To approve an increase in capital expenditure to deliver a joint customer services hub at Blueschool House.

The director for economy, communities and corporate introduced the report. He stated that the project made good use of a building, would bring a positive net return to the council of £1m over the next 10 years and was a good example of co-locating services in a city centre building to enhance a range of customer services for the public. It was disappointing was that the original costing and the process by which the original costs were derived were incorrect.

A number of weaknesses had been identified in cost planning and monitoring of the project. A detailed review of the project was being undertaken by the council’s internal auditors. The outcome of the review would be reported to the audit and governance committee in September. It was expected that there would be a number of learning points.

The cabinet member for financial management and ICT asked for confirmation that the SCAPE framework used for the project would not be acceptable under the new constitution of the council, which had been implemented in May 2017. The monitoring officer confirmed that it would not be acceptable.

The cabinet member for young people and children’s wellbeing asked whether the project would have been recommended for approval if the actual costs had been known. The director confirmed that the project still had significant benefits for customers and provided a net benefit to the council. As such it would still have been recommended for approval in spite of the higher costs.

The group leaders were invited to comment on behalf of their group.

The leader of the It’s Our County group stated that the items listed in the report as responsible for the additional cost should have been anticipated. He welcomed the review of the management of the project and stressed that lessons needed to be learned as this relatively small project had exposed weaknesses which could have consequences for larger schemes.

The leader of the Herefordshire Independents group asked whether the investigation into the management of the project had been completed and if not whether it was appropriate to take the proposed decision.

The director of economy, communities and corporate explained that the council’s internal auditor, South West Audit Partnership, was undertaking an investigation into the processes used and that it had not been completed. The results of the audit were expected to be reported to the audit and governance committee in September. The report currently before cabinet was about whether the joint customer services hub project should proceed, now that the full costs had been established.

The group leader stated his concerns about how the council had managed this and other property projects. He welcomed the internal audit investigation and hoped that the audit and governance committee would do an in depth investigation.

The leader of the council stated that he understood the comments made and the reasons for them, and that members of all parties shared the concerns expressed.

Resolved that:

(a)         £50k be allocated from the ICT revenue reserve to provide sufficient ICT equipment at Blueschool House;

(b)         £200k be allocated from the earmarked economy, communities and corporate revenue reserve to support the increased costs;

(c)         having regard to the continued revenue benefits identified in the revised business case, a further £720k be approved to deliver a joint customer services hub at Blueschool House, bringing the total estimated cost to £1.92m;

(d)         the audit and governance committee be asked to identify and recommend improvement actions to strengthen property capital project management and control.