Selwyn_Times: April 12, 2023

Wednesday April 12 2023 Selwyn Times
NEWS 11
COSTS: The Darfield sewer trunk project ran over budget by $3.40 million.
PHOTO: SDC
Councillor raises
concerns about
budget blowouts
• By Daniel Alvey
CONCERNS HAVE been raised about
the budget forecasting of district council
projects not being accurate enough, after a
number of cost overruns.
Councillor Grant Miller raised
the issue in the finance and performance
committee meeting last
week.
“We are seeing continual budget
overruns and forecasting not
just being marginally out but
substantially out,” Miller said.
“It raises real concerns for us as
governors around our budgeting
processes, we’re sending out a 5.9
per cent rates increase based on the
forecast we are doing here and history
is telling us that our forecasting
is not good.”
Miller referenced the Darfield
trunk sewer project, which saw a
sewer line built from Darfield to
Pines Wastewater Treatment Plant,
and pump stations at Kirwee and
Darfield. The current financial forecast
estimates the total project costs will exceed
the approved budget by $3.40 million with
a current estimate of $22.36 million.
His second example was the Kakaha
Park (Prebbleton) car park development,
with $420,000 in roading adjustments not
originally within scope.
“It’s a damning indictment on our
business practice here, any other business
wouldn’t get away with that lack of project
management. This is a disaster, you can’t
dress it up any other way,” Miller said.
District council group manager, enabling
services, Kelvin Manson, came to
the defence of the budgeting processes.
He said as projects progress exact costs
become clearer with the preparation of
project budgets requiring staff to make
assumptions and estimates.
“The current economic conditions with
higher levels of inflation, tight labour
market, and constrained supply chains
Grant Miller
Kelvin
Manson
has meant there have been challenges to
the accuracy of project forecasts,” Manson
said.
Miller said projects that overrun need to
be closely scrutinised.
“We employ professional roading engineers
and design agents to get these
right so again . . . (it) is going back
to these people and saying actually
where did you get this wrong.
“I like to think that we should
spend every dollar like it’s our own.”
Manson said at the end of any
major project there is a review
that focuses on all aspects of the
project, including financial performance,
from which learning is
derived.
Mayor Sam Broughton defended
district council staff, saying responsibility
was on councillors as well as
staff.
“The decision around the Darfield
sewage line was a decision we made
as councillors against staff recommendation,
because of a philosophical
position we took because we wanted
a better outcome for our community,”
Broughton said.
“The culture we have as governors set
the tone for the rest of the council staff so
compressed timelines and new projects
jumping in priority adds the emphasis that
the most important thing is to get on with
it.”
The district council is also looking at
providing more accurate reporting of
professional fees, a group of costs
often outsourced. The fees in this
category include engineering, quantity
surveying, legal, planning, and project
management.
“The council is refining its project
reporting to create greater transparency
and enhanced focus on cost and value
management. The approach to reporting
is evolving with further changes planned
that will enhance the council’s project
controls,” Manson said.