Damning review reveals errors that mean £18m extra needed to finish tower block refurb

The cabinet report from Sandwell Council reveals a string of failures over the multi-million-pound major refurbishment of tower blocks in Oldbury and Wednesbury.

The critical review found there was “inadequate” management of the major refurbishment projects, avoidable delays as well as “significant additional costs” brought on by ever-changing contracts.

The refurbishment budget was ‘inadequate from the beginning’ according to the report and many of the flats did not even meet national social housing standards.

The delays have been so bad in some cases that contractors are making loss and expense compensation claims.

As much as £55 million has already been spent on refurbishing the 350-strong social housing in the low and high-rises at the Darley House estate and The Lakes in Oldbury, as well as Alfred Gunn House in Langley and Thorn Close in Wednesbury.

The extra £18m requested would swell the budget by nearly a third.

The extra costs come despite the council previously accepting the lowest bids for the work.

A third of both Alfred Gunn House and The Lakes would be inhabitable if left unfinished. 30 per cent of flats in Alfred Gunn House have been stripped to the bare bones and not yet refurbished.

The work to refurbish Alfred Gunn House has been particularly problematic with a 15-month delay in moving telecommunications equipment from the block’s roof blocking contractors from accessing the top of the building which has led to an estimated £3 million delay.

The building’s original sprinkler system did not meet standards which required extra electrical work, and added ceilings and additional structural support work to the building’s roof and balcony due to the condition of the concrete will cost at least £1.2 million.

As much as £3.3 million has been added to the budget for new bathrooms, kitchens and fire doors.

Darley House has racked up an extra £3 million alone from also having contingency plans excluded from the original budget and by a delay in handing over the building to contractors.

A loss and expense compensation claim at The Lakes is still to be decided and that comes after an extra £595,000 in architect costs was racked up by redesigns that included work to structural beams, lift shafts, windows and vents.

If the extra money is not approved, the council says security costs would mount for the empty parts of the unfinished tower blocks, which in itself would prove to be a "significant risk" to residents' safety.

The council would also lose more than £330,000 a year in rent income.

Installing external wall insulation at Darley House has not been finished, one lift has not been installed and there is currently no central heating in the flats.

The review found that original budgets were “inadequate” from the start and failed to include essential fees and costs.

Several changes have led to expensive delays and compensation claims from contractors – many of which are still to be decided and could see the budget balloon even further.

The homes also failed to meet ‘decent’ social housing standards.

The review by the council found the authority took a ‘frowned-upon’ approach by ignoring multi-million-pound ‘contingency’ plans.

The cabinet report said the plans, which includes money set aside to cover unforeseen costs, risks or changes, were scrapped so projected costs were within the budget approved.

The cabinet report said excluding contingencies was a “high-risk approach” and “not recommended practice".

The review said the council’s approved budgets were “inadequate” from the early stages.

Cost estimates also ignored professional fees – described as “essential in the development and delivery of major projects” – which led to costs running over budget.

The work that was originally approved was “insufficient” to even meet ‘decent homes standard’ – the minimum standard for social housing that has been in place for decades.

The changes made during the planning and construction stages have led to costs rising “significantly".

The cabinet report goes on to say that management of the various contracts had “proven to be inadequate” and “avoidable” delays had to “legitimate” claims for time extensions from contracts leading to even more additional costs.

Several compensation claims from contractors are still to be decided and the council says “there remains a significant range of potential final costs that cannot yet be determined".

The report also criticises officers for not requesting ‘proportionate’ increases in the budget as inflation added extra costs on estimates that were made as many as six years earlier.

In the report, Sandwell Council said it had already made “significant efforts” to make sure the failures were not repeated.

The cabinet report said: “New procedures have been implemented to ensure that in the case of future major capital projects, a more rigorous approach is taken including a detailed financial appraisal to ensure that investment is the best option, more robust budget setting, clarity on the establishment of contract scope and specification and better ‘in flight’ project management.

“A new reporting mechanism has been implemented to ensure full clarity on budget setting and requests for additional resources in the event of unforeseen and unavoidable additional cost.

“It is intended to seek to appoint a suitably qualified and experienced construction expert to conduct a detailed post-completion evaluation of the projects and to make recommendations as to how future major capital projects should be managed.

“This will ensure that new processes and procedures reflect the lessons learnt and that effective measures for project inception, approval and management are in place in future.”

Sandwell Council’s cabinet will be asked to approve the extra money at a meeting on Wednesday, September 11.