The need for a business case to be produced prior to the start of a large capital project is the top “lesson learned” takeaway from a probe into what went wrong as spiralling costs landed Westmorland and Furness Council with a final bill of £8.3 million for the upgrade of Voreda House.
Having finally opened to the public in June, Voreda House is the council’s Penrith “hub”, providing a focal point for those requiring services in the Eden area.
But it was the desire of the now defunct Eden District Council to move all its staff under one roof — rather than have them split between the Town Hall and Mansion House — which first set the ball rolling for the single site project in 2011.
In Westmorland and Furness Council’s Voreda House – Lessons Learned report, the authority sets out what has been learned about the development of the building pre-April 2023, following an internal audit review, and outlines steps which will be taken in future for major building projects.
A report considered by members of Eden District Council in February, 2020, failed to inform councillors of key points which should have been important factors in shaping the decision to purchase Voreda House for £900,000.
Voreda House was independently valued and its market value, as a vacant building, was found to be £785,000, but Eden District Council agreed to pay £900,000 for it.
In addition, specialist surveys were not undertaken prior to the property purchase which could have identified any potential additional construction costs.
During the renovation a number of issues emerged, including the presence of asbestos, which added to the cost of its refurbishment.
Going forward, Westmorland and Furness Council has said: “Members should be provided with all relevant information on which to make a decision, particularly important in respect of property purchases where the valuation is below that purchase price or the building survey recommends further specialist surveys.”
Other issues raised include high-risk funding sources being used, steering group meetings not being minuted, lack of documentary evidence to support the assertion of ongoing risk assessment prior to March, 2023, and financial updates being presented verbally to councillors and not documented in written reports.
A budget of £2.3million was approved for single site accommodation in April, 2018, and Voreda House was purchased in summer, 2020, with the intention for it to be occupied by 31st March, 2021.
By March, 2023, Eden District Council’s finance scrutiny committee was told the total cost would be no more than £4.56m.
Then came the bombshell that Westmorland and Furness Council had identified a cost increase due to construction and wider project inflation and financing of £3.2m for Voreda House — taking the final figure up to £8.3m.
The lessons learned report produced by Westmorland and Furness Council also identifies issues relating to risk assessment in the commissioning and refurbishment of Voreda House.
A Funding Delivery Assurance Group has now been established, to be chaired by the director of resources, to review progress with all externally funded schemes and any high risk internally funded schemes and to approve any required amendments to either the overall business case or spend profiles ahead of reporting the changes to government or to council. This includes monitoring the outputs and impacts of the schemes.
Andrew Jarvis, deputy leader of the council and cabinet member for finance, said: “This council rightly recognises that it has a duty to ensure public money is invested wisely and as costs rose on this inherited project we undertook a lessons learnt review to inform future projects.
“This report has helped us to challenge our current processes and we are confident that they are robust and we will continue to regularly review these as outlined in the management response.
“Voreda House has now been in operation for more than two months and we are beginning to see the planned benefits of bringing Westmorland and Furness Council staff together into one central, modern and flexible building.
“This is a significant milestone in our carbon reduction plan and is evidence of our commitment to investing in our workplace environments across Westmorland and Furness.”
