Welsh Hospital Upgrade Cost Over £60m More than Approved
Complex £171 million programme of asbestos removal and refurbishment at Ysbyty Glan Clwyd was completed successfully only a few months later than planned.
An Audit Wales report sets out the key factors contributing to the significant increase in project costs.
Following two asbestos-related incidents in 2010, the need for action to strip asbestos from Ysbyty Glan Clwyd became considerably more urgent, driven by statutory improvement notices issued by the Health and Safety Executive. Early in 2011, Betsi Cadwaladr University Health Board (the Health Board) applied to the Welsh Government for capital funding to remove the asbestos and refurbish the hospital.
In 2012, the Welsh Government agreed funding of £110.4 million. The complex process of stripping asbestos and removing some 300,000 tonnes of contaminated waste from the site of a ‘live’ working hospital was successfully completed in 2019, only a few months later than planned, but at a cost of £170.8 million, almost 55% more than the original approved budget.
The review found that:
- The Health and Safety Executive’s 2011 deadline for the Health Board to provide a plan to remove asbestos from the hospital created challenges for both the Health Board and the Welsh Government.
- Weaknesses in the business cases were not fully addressed by the Health Board and the Welsh Government before the final business case was approved.
- Significant deficiencies in the Health Board’s governance and management of the project were identified in 2014, when it became clear that the capital funding provided by the Welsh Government was insufficient to complete the project.
- The project has cost the Welsh Government £53.2 million more than the original agreed funding. The Health Board has also provided a further £7.2 million from its own resources.
- Both the Health Board and the Welsh Government have taken steps to strengthen their approaches to managing and approving capital projects.
Auditor General, Adrian Crompton said:
“This report demonstrates the fundamental importance of good governance and robust oversight of complex capital projects. Whilst the complex refurbishment has been delivered largely on time, the very significant cost overrun might well have been avoided if concerns about the original business case had been properly addressed at the outset.
The lessons learned by both the Health Board and the Welsh Government from this project are of relevance to all Welsh public bodies engaged in major capital programmes.”