Centre extension risk process slated

KATE DAVIDSON
Last updated 13:00 21/05/2014

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The closure of the Trafalgar Centre is backed in a new report, but Nelson City Council is criticised for its lack of financial risk analysis when building the centre's southern extension.

An independent review commissioned by council strategic management consultant Alan Bickers criticised the council for its failure to undertake a financial risk assessment when building the extension.

The cost of the project, completed in 2009, blew out from $4.5 million to $7m.

However, he said said the council was justified in its decision to close the building last December due its earthquake-prone status and risk to public safety.

Bickers, a former council chief executive, said the council had acted responsibly as the building owner by restricting entry "until such time as further consideration or possible practicable options are undertaken".

As part of the review Bickers was provided with documents and visited Nelson to see the site and interview staff.

He criticised the council's process in giving little or no consideration to possible risks with the project, especially financial risk, and it did not "conform to good-practice methodology. The fact that the project budget increased from $4.5 million to more than $7m is prima facie evidence that good practice was not applied in estimating the costs of the project", he wrote.

He said the council should improve its business practices for the management of capital projects and suggested the council consider a policy requiring the preparation and approval of business cases when it came to such projects.

Bickers had provided a template for the council to think about using, outlining matters such as what costs would be involved, the economic justification for the case, and an analysis of risks associated with projects and how these could be mitigated.

The report examined whether the southern extension was carried out and constructed as it should have been considering what was now known about the land and the buildings.

Bickers said the council and building consent authority did exercise good practice in relation to the consenting, inspecting and certifying of the extension.

"In my opinion, NCC officers were prudent in their approach to assessing the design as being suitable for a consent to be issued," he said.

The council's infrastructure committee will review the report tomorrow, before it goes to the full council with recommendations to incorporate the business case approach suggested by Bickers for significant projects undertaken by the council.

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Mayor Rachel Reese said today Bickers' comments on financial risk assessment were "a fair call".

"It's not a great way to run a project. I'm hoping that we're near the end of those historical practices.

"We've had consistent advice regarding the closure, and what he's said is consistent with that."

A report from the Trafalgar Centre project team would come to the council on June 5, when the next step would be discussed, she said.

- The Nelson Mail

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