Redland Green School in Bristol is a very stylish building. It's built on a hill with the structure following the curvature of the landscape. From some angles, it's a bit like a landslide has covered one end.

I occasionally visit Redland Green as part of the Young Enterprise initiative -the school's YE achievers are currently developing a profitable business selling school-branded hoodies and other clothing. I'm always impressed by the central, covered street within the building - it gives one the feeling of being in an open environment, but the temperature control, security and safety of an enclosed space.

But it was a very expensive project - originally expected to cost slightly under £30 million pounds, by the time it was finished it had cost £36.4 million. This overspend was also evident across the larger schools programme. In total, five schools ended up costing an extra £7.9 million to build.

Last July (2007), Councillor Derek Pickup, Executive Member for Children and Young People's Services, told the BBC:

"I find it unbelievable. Redland Green is very concerning and we've been concerned about that for some time. What happens now depends on who's at fault."

An external consultancy company, Grant Thornton UK, ("Advisers to the independently minded") was called in to report on the project, and that report is now available.

The GTUK report will be discussed under Item 9 of the Resources Scrutiny Commission on 22nd February 2008. It doesn't appear that this meeting will be webcast, unfortunately.

It's not a brilliant report, in that it is filled with caveats and exemptions. At one point, GTUK even say

"we are not quantity surveyors and cannot, therefore, comment on the reasons for the cost overruns"

which rather makes one wonder why they were chosen to audit the project in the first place.

Reasons for Failure

But there are some useful points. First off, let's dispense with the off-the-peg excuses. These are the key issues identified by GTUK's audit team:

Translated out of of consultant-speak, this means:

1. The customer didn't know what they wanted.
2. No one worried about what might go wrong.
3. Management lacked experience.
4. Very little was put in writing.
5. No one worried too much about the final bill.
6. It was all a bit shifty, anyway.

In a sense, GTUK have correctly identified the causes of the overspend. However this identikit list can be applied to every failed project you can think of, whether it be big or small, public or private sector, construction or services.

None of this really helps us understand the core problems. You can if you wish look through the report and see the usual "lessons learned". Better risk management, better project management, more rigorous processes, yadda, yaddda... After a big project goes pear-shaped, these are always the lessons, and they are never learned.

Who's Who

Before continuing with an analysis of the game, we need to talk about the players on the field. Here's a diagram to help:

After the decision was made to build a school, a Feasibility Study was used to justify the Redland site. The department at the council in charge of education (now CYPS) asked the department at the council in charge of property (P&D) to build a school. P&D appointed a consultant to manage the project. The consultant then appointed a Quantity Surveyor (which, interestingly, they partially owned) and a Builder.

During this process, tweaks to the design continued, the Council's Planning department intervened to add to the bill, and negotiations took place to find the cash. PFI credits were used to bait the hook - after all what's the point of building a few small schools when you can have one great big one - and other central government departments supplied more (of your) money. Around this point, the Council's Bank manager probably ordered champagne in anticipation of a very nice fiscal quarter.

Through out this process, the people ultimately in the frame were the Executive Members of the Council for Capital Projects and Regeneration (during build) and Children & Young People's Services.

A Risky Business

I want to pick out one key phrase from the project audit: Cost Certainty .

Following the tendering of the work packages in March/April 2005, the Quantity Surveyor wrote to Property and Finance on 19 May 2005 recommending that the Building Contractor be formally appointed as main contractor as approximately 70% cost certainty had been achieved.

Cost Certainty is one of those lovely little bits of jargon which crops up in local government. Let's say you go to Tesco to do your shopping. As you pick up groceries to put in your trolley, you will notice a price displayed next to each item. If you are so minded, you can make a shopping list and - using your receipts from a previous trip or by referring to the Tesco web-site - you can predict very accurately how much you must spend to get your shopping.

One could say that you have 100% Cost Certainty about your shopping bill. But you wouldn't, because it would sound mad. You would instead say that you have an agreed, fixed, price for each item on your shopping list, and thus an agreed bill to pay at the end.

If you went into Tesco, and each grocery item was labelled with a price range - say a tin of beans was listed as costing between 9p and 40p - and you wouldn't know the final bill until after you'd typed your PIN number at the check-out, then you'd probably go to Asda or Morrisons instead.

Agreeing a price for big projects is a difficult task, in both public and private sectors. Big projects typically come with lots of requirements - perhaps conflicting requirements - as well as tight timescales and complex procurement rules. But it's not as though we started building stuff yesterday. Take a trip to Bristol Museum and, in the Egypt gallery, you will find evidence that humanity has been in the construction business for some time now.

Construction is more complex than shopping, but buying buildings is pretty straightforward. Part of the rationale for seeking out specialists such as quantity surveyors, builders, architects and even consultants is that they can help to make pricing predictable because they have experience of doing similar exercises and know where the traps and pitfalls are to be found. And part of the procurement process is to tender for predictable prices before works starts, the deal being that if the customer can express their needs, the supplier will agree to meet those needs for an agreed, fixed price, or at least an open book pricing system (like an Argos catalogue).

The reason that suppliers are willing to agree to contractually controlled prices up-front is that they - one would hope - are able to control the risks associated with complex work by virtue of their relevant experience and professional conduct. Experience - personal experience from doing a job for a long period or organisational experience from repetition of similar works - is really the only way that a supplier can find the right balance between pricing low enough to win a bid but still covering their own backs and making a profit.

But this contract was let using a legal framework called the New Engineering Contract, which even has its own website. You can buy a set of generic contracts for only £475.00, fill in the blanks, colour in the charts and, hey presto, you're off. There is a catch though, which GTUK did spot:

The drawback to this type of contract is that it only works if the information that has been used to obtain tenders is correct. The contract price is not fixed. If the costs increase because of incorrect tender information then the cost of the project to the client [increases].

Brilliant. Just Brilliant.

Problems ensue with Divers Alarums and exeunt stage left

Afficionados of Parkinson's Law will appreciate the organisation of the project, post tender.

1. The Council's Property division appointed a "Principal Project Co-ordinator".
2. The "Principal Project Co-ordinator", along with the "Cost Control and Contracts Manager" recommended the Consultants.
3. The "Director of Education" accepted the Consultants.
4. The "Head of Property and Finance" wrote to the Consultants to confirm their appointment.
5. The "Consultants" appointed (themselves) as the "Quantity Surveyors".
6. The "Consultants", the "Quantity Surveyor", the "Principal Project Co-ordinator" and the Education department's "Head of Architecture" recommended the "Building Contractor"
7. The "Building Contractor" was given the nod by the "Head of Property and Finance"
8. The "Principal Project Co-ordinator" and the "Quantity Surveyor" drew up specifications for lots of little bits of the school (work packages) and gave these to the "Building Contractor"
9. The "Building Contractor" and the "Quality Surveyor" tendered the work packages to a number of "Subcontractors"
10. The "Subcontractors" hired Baz and Terry to shift hods of bricks.

Now this is just the construction. Finding the cash also involved the following people:

1. "Strategy Leader for Capital, Assets and School Organisation"
2. "School Organisation Officer"
3. "Planning Officer"
4. "Assistant Director of Education"
5. "Resident Quantity Surveyor"

And there were plenty of problems on the funding side:

We are informed by the Principal Project Co-ordinator that after the design and tender stage, the LSC confirmed funding which was significantly less than anticipated. It was to contribute £7.5 million rather that the £9.8 million anticipated. The shortfall in funding fell on the Council. This resulted in a design change to reduce costs and contain the funding requirement.

As an individual, would you partner with another party to do something on a promise for £10 million? Hell, would you take them on trust for £1,000?

The management throughout the project was remarkably light, but one written item dug out by the auditor was the collection of monthly cost reports, which detailed the anticipated overspend. Let's look at the key figures from these reports in a handy graph form:

Now if you look carefully, you may notice that there's a bit of a jump around August/September 2006. Go on, have another look and see if you can spot it. Click on the image if you need a larger version of the graph. In August, the project was reported as £1,163,000 in the red (Cost Report 9). In September, the project was reported as over £4,107,000 in the red (Cost Report 10). What do the auditors have to say about this?

• [8.20] Cost report 9 shows a cost overrun on the original budget of around £1.2 million. Following receipt of cost report 9, the Head of Property and Finance and the Principal Project Coordinator requested the Consultant to review the cost position and to produce a report, which fully projected the anticipated costs to the end of the project. This culminated in a significant increase in projected overspend between cost report 9 and cost report 10.
• [8.21] Cost report 10 shows costs at around £4.1 above the original contract sum. Though it is a matter for a quantity surveyor, it appears to us that the sudden increase in the reported costs indicates a previous under-reporting of the cost position. The Principal Project Co-ordinator requested the Consultant not to send through any more cost reports if the cost position had not changed. Cost report 10 was meant to have included all costs expected to deliver the final project. As a result of this request, cost reports 11 and 12 were not submitted by the Consultant. (My Emphasis)

We'll come back to BDP (the consultants) in a minute, but remember Grant Thornton, the auditors, have already admitted "we are not quantity surveyors and cannot, therefore, comment on the reasons for the cost overruns". Their brilliant insight, from paragraph 8.21 above is worth repeating:

Though it is a matter for a quantity surveyor, it appears to us that the sudden increase in the reported costs indicates a previous under-reporting of the cost position.

Thanks, GTUK. Any news on your report into the strong positive correlation between quantity of fecal deposition by large mammals of the family Ursidae and density of arboreal cover ?

I'm waiting for the output of the Resources Scrutiny Committee before going into more detail about the relationship between the council's officers and the consultant, BDP. The difficulty is that even after reading the audit report it's still not clear why costs were under-reported. Certainly the council did contribute to the overspend due to poor architectural designs and failure to identify necessary works. For example:

[8.52] [...] the Council states that apparently no proper spoil balancing exercise had been undertaken by the design team and there was no plan in place or allowance in the tender for disposing of the considerable quantity of surplus spoil.

I am not making this up. No one considered that if you dig a big hole in the ground, then you will end up with a large pile of soil that must be removed.

What can one say about BDP? Well they must have great legal people. They managed to negotiate a deal where they get paid to run a building contract on the council's behalf, while apparently not having to accept any financial risks. Originally much of the information in this report was withheld from the public because of potential legal action against BDP, so the fact that it is now on the Council's web-site would seem to imply the consultants are off the hook.

There's also no information about whether the Architects and Designers are in the frame for cocking up the structural steel-work. Nor is there any information on whether irregularities in the handling of sealed tenders received from subcontractors will result in criminal action against council officers or employees of the Building Contractor or Consultant.

So, really, the only firm conclusion we can draw from this audit report is that Bristol City Council ought to get a refund from Grant Thornton UK for doing such a rubbish bit of analysis.

Will it happen again?

There are several things we csn do to reduce taxpayers exposure to project risk:

1. Think small: Spread the risk by solving problems with lots of small initiatives, rather than huge projects.
2. Hire some decent lawyers: there are plenty of suppliers who will undertake high risk programmes at fixed prices (including me), but you need a proper contract to control the relationship.
3. Fund the services, don't supply them: If local government must be involved in education, care, waste management and other services then structure them in a way that tax payers can directly reward (and punish) private service providers on the basis of real performance.
4. And, of course, Vote Conservative. The city has been run by various branches of Socialism for a generation. It's time for a change.

The Council have prepared a new DVD with the aim of discouraging school children from committing acts of vandalism. The press release states:

‘Graffiti versus art’ is a subject long and hotly debated in Bristol, due partly to its links with Banksy and other home-grown graffiti artists. Now, Bristol City Council is aiming to stoke the fires of the debate again with a new DVD to hit all secondary schools and an internet campaign.

The DVD aims to stimulate discussion about graffiti, increase respect for their local environment and educate young people about the effect getting caught can have on their lives. It will also show them how participating in legal street art is a much better alternative to this illegal activity.

I've previously written on this subject, and without wishing to seem a outdated, old curmudgeon (which, I must confess, I am) I don't understand the need to "engage in a debate". They are kids - you tell them what moral code you expect, explain the consequences of infringing that code, and enforce the punishment. Framing the process as "debate" seems counterproductive.

“This campaign aims to help them see the flip side - not only does graffiti create a negative impact on an area which can actually lead to an increase in crime, but it is a criminal offence for which anyone over the age of 11 can be tried in court.”

Perhaps a more productive approach would be to apply vicarious liability to parents for the actions of their offspring. This approach brings with it some problems, but it offers a great incentive to those in a position to best enforce the required behavioural standard.

If you'd like a copy of the DVD, call 0117 922 3838 or email graffiti.education@bristol.gov.uk. Or alternatively there is Facebook Group, and a You Tube channel, from which the video will soon be available.

While you're waiting for the new vid, have a look at the "Consulting Bristol" presentation, produced two years ago by the Council's Corporate Consultation Team:

Well, I tried. I sat through the first hour of the Climate Change Select Committee, but I just couldn't face the PowerPoint slides. Sorry. All three hours of the meeting are available from the Webcast Archive.

On the plus side, I learnt a great deal about the Bristol Environmental Technologies and Services (BETS) Project. More to follow, including a transcript of elements of the BETS presentation from the Select Committee. Trust me, you'll love it.

On to the main point: I've updated the Buzzword Bingo Game Card. The PDF Version is available for download here:

http://www.jamesbarlow.co.uk/files/councilbingo.pdf

Let me know what you think...

Herewith my Christmas gift to the people of Bristol on which I've been working all through the holiday season, coming to you live on Christmas morning. Assuming I've got the cron job configured correctly that is. (whoops, I said the quiet part loud, and the loud part quiet).

The Council published its budget proposals for next year on December 17th. Unfortunately they are published as a PDF file, which makes it quite difficult to analyse the figures. Unless of course, you have some software to convert PDF files into Excel spreadsheets.

Here's the original version, and here's my initial conversion.

http://www.jamesbarlow.co.uk/files/draftbccbudgetjmbv1.xls

Broadly speaking the numbers add up (subject to some rounding errors).

If you want to get involved in the budgeting exercise, you could register on this AskBristol.com site and leave a comment. Or you could come along to one of the public budget meetings. You bring the tar, I'll supply the feathers.

A quick orientation for those new to budgeting. This is a revenue budget proposal, detailing changes to last year's budget. Tracking back year by year to find out the origins of spending decisions can be a painful process, but occasionally illuminating. Capital charges and extra borrowing - stuff bought on tick like the £24.7 million for the Museum of Bristol - will not be shown in this accounting.

My initial thoughts:

I've got a fiver that says at some point during the last couple of months a memo went round the senior officers at the council saying something like: "We've got to make an effort to cut costs, so look for ways to increase productivity, and make your departments more efficient". Hey presto: We've got lots of unspecified "efficiency and productivity" line items in the budget. The total saving getting on toward £4 million, which is equivalent to about a £20 saving for every council tax payer. But to be productive is to achieve more with the same resources, and to be efficient is to achieve the same with fewer resources. So when someone tells me they can achieve a saving by simultaneously becoming both more productive and more efficient I get a bit suspicious. I hope they can do it.

The Department of the Chief Executive is really tightening the belt this year, as they propose an increase of only £2 million in their budget (£10 for every council tax payer), including an extra £106,000 pounds for three more issues a year of the "Bristol News" - a glossy PR sheet that I can't recall ever seeing. Regardless, "Bristol News" is now to be renamed "Our City", possibly using the Pluralis Majestatis. The latest issue is available online, and is the usual exercise in spending your money to tell you what a great job is being done spending your money.

I said the numbers added-up, but the Chief Exec is the only one to make a minor slip - their departmental total for the current year doesn't include the £50,000 cost of the Director of Public Health. But what's £50k between friends?

The "Our City" booklet gets the justifications in early, stating:

"In 2008/09 the council will face some unavoidable pressures that will have implications for the budget and will limit the spending options available."

Hacking through the Adult Community Care figures to work out specifically what these implications are will be a proper forensic job - although I have previously discussed the subject of Home Care and Care Homes, which will be the cause of a ruckus in the New Year.

The Planning, Transport and Development directorate wins the award for barmiest accounts - loss of parking income apparently implies and extra £300k in the kitty, and "Increased income and operational savings related to long stay parking, controlled parking zone and street closures" apparently means that instead of losing £585,000 they're only losing £540,000. I'm buggered if I can work out how they calculate their figures, but needless to say the Lord Mayor won't be affected. And don't even get me started on the "Above Inflation increases for local bus service contracts."

It would appear that the Severn Beach Line will finally get the full £450,000 for an increased service. This sort of subsidy is - in the long term - counter productive, but in the short term it might help to alleviate some of the structural problems with the British Railways.

And of course there's another £250,000 in the pot for Abolition 200, back by popular demand for a second year.

The unfunded requirement implied by this budget is £167,120,000.00. That's one hundred and sixty seven million, one hundred and twenty thousand pounds. What does that mean for the tax payer? Well the official statement is that council tax will be going up by 4%. But that doesn't seem to work, unless there's been a massive increase in the taxbase over the last 12 months.

Assuming the Police and the Fire Brigade can stick to something like an inflationary increase in funding - say about 3% - then the overall council tax increase will be around 5%. On a Band D property, your bill will rise from £1423.79 to £1507.12. In Band A, you'll pay an extra £51.53, and in Band H you'll pay an extra £154.60

So, on that note: Merry Xmas!

The Museum of Bristol (hereafter MoB) is an odd project. At heart it's a rebranding of the old Bristol Industrial Museum (hereafter BIM), which was a big shed full of well-researched and interesting bric-a-brac organised by an appropriate taxonomy . (just like every other traditional museum in the world).

But there has been a laying-on of hands by grant awarding bodies, diversity officers, cultural commentators, sustainability consultants, transport planners, and other nabobs of the collectivist class. So what is the current rationale for the new MoB?:

"Its relevance to the people of Bristol in providing a cultural lever for engagement and
regeneration within the city is pivotal to the projects[sic] success."

I know what all these individual words mean, but when you put them together in this order I don't really get it. I'm not sure what a cultural lever looks like, but I reckon you could get one for less that £25 million.

The rebranding has been kicking around since 2001, but the current plans are driven by the availability of funds from the Hope Tax - the Heritage and Lottery Fund of the National Lottery - specifically a grant of £11.2 million.

Here's a quick run-through of the key documents*:

In September 2004, Bristol City Council conducted a consultation exercise about the MoB, which has yet to be published.

The Cabinet Agenda from 9th March 2006 (Item 12) links to the report that justified the go-ahead to apply for the grant.

The Cabinet Agenda from 23rd November 2006 (Item 6) links to the report that justified acceptance of the HLF funding.

The Planning Application is worth a look, as the supporting documentation includes all designs and related plans. It's available via the PublicAccess for Planning web application, searching for either Property UPRN 000000112209 or Application Reference 06/04643/FB

An excellent document in the electronic pile is the design report produced by architects Lab Architecture Studios, whose achingly hip website can be found here. This link might expire, in which case you'll need to search the Planning database using the UPRN above. As well as discussing the history of the buildings, it details the different attempts to develop the site, the directives of various government agencies and the iterations of the design. Best quotes:

In the May 2005 Council Elections, BCC changed from being a Labour Council to a Liberal Democrat Council. Fortunately Cllr Anne White, who had been instrumental in the initial appointment and development of the brief, was re-elected. [...]

After the public presentation of the scheme, and as a consequence of some public disapproval about aspects of the architecture, as well as the concept of the Museum of Bristol itself, a revised brief from BCC was presented to the Design Team. [...] The revised brief was so substantially different from the direction the Design Team had been developing for the last year that it has neccesitated the reassessment of almost every aspect of the scheme [..].

And an honourable mention to:

The revised brief (November 2005) instructed the Design Team to locate the entrance at the centre of the building. [...] The initial project brief requested a..."stunning" entry space.

There's nothing like giving SMART objectives, is there? You know: clear, unambiguous, objective objectives.

Pursuant to the decision of the cabinet meeting of 15th November 2007, the agreed budget for the project is now £24.7 million (up from £20.6 million). £11.2 million of that is coming from the HLF and £10.5 million is being borrowed from the bank (annual interest payments approx £900,000). Imperial Tobacco have also put £250,000 in the kitty.

Given that £1.4 million was spent on the first phase of the project, that leaves £2.65 million to find. Or does it? The trouble is that the grant only covers certain types of expenditure, and the accounting rules on local council capital expenditure also limit what you can stick on the never-never. Plus, if the project needs extra support from another department is that a cost to the project needing new funding, or a contribution from existing council spending?

The project team want £1.5 million from an S106 agreement (Section 106 of the Town & Country Planning Act (1990) probably paid by land developers of other properties around the wharf), and another £2 million from the Paul Hamlyn Foundation, a charitable trust set up by the late Lord Hamlyn. What happens if they don't get the money? Will the council give the grant back to HLF and cut our losses or plough on regardless? Answers on a postcard, please.

Setting aside the project costs for the moment, when this is all complete the annual running costs of the MoB are projected to be £909,000 a year, not including the £442,000 vigorish payable on the extra £5.1 million of project costs voted through by the Cabinet. The operating annual budget for the BIM in 2001 was £329,000, and it received £303,000 funding from the "Renaissance in the Regions" funding - a programme paid for by the Museums, Libraries and Archive Council - which is not guaranteed for the new MoB.

[edit - a reader points out that the money from the MLAC is, of course, also taxpayers' money) 

Let's go through that again in slow motion. The BIM cost £329,000 year to run, funded largely (92%) by a central government grant, and generated a net income of £30,000 a year. The MoB will cost £909,000 a year to run, plus £442,000 juice for the bank manager and no guarantee of operational funding from anyone other than the Bristolian tax payer.

The next time some one tells you that it's free to visit museums in Britain, remember that there's no such thing as a free lunch. Somebody is always paying. In this case, as analysed previously, every council taxpayer in Bristol will be paying a minimum of £7.00 a year to fund the MoB.

Bristol has some impressive museums , but you can see there's a budget crunch coming. One wonders whether the Red Lodge and the Georgian House will find themselves outmaneouvred by the politically sophisticated diversity crew at the Empire & Commonwealth Museum and the new MoB.

Addenda

1. If you look at the "Travel Plan" for the MoB, you will find that

"walking will be the key mode for the vast majority of people visiting the new museum".

Therefore, the projected 250,000 visitors a year (up from 130,000 remember) won't be needing parking spaces, will they? So that's why there are only 25 planned spaces, of which 7 will be permit controlled and 3 reserved for blue badged vehicles, for a total of 15 visitor's spaces for the museum. Oh - and there's no on-site coach parking for the 1-2 coaches a day that are expected either.

15 parking spaces. For a quarter of a million people.

2. There is of course an Equalities Impact Assessment for the MoB "to meet the needs of those disadvantaged by physical, social, intellectual, cultural, economic factors". I'm not quite sure who the intellectually disadvantaged are, or whether they'll want to come to a museum, but we can only hope.

But here's a problem - the summary given to the Cabinet reveals that the Abolition 200 content currently in circulation in Bristol will form a large part of the content of the MoB. Is it likely that you're going to get lots of new punters to come and see these exhibits if they've already seen them at another museum about a mile away?

And, finally

Some fantastic comments received from the public in response to the planning application:

"These buildings were designed to support a lot of weight in terms of cargo/freight. Surely they woud thereore be capable of supporting a swimming poopl/spa on the roof in the same manner as the one recently opened in Bath. The City needs such a pool and the views would be great. One could even imagine piping hot water from Hotwells to heat the pool and beat Bath at its own game"

"How about a model of Concorde on the top or even the real thing."

*I give the public sector a lot of flak about performance and management of taxpayer's funds. Having worked for a few central and local government organisations over the years, I've seen some dreadful decision making and awful project management. But I've seen the same thing in private sector organisations. Some of the best operational management in the world can in fact be found in the British civil service. The reason why some teams get it right where others get it wrong is a combination of having realistic goals and open exchange of information. As a taxpayer in Bristol I can get access to much of the data and documents relating to Council activities with far greater ease than if I were a shareholder trying to find out about the activities of a publically limited company.