Sunday, 11 December 2016

Knowle relocation project: time for some number crunching >>> a £17 million cost ... or even £30 million?

There are all sorts of 'developments' happening round the District Council's pet project:
Do recent external and internal developments call EDDC relocation into question? | Save Our Sidmouth

Looking at the cabinet agenda for Wednesday, the EDW blog asks:


£1.6 million (minimum) overspend on Queen’s Drive, Exmouth
£400,000 (minimum) underestimate on Exmouth Town Hall refurbishment
£300,000 (minimum) not collected in Section 106 payments

£2 million … and still a quarter of the financial year to go.

Hello, KPMG, hello …..

Not all this expenditure will be in this financial year.

This list doesn’t include the £2.2m overspend if the Knowle Relocation goes ahead.

And these are only the overspends that we know about.

Who counts the pennies at EDDC? | East Devon Watch
Extra £408,000 needed for Exmouth Town Hall refurbishment – estimate did not include things like rewiring and new boiler! | East Devon Watch

With the cabinet report here:

Council approved a relocation project budget of £9.2m, after deduction of the capital receipt for the sale of the Knowle (of £7.505m) this gave an approved net budget of £2.2m.


Looking at the options for the District Council, further comment on the EDW blog draws attention to the promised 'savings':

I doubt even the script writers for East Enders or Corrie could come up with a plot line as bizarre as EDDC’s Relocation saga.

The trouble is that the Tories have nailed their colours to the mast and they cannot possibly back down now without a MASSIVE loss of face. So we should expect them to:

> Pretend that this is a minor blip

> Carry on spending money as if it isn’t their own (which of course it isn’t – it is our money)

> Put their fingers in their ears and hum loudly whenever anyone might be talking sense

> Blame Sidmouth residents for their project falling apart at the seams – it’s always someone else’s fault

> Continue to keep secret information that the Information Commissioner says they should release, and spend even more of our money on lawyers to defend their spurious reasoning to the bitter end

> Deny that costs are increasing (despite their own figures) and continue to claim that the project is good value for money and cost neutral even though it isn’t (because they said it would be cost neutral and they cannot admit to any failings or lose face)

But let us not forget that a net cost of £2.2m is actually a net real-expenditure of c. £17m because the business case that was cost neutral had c. £15m of savings from not repairing the Knowle. 
But of course, we know from earlier EDW posts that these costs may be somewhat exaggerated e.g. Castle Drago was refurbished for “only” £11m https://eastdevonwatch.org/2014/12/10/what-can-you-get-for-15000000-eddc-estimate-for-knowle-refurbishment/
In other words, if they didn’t do this project THEY COULD SPEND £15M ON REFURBISHING THE KNOWLE and still be £2.2m better off – and if the refurbishments were done more economically (for say £5m – which still buys you a lot of refurbishing) then they would be saving us – the council tax payers – £12m by cancelling the project, not just £2.2m.

Oh how I wish logic and proper business cases would, for once, win over the “post-truth” politics of the EDDC Tory leadership.

EDDC progress: move from an old building – to an old building! | East Devon Watch

See here for the District Council's calculations from July 2013:
Futures Forum: Knowle relocation project ... What do you get for a £15m refurbishment? ... part one

Looking at all the figures, the EDW blog quotes an 'expert correspondent' in its latest piece:


The views below are those of an expert correspondent. Owl, needing only the branch of the nearest tree to call it home, is no expert and is happy to hear from others with different views

The build cost of the new building at Honiton must have increased: there is no way they will build it for less than £7 million.

But the big ‘economy with the truth’ is that relocation will be achieved for less than £10 million, because the costs of moving will be very high, not least for compensation to staff for having to travel further to work. Steve Pratten (the relocation consultant) alone is going to cost £1 million by the time the project ends and then there is all the officer time (never, ever costed by EDDC), and legal fees.

The real numbers, in my personal opinion (writes the correspondent) are likely to be:

Exmouth refurbishment:
£2 million

New Build at Honiton:
£11 million
(West Dorset’s new HQ was smaller three years ago and cost £10 million +)

Steve Pratten:
£1 million

Staff Compensation:
£1 million

Officer Time:
£2 million

Legal and other consultants:
£1 million

The move itself (physically relocating, plus things like new notepaper, equipment, etc):
£2 million

And, significantly, the immediate loss in asset value (the new building will only have a value of £2-3 million).

So subtract that figure from the asset value of Knowle (£7.5 million ):
loss of £5 million

Total: £25 million.

The improvements at Exmouth might give a modest boost to the value of the building, say £0.5 million, so a total cost of £24.5 million.

These figures are conservative. In truth, the ultimate cost is probably going to be higher. The ‘officer time’ figure of £2 million looks very low for example. It would not be at all surprising if the ultimate cost is of the order of £30 million.

The refurbishment of the modern buildings at Knowle was estimated at less than £2 million, which looks incredibly good value by comparison.

The refusal of the Pegasus application, together with the current upheaval over local government reorganisation in Devon, offer a clear opportunity to think again.

Cabinet on Wednesday might see the first signs of cracks appearing.

Knowle relocation – the estate agent’s view? | East Devon Watch

See also:
Futures Forum: "A truly green alternative to EDDC's proposal"
Futures Forum: Knowle relocation project: the cost of council buildings: before and after

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