A project to create a dual carriageway on an 8km stretch of road will cost taxpayers around £100m more than expected at the start of construction and be delivered nearly three years late.
An interim report from the Auditor General for Wales on the section of the Heads of the Valleys road between Gilwern and Brynmawr today outlines the problems that have beset what some are describing as the most complex road engineering project in the UK at the moment.
It involves building on a steep-sided valley – the Clydach Gorge – and passes through the Brecon Beacons National Park.
The work to improve the road is part of a larger scheme to improve 40km of the A465 between Hirwaun and Abergavenny that is expected to cost around £1bn overall.
The scheme is intended to have a considerable impact on investment and economic activity along the Heads of the Valleys corridor.
The final cost and timescale for Section 2 – the 8km (four-mile) stretch between Gilwern and Brynmawr – remain uncertain. The work was due to finish in September 2018, but full completion is now expected to run into 2021. Welsh Government estimates from November 2019 suggest a total bill of around £321.1m to the public purse.
However, the Welsh Government and the main contractor, Costain Ltd, have been in dispute about who is liable to pay certain costs. Costain considers that the latest estimates of Welsh Government liabilities are understated, while the Welsh Government maintains that the figures represent a reasonable allowance for its liabilities at this stage.
The £321.1m figure is less than the £336.2m estimated in April 2019, but at the start of the detailed design and construction contract in December 2014 the Welsh Government estimated a cost of £223.2m. Some of the increase relates to design changes requested by the Welsh Government and additional measures to address environmental impacts, but the engineering and contractual challenges experienced on the project account for most of it.
Originally mooted by the pre-devolution Welsh Office in 1994, the then Secretary of State for Wales announced the preferred route in 1995.
In 1998 a public inquiry was held which led to confirmation of the route for dualling.
In 2000, to enable a phased delivery, the Welsh Government divided the A465 scheme into six sections.
At that time, the Welsh Government expected that all six sections could potentially be completed by 2009 at an estimated cost of £268m.
By 2011, at the time of an earlier Auditor General’s report, the potential cost had gone up to around £763m, with the whole scheme due to be completed by 2020.
But the timetable has slipped again and the Welsh Government is now planning on the basis that the programme will be delivered by 2025 at a cost of around £1bn.
The complicated nature of Section 2 is illustrated by the need to build seven bridges, 12.5km of retaining walls, as well as the excavation of more than 1.3 million cubic metres of earthworks – almost enough to fill the Principality Stadium in Cardiff.
Costain was appointed as the contractor even though it did not make the lowest bid. However, its bid was judged to be the best because of its high mark in a quality evaluation.
As the project developed, a series of disputes arose between the Welsh Government and Costain. In arbitration, both parties won part of their claims and lost others. Nevertheless, the dispute between them remains live.
Today’s report highlights that despite the increasing costs and delays, the project has delivered some wider social, economic and environmental benefits already. These include employment opportunities and the creation of a construction training academy, contracts with other Welsh companies, the acquisition of land for tree planting along the route and wider community outreach and charitable work.
However, the disruption and delays have had a significant impact on the local community. By the end of November 2019, this had included 57 weekend closures and a further 75 weekday overnight closures.
The level of disruption has been substantially greater than expected at the start of construction and has raised complaints from drivers and the local community.
The report says the Welsh Government could have opted to abandon the project, but it was already more than two years into the construction stage when the likely scale of the extra costs emerged.
Abandoning the project would also have exposed the Welsh Government to further liabilities to Costain.
Auditor General Adrian Crompton said: “This is not the first time that the Welsh Government has faced difficulties with significant cost increases and delays on road projects and it is vital that lessons are learnt for future infrastructure schemes.
“Despite some wider benefits being delivered and expectations about the eventual impact of the road improvement, those living and working locally are paying a higher than expected price for the ongoing delays and disruption during construction.”
Monmouth Tory AM Nick Ramsay, who chairs the Senedd’s Public Accounts Committee, said: “I welcome this interim findings report by the Auditor General. It is no secret that the A465 Section 2 project is substantially over budget and behind schedule and it is clear that the construction work has had a significant impact on the local community.
“The report provides a useful summary of issues that have affected project delivery and that have been at the heart of the contractual dispute about the liability for certain costs.
“While the end of the project is now in closer sight, the final cost to the public purse remains uncertain.
“The Public Accounts Committee will be considering the Auditor General’s findings shortly.”
In a written statement earlier this month, Wales' economy and transport minister Ken Skates said he was disappointed by further delays.
However, he added: "I remain confident that this ambitious and complex scheme will being significant benefits to the region."
A Welsh Government spokesman said: "This project is widely recognised as one of the most complex road engineering projects in the UK at the moment, presenting significant construction challenges.
“We recognise the frustration caused by the issues highlighted in the report, and will of course consider its findings. Lessons from the project so far have already been incorporated into subsequent projects.
“We remain confident that this ambitious and complex scheme will be completed as intended and will bring significant benefits to the region.”
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