Part 14: Our overall comments on how the Council dealt with problems

Inquiry into the Mangawhai community wastewater scheme.

Between 2003 and 2007, the weaknesses in the way the project had been set up started to show. In this Section, we have detailed how the Council dealt with the many problems it faced during these years. We consider that the Council would have been able to deal with these events better if it had had a stronger system for maintaining overall control of the project. Instead, what we have detailed is a series of disjointed decisions on issues when they arose, with no particular regard for the overall aim and affordability of the project.

In our view, the Council had become committed to the project in its current form and was not able to stand back and reassess it appropriately when problems arose. We saw no evidence of a willingness or ability to contemplate writing off what had been done to date or backtracking a step or two. Instead, there was a determination to press on and find solutions to whatever problems presented themselves. Several problems that were encountered should have caused the Council to stand back and reconsider whether its approach remained appropriate.

We are concerned that the Council lost control of the size and cost of the project during these years. It is not satisfactory that we could not find clear and consistent figures for the project's costs and funding during its life.

More generally, our concern about the quality of KDC's record-keeping and its informal approach to decision-making increases as the years progress. We have commented in several places on the poor quality of KDC's decision-making processes. For example, in Part 10, when discussing the work to find a disposal site, we commented that:

  • The records are partial at best. For example, the written records do not show whether the Council was given information about the limited capacity of the site.
  • Decisions seem to have been taken informally (for example, we do not know what formal authority the Chief Executive had to make the initial offer to purchase).
  • KDC did not obtain a valuation for the farm until the bank required it to.
  • We did not see evidence of appropriate work to consider financing and borrowing options, and the value for money of the proposed financing arrangements.

In summary, we consider that, by the time construction was ready to begin in late 2007, the Council had already lost control of the project – what was being built, what it would cost, how many properties it would service, how it would be funded, and what the legal responsibilities of each of the parties were.

As we set out earlier in the report, the Council initially failed to understand what it needed to do to manage the project and the limits of the project management services the Beca consortium would provide. The Council appears to have mistakenly assumed that the project managers would provide it with assurance that what was to be constructed would be cost-effective and appropriate for its purposes and that the financing arrangements would be appropriate and competitive. In fact, the limited project management services provided none of these things, and the Council needed to manage these issues itself. The Council did not have enough information to make the decisions it was being asked to make, so it relied heavily on the project managers' advice.

The Council's focus on the affordability to ratepayers rather than the overall project costs meant that it failed to appreciate the significance of the increase in capital costs and to assess whether that was appropriate.

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