REDEVELOPMENT plans for the centre of Pontypool are already over budget just two months after grant funding of £7.6 million was announced.
The UK Government confirmed it was supporting the Pontypool Cultural Hub project under its Levelling Up programme in January.
The Torfaen Borough Council led development will see public toilets in Hanbury Road converted to a restaurant, a pop up cinema and exhibition space created in the derelict grade II listed St James’ Church and improvements to the Glantorvaen multi-storey car park.
But the borough council’s Labour cabinet was told, when it met on Tuesday, March 28, that work to progress to the next design stage is 10 per cent over the previously agreed budget of £150,000.
The council is within budget for the third stage of the design process, which includes submitting applications for planning permission, but has warned rising costs mean the fourth stage of the design process has cost more than the anticipated financial variation in the contract.
Rachel Jowitt, the council’s economic director, reminded the cabinet they had already agreed the £150,000 contract in February ahead of a formal agreement being in place with the UK Government for the £7.6m.
The variation was reported to the cabinet as it exceeds 10 per cent but she said the spending is “really important as it allows us to proceed to take forward the Levelling Up project in Pontypool.”
Cwmbran Pontnewydd councillor, and cabinet member, David Daniels said quotes for “a lot” of capital projects are currently going over budget and asked Ms Jowitt: “Why is that happening? It’s important for us to explain to the public what is leading to these sort of increases.”
Ms Jowitt replied: “There is just so much work out there at the moment it is literally name your price.”
She said as a result projects are being put on hold, with one of the most notable being the decision to delay by two years the HS2 high-speed rail link from Birmingham to Crewe and added: “Inflation in the market is like nothing construction has ever seen.
“Contractors are refusing to hold prices in some cases for more than 24 hours, I’ve seen that on some of our own schemes.”
She said that meant it is difficult to get contractors to commit to prices when construction may not start for another year and the global pandemic also meant the industry is “playing catch-up and there is saturation in the market”.
Ms Jowitt added: “In the UK we already had a lack of some of these skills, the war in the Ukraine also made prices increase and some materials became very scarce and there is the ‘B’ word, I’m going to say it, as well in terms of Brexit.”
She also said if the council is committed to paying fair wages in construction it has to accept an increase in costs.
At present the council uses frameworks, with pre-approved contractors, but Ms Jowitt said it could consider ‘open procurement’, which would allow more firms to bid for works, to manage costs in the future.
Senior officer David Leech said the contracts have a contingency for cost increases so they can be managed without having to scale back on projects.
Costs for stages five to seven, which is the completion of the project, of the Pontypool Cultural Hub are to be agreed following the end of the stage four design process. If the costs of the final stages exceed the original contract sum by a further 2.5 per cent it will also be reported to the cabinet in line with the authority’s spending rules.