THE costs of the first phase of the renovation of Rhyl’s Queen’s Buildings” doubled” and Denbighshire Council failed to stick to “contract procedure rules”, a damning internal audit shows.
The initial three-phase project to redevelop the Queen’s Buildings into a mixed residential, retail and night-time economy scheme was projected to cost £30 million.
But by September last year, the first phase was said to be 57% over budget with costs spiralling to £11,734,571.
The latest report – the full details of which were taken into a private session – show the costs are now nearer £15m, with the demolition having only just started.
Also in September Denbighshire’s cabinet voted to plunge another £1.5m of public cash into the scheme just to get it demolished and asbestos removed.
The authority was also going to ask the Welsh Government for another £2.8m. But even that looks like it won’t be enough to complete phase one now.
In a report sent to the authority’s corporate governance and audit committee, its own internal auditors gave the project a “low assurance” rating.
That was because of “procurement concerns” and what it called “the significant funding issue” surrounding the scheme, which is planned to be built in three phases.
A project board for the development was set up but the audit report said “there is a lack of evidence to support that the project board has sufficiently referred key issues” to Rhyl’s Regeneration Programme Board.
The report said: “Robust scrutiny should have been put in place from the beginning of the project, to ensure estimated costings were reasonable going forward, although some additional costs were unforeseen.”
It said Denbighshire’s cabinet had been regularly briefed but couldn’t confirm it would meet the extra funding needed due to the “spiralling costs”.
“A revised business case was taken to Cabinet in September 2020, but the minutes do not demonstrate approval,” the study continued.
“The council will also need to consider its priorities post-Covid-19 for future phases of the project as these may be different.”
The report highlighted how senior officers had departed and there had been changes in the “project executive”.
It also questioned the way the contract had been delivered. Auditors said: “Contract procedure rules (CPRs) have not been adhered to and there has also been a lack of internal legal involvement with respect to certain legal advice obtained for this project without legal service’s oversight.”
The exact nature of this was not discussed because the full report was kept secret – and discussion of it was held behind closed doors away from press and public.
The company ultimately partnering with the council on Queen’s Buildings is called Ion Properties Ltd, based in Liverpool.
Demolition has now started on the scheme but the audit report suggests the scheme will cost considerably more than the original estimate if it is able to get the required funding.