Dundee design museum's £31 million cost hike due to original budget 'understatement'

Will Green is news editor of Supply Management
18 August 2015

Procurement expert John McClelland's review into why the costs of a new design museum in Dundee ballooned by more than £31 million has concluded the main reason was the original budget was underestimated.

It found the Victoria and Albert Museum of Design Dundee project had “little prospect of being delivered for the original budget” because initial cost estimates were for a “high quality but not an elite structure”, although in the end a design was selected with “very significant cost premiums”.

The report said between June 2011 and January 2015 project costs increased by £31.1 million to £80.1 million, due in the main to construction costs rising by £28 million to £60.8 million.

McClelland said while a procurement manager was involved in “administrative processes associated with the pre-tender and tendering activities for the building project”, procurement was not involved in the prior architectural competition. “The procurement section at Dundee City Council was not formed at that time and therefore not involved in this process,” said McClelland, who was commissioned by the council to undertake the review.

Instead the architectural competition was conducted by a charity specially established to oversee the project, Design Dundee Ltd (DDL), a collaboration between the V&A, the University of Dundee, Abertay University, Scottish Enterprise and Dundee City Council.

McClelland said it was “not clear” if a judging panel at DDL had access to information about the achievability of the winning bid’s cost estimate.

“As a result it may not have been possible at that stage to appreciate that in choosing the stunning winning design the complexity and challenge of actually building it would generate very significant cost premiums, some of which were neither provided for in the architect’s bid nor later in the June 2011 budget,” said the report.

However, McClelland said it was the “right decision” to proceed with the project and “for building this complex and sophisticated design the contracted price is credible”. Work on the site by BAM Construct began in March 2015.

Among his recommendations McClelland, who carried out reviews into public procurement in Wales and Scotland, said the project should be fully integrated into the council’s existing structures for construction projects, which has now taken place, and that a project manager and cost manager should be appointed.

The report is due to be discussed by the council’s policy and resources committee on 24 August. Councillor Ken Guild, convener of the committee, said: “This comprehensive review shows us where lessons need to be learned and I am happy to accept the recommendations.

“We are working with our partners and BAM Construct to ensure that this unique building helps boost the economy, cultural offer and confidence of our city.”

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