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Corby Cube: 'financial and project management was poor'

A damning report by auditors KPMG has slammed Corby Borough council for its handling of Hawkins\Brown’s problem-hit Corby Cube project

The accountants uncovered a ‘significant number of failings’ in the management of four major capital projects, including the flagship Cube building which came in more than £12 million over its original £35 million budget.

The civic headquarters building, which has been plagued with issues since opening in late 2010, was branded ‘commercially and operationally flawed’ following an internal working group report last year (AJ 19.07.2012).

Brought in last September to investigate the council’s processes, KPMG said the authority needed to take immediate action to improve its governance arrangements which it claimed were ‘ambiguous’.

The reports reads: ‘Financial and project management of the projects was poor… the checks and balances which would have alerted the council to these failings, including the statutory responsibilities of key officers, did not operate as they should.’

It is unclear whether any legal action will be taken on the back of the findings, but KPMG reported that ’ the council may have made decisions contrary to law and against its internal policies and procedures’.

KPMG was brought into look at the Kingswood housing project, the CUBE , the Rockingham Triangle sports stadium scheme and sale of land at St James.

The report continues: ‘Over the last few years external borrowing increased from nil to £47 million in 2011/12 and the Council had limited usable revenue reserves over its minimum designated general fund balance of £0.8 million at that time. The Council has a Medium Term Financial Strategy aimed at managing the risks and it has since decreased its external loan debt to £36 million, but there is little doubt that it would have been in a better position to address these had the failings not occurred.’

Response from council leader Tom Beattie and chief executive Norman Stronach

The failures that have been identified in this report surrounding these projects are unacceptable. The people of Corby have been let down but they can be assured that these failings are a thing of the past.
The report confirms the outcomes of our own investigations and endorses many of the steps we have already taken to improve accountability and oversight. It indicates that the steps the council has taken over the last 18 months have been the right ones.
At the time when these projects were undertaken there was clearly a lack of oversight by elected members, weak project management procedures and a
culture in which officers were fearful of questioning or drawing attention to practices which fall well short of the standards our residents expect of Corby
Council. These issues are all being addressed. Many of the report’s recommendations are already being acted upon following our own investigations and those of an independent review of Corby Council’s financial management, which we asked to be completed last year. So far the recommendations that emerged from those investigations have either already been implemented or are in the process of implementation. We have also put in place an independently chaired, cross-party Improvement Board to ensure that our positive progress remains on track.
It would be a great shame and a disappointment if the lasting benefit which will be delivered to Corby as a result of these projects is tarnished by the clear
failures identified in this report. Corby remains a place of ambition and growth and we plan to continue to work hard to deliver the improvements local people
want to see in their town.

Previous (AJ 30.08.2012)

Hawkins\Brown counters Corby Cube claims

Hawkins\Brown has hit back at the damning report into the failures surrounding the allegedly ‘commercially and operationally flawed’ Corby Cube

Last month (AJ 19.07.12), Corby Borough Council released a 91-page document drawn up by an internal scrutiny working group looking at, among other things, why the flagship building was now more than £12 million over its original £35 million budget. The 7,700m² landmark can still only house a maximum of 1,560 people – half that originally envisaged in the brief.

However, in a letter sent to Corby councillors by the practice, the firm said many conclusions in the report were based on ‘falsehoods and inaccuracies’ (see below and attached).

As well as questioning where the reported £47 million cost figure had come from, the practice also pointed out that although it had queried ‘poor construction practice’ and noted an ‘extensive list of construction defects’, a number of the problematic items had been ‘accepted by the council against the advice of Hawkins\Brown’.

In a filenote attached to the letter, Hawkins\Brown branded claims that its alleged ‘lack of performance’ had led to the scheme becoming a ‘de facto hybrid’ building as ‘patently untrue’.

Founding partner Roger Hawkins said: ‘The decision to adopt a “hybrid” building contract rather than the one issued with the tender was taken by Corby Borough Council and its contract administrator, six months after the works were tendered, and against the explicit advice of the design team.’

He added: ‘We just want the truth to emerge and a balanced view into any investigation.’

Dear councillor,

As you may be aware, Hawkins\Brown was employed by the council as architect and lead designer on the Corby Cube project. We are concerned that the Public Report of Scrutiny Review into the Cube, Parklands Gateway is unfairly critical of work carried out by our practice and the whole design team. It contains a large number of false statements regarding Hawkins\Brown, and the opinions and conclusions that the report puts forward are based on falsehoods and inaccuracies. The Report disparages Hawkins\Brown and has the potential to cause serious damage to our professional reputation as it has been widely reported.

 Given your role as a councillor, we can identify you as our client for this project and therefore write to you formally to ask that our proposal to offer a balanced view to the report is reconsidered by Corby Borough Council.

 I attended the open session of the meeting of the full council on 8 August 2012 and was pleased to note that several members of the council acknowledged that the Overview and Scrutiny Panel Working Group had based their report on opinions rather than contractual fact and had not taken the views of several key people involved with the project.

 For your information I have attached a few examples of the statements we believe to be false set out in the ‘summary’ and ‘conclusion’ section of the report. This is not a line-by-line review of the entire report but will hopefully give you an understanding of the gravity of our concerns.

There were several variations related to changing client requirements, such as the late involvement of the theatre operator needing a box office and amendments in the technical demands of a complex theatre, together with the reorganisation of the library and ‘one stop shop’ which caused an increase in the contract value. Costs can also be attributed to completion of the adjacent Corby swimming pool and public realm works.

It is unclear where other costs, now reported as part of the cost of the Cube project, have come from, as these did not form part of the contract works. Several areas within the Cube were left as shell space at completion with the council seeking a commercial operator for a gallery and café. In the event, the council has not been able to secure this investment and is now seeking to carry out the work itself.

Throughout the contract, there were examples of poor construction practice reported by Hawkins\Brown and at practical completion there was an extensive list of construction defects and snagging items identified by Hawkins\Brown and the design team. It appears that some of these items have been accepted by the council against the advice of Hawkins\Brown. Any further costs to rectify such construction defects should not form part of the contract works.

The Council’s Scrutiny Report opens with the lines ‘the Cube is a building of elegance and presence forming Corby Borough Council’s civic headquarters … it has already established itself as the heart of the town’s civic and cultural life’. Hawkins\Brown acknowledges these positive statements and the support it has received from friends and local people in response to the report’s unfavourable allegations. We have confirmed that while we strongly disagree with much of the report’s contents and conclusions, and are extremely disappointed not to be allowed to contribute to the report, we are continuing to support the council and work with it while the contractor completes the defects.

Yours sincerely,

Roger Hawkins
For and on behalf of the partners at Hawkins\Brown and the associated Corby Cube Design Team

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