Examination of witnesses (Questions 100
- 119)
WEDNESDAY 4 MARCH 1998
PROFESSOR JOHN
KREBS, MR
COLIN READ
and MR JOHN
HANSFORD
100. BDP service engineers together with
the other consultants had a very short time span in which to cram
in an awful lot of work on the logistics in terms of designing
the building. That is what led to a lot of delay, was it not?
(Professor Krebs) Certainly a lot of delay pre-construction
was due to further development of the M&E.
101. Really, if you had been thinking this
through from the beginning and wanting such an ambitious project
you should have thought to yourselves, "We can't get 12 gases
all around the building without first incorporating how to actually
do that." That should have struck you.
(Professor Krebs) Yes.
102. We know you set aside a two per cent
contingency provision and we know that the consultants' fees leapt
quite considerably. Therefore, if you add the £4.3 million
extra consultant fees to the potential in Paragraph 4.2 of Wimpey's
full extra claim against you of £12.6 million this comes
to around £17 million on top of your initial estimate of
£29 million in terms of the cost of the project. So it looks
as though the actual increase on your initial budgeted amount
is 60 per cent. You budgeted for a two per cent variation and
it is looking as though it is going to be 60 per cent.
(Professor Krebs) As I have said several times,
our position is that whatever dispute Wimpey may have with Matthew
Hall, which is an on-going process as far as we are concerned,
our position remains and that is the position that our legal advisors
advise us is their position, that there is no case behind this
putative overrun.
103. I realise this is your bargaining position
at this stage.
(Professor Krebs) No, that is not a bargaining
position, that is our position from expert legal advice.
104. It seems to me, looking at it objectively,
this is potentially a very significant over-run indeed, 60 per
cent, and if you had set that at 2 per cent you should have either
stuck to it or been capable of admitting right up-front you could
never have stuck to it with the ambitions you had for this very
generous facility.
(Professor Krebs) Coming back to this hypothetical
sum—and I am not being complacent about it but I want to
get the facts straight—much of this is based on the extension
of time in the construction phase and, as you will have read in
the Report, our consultants advised us not to grant any extension
of time, which we followed, so there has been no extension of
time granted and indeed we deducted liquidated damages from the
construction phase when the project went into over-run. I am just
reiterating the facts, that from our position there was no granting
of extension of time, there was deduction of liquidated damages
when the project over-ran, and the figure that is mentioned here
in paragraph 4.2 from our perspective has no credence.
105. Fingers crossed then in terms of any
disagreements and litigation you get into with Wimpey. Would you
agree though, generally, looking at the experience you had in
running these projects, that this objectively is a classic example
of how a small organisation with inexperience in capital projects
faces major difficulties in significant building projects such
as this? You were out of your depth, were you not?
(Professor Krebs) I would accept that the management
mechanisms that the Council put in place should have been different,
and they would be different today.
Mr Leslie: Thank you.
Mr Hope
106. Good afternoon, Professor Krebs. I
think we have touched many of the areas I wanted to talk about
in some detail, so I will not linger on well-trod territory. Can
I ask a couple of basic questions to begin with? You said earlier
that the aim at the start was to create a world-class centre,
have we got one? If I go to Southampton, can I see a world-class
centre?
(Professor Krebs) You certainly can. What you
would be well advised to do would be to ask the opinion of others
in other countries. We have benchmarked it against other countries
and we are convinced it is a world-class centre, but it would
be good to ask people in the States or in Germany or France what
they think of it.
107. And it is a world-class centre which
does not have photographic facilities, a plankton tower, a pontoon,
restoration of quay and external works, a sea water archive, shore
side facilities, autosub facilities, extensions to the aquarium,
ship science, et cetera, which are listed on page 17? It is a
world-class centre without those items?
(Professor Krebs) We have to look in detail at
what these actually mean. You may think, for example, there is
no capability for taking photographs at the centre, well that
is not the case. You may think there is no facility for the development
of the autonomous under-water vehicle which is called autosub,
but that is not the case. These were elements of the build which
were eliminated or reduced, but then other ways were found of
achieving the essential core science objectives. The priority
in making cuts and reductions was to achieve the core science
objectives and those have been achieved.
108. So the answer to my question is, despite
all these cuts we do have a world-class centre?
(Professor Krebs) Yes.
109. Why then do the users not agree with
you? On page 19, paragraph 2.36 of the Report, it says, "The
numerous cuts and reductions made during briefing and design mean
that the building does not provide everything users specified."
How can you say it is a world-class centre when it does not deliver
what it is supposed to deliver?
(Professor Krebs) Users had a wish list at the
very beginning, and the wish list was only partially fulfilled.
(Mr Martin) Can I say, Chairman, that I regard
the way the users' requirements, which are very often I think
in central government experience properly described as a wish
list, were challenged in this process as one of the better elements
of its managements. Often the experience is that the users themselves
will, as we use the terminology in MoD, gold-plate their requirements.
I regard the challenge that seems to have been in this part of
the process as good practice.
110. Thank you very much but it does not
read that way from the Report. I have to say what it looks like
is that a list of proposals was put forward to create a world-class
centre, the ambition of the Government and your organisation at
the time, and then when they realised they could not afford it
they just cut back and cut back to fit within a budget. That does
not look to me like planning for a world-class centre but like
crisis management, as one of my colleagues said earlier.
(Professor Krebs) I think you have to understand
what lies beneath it and, as my colleague from the Treasury said,
you can have a world-class centre without gold-plated taps.
111. I would very much hope we do. That
takes me really on to the question about the nature of decision-making
and the way you went about doing this. I go back to Figure 15
on page 41. I am intrigued. Eight attempts the Council took to
try to get to grips with the fact that it was not to grips with
what it was trying to do. Can you describe the dynamics? It looks
to the lay person, the outsider, that we have a group of academics
with their heads in the clouds, professional jealousies to the
fore, unable not to provide collective leadership but basically
arguing themselves into collective immobility on this project.
Would that be a fair description of the way the Council was operating
over that period?
(Professor Krebs) I was not in the organisation
at that time, but I can tell you how the Council operates, and
I have mentioned to your colleague that the Council has a composition
of 50 per cent academics, 50 per cent users of whom many are industrialists,
and an industrial background chairman. I think your description
would not be an appropriate description of the way the Council
currently operates.
112. Forgive me, but obviously we are looking
at the history of why we have managed to arrive at a world-class
centre which does not have half of what it is supposed to have,
with a cost over-run of 60 per cent, with decision-making being
a shambles. I would like to know why during the period 1990 to
1993 the Council was unable to give any collective leadership.
(Professor Krebs) I can only speculate about what
may have happened at that time. As I read it, and as I read the
Report, Council set up a process, they did not appoint an independent
project manager which I think they should have done and I would
do now. Having done that, they then took advice from a number
of independent consultants——
113. And ignored it.
(Professor Krebs) —— and in a sense
hedged the thing around with safety views from independent consultants.
The key response they made to those was to conclude that the appointment
of external expertise—this is in March 1992, under that
row—would be sufficient to carry forward the project with
in-house expertise.
114. I can understand that, I can read the
Report for myself. I am trying to understand what led a group
of academics and others to sit around and make bad decisions.
(Professor Krebs) It is very difficult for me
to answer.
115. Can you try and answer a point on page
39, paragraph 5.4? How did this same group of people manage to
appoint three different members of staff to take charge of the
project, none of whom had expertise or experience in construction
projects? Do they draw up a personnel specification? I do not
need Treasury guidance to tell me how to go about doing a job
description for a particular job. Why did they appoint three people,
none of whom were full-time, none of whom had construction experience
or expertise, to be in charge of the major construction project
the organisation was in charge of? How could they have done that?
(Professor Krebs) The particular staff who were
involved in the coalface management from the NERC central office
end did have experience of construction projects. These were the
senior managers who were overseeing those individuals.
116. Indeed, and the whole criticism throughout
the Report is that there has been nobody at senior level with
experience of running construction projects of this magnitude.
Did they have a job description with a personnel specification?
Was the thing looked at in that way? Did basic good management
apply to the Council in the period 1990 to 1993?
(Mr Hansford) I can give you some help here, I
think. It goes back to what Professor Krebs said earlier about
the Council's practice with previous projects which was to adopt
a collective approach to use their own staff to run the project
within the office supported by a professional consultant team
and this was, as we said before, a procedure that proved relatively
successful on previous projects and which was repeated on this
one. With hindsight, as we have already agreed, a full-time professional
project manager would have been a much better option.
117. I just want to pursue this one step
further. The pull-out, Figure 16, Figure 17 and Figure 18, gives
three project management structures: the traditional one that
would have sorted it out if you had had it; the actual project
management structure prior to construction; and the project management
structure during construction, which as you can see gets progressively
more confusing and progressively more complicated for accountability
and control. If you were not using job descriptions to appoint
the people in charge of the job, surely somebody could have spotted
from this shocking description of how the accountability and control
lines were developed that this was never going to work? There
were always going to be problems with the delivery of the management
of a construction project with that mess of management accountability.
Was this never looked at? Did the Council never ask themselves,
"Have we got a grip on this?"
(Mr Read) Can I comment please. I think your previous
line of questioning was about the project sponsor and the project
sponsor is normally a senior manager from the client organisation
who takes personal responsibility for the delivery of that project.
Although it would be highly desirable that that person has experience
of construction it is not always possible to find someone with
that experience within an organisation. The weakness, as we have
already alluded to, is that did not happen because these people
left and they were replaced, and were not underpinned by a competent
professional project manager.
118. I understand all that. What I am trying
to get at is you did not appoint a project manager, as we have
described, and you have also got a management structure within
the organisation which is horrendously complex and which must
have exacerbated the absence of that post. I cannot understand
how a group of people at that seniority of level with that degree
of experience can fail to identify the need to appoint a project
manager, appoint three people into posts who did not have the
qualifications or the background and were doing it part time,
and who were working to a structure which quite clearly did not
allow them to understand and deliver and control the project.
I am trying to understand how that could have happened. What is
going on in the Council at that time that allowed this mess to
be created?
(Mr Read) The project sponsor in this case in
Figure 17 in the design phase was the senior marine scientist
in NERC who had a personal interest in the development of this
initiative and therefore he acted as project sponsor and he was
the person who brought together——
119. So he had sole responsibility?
(Mr Read) He had responsibility directly to the
accounting officer as it shows in Figure 17. In Figure 18 when
you move on to the construction phase, yes, we certainly accept
that is an over-complicated diagram and it is a recipe for confusion,
nevertheless it is possible to draw a direct line of accountability
from the contractor straight up to the accounting officer, going
through the architect to the project sponsor straight to the accounting
officer. We accept it is over-complicated, nevertheless there
was clear accountability in place during this part of the project.
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