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22
May
Kex Gill: Council leader questioned over £13.7 million price hike
North Yorkshire Council leader Carl Les has defended the council’s approach to managing the risk of cost increases on the A59 Kex Gill road realignment.
The Stray Ferret revealed this month the cost of the project has rocketed by £13.7 million from £68.8 million to £82.5.
The increase, which is being paid by local council tax payers, was due to compensation claims by contractors.
The council has also warned the cost is likely to increase further and has set aside extra contingency funding, although the amount has been kept secret from the public.
Under the terms of the contract with the Department for Transport, agreed in 2021, the council received a fixed sum of £56.1 million from the DfT.
It contributed the remaining £12.7 million and was also liable for any future cost increases.
Councillors say £2.5 million of the increased sum was caused by the DfT delaying the start of what is the biggest highways project the council has undertaken.
In a question at yesterday’s (May 21) full council meeting, Councillor Bryn Griffiths, the Liberal Democrat leader on the council, asked Tory leader Cllr Les:
Was a financial risk assessment exercise undertaken to evaluate the council’s potential financial exposure? If so, what were the conclusions and recommendations of this exercise?
Carl Les replied that a quantified risk assessment was undertaken before the contract started “to inform both the project’s full business case and the council’s risk exposure”.
He added:
Using a standard approach across the industry, this quantified risk assessment determined the various risk factors, their probability of occurring and the associated value that should be attached to them to arrive at a suitable contingency fund for the project at that stage.
The risk value for the project was calculated at £6.39 million, which was roughly 10% of the overall project budget and in line with expected contingency levels at pre-contract stage.
This was included in the £12.7 million the council allocated to the scheme.
The delivery of a complex project such as Kex Gill is always subject to a wide range of risk factors which may change over time and the quantified risk assessment document is a dynamic and living document that evolves over the course of the project, which in this case has led to new risks being understood on a live basis.
Repairing a landslip last year.
What is the Kex Gill scheme?
Council contractors are realigning four kilometres of the A59 at Kex Gill after the area suffered 15 landslips in two decades. According to the council, they have cost about £6 million to repair.
The council’s contribution has increased from £12.7 million to £26.4 million following the compensation claims.
Construction work, which began in February 2023, is taking place on a 27.8 hectare working site.
It involves creating 12 new structures including two underpasses, walls and culverts, 4 km of bridleways, 7 km of dry stone walls, 9 km of drainage, the diversion of Hall Beck, planting 12,000 trees and shrubs, 12 km of utility diversions and reverting the existing A59 back to moorland.
Work to build the new road was supposed to take 113 weeks from January 2023 to March 2025. But the finish date has been put back to June 2026, which is the cause of one of the compensation claims. Once the new road is built, contractors will then complete a second phase of work decommissioning the existing A59 and turning it back to moorland, which is not now due to finish until March 2027.
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