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'Badly-managed Whitehouse project' - Audit team finds poor supervision, incestuous linkages
published: Sunday | September 10, 2006 <DIV class=KonaBody>
The Sandals Whitehouse European Village and Spa in Westmoreland.
The Forensic audit-reportinto the Sandals Whitehouse project which was commissioned by former Prime Minister P.J. Patterson into the multi-million-dollar overruns at the Westmoreland-based hotelwas tabled in the House of Representatives on Tuesday. Here are excerpts from the report.
"In reviewing The Project Cost and Final Account prepared by the consultant Quantity Surveyor, the Audit Team can report net project overrun of approximately US$43.36 million. This is over and above the budget of US$70.0 million.
"These overruns can be summarised as follows:
1. Overruns Construction ContractUS$38,420,056.33
2. Other Project Overruns US$6,443,374.12
3. Underexpenditure on Project US$1,957,401.00
4. Expenditures without Budget Provisions US$452,637.00
5. Net Project Overrun US$43,358,666.45
"Non-payment of shareholders equity also contributed to the overrun on the project. When these funds were not available, ANDCO was forced to seek funding elsewhere. Interest charges on these loans also contributed to the overruns on the project."
"In respect of the performance of contracted parties, we can make the following comment on the overall management of the project and the performance of the Project Manager. One of the items in the contract between Urban Development Corporation (UDC) and Nevalco Ltd. is that Nevalco "shall not without prior written consent of the UDC give instructions to any contracted parties which could increase the project cost or time taken to complete or procure anything that is not provided for in the bills of quantities of the project."
"As a large percentage of the bills of qualities were provisional sums, it meant that UDC/Nevalco should have closely monitored the expenditure of these sums. In the event that the final designs for these items of work resulted in a cost in excess of the provisional sum, permission should have been sought from the ANDCO board. The Audit Team has not seen any such request or written consent.
"The UDC had to "ensure compliance of designs to brief." It is clear that this was not effectively done as the designs far exceeded the original brief and Project Budget. It was not until the latter stage of the project when UDC's chief architect got involved with the project full time on site, that more concerted efforts were made to rationalise the cost of construction and to achieve completion.
"The Project Manager/Project Manager Representative had a responsibility to report projected cost overruns to the ANDCO board, advise on how to reduce these costs, and obtain the board's permission to proceed with the works. From all indications this was not done, and this was one of the main downfalls of the project.
No effective management
"The Project Manager/Project Manager Representative did not effectively manage the project. However, it should be noted that the ANDCO board did not meet formally between October 2003 and January 2005 and, therefore, this avenue of formal approval was not available.
"In respect of Gorstew Ltd./ Implementation Limited, Gorstew was greatly influential in determining Furniture Fixtures and Equipment (FF&E) and specialist items through the architect and interior designers.
"Although they assisted in determining the revised US$70 million project budget, it appears that the special system items, such as the air conditioning, standby generator, kitchen equipment, garbage disposal, special light fixtures, and thei
published: Sunday | September 10, 2006 <DIV class=KonaBody>
The Sandals Whitehouse European Village and Spa in Westmoreland.
The Forensic audit-reportinto the Sandals Whitehouse project which was commissioned by former Prime Minister P.J. Patterson into the multi-million-dollar overruns at the Westmoreland-based hotelwas tabled in the House of Representatives on Tuesday. Here are excerpts from the report.
"In reviewing The Project Cost and Final Account prepared by the consultant Quantity Surveyor, the Audit Team can report net project overrun of approximately US$43.36 million. This is over and above the budget of US$70.0 million.
"These overruns can be summarised as follows:
1. Overruns Construction ContractUS$38,420,056.33
2. Other Project Overruns US$6,443,374.12
3. Underexpenditure on Project US$1,957,401.00
4. Expenditures without Budget Provisions US$452,637.00
5. Net Project Overrun US$43,358,666.45
"Non-payment of shareholders equity also contributed to the overrun on the project. When these funds were not available, ANDCO was forced to seek funding elsewhere. Interest charges on these loans also contributed to the overruns on the project."
"In respect of the performance of contracted parties, we can make the following comment on the overall management of the project and the performance of the Project Manager. One of the items in the contract between Urban Development Corporation (UDC) and Nevalco Ltd. is that Nevalco "shall not without prior written consent of the UDC give instructions to any contracted parties which could increase the project cost or time taken to complete or procure anything that is not provided for in the bills of quantities of the project."
"As a large percentage of the bills of qualities were provisional sums, it meant that UDC/Nevalco should have closely monitored the expenditure of these sums. In the event that the final designs for these items of work resulted in a cost in excess of the provisional sum, permission should have been sought from the ANDCO board. The Audit Team has not seen any such request or written consent.
"The UDC had to "ensure compliance of designs to brief." It is clear that this was not effectively done as the designs far exceeded the original brief and Project Budget. It was not until the latter stage of the project when UDC's chief architect got involved with the project full time on site, that more concerted efforts were made to rationalise the cost of construction and to achieve completion.
"The Project Manager/Project Manager Representative had a responsibility to report projected cost overruns to the ANDCO board, advise on how to reduce these costs, and obtain the board's permission to proceed with the works. From all indications this was not done, and this was one of the main downfalls of the project.
No effective management
"The Project Manager/Project Manager Representative did not effectively manage the project. However, it should be noted that the ANDCO board did not meet formally between October 2003 and January 2005 and, therefore, this avenue of formal approval was not available.
"In respect of Gorstew Ltd./ Implementation Limited, Gorstew was greatly influential in determining Furniture Fixtures and Equipment (FF&E) and specialist items through the architect and interior designers.
"Although they assisted in determining the revised US$70 million project budget, it appears that the special system items, such as the air conditioning, standby generator, kitchen equipment, garbage disposal, special light fixtures, and thei