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SURVEY SLAMS CAPITAL PROJECT MANAGEMENT

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Most local authority capital projects are completed behind schedule and poorly costed, according to an Audit Commis...
Most local authority capital projects are completed behind schedule and poorly costed, according to an Audit Commission study.

In the first phase of a major commission investigation into local government capital expenditure, two-thirds of the 700 projects examined were late and half regarded as being significantly delayed.

In nine out of 10 cases, councils gave contractors more time to complete work with few imposing penalties, suggesting local authorities were largely at fault.

English and Welsh councils spend some £7 billion a year on capital projects, but a quarter of schemes studied shot above their projected cost by more than 5%. The same proportion came in below their projected cost by more than 5%.

The commission claims this is partly because councils are not giving contractors sufficient time to prepare tenders.

Bad estimates meant that in 40% of projects there was a difference of more than 15% between the estimated costs at design stage and the original prices quoted when tenders were submitted.

While clearly worried about increases in price at the design stage, when only one contractor is still involved, the commission is also concerned where estimates drop significantly below tender-stage prices.

It says this indicates that resources have been wrongly earmarked and could mean alternative projects are being unnecessarily sacrificed.

Phase two of the commission's work on capital expenditure will focus on how councils acquire resources for capital projects and the role of central government.

The commission acknowledges that authorities are 'champing at the bit' for work on phase two to commence. But the results of phase one may disappoint champions of a relaxation of capital controls, notably those governing capital receipts, as the commission's study suggests that local government is failing to use current capital resources efficiently.

Commission controller Andrew Foster 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.'

Association of District Councils' finance panel chair Janet Sillett said: 'This report clearly illustrates the decline in real terms of capital expenditure since 1990 - down from more than £8bn to under £7bn this year. This cannot be healthy for local authority services or indeed for the economy generally.'

*Just capital - local authority management of capital projects, is available from HMSO, (ISBN 0-11-886435-1), price: £12.

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