Agenda item

 

Report from the Executive Director of Regeneration and Environment.

 

Recommendations

 

That Cabinet:

 

1.    Approves the revised budget of £12.02m for the Wath Library scheme, including an increase of £2.04m to be funded from unallocated Local Regeneration Grant, as set out in Appendix 1.

 

2.    Approves the revised budget for the Rotherham Markets & Library scheme, increasing the total project budget to £46.84m, representing an additional £5.95m, funded as set out in Appendix 5.

 

3.    Notes that the revised budgets reflect the completion of the detailed design, resolution of construction stage risks and the establishment of a more robust and deliverable position for both projects.

 

4.    Notes the intention of the Chief Executive to commission an investigation into the development and delivery of the Rotherham Markets & Library project which has resulted in the cost increase noted in Recommendation 2.

 

At the Chair’s invitation the Cabinet Member for Transport, Jobs and the Local Economy, Councillor Williams reported that a cabinet report relating to the Wath Library and Town Centre Markets and Library regeneration projects would be presented the following week, setting out revised budgets and additional funding requirements.

 

Significant concern and frustration were expressed regarding the need for additional funding, particularly for the Town Centre Markets and Library project, which had previously required further funding. It was noted that the Wath Library project required an additional £2 million (bringing the total to just over £12 million), and the Town Centre scheme required an additional £5.95 million (bringing the total to just over £46 million).

 

Assurance was provided that the additional funding would not require new borrowing but would be met through existing regeneration budgets and unallocated funds, including the capital programme contingency established to address cost pressures such as inflation.

 

It was acknowledged that the report set out, in a transparent manner, the issues contributing to cost increases. For Wath Library, a significant proportion of the additional cost was attributed to the discovery of asbestos. For the Town Centre project, a range of issues relating to design, cost management, and governance were identified.

 

It was confirmed that a review would be commissioned to examine the Town Centre project in detail, with a view to understanding what had gone wrong. It was also emphasised that lessons learned would inform future capital projects to prevent similar issues. Finally, it was indicated that a further report on the outcomes of the review and lessons learned would be brought back to the committee.

 

The Chair invited members of the Overview and Scrutiny Management Board (OSMB) to raise questions and queries and began by asking whether an asbestos register had been in place for the Wath building and whether this should have identified the extent of asbestos and the associated removal costs.

 

In response, Simon Moss, the Service Director, Planning, Regeneration and Transport explained that assumptions had been made based on surveys undertaken to estimate the level of asbestos. However, it was noted that the full extent often only became apparent once intrusive works and more detailed surveys were carried out, which had been the case in this instance.

 

In the supplementary question the Chair sought assurance on health and safety grounds, stating that an asbestos register should have been in place to identify the presence of asbestos in the building and inform any required works. The Service Director, Property and Facilities Services, Kevin Fisher, confirmed that asbestos management requirements were in place, noting that all buildings should have an asbestos survey and a health and safety file containing an asbestos management plan. It was explained that buildings constructed before 2001 were generally assumed to contain asbestos, and management approaches were based on this assumption.

 

It was further clarified that fully invasive surveys were not normally undertaken unless necessary, with asbestos instead managed based on available information. In this case, while asbestos had been anticipated, the extent was greater than initially expected.

 

It was also highlighted that the council had committed to reassessing its estate, with approximately 90% compliance achieved to date. Although compliant from an asbestos management perspective, it was acknowledged that a more robust approach to asbestos management would be pursued going forward.

 

The Chair expressed concern that, given the significant additional costs encountered at Wath, similar issues could arise in other older buildings, particularly those constructed in the 1960s and 1970s where asbestos was more likely to be present. It was suggested that a clear plan should be developed to assume higher levels of asbestos in such properties and ensure its safe removal. In response the Service Director, Property and Facilities Services agreed and added that, without pre?empting the forthcoming investigation, a more thorough asbestos assessment should have been undertaken once the building became vacant. It was acknowledged that the project proceeded on assumptions rather than a full investigation, and agreement was expressed that a more robust approach was needed in future.

 

Councillor McKiernan referred to previous investment in additional resources to address cost underestimation in regeneration projects, noting this indicated prior awareness of such issues. It was queried whether an investigation was necessary given this existing knowledge, and whether the plans in question had been developed prior to those resources being in place.

 

The Service Director, Planning, Regeneration and Transport explained that there had been a significant period of growth in regeneration and related teams, alongside lessons learned and improvements in resourcing and project delivery. This included the introduction of additional project management capacity, increased quantity surveying resources, and external cost control support. It was noted that the project had a longer development history, originating from a 2019 funding bid, with the main contract entered into in March 2024. It was therefore likely that the additional resources introduced in more recent years came after key decisions had been made, limiting their ability to address some of the fundamental issues within the project.

 

The Executive Director of Corporate Services, Judith Badger, reminded members that, in recent years, internal audit work had been commissioned on capital projects following a number of overspends. This review, which examined a sample of schemes across different service areas and scales, identified causes of cost overruns and informed subsequent improvements, including additional resourcing and the creation of a capital programme contingency.

 

It was noted that the issues referenced were likely those highlighted in that earlier audit work. However, it was explained that the schemes discussed in the report pre?dated those findings and changes, meaning there remained a risk associated with longer?standing, more complex projects. It was also acknowledged that the forthcoming review would identify the specific issues relating to the projects in question.

 

Councillor McKiernan asked whether the proposed review should be conducted externally rather than internally. In response, the Chief Executive, John Edwards, stated that the process had not yet been finalised ahead of Cabinet, but it was anticipated that the investigation would be undertaken by an external party, subject to further consultation.

 

Councillor A Carter expressed concern regarding the high costs of the Wath Library and Town Centre Markets and Library projects, questioning their value relative to other priorities. Concerns were raised about delays in tendering and prolonged contract periods, noting previous assurances that processes had improved. It was questioned what assurances could be provided to prevent further cost increases, and whether continuing to fund the projects represented value for money. In response, the Chair acknowledged the concerns raised but emphasised that, once projects had commenced, there was an expectation to complete them. It was noted that halting the Wath Library project could lead to dissatisfaction among residents. However, agreement was expressed on the importance of ensuring robust tendering processes at the outset of future projects.

 

Councillor Yasseen acknowledged the comments made but expressed concern that the issues represented a significant governance failure, including at the early stages of the project. It was noted that key decisions, including contract award, appeared to have been based on assumptions and insufficient design information, with risk not effectively managed. Concern was raised that this reflected past failures in governance, particularly in relation to risk exposure and long?term commitments, and that lessons from previous experiences had not been fully applied. While support was expressed for an independent review, it was queried how assurance could be provided that similar issues were not occurring across other projects, and what immediate steps were being taken to minimise risk going forward.

 

The Executive Director of Corporate Services outlined that there had been a number of historical issues, including compliance concerns across council buildings. It was noted that significant improvements had since been made in property management, processes, and record?keeping, with compliance levels having increased. It was emphasised that, while these improvements related primarily to general property management rather than large capital projects, stronger processes and oversight were now in place. It was acknowledged that some issues related to long?standing projects stemmed from earlier decisions, and these were being identified as projects progressed under improved arrangements. Assurance was provided that, although risks could not be entirely eliminated, current processes were more robust, supported by service restructuring and better alignment of resources to strengthen oversight and delivery.

 

The Chief Executive added that there was little to add to the previous comments, noting that a Capital Project Board had recently been established to provide oversight of the full programme and support a more open and transparent approach. It was acknowledged that, while the council had skilled staff, stronger culture and processes were required to ensure major projects were delivered effectively, on time, and within budget. It was emphasised that the forthcoming investigation would support learning and improvement, alongside wider work to strengthen project management, clarify responsibilities, and ensure the necessary skills and processes were in place from project inception through to delivery.

 

The Service Director, Planning, Regeneration and Transport agreed with previous comments and noted that significant improvements had been made in recent years to capital project and programme management. These included the introduction of project gateway processes, improved contractual and procurement approaches, and greater alignment of responsibility between project managers and sponsors. It was acknowledged that, for this particular project, some challenges had been inherent from the outset. While subsequent improvements had helped to identify and mitigate issues, they had not been able to fully resolve them. Assurance was provided that lessons learned had been applied to other projects, which were now being delivered successfully across the borough.

 

The Cabinet Member for Transport, Jobs and the Local Economy agreed with the concerns raised regarding governance and assurance, noting these had been key issues. However, it was emphasised that it was not appropriate at this stage to attribute accountability to individuals. It was stated that the priority had been to ensure transparency through a clear and direct report, followed by an independent investigation to establish findings and conclusions. It was confirmed that a further report setting out the outcomes and lessons learned would be brought back to the board. The Chair added that the findings of the external review should be reported back to the board in due course.

 

Councillor Yasseen expressed appreciation for the discussion but stated they did not feel fully assured at this stage, while welcoming the forthcoming investigation and the transparency of the process. Concern was raised regarding organisational culture, particularly around values, behaviours, and the level of professional scrutiny applied. It was questioned whether sufficient challenge was being exercised by both officers and Cabinet, and whether relationships may have become too close, potentially limiting effective oversight. It was noted that this perception could also be shared by residents.

 

In response, the Chair acknowledged the concerns but emphasised that it would be inappropriate to criticise individuals prior to the outcome of the independent review. It was reiterated that the report had been brought forward to ensure openness and transparency, and that conclusions should be considered once the investigation findings were available.

 

Councillor Allen expressed agreement with concerns raised, thanked the Cabinet Member for the transparent approach, and acknowledged the need to support the recommendations to ensure the safe completion of the projects.

 

Support was also given for an external review. It was further asked whether there was an anticipated timescale for completion of the review following the Cabinet decision, and when the findings would be reported back to the board.

 

The Chief Executive stated that no fixed deadline had yet been set for the review. It was explained that commissioning arrangements were still being determined in consultation with the Cabinet Member, and that an appropriate independent provider would need to be appointed. An indicative timeframe of a small number of months was suggested, though it was emphasised that flexibility would be retained to ensure the investigation could be completed fully and thoroughly. It was noted that timelines could vary depending on the chosen approach, and that the intention was to report back promptly once the investigation had concluded appropriately.

 

Following up Councillor Allen reiterated concerns regarding organisational culture and the need to identify and implement lessons quickly to avoid impacts on other projects. While welcoming the proposed review, it was emphasised that findings should be delivered as soon as possible to ensure any improvements could be applied promptly across similar schemes. The Chief Executive agreed with the point, noting that improvements to processes, project documentation, management arrangements, and governance oversight had already been implemented. It was acknowledged that the project in question had been ongoing for some time, but it was emphasised that there was a shared interest in progressing the investigation promptly. It was also stressed that, while timeliness was important, the review should not be rushed, and a definitive timescale would be confirmed once the scope and approach had been agreed with an appropriate independent provider.

 

Councillor Brent thanked the Cabinet Member for the transparency shown and raised concerns about the wider decline of Wath town centre, noting reduced commercial activity and vacant premises. It was suggested that this posed a risk to attracting commercial tenants within the regeneration scheme and that this should be considered as part of the review. In response, the Chair acknowledged the concerns but emphasised that discussion should remain focused on the report, specifically the additional expenditure for the library projects. It was noted that broader town centre regeneration issues could be addressed separately. Councillor Brent clarified that the point related directly to risks identified in the report, particularly around attracting commercial interest, and reiterated concerns about investing in the scheme given the area’s current economic challenges. The Chair concluded by noting it was believed that there remained strong local demand for the library and that it continued to be used by residents.

 

The Cabinet Member for Transport, Jobs and the Local Economy thanked the member for their contribution and acknowledged the concerns raised, noting familiarity with the issues affecting Wath. It was recognised that town centres were facing wider challenges.

 

It was clarified that the proposed review related specifically to the Town Centre Markets and Library project, not the Wath Library scheme. The Wath project was described as a positive proposal, delivering a modern, purpose?built library alongside wider community facilities, commercial space, and public realm improvements. It was noted that local feedback indicated support for the scheme and a desire to see it completed. It was also highlighted that the council was taking broader action to support town centres, including the introduction of high street support officers, dedicated funding for local initiatives, enhanced street services, and the continuation of grant schemes to support local businesses. Despite ongoing pressures, these measures were presented as part of a wider commitment to supporting high streets.

 

Councillor Monk referred to risks relating to unmet trader expectations and potential reputational damage, noting recent media coverage suggesting some traders had already lost confidence in the project. It was asked what engagement and support was being provided to those affected to rebuild trust and encourage their return once the development was complete, ensuring continued activity within the building.

 

The Service Director, Planning, Regeneration and Transport emphasised that traders were central to the success of the scheme and that significant efforts had been made to maintain their engagement. It was noted that the provision of a temporary market had been introduced in response to trader concerns, allowing them to remain on site during the works. It was further outlined that measures had been taken to mitigate disruption, including a 50% rent concession, a commitment that traders would not pay more than their current rates during the temporary period, a reduction in the closure period to one week, and an extension of the rent?free period to three months. It was also highlighted that a new market team had been introduced, bringing renewed focus and improved communication with traders. While acknowledging that disruption and concerns remained for some, it was considered that engagement had strengthened and that the relationship with traders was in a more positive position.

 

In a supplementary question, Councillor Monk asked whether there were plans in place to promote the new facility upon opening, including potential launch activities to attract visitors and support traders following a prolonged period of disruption. In response, it was explained that the indoor market was due to relocate to a temporary site in the new market hall in summer, with an indicative date of June, subject to confirmation with the construction programme. Traders would be kept informed as soon as dates were finalised. It was further stated that plans were in place to promote the new offer and generate interest. It was acknowledged that, despite current challenges, the development was expected to provide a positive boost to the town centre, with investment anticipated to increase footfall and support a more vibrant local economy.

 

Councillor Baggaley asked what the reallocated funding would prevent from being delivered and whether any schemes were at risk. It was confirmed that the project would still deliver its core scope and outputs, including the new library, market hall, refurbished indoor market, and public realm. While cost pressures had required value engineering, potentially limiting investment in some areas, no other projects were delayed or impacted, as additional costs were met from the Council’s capital contingency.

 

Rob Mahon, the Service Director, Financial Services explained that unallocated Town Centre Investment funding originated from borrowing approved at the outset of the programme, with remaining resources reflecting success in securing external grant funding. The Capital Contingency Fund, introduced in 2022–23 due to the scale of the capital programme and anticipated economic and inflationary pressures, had been maintained and increased through savings and additional funding. While the use of this contingency represented an opportunity cost, it had been intended for such circumstances and no wider programme impacts were identified.

 

Following up on the original question, Councillor Baggaley suggested that the report also be referred to the Audit Committee to consider wider issues beyond capital funding, including governance, health and safety, and overall funding arrangements. Consideration was given to whether this could be undertaken jointly with the Overview and Scrutiny Management Board or as a separate review, subject to further advice.

 

Councillor Blackham emphasised that the report should both identify the causes of issues and set out how processes could be improved going forward. Reference was made to seeking external professional advice to inform more robust project management arrangements, which may have implications for organisational structures. The importance of establishing accurate cost estimates at the outset of projects was highlighted, along with the need for assurance on current forecasts and future projections. Concerns were raised regarding the delivery and momentum of capital projects, and it was noted that a clearer focus and stronger processes were required to ensure projects are delivered as intended and provide confidence in cost and outcomes.

 

The Chief Executive clarified that two separate pieces of work were being undertaken: a project-specific investigation for the Town Centre Markets and Library regeneration project to understand what had occurred, and a broader review of end-to-end processes for major capital regeneration projects. The latter would focus on identifying improvements and embedding best practice, potentially with input from an independent external organisation, to strengthen future delivery.

 

Councillor McKiernan queried what schemes or proposals might no longer be funded as a result of utilising unallocated Town Centre Investment Fund resources. Concern was expressed regarding the availability of this funding and whether its use for the current scheme would limit other planned or potential projects.

 

In response the Service Director, Financial Services explained that the surplus within the Town Centre Investment Fund reflected success in securing external funding and delivering some schemes below anticipated costs. As the funding relates to corporate borrowing, it had been retained unallocated until required, avoiding unnecessary borrowing costs. It was noted that clarification on any schemes not delivered as originally planned would be provided by the relevant service lead.

 

It was confirmed that no funding was formally earmarked against the unallocated resources. While there remained potential for further investment opportunities, most projects identified within the 2017 town centre masterplan had either been delivered or were in progress, with only one scheme not taken forward. It was noted that a new masterplan for the town centre was being developed from which future projects and funding priorities would be identified.

 

Thanks were expressed by the Cabinet Member for Transport, Jobs and the Local Economy for members’ contributions and questions. The situation was acknowledged as disappointing and frustrating. It was emphasised that lessons would be learned, particularly in relation to the markets and library project, with a review commissioned and supported. A clear commitment was made to improving the delivery of capital projects in the future.

 

A commitment was reiterated by the Chief Executive to commission an independent investigation into the Town Centre Markets and Library regeneration project, alongside a separate independent review to identify best practice for the delivery of major capital projects going forward. It was noted that findings from both would be reported back for consideration. Ongoing work to strengthen governance and project management arrangements for current projects was also highlighted, with a continued organisational focus on improving delivery.

 

Resolved: That the Overview and Scrutiny Management Board supported the recommendations that Cabinet:

1. Approves the revised budget of £12.02m for the Wath Library scheme, including an increase of £2.04m to be funded from unallocated Local Regeneration Grant, as set out in Appendix 1.
2. Approves the revised budget for the Rotherham Markets & Library scheme, increasing the total project budget to £46.84m, representing an additional £5.95m, funded as set out in Appendix 5.
3. Notes that the revised budgets reflect the completion of the detailed design, resolution of construction stage risks and the establishment of a more robust and deliverable position for both projects.
4. Notes the intention of the Chief Executive to commission an investigation into the development and delivery of the Rotherham Markets & Library project which has resulted in the cost increase noted in Recommendation 2.

 

Additional recommendations to Cabinet from OSMB were that:

5. That future capital monitoring reports include a clear narrative for the Rotherham Markets & Library scheme explaining how key risks have changed, how contingency has been used, any new cost pressures, and the actions taken to manage them, so Cabinet and Scrutiny can see whether the project was genuinely stabilising.
6. Requests that the Chief Executive’s investigation into the development and delivery of the Rotherham Markets & Library project, focusing on causes of cost increases be conducted by an independent external organisation and the findings be presented to OSMB at the appropriate point.
7. Notes that the Chief Executive has commissioned a separate independent end-to-end review of the capital project processes with a focus on large-scale development projects with a view to identifying learning and developing recommendations on how to embed best practice going forward and that the findings be presented to OSMB at the appropriate point.

 

Further actions that arose from discussions were that:

·       That OSMB asks the Audit Committee to consider a review into the capital programme, focusing on risk management, health and safety, project oversight, and value for money, and exploring the potential impact of organisational behaviour and culture to directly address concerns raised around perceived lack of professional challenge.