29 September 2000
Black, in a report on the management of the £195m project at Holyrood in Edinburgh, said the construction management type of contract was innovative in the public sector and, while offering advantages of control, left most of the risk with the client rather than the contractor.
Black suggested that project management could have explored alternative fee arrangements more carefully, with financial incentives to reinforce the achievement of value for money.
The latest cost estimate of £195m for the Parliament project compares with the £50m original costing. Consultancy fees have risen from £10m to £26m, an increase of 127%.
Members of the audit committee, beginning their investigation into the report's findings this week, were told by Russell that the management construction route was chosen on the basis of experienced professional advice and at a time when it was necessary to make progress.
'There was no reason to sit back and wait until there was a full design and then tender,' he said. 'We were quite clearly seeking to make progress and keep going on a critical path. We recognised that some elements of design would take longer than others.'
Russell said the relatively innovative approach that was used enabled professionals to manage while allowing a direct relationship between contractors and clients 'for good or ill'.
He added that it was a sensible approach that prevented the kind of problems that can arise if penalty clauses are invoked.
Of the auditor general's doubts about whether the management team had sufficient skills, he responded: 'I am not sure that is a question I would go along with.'
Russell said he did not dispute the accuracy of Black's report. But he added: 'I have to make it clear that there are some points of interpretation where I disagree.'
Black, answering questions on his report, said he believed it might have made a difference if the project team had included someone with the right professional experience in construction.