The construction of an $8 million community center in Nelson faced a wide variety of issues, according to an outside review released today.
On Thursday, Nelson City Council received the assessment of the capital intelligence firm Klu’dup at the Pūtangitangi Greenmeadows Center in Stoke.
It stated that the center had been built to a high standard, but that the project was affected by significant delays, quality issues and cost overruns. Construction took nearly three times longer than planned and ran nearly 10 percent over budget.
The center was initially budgeted at $5.72 million, with a final approved budget of $7.35 million and a final cost of $8.04 million. While construction on the center began in November 2016, it was not completed until May 2019.
The assessment found that the business case for the project did not meet the fundamental requirements and was not sufficiently detailed, the project did not have a clearly defined remit, there was a lack of clarity about how it would work and there was no robust project management framework.
It also found that the reporting structure within Nelson City Council had multiple layers of overlapping communication, that there had been significant staff restructuring resulting in many staff changes, and that there was a lack of internal project management capacity.
Council employees had multiple roles in the project that were not separated in the documentation, including customer, supervisor, operator and certifier. An example was where the group manager acted as the engineer of the contract.
The assessment found that no procurement plan had been developed, that there was a lack of accurate and timely cost reporting procedures and that the municipality did not have sufficient expertise to evaluate the bids received.
It made a number of recommendations, including that the council should adopt the Treasury-defined best practice regime Better Business Cases.
Nelson City Council CEO Pat Dougherty said the project and subsequent evaluation had dominated nearly four and a half of his five years in the post.
“When we realized things were going wrong, we responded really well and did a really good job of fixing things,” Dougherty said.
“We learned our lessons very quickly. It was great to get this report to determine what else we need to do.”
A number of changes have been made to the way major vertical infrastructure projects are run, he said.
“There was no chance we would continue until we knew what had gone wrong. We took it very seriously.”
The Council had made changes to the infrastructure and capital project teams to improve project delivery resources, allocated appropriate contingencies during the project, better understood risks in advance, introduced a non-price attribute advantage for local contractors, increased due diligence on preferred bidders , established a procurement subcommittee and improved IWI engagement processes.
Dougherty said the structure put in place for the library’s development demonstrates the council’s robust approach to major construction projects and the ability to identify risks early.
“We recognize that with Pūtangitangi Greenmeadows, the systems were not in place to act quickly when issues arose and while the review indicates that construction took place at a challenging time for the industry, including Fletcher Construction’s exit from the market, if we With the right systems, we could have managed these challenges better.”
Nelson Mayor Rachel Reese said the project has caused great suffering to staff, councilors and the community, and the council owed it to the residents of Nelson and the Stoke community in particular to learn from the mistakes .
“With the completion of the assessment and the very clear recommendations it contains, the municipality now has a blueprint to follow for future major construction projects to ensure this situation does not happen again.”
The council commissioned an external review in 2018, but it could not begin until a settlement process between the council and key parties involved in the construction over unresolved concerns about the project was completed.
The case was resolved in March 2021, with $340,000 being paid to the board on behalf of the parties without any admission of liability.