier indication of budget overrun issues before the eventual escalation in January 2021,” says The report.

The auditors were unable to identify the original record of land and associated costs for the budget described in the project business case for land purchases. As a result, it was unclear, they say, which properties were added to the original purchase plan, leading to increased costs.

“Without this evidence, it is difficult to determine when in the project’s history the cost increases occurred and for which properties. . There are a number of governance-related weaknesses, including clarity of decision-making relationships and a lack of governance related to increased costs associated with awarding contracts,” the report states.

Other weaknesses were identified regarding compensation events for the contract. Specifically identified is the lack of related records and the concern over service orders apparently not being put in place to sufficiently cover the work needed – further compensation then being required.

The HCCTP is an integrated package of schemes including the new City Link Road, a new transport hub at Hereford station and extensive walking, cycling and public transport improvements. The financial dossier for the project identified the base cost estimate of over £36 million.

This business case outlines the contribution of the Marches Local Business Partnership (LEP) of £16 million. In January 2012 the then Cabinet of Council backed spending of £27m on the link road and in 2015 the then Cabinet approved a further £13.6m, bringing the total budget at £40.6m. This, the auditors note, represents a difference of £200,000 from the estimated business case amount of £40.651 million, which reduced the council’s contribution to £24.651 million.