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BUILD ON THE BEST - AUDIT COMMISSION TELLS AUTHORITIES

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The cost of constructing and renovating homes, schools and other buildings is an important part of nearly every cou...
The cost of constructing and renovating homes, schools and other buildings is an important part of nearly every council's budget - local authorities in England and Wales spend £7bn each year on capital projects.

But an Audit Commission report out today shows that many authorities could make big improvements to the way they manage their projects.

The commission, which studied over 700 projects, found many examples of good practice, but no council where all the elements of good practice were in place. Local authorities should look at how they organise and run building projects to achieve better control over cost and timescale for completion.

They should also make sure that, once completed, projects serve the purpose for which they were designed.

In more than half the projects the commission looked at, estimates of cost were not adjusted as the project progressed.

As a result of poor estimates, in two out of five projects there was a difference of more than 15 per cent between the estimated cost at the design stage, and the prices quoted when tenders were submitted.

A quarter of projects overran their projected cost by more than five projects there was a difference of more than 15 per cent between the estimated cost at the design stage, and the prices quoted when tenders were submitted.

A quarter of projects overran their projected cost by more than five per cent.

And the cost of architects and other technical consultants' fees varied from less than two per cent of the contract costs to more than 30 per cent.

Time delays were common in capital projects. Two-thirds were completed behind schedule and half took at least 15 per cent longer than planned.

And once the projects were completed, few councils reviewed them to see if the money spent on the had been worthwhile.

To help avoid these pitfalls, the report advises councils how to:

-- assess, select and plan projects so that they meet the needs of local communities and deliver the benefits intended;

-- assemble project teams that understand each other's roles and work together well;

-- allow enough time for design and avoid making late changes;

-- achieve better value for money by adopting a well thought-out approach to the way contracts for capital projects are tendered and awarded, and by assessing risks and comparing costs and methods of construction;

-- monitor projects closely so that they are completed on time and to budget; and

-- review all projects to see what lessons can be learned for the future.

A second report, to be published in 1997, will look at how capital is allocated to local authorities and how they plan and prioritise its use.

Andrew Foster, controller of the Audit Commission, said:

'Local authorities spend a lot of money on capital projects. Many of them need to manage those projects better to get the most out of their expenditure and to deliver benefits for their local communities.

'In addition, the management of construction projects is being affected by changing factors such as increasing reliance on private sector finance.

'This makes it all the more important for local authorities to look at their performance and build on the good practice of the best.'

Just Capital - Local Authority Management Of Capital Projects is available through HMSO (ISBN 0-11-886435-1) price £12.

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