While construction began on the Pūtangitangi Greenmeadows Centre in November 2016, it was not completed until May 2019. Photo: Supplied / Nelson City Council
The construction of an $8 million community centre in Nelson faced a wide range of problems, according an external review released today.
On Thursday, Nelson City Council received capital intelligence firm Klu'dup's review into the Pūtangitangi Greenmeadows Centre in Stoke.
It stated the centre was constructed to a high standard, but the project was affected by significant delays, quality issues and cost overruns. Construction took almost three times longer than planned and ran close to 10 percent over budget.
The centre was initially budgeted to cost $5.72 million, with a final approved budget of $7.35m and a final cost of $8.04 million. While construction began on the centre in November 2016, it was not completed until May 2019.
The review found the business case for the project did not address its fundamental requirements and lacked sufficient detail, the project did not have a clearly articulated brief, there was a lack of clarity around how it would operate, and there was no robust project governance framework.
It also found the reporting structure within Nelson City Council had multiple layers of overlapping communication, there had been a significant staff re-structure which resulted in many staffing changes, and there was a lack of internal project management capacity.
Council staff had multiple roles in the project that were not separated in the documentation, including client, regulator, operator and certifier. One example was where the group manager acted as the engineer to the contract.
The review found a procurement plan was not developed, there was a lack of accurate and timely cost reporting procedures, and the council did not have sufficient expertise to evaluate the bids it received.
It made a number of recommendations, including that the council should adopt the best practice Better Business Cases regime defined by Treasury.
Nelson City Council chief executive Pat Dougherty said the project and subsequent review had dominated close to four-and-a-half of the five years he had been in the role.
"Once we realised things were going awry, we responded really well and did a really good job of getting things fixed," Dougherty said.
"We learnt our lessons very quickly, it's been great to get this report to identify what more we need to do."
Greenmeadows centre in Stoke. Photo: RNZ/Tracy Neal.
A number of changes were made to the way large vertical infrastructure projects were run, he said.
"There was no chance of us carrying on until we knew what had gone wrong, we have taken it very seriously."
Council had made changes to the infrastructure and capital projects teams to improve resourcing of project delivery, assigned appropriate contingencies during the project, better understood risks up front, introduced a non-price attribute advantage for local contracting firms, increased due diligence on preferred tenderers, established a tenders subcommittee and improved iwi engagement processes.
Dougherty said the structure put in place for the library development showed council had a robust approach to major building projects and could identify risks early.
"We acknowledge with Pūtangitangi Greenmeadows the systems weren't in place to act quickly when problems arose and while the review points out that the build occurred in a challenging time for the industry, including the exit of Fletcher Construction from the market, had we had the right systems in place we could have managed these challenges better."
Nelson Mayor Rachel Reese said the project had caused considerable distress to staff, councillors and the community, and council owed it to the residents of Nelson and the Stoke community in particular to learn from its mistakes.
"With the completion of the review and the very clear recommendations it contains, council now has a blueprint to follow for future large building projects to ensure this situation isn't repeated."
The council commissioned an external review in 2018, but it could not begin until a settlement process between the council and the principal parties involved in its construction, over unresolved concerns about the project, had concluded.
The matter was resolved in March 2021, with $340,000 paid to the council on behalf of the parties without any admission of liability.