Published here August 2010

Note: The Issues for Discussion at the end of this case study may require research on the Internet.

Introduction | Project Evolution | Project Concept
Planning and Organization | Design Timelines | Construction | Project Cost
Project Progress Report, March 1st 2005 | Commentary | Issues for Discussion

Project Cost

The Auditor General's Report of 2000 observed that the significant increase in the area of the building has inevitably increased construction costs. However, the average unit cost of construction also increased, see Figure 10. Proportionately, the increase in the gross area of the building since April 1998 (47%) is close to the increase in unit costs in the same period (48%). Since the 116% increase in total construction costs is a product of these two factors, the increase in gross area explains almost exactly half of the 58 million increase in forecast construction costs.

Figure 10: Space estimates and unit cost escalation as at September 2000
Figure 10: Space estimates and unit cost escalation as at September 2000[16]

The Auditor General then accounted for the remaining difference as follows:

  • Higher quality finishes.
  • Increased cost of providing the basic building fabric based on a design incorporating several smaller buildings instead of the monolithic single building in the original "box" feasibility design.
  • Within this, the use of features such as curved walls and elaborate external detailing in the facades throughout the structure that are now an integral part of the architects' current design and that involve the use of high-cost materials and construction methods.
  • Inclusion of necessary but costly security aspects. For example, in many areas the main structures of the buildings have to be constructed to be sufficiently strong to withstand bomb blast.
  • The relatively high costs of refurbishing Queensberry House. The original feasibility design in late 1997 did not include Queensberry House within the Parliament site.
  • Other risk factors associated with the construction process that were not included in the initial estimates such as the delays to progress of the earliest works packages.

From October 1998, as soon as there was sufficient design information to permit it, project management received reports from the cost consultant. These were at intervals that varied between a few days and three months, according to availability of the underlying design information. For most of the project duration there has been a large gap between the cost consultants' estimates and the approved budget that was the basis for top-level review, as shown in Figure 11.

Figure 11: Budget to Estimate disparity
Figure 11: Budget to Estimate disparity[17]

According to the Auditor General's Report, 2000:[18]

"On some important occasions project management did not report all relevant construction cost estimates to the client. This was on various grounds but mainly that the cost estimates were unacceptable to project management because they significantly exceeded the available budget, and therefore project management could not recommend them to the client. In my opinion, the high level of the estimates made it more not less important that the client was informed about the higher figures from the cost consultant, in order to allow judgements to be made at the highest level regarding the stewardship of the project."

A breakdown of costs and increases is shown in Figure 12.

Figure 12: Cost increases as at September 2000
Figure 12: Cost increases as at September 2000[19]
Construction  Construction

16. AG's Report, 2000, p23
17. AG's Report, 2000, p41
18. Ibid.
19. AG's Report, 2000, p26
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