Just under two thirds of the total cost increase occurred before the start of the main construction work. Overall, the performance of individual projects varied significantly, with some suffering significant cost increases and delays during construction, but other coming in on time and on budget.
Construction price inflation and deferral because of budget constraints were significant factors in the overruns. Other reasons included: environmental mitigation; poor weather; unforeseen work, including utilities work; protracted negotiations, for example over land costs and compensation; design changes; and the time taken to complete statutory processes.
The report recognises that the Welsh Assembly government has strengthened its processes for managing trunk road projects, which are under its direct control, but the full impact of its improved processes is, as yet, unclear. For example, the Assembly Government has:
- sought to improve the management of project risk, including the provision of more realistic cost and time estimates;
- moved towards Early Contractor Involvement as its preferred approach for contracts worth more than £18 million;
- taken action to improve project performance during the construction phase; and
- introduced new Welsh Transport Planning and Appraisal Guidance which, alongside Office of Government Commerce gateway review processes, should improve project evaluation.
The Assembly Government has also exercised greater control over the local authority managed transport projects it funds. Before 2009-10 the Assembly Government had exercised only limited control over these Transport Grant funded projects despite carrying most of the financial risk. The Assembly Government is also introducing revised funding and management arrangements to provide more effective control over delivery of projects identified in the new regional transport plans.
The report makes seven recommendations to support further improvements in respect of:
- the Assembly Government’s information systems and processes for reviewing and evaluating project and contractor performance;
- developing common guidance to support the delivery of all major transport projects, whether managed by the Assembly Government or by local authorities;
- relationships between the Assembly Government and/or local authorities and utility companies, to help mitigate the risk of cost increases and delays due to utilities work; and
- the Assembly Government’s oversight of local authority managed transport projects that it funds.
Auditor General for Wales, Huw Vaughan Thomas, said: “Cost increases and delays in major transport projects are by no means unique to Wales, but there has been an inevitable knock-on impact in terms of the Assembly Government’s ability to deliver its wider transport programmes. The action taken to try and improve the management of individual projects is important, but the Assembly Government also needs to be realistic about what it can deliver within future transport budgets based on robust estimates of likely project costs and timescales.”
The full report, Major Transport Projects, is available by clicking here
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