Posted: 01.03.21 at 11:05 by Jez Hemming Local Democracy Reporter
A local authority’s “shaming catalogue of errors” led to a contract that never should have been signed, for a building that was never fit for purpose.
The mistakes surrounding Conwy county council’s £3.6m white elephant project to site an HGV depot at Mochdre Commerce Park can now made be public.
It’s a sorry tale highlighting a lack of leadership, policies ignored or misunderstood and no one being held to account for organisational failings which permeated the authority’s project management.
Conwy county council’s CEO Iwan Davies called the episode “highly regrettable” at a virtual governance and audit scrutiny meeting on Monday, as he outlined the measures he hopes will prevent anything like this happening again.
Cllr Anne McCaffrey, who sat in on the committee, called it “a really quite shaming catalogue of errors”.
The authority entered into a 35-year lease with Conygar Investment Company PLC (Conygar Strand Ltd), on units 6, 7, 8 and part of unit 5 at Mochdre Commerce Park, Conwy Road, in May 2016.
The idea was to move all of the authority’s HGV vehicles and equipment under one roof from nine other sites across the county, in a bid to save cash.
However, incredibly, no one bothered to check if it was structurally fit for purpose until after the £240,000 per annum plus vat leasehold agreement was signed.
Eventually a council survey, when it looked at installing inspection pits for the vehicles, showed the floor couldn’t take the weight of them – and revealed 21 other issues with the units rendering them unfit for purpose.
The contract the council signed meant they couldn’t even get redress and had to continue paying the rent.
With solicitors and report fees added in more than £1m has already been wasted on the facility, which Cllr Donald Milne described as “the biggest financial liability in the history of Conwy”.
If lease payments aren’t negotiated down at this year’s review, it could cost the council at least £3.6m plus service charges, up to 2031 – when there is a 15-year break clause in the lease agreement.
That’s without calculating how much officer and staff time has been lost investigating the project, along with solicitors’ fees, costs for reports and money spent finding alternative provision for HGVs.
An independent report into the debacle was commissioned by Conwy county council with solicitors DWF LLP, based in Newcastle.
Originally secret, a redacted version was released under the Freedom of Information Act last year.
It revealed the concrete slab floor was not “fit for purpose” there were problems with drainage, defective lightning protection and “defective installation of ground gas management systems to external areas” on the former tip site.
In all there were 22 defects or areas of work which needed rectifying.
The study also revealed a catalogue of errors in management which led to the council handing out tax payers’ cash for little in return.
The original plan (Project K) started in 2013 and was led by the authority’s estates department.
The remit was to find new offices for the environment, roads and facilities (ERF) section.
In August 2014 the officer in charge of the project left and it appears no one in authority thought to replace him.
The independent report said: “From mid-2014 onwards the paperwork indicates there is much reduced internal project governance.
“A sound project management methodology does not appear to have been followed.
“The failure to appoint a project manager resulted in a failure to allocate tasks and responsibilities to project team members.”
On top of this the plans were then changed. The report went on: “The specification altered significantly in 2015 with depot facilities being added into the scope of the property and a planning application being required to authorise the user.”
The report explains how there was no “physical due diligence” carried out on the building.
Even though there were known issues with the property the council left Conygar to sort them out and then assure officers they’d been rectified.
The council simply took the company’s word everything was fit for purpose.
The report noted: “There is evidence CCBC were aware repair works had been required at the property and of some limited questioning of Conygar about the works…
“There is no evidence a building survey was commissioned or the suitability of the property was investigated in any detail.”
It added checks “fell below the standards expected from a diligent and prudent authority” and described missed opportunities to “identify some of the key issues involving the defects”.
In May 2015, aware the building was on a former tip, the council’s cabinet told officers it should only proceed with the deal if it was “supported by legally enforceable assurances confirming the property was free of inherent defects and specifically any issues resulting from ground conditions”.
What council officers finally agreed was a limited 10-year warranty which excluded the building condition and left out all pre-contract issues.
According to the study even if the authority could have claimed any recompense from Conygar it wouldn’t have covered the rent on the property.
Two departments were involved after the project leader left and neither thought it was its responsibility to lead it – or raise the lack of scrutiny as an issue.
Nor did anyone in the council’s hierarchy recognise the void left by the departure of the project manager.
The report said: “This resulted principally in two departments, being estates and ERF, operating without carefully defined roles and without any formal and accountable division of responsibility.
“Individuals from each department claimed they believed the other was leading on the issue of due diligence and this resulted in only limited due diligence being undertaken prior to the exchange of contracts.”
Independent investigators found “no evidence of any conflict of interest or inappropriate behaviour by CCBC staff members” with regard to the deal but slammed the lack of oversight.
The building has been on standby as a temporary morgue during the Covid crisis, with Welsh Government picking up the bill, but it hasn’t been needed.
Currently it is being used for “storage and distribution of pandemic related equipment” said CEO Mr Davies.
Mr Davies’ report on Monday outlined the progress being made to ensure such poor management never happens again.
The safeguards being put in place have been backed by Audit Wales.
All senior managers are undergoing project training and the council is making sure they all understand the definition of a project – as one of the issues was officers not recognising it as one at the time.
Information sharing will make sure all departments are aware of who is in charge of future projects, what their responsibilities are and where they are up to.
The estates and asset management function has now been removed from the strategic director of finance and resources and handed to the strategic director of economy and place.
Conwy county council has refused to reveal if anyone faced action over the failures, saying it “does not comment on staff disciplinary issues”.
Cllr Anne McCaffrey asked Mr Davies if accountability had been written into job descriptions.
He replied: “I would have to look specifically at job descriptions to see if accountability was in there but even if it isn’t written in those words it’s implicit in the employee-employer relationship.”
Cllr McCaffrey commented: “That’s good to hear as I’m not sure that’s how many people feel, so it’s good to get you on the record confirming that.”
The CEO said he remained “bitterly despondent about what happened” but the risk of a recurrence was “very, very low, if non-existent”.
Audit Wales said the “absence of project management for the property at Mochdre Commerce Park was the root cause of the problems which occurred” but said the council now has “clearly defined and improving project management arrangements”.
The original landlord, Conygar Strand Ltd, changed its name in 2017 to RR Sea Strand Limited, according to Companies House. The previous directors left at the same time and two new directors were appointed.
RR Sea Strand Ltd’s latest annual accounts say it is wholly owned by Jersey-based Regional Commercial Midco Ltd, which in turn is a wholly owned subsidiary of Guernsey-based Regional REIT Limited.
The LDRS was unable to contact RR Sea stand Ltd directly and has asked for comment from the ultimate parent company