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ii) Experience of the Council's staff
29. During the life of this project there were changes
to the senior staff of the Council. Prior to 1994, the Chairman
of the Council's Governing Board had been a full-time executive
post. In April 1994, the post of Chairman became part-time and
non-executive. The administration of the Natural Environment Research
Council became the responsibility of the Chief Executive—a
new post.[46]
30. The Committee asked whether the Council's Governing
Board had commercial, property and management experience. In evidence
we were told that the Council have 14 members and a non-executive
Chairman. The Chairman is from a business background, seven of
the Council's members are from an academic background and seven
from the user community. Of those, three are from the public sector
and four from the private sector.[47]
31. During the project, the Council appointed three
different members of their staff to take charge of it. None of
these staff had expertise or experience in construction projects.
Nor were they full-time on the project. Although in charge of
it, they did not fulfil the normal sponsorship role, since they
were not fully responsible for the project's successful completion
or for its management.[48]
We asked the Council how it happened that they had appointed three
different members of staff to take charge of the project, none
of whom had expertise or experience in construction projects.
The Council told us that these were senior managers. The particular
staff who were involved in the coalface management did have experience
of construction projects.[49]
iii) Use of consultants
32. When appointing some of their consultants, the
Council limited their choice to firms who had worked for them
in the past but on smaller projects.[50]
All but one of their consultants were appointed after fee competitions.[51]
We asked whether it was appropriate to have appointed the quantity
surveyors without competition. The Council told us that it was
their practice at the time, but accepted that it would now be
appropriate to appoint with competition.[52]
33. The Council might have been better served had
they asked professional organisations to suggest architects and
services engineers with past experience of highly serviced laboratory
projects of a comparable size. The three firms invited to bid
for the post of architect had only limited experience of projects
of a similar nature to the Centre. The Council did not approach
the Royal Institute of British Architects for the names of suitable
firms. The National Audit Office had approached the Institute
who supplied a list of eight firms, none of which had been considered
by the Council.[53] We
asked whether the Council were satisfied that they had chosen
their architects in a professional way. The Council said that
they had made their choice on the basis that the firm had worked
successfully with them before, though on substantially smaller
projects.[54]
34. The National Audit Office found little evidence
that users' requirements had been seriously challenged by the
Council's professional advisers and that the Council did not require
them to challenge users when it became evident that they were
not doing so.[55] We
understand that it is fairly normal for architects to do that
job.[56] The Council
agreed that this should have happened.[57]
35. The architects issued over 1,600 instructions
outside the change control process, increasing the cost of the
main contract by a net £1,143,000. The costs of these instructions
were not usually estimated before issue, some estimates were substantially
inaccurate, changes to drawings were not highlighted and the architects
often exceeded their delegated limit without client approval.[58]
The Council agreed that this should not have happened. [59]
We asked whether the Council had any penalty clauses in their
contract with their architects. They said that there were no such
clauses[60] and that
they paid the architect £2.5 million against an original
estimate of £1.8 million.[61]
36. In March 1990, when the brief was nearing completion,
the Council appointed Building Design Partnership as their consultants
for the mechanical and electrical services. It was not until early
1991 that the services requirements were fully established.[62]
We asked the Council whether the late appointment led to delay
in the project. They told us that a lot of the pre-construction
delay was due to the further development of the mechanical and
electrical services.[63]
37. The largest excess of tender price over estimate
was for these services. For example, Wimpey's tender for these
exceeded the Council's estimate of £9 million by £1.8 million.[64]
We asked why there had been such a large variation between the
tender and what was put in the budget. The Council told us that
the method of calculation of the budget was a standard procedure
but had a high variance.[65]
The services were estimated by Building Design Partnership on
a cost per unit area or volume basis, which is less accurate than
estimates based on measured drawings as used for the building
costs. Despite recommendations that the Council should have had
the costings done on the more accurate basis, they had opted for
a more limited check on the accuracy of the estimates.[66]
iv) Management of risk
38. When the Council started the Oceanography Centre
project there was very little guidance or consensus on the appropriate
methodology for managing risk within the construction industry.
They were aware that construction projects risked encountering
time, cost and quality problems. In 1993 the Central Unit on Procurement
issued guidance on the management of contingency and risk for
works projects.[67]
39. At different times during the project, the Council
took action to reduce risks, such as placing additional responsibilities
for design on the services consultant. However they did not carry
out a formal risk assessment, nor did they manage risk actively
throughout the project.[68]
The Council told us that, when it became clear that costs were
likely to exceed the budget, action was taken to reduce the specification
of the building.[69]
In the pre-construction phase they refined the design to minimise
risk.[70]
v) Payments to the contractor
40. The contract payment regime provided little incentive
early in the contract for the early identification and agreement
of the value of instructions. Payments were made in accordance
with an agreed schedule which led, early in the contract, to the
contractor being paid in advance of the value of the work completed.
This over-funding was reversed later when the value of work planned
exceeded the scheduled monthly payments.[71]
41. We asked the Council why the contractor had been
paid in advance of need. They told us that, in their pre-contract
negotiations with Wimpey, they had agreed a profile of payments
which meant that in the very early stages of the project payments
were running slightly ahead of the value of the work on site.
The Council said that this had not been intentional and that they
would perhaps be a little more rigorous in a future contract.[72]
vi) Conclusions
42. The Council did not follow Treasury guidance
that the services of a project manager should be obtained. Instead
they adopted a collective approach, involving a number of committees
and groups, on the management of the Southampton Oceanography
Centre project. As a consequence, the management structure was
needlessly complicated and resulted in a weakened grip on a project
which over-ran on both time and cost. We find it incomprehensible
that the Council should have repeatedly rejected the advice given,
by those whom the Council themselves had appointed, against the
adoption of a collective approach.
43. Given their lack of experience in building work
and their decision not to appoint a project manager, the Council's
choice of consultants was crucial to the success of the project.
Since the building was to be highly serviced and was larger than
the Council had previously managed, the Council should have appointed
consultants by means of competition and from a wide field rather
than simply relying on those with whom they had worked in the
past. We are concerned that they appointed a quantity surveyor
without competition; and that they did not, in the case of architectural
services, seek the advice of the Royal Institute of British Architects
about potential firms. It would have been sensible for the Council
to have obtained technical advice on the mechanical and electrical
services earlier rather than later in the project.
44. It is worrying that the Council's architect did
not challenge the users' requirements, often exceeded his delegated
limit without authorisation, and was paid £2.5 million
against an original estimate of £1.8 million. In the
light of these points we are disturbed that the Council's contract
with their architect did not provide for them to obtain redress.
In the case of mechanical and electrical services, the Council's
method of estimating the cost was less accurate than if measured
drawings had been used. We consider that, for an area so critical
to the building, the Council should have used a more accurate
method of estimating the cost.
45. The payment regime used by the Council in the
early stages of the project led to Wimpey being paid in advance
of work completed. We are concerned that this should have been
allowed to happen. It is a feature of good contract management
not to pay for services until they have been satisfactorily performed.
We note the Council's assurance that they would look more closely
at the payment terms to prevent this happening again.
37 C&AG's Report, paragraph 5.5 Back
38 Q10
and footnote Back
39 C&AG's
Report, paragraph 5.14 Back
40 C&AG's
Report, paragraph 5.6 and Figure 15 Back
41 Q119 Back
42 Q116-117 Back
43 Q10 Back
44 Q6 Back
45 Q42 Back
46 C&AG's
Report, Appendix 2, paragraph 6 Back
47 Q71 Back
48 C&AG's
Report, paragraph 5.4 Back
49 Q115 Back
50 C&AG's
Report, paragraph 21 Back
51 C&AG's
Report; paragraph 5.26 Back
52 Q51-52 Back
53 C&AG's
Report, paragraph 5.27 and Figure 20 Back
54 Qs
37-38 Back
55 C&AG's
Report, paragraph 2.14 Back
56 Q27 Back
57 Q32 Back
58 C&AG's
Report, paragraph 4.32 Back
59 Q79 Back
60 Q34 Back
61 Q25-26 Back
62 C&AG's
Report, paragraph 2.12 Back
63 Q99-100 Back
64 C&AG's
Report, paragraph 4.16 Back
65 Q84-85 Back
66 C&AG's
Report, paragraph 4.16 Back
67 C&AG's
Report, paragraph 5.32 Back
68 C&AG's
Report, paragraphs 5.32-5.33 Back
69 Q94 Back
70 Q95 Back
71 C&AG's
Report, paragraph 4.33 Back
72 Q144 Back
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