Good afternoon. Welcome to this, our second meeting dealing with the costs and management of the Holyrood Parliament building project. Our witnesses today are Mr Paul Grice, the clerk to the Parliament—who, I believe, has risen Lazarus-like from his sick bed to be with us this afternoon—and Mr Martin Mustard, who is the project team manager. Last week we heard evidence from the permanent secretary and principal accountable officer of the Scottish Executive, who was the official responsible for the project in the period before 1 June 1999, at which point client responsibility passed from the First Minister to the Scottish Parliamentary Corporate Body. Since that date, Mr Grice has been the project owner and is the most senior official responsible for the successful delivery of the project.
Yes. However, I will first introduce Martin Mustard, the project manager, who was referred to last week. I had in any case planned to bring him with me, as I thought that that would be useful.
Before we get on to detailed questions, I would like you to provide us with some background. What was your role in the Scottish Office before you took responsibility for the SPCB?
I was a senior member of the constitution group. My principal responsibilities were the referendum legislation and running the referendum. I then took over responsibility for what became the Scotland Act 1998. I had other general responsibilities. As a senior member of the constitution group, I have had contact with the Holyrood project throughout. I had no responsibility for it, but during the designer selection process, for example, I gave support to the designer selection panel and provided input to the user brief, as requested. That input was based on the emerging conclusions of the consultative steering group. My principal responsibilities were legislation and, more recently, setting up the organisation for the Parliament in the temporary accommodation. However, the Holyrood project has been a major factor throughout the period. I had contact and involvement with it, but not responsibility for it.
If you have read the evidence that we took at last week's meeting, as I am sure you have, you will have seen that Muir Russell said of the project:
The most important point to make is that the entire project team was transferred across from the Scottish Office to the Scottish Parliamentary Corporate Body. That was the main plank of the transfer. In the early days of the corporate body's business—bearing in mind that it had many other things on its plate—its members were given extensive briefings by both the project team and the design team. There was a formal handover meeting that the First Minister attended with one or two of his senior officials to discuss wider contextual and political aspects of the project. A series of meetings and presentations took place, but the handover was founded on the fact that the team responsible for the project transferred en bloc to the corporate body.
In his evidence last week, the permanent secretary told us that he had handed over a doable and robust project that could have been completed for £62 million. During the period immediately after handover in June 1999, many things took place. What was your view of the state of the project when you became responsible for it in June 1999?
There is no doubt that it was a difficult project, but it was in reasonable shape. I had no reason to doubt anything that the permanent secretary said last week in that sense. When the SPCB presented its report to Parliament last April, it came to the view that it might have been possible to build the project for the then budget—I stress that it said "might have been", not "would have been". There must be a degree of uncertainty.
Should you have been handed a completed design at that stage?
Ideally, we would have had a completed design. As I understood the permanent secretary's response last week, he too would have liked a completed design, but the transfer order that required the project to be transferred on 1 June prevented that. A completed design would have given us a better baseline, but the decision to reopen the issue of the debating chamber was prompted by the briefings that the design team gave to members, as well as by the debate in Parliament. With hindsight, I believe that the process of unravelling that design and redesigning it would have happened anyway. To that extent, I am not sure what the value would have been of a completed design other than that it would have given us a firmer baseline to look back on.
Are you happy that the fact that you were not handed a completed design did not leave you in a position where you had to redesign virtually from scratch?
We did not redesign from scratch. The SPCB was in a difficult position, as it is required under law to provide the services that the Parliament requires. It does not have a choice in that. It was clear to the SPCB, from the feedback that its members were getting from their colleagues, that the chamber was not adequate. The chamber of a Parliament is its centrepiece—it is not a minor part of the building—so it was the centrepiece of the Parliament that was unacceptable.
How much did the revised design of the chamber change the forecast construction costs? Can you put a figure on it?
I am afraid that I cannot. The biggest impact that it had was that for about three months it diverted the senior designers—the senior people, if you like—away from the project, as they were concentrating on finding a solution to the design of the chamber.
I was curious, Mr Grice, when you said that the SPCB does not have a choice in these matters. Presumably, the SPCB could go back to the Parliament.
That is true, and, in fact, it did so. The SPCB went back to the Scottish Parliament in April.
But that was a considerable time after the Parliament arrived in these buildings in May 1999. I wondered what advice the SPCB was getting. Do you advise it?
Yes. The judgment on when to go back to Parliament is a difficult one. The point is that, formally, the Scottish Parliamentary Corporate Body is the client—that is clear in law and is important to understand—and it is for it to decide. It seeks a steer from Parliament as it sees fit. The first steer that it got was from the debate in the chamber—initiated by the Executive—in June last year. The end result was a direction from the Parliament to get on with building the Parliament.
Mr Grice, you suggested that the redesigned chamber may not necessarily have cost any more than the original design. Did I hear that correctly?
Yes. I could not put a figure on it, although I would like to. Some of the engineering became a bit more complex, which might lead one to think that the construction costs would be higher. The point that I was making was that the main impact of the redesign was the redesign process, which took the principal architects off the project for a while. If that design had come up first, I do not know whether it would have cost any more or less than it did.
The main impact of redesigning the chamber was vis-à-vis programme. Of course, delay in programme equals cost—although not a cost in terms of the actual product. Like Mr Grice, I think that there would be almost a negligible difference between the cost of the chamber as designed previously and as the design stands now. Nevertheless, costs were incurred, including programme costs and disruption costs to the design team, which resulted in increased fees.
The redesign might explain part of the increase in fees, but it does not explain in any way the increase in the cost of construction, which seems to have escalated significantly.
You raise an important issue, and I would like to say a little about it. I want to explain to the committee as best I can how the £62 million became £108 million. We have access to those costs, and I studied them so that I could report to the committee.
In written evidence to the committee, could you give us a broad-brush breakdown of the costs, to the nearest million or whatever? That has not been forthcoming so far. Could you also tell us when the decisions were made on each of those elements?
I would be happy to do that.
I remind you that the debate in June 1999 took place at the behest of Donald Gorrie and me, not at that of the Executive.
Sorry.
That is quite all right. However, that makes a difference, as the debate took place in the Parliament. I presume that advice was given to the Executive on how to handle those two stroppy back benchers.
I would not know.
Was that advice to the effect—to use your words—that the project was in good order? Was the advice against undertaking what Donald Gorrie and I were asking for—a moratorium to review the project—which would have been in line with what the Auditor General said should have happened when the project was handed over? No audit was undertaken.
I am sorry, Margo. The choice of architect does not fall within Mr Grice's remit.
He told us that he had contributed to the process—that is why I asked the question. The choice of architect impacts later, on the design changes that I presume relate back to the design brief that the architect was given during the competition and the changed brief that was presented to the client by the architect. Mr Grice must have had an input into both those parts of the project.
Mr Grice, you are answering questions as the accountable officer from 1 June 1999. However, are you happy to answer that question as a point of background information?
Of course, but thank you for reminding the committee of the basis on which I am here. I provided support to the designer selection panel; I did not choose the designer. You would have to ask the designer selection panel any question about the designer.
Two did.
I would like to ask about the changeover and the type of contract. We heard evidence from Mr Russell last week that a construction management approach was adopted. He claimed that there were advantages in that, because it allowed you to let the project progress in parts and to have several contracts. However, the risk was greater, because it would fall on the owner of the project. On the other hand, there might be no difficulty in renegotiating a single contract. At what point did you become aware that what Mr Russell described as an "innovative" form of contract was in operation? Was it 1 June, was it sometime afterwards, or were you told in briefings beforehand?
You are testing my memory. We had a long discussion with the corporate body that summer—my instinct tells me that it was after the debate, but perhaps not that long after the debate. I remember a long discussion with the corporate body—which was obviously very interested—about the nature of the contract. I recall that it was not that easy to grasp—at least, I did not find it easy to grasp immediately. The discussion inevitably began with the corporate body asking whether a particular cost could be guaranteed. Under construction management, the short answer is, "No, it can't." I think that you explored the reasons for that with Muir Russell last week.
The key question is this: did someone from the Scottish Executive explain this type of contract to you before you took over the project or prior to the discussion that took place within the corporate body? Was there any report, any exchange of letters, or anything that said, "Look, we have chosen an innovative route: these are the advantages, but these are the disadvantages"?
I think that I was briefed at the same time as the corporate body.
Mr Grice, would you have had any choice? Was it possible for the corporate body to revisit the whole thing and decide to do it under a different regime and not go with the construction management approach?
We have considered that seriously, even recently; having learned about the types of project, one should always ask oneself that question. As members know, we passed a major milestone in the project early this year when we achieved stage D in design terms, the cost plan, and so on. At that point we asked ourselves that very question: "Is this the right project?" We had no choice in what we inherited. Under a transfer order, we took on all the liabilities relating to the project; we had no choice at all in that. However, there is always an option, and we did consider that. The view that we came to, and the view that the corporate body has stuck with, is that the premium that we would, in effect, have to pay to the contractor—Bovis Lend Lease (Scotland), in this case—to accept our risk would be very high. A contractor is not going to take on the project without a very large premium, because they would be being asked to take the risk. The judgment was that that premium would have been of a higher value than if we managed the risk ourselves. The further on that we have got with the project, the less benefit there is in handing it over.
We will probably come back to this line of questioning later.
I would like to take you back to the stage at which you inherited the project. Last week, the permanent secretary said that the project was doable and robust. When you inherited the project, what steps did you take to ensure that it was as robust as people claimed it was? It has fallen from being seen as a robust project into, some would say, a project in a state of disarray. Who is responsible for that? When did that happen? Did it happen before or after you took over the project? Was the project robust?
I do not accept that the project is in a state of disarray, although I accept that there is a perception that that is the case.
Did you do any work to assess whether what you were being given matched what you were being told, or whether the targets that you were given for the next stage of the project could be achieved?
The committee should bear in mind the fact that we inherited the entire project team. The situation would have been different had we set up our own project team, as we would certainly have crawled over the project with a fine-toothed comb. However, I inherited the entire project team, from project sponsor all the way down the line. The members of that team were comfortable with what we inherited, which I took as a pretty good reassurance. They had lived with the project for the previous two years and that seemed to me to be a pretty reasonable basis on which to start.
Paragraph 1.18 of the Auditor General's report refers to the identification in August 1999 of
Do you want me to go through them one at a time?
Whichever way is more comfortable. Going through them one at a time might be more useful in providing clarification to the committee. I think that you have covered the first bullet point, which deals with delay.
Yes, I think that we did.
Yes.
We took the plaster off the walls and that was the point at which the building's true state of disrepair was revealed. As I recall, the Scottish Office commissioned a report from James Simpson and Brown, which said that the building was basically structurally sound. However, that report did not have the advantage of an invasive investigation, which we were able to conduct.
That particular point goes back to diverting design team resources during the summer. With the principal architects otherwise engaged, there tended to be a lack of direction in the information being produced for work packages that were about to be let. In the report, the Auditor General points out the fact that there was a fear that construction information from the design team would dry up. It did not quite dry up, but the design team was finding it increasingly difficult to hit the design programme dates set by Bovis.
Why?
Because the principal members of the design team were otherwise engaged in examining the redesign of the chamber.
I would not dispute anything that the final bullet point says. There was a great difficulty. There was a crunch meeting at the end of August last year at which the principals—the leading members of the design team and of the project team—got together to try to resolve the situation, but it was not resolved. There continued to be an insistence—rightly, from a project management point of view—that there was a budget of £62 million, which had to be stuck to. It is however only fair to say that the design team did not feel that the project could be done within that amount. We must also add in the fact that there were an extra 4,000 sq m and it was not clear where they had emerged from.
If I understand correctly, the design team took its instructions from the corporate body and produced the extra 4,000 sq m that were needed. Is that the way round it happened?
No. As I understand it, when the design team produced a set of drawings at the end of the summer, which were costed by the cost consultants, they noticed that there were 4,000 sq m in addition to what had previously been briefed, which most certainly was not instructed by the corporate body. That was the problem. It had emerged uninstructed. Two immediate action points were therefore instructed. The first was to find out where the space had come from. The second was to initiate a value engineering exercise to reconcile the latest cost projections from the cost consultants and the budget.
Did you find out where the 4,000 sq m had come from?
We were in the process of finding out when that was overtaken by events. That was at the end of August, spilling into September. The sequence of events was that, around the middle of September, the design team came back with a redesign of the chamber, which the corporate body accepted and, I think, reported to MSPs on. The value engineering exercise was proceeding at that time, as were investigations into where the 4,000 sq m had come from. By November, we had reported to the corporate body that there were quite significant pressures on space, because we were learning a huge amount about what was needed to run the Parliament—we needed more clerks, more researchers, more reporters and more IT people. All that translated into demands that simply could not be met. On that basis, the corporate body accepted our advice that we needed more space. It could not be managed by simply stretching the buildings upwards or sideways; it needed a fundamental re-examination. The design team was sent away to do that. Once it was decided to do that, the other information was not relevant—we were moving into a different phase altogether.
This 4,000 sq m was moving around space. I will put this in layman's terms that will be understood, because people will be confused that we cannot account for this extra square metrage. What happened was that a design brief was given and the architect changed the design brief. As the Parliament built up experience and knew more about its practices and facilities requirements, it asked that those requirements be added. Therefore, what was a complicated design became all the more complicated. I go back to my original question about the choice of architect and the fact that—
We have covered that point Margo.
We are still paying for it.
I am sure that there is a question in there somewhere, Mr Grice. Was the design team prescient in realising that you were going to need more space, or did it produce 4,000 sq m that were not asked for, but which subsequently you found you needed anyway?
It is an unfortunate coincidence that the numbers are the same. I do not think that you could credit the design team with prescience. The additional space that was commissioned in November was separate from the extra 4,000 sq m. In fact, you do not commission extra space; you send the team away and say that you have extra demands to be met. That is what happened. It just so happens that the numbers were the same. It was not that over the summer the design team had looked ahead and said, "We think you need this extra space." It was different from that. The space was space that the team could not satisfactorily account for, so it was sent away to work with the project team and cost consultants to explain it in a satisfactory way or take it out.
You are suggesting that the bulk of the extra 4,000 sq m is a consequence of decisions that were made after the handover. Did any of that space result from decisions, considerations, observations or whatever took place prior to the handover?
I do not think so. I think that the extra space was the result of a decision taken by the Scottish Parliamentary Corporate Body in the autumn. It is pretty clear that decisions were taken around the autumn of last year that led to the extra space, and they were based on lessons that we had learned from running the Parliament.
I refer you to paragraphs 3.56 and 3.57 of Mr Black's report. Just before the handover of the project in May 1999, the cost consultants had estimated the construction costs to be £89 million. Were you and the SPCB made aware of that information at the handover?
No.
If you had been made aware of it would your view about the robustness or otherwise of this project have been different?
That is a hypothetical question. I do not know. An explanation has been offered, which is plausible in many respects.
That is a matter of opinion.
The whole thing is a matter of opinion. It is a hypothetical question. I do not know. We were not told at the time, and therefore—
Do you feel that you should have been told?
It is important to understand the nature of these projects. One gets a lot of cost information all the time. You employ a project team to handle that information, along with a lot of other information, and advise accordingly. As I said, we inherited the same project team as the Executive had, and on that basis I was happy to rely on the advice that the team gave. They had worked with the project all the way through.
With hindsight, were you being offered good advice by the project team?
It was clear in the advice that the project team gave that the budget excluded risk allowances, contingencies and so on. It never hid the fact that there were other factors to be counted up. It never quantified them, which is a fair comment to make, but the advice that went to the SPCB made it clear that the £62 million excluded risk allowances, contingencies, fit-out, VAT, fees and so on. It did not hide that from the SPCB—or me. A fair point is that they were not quantified, but they were not hidden.
Should it have been spelled out in more detail? The project team had a contingency of £6 million, which was clearly a gross underestimate of the position.
The SPCB insisted that we discussed and reported costs in gross terms. That is where the £109 million came from, which relates to the £62 million. That separately identified items such as contingency and fit-out. The contingency is generally a percentage of the base construction estimate, so when the construction estimate was £62 million, the contingency was £6 million. The contingency is now at £11 million, which relates to a base construction estimate of £108 million. The contingency is in line with Treasury guidance and has moved up accordingly.
Many other elements were excluded. The reasons for exclusion were provided by Mr Russell and his colleagues in the appendix to the report. Do you accept that those reasons are valid?
I have discussed that with the project team. Its advice to me is that, for the most part, those risks did not materialise. Other risks have materialised since.
Given that the total figure of £109 million ended up above £200 million and was reduced to £195 million, do you not think that somebody did not get this right? Part and parcel of this exercise is to find out what went wrong, how it went wrong and how we can now go about it. I am finding it difficult to get concrete answers to questions about what went amiss, how it was quantified, when it happened and who did it—not for the sake of nailing someone to a wall, but to find out what went wrong.
I can only explain what happened under my stewardship of the project. You will come to a view as to the £62 million handover figure. I do not think that I have ever used the term robust.
Looking back, do you agree with the Auditor General for Scotland's suggestion that there should have been an independent audit of the state of the project for the SPCB at the point of handover?
That is a reasonable suggestion to make with the benefit of hindsight. I am trying to think back to how it was in June 1999, when Parliament had just voted to continue with the project. There has always been a huge amount of politics around this project, which has not always made it the easiest place for officials. That aside, the Parliament had instructed the SPCB to get on with it. I am not sure that it would have been feasible for the SPCB to say, "Notwithstanding what you have told us, we will stop and undertake an independent review of the project." The SPCB felt that it was incumbent on it to get on with this to deliver what the Parliament had asked it to do.
Was it within the powers of the SPCB to do that?
Absolutely. It was, and remains, the client.
Did it consider doing that?
Yes, it considered that in the summer.
Is that minuted?
Are you asking whether the corporate body considered having a completely independent audit?
I am asking whether at the time of handover the corporate body considered having an independent audit.
It considered whether it should have independent advisers either on the corporate body or advising it separately.
Could you provide us with written evidence of that?
I can write to confirm that.
So there is no minute.
There might be something in the minutes. I am telling the committee that on more than one occasion the corporate body considered whether it should have independent advice—not an independent audit, but something equivalent to what the Holyrood progress group now has.
So you will write to us to confirm what you have said and to indicate that the corporate body considered this in June 1999.
It was more likely in July or August. I will write to the committee to confirm what I have said if you would like.
Yes, please.
I am sorry, but I am not quite sure of the question.
I am thinking about the redesign of the chamber last summer which, as you explained, took three months. Three months is not a year. I am also thinking of the value and cost review, which took place in the autumn, and the additional feasibility work that was done to find more space and was instructed last November. What other options did you consider? The problem was not just with the overall cost, but with a very significant delay. What options did you consider to regain time that might have been lost as a result of major changes and additional work?
One cannot do anything without a design that people agree meets the needs of the client. We did not have it. We did not get it until well into this year.
Given that 10 per cent more space was added in November last year—
That is not right. In November last year the corporate body instructed the design team to institute a design feasibility study to accommodate the extra space. It came back in January or February this year with proposals. As the Auditor General's report makes clear, that study required 75 or 80 per cent of the entire project to be re-examined. This project is not like a supermarket or Victoria Quay, where one simply adds another bit on to the end or another floor. It required a fundamental redesign of the building. That is what took the time.
In paragraph 2.33 of his report, Mr Black covers the points that you are making. The report suggests that by November 1999 10 per cent more space was required. Did the team consider leaving the existing design untouched and finding the additional space somewhere else, rather than trying to rejig the whole thing? Did you consider moving some of the activity to another site?
If you are building a new Parliament building and you have a site that can accommodate the extra space, setting out to accommodate some staff on a remote site does not seem to me to be a feasible option. That is fine if a site has been filled up and, 10 years down the track, more space is needed, but all we had was a set of designs.
Surely there must be a value-for-money exercise. I accept your point that, ideally, you would want to have everything on one site, but considerable concerns had been raised by that time about the significant effect on the time scale and cost. Surely other options, including the possibility of using another site for part of the facilities, should have been considered and put to the Scottish Parliamentary Corporate Body for a decision. Was it an absolute part of the brief that you could not provide some of the services from somewhere else?
The corporate body was clear that it wanted to have the parliamentary complex on that site as far as possible. If the design team had come back to us and said that it could not be done on the site, that would have been the point at which the corporate body would actively have explored other sites.
I understand that that might have been your motivation, but surely the time problem and the cost problem were also factors. At that point, those who were making the decisions ought to have been informed of the consequences of going ahead. Was there any discussion between the project team, or you as the accountable officer, and the corporate body about the options, consequences and knock-on effect on time and costs of that 10 per cent increase in space?
There was certainly discussion about the time it would take to redesign, but what we could not quantify for the corporate body was exactly how much longer it would take. It may be stating the obvious, but if one sets about redesigning the project in quite a fundamental way, that will take time.
Did any members of the corporate body raise the possibility of an alternative to having it all on one site?
I cannot honestly remember, although I am happy to come back to you on that point. We were aware that there are a lot of developments on the north Holyrood site. We also realised that the interim accommodation is not big enough. As you may be aware, we have recently taken accommodation at St Andrew Square for some staff. We considered north Holyrood as a possibility for extra interim accommodation, but St Andrew Square has provided a better option. We therefore had cost data at official level on the costs that might be involved.
But that information was not passed to members of the corporate body to help them form a judgment.
That information was sought in a different context—the context of providing additional interim accommodation. I cannot honestly say off the top of my head whether the corporate body ever discussed that as a long-term solution. My strong instinct is that, even if it did, it would certainly have stuck to the view that the whole point of building a new parliamentary building must be to try to get all the accommodation on the site. To set out at the outset to build a new Parliament building that one knows is not big enough, on the ground that one could rent some accommodation elsewhere, calls into question, in my judgment, the whole point of building a new parliamentary complex. That is not the game that we were in.
I would like to move on, as time is pressing.
I am coming to my final question. The report is critical of the control procedures. What control mechanisms were in place to manage and report cost changes arising from requests to alter the design of the buildings?
We had an informal change control process in place. What we did not have was a settled design. Until there is a settled design it is not possible to have a cost plan, and until there is a cost plan it is difficult to quantify the effect of additional changes in design. The way we approached it, therefore, was to get the design to a position in which the corporate body felt that it met the requirements of the Parliament. As soon as we had such a design, we costed it and brought in Spencely to verify those costs. At that point we took it to the Parliament. We now have a cost plan. We are now in a position to evaluate how changes in design will affect cost, but we were not in that position last autumn.
Do you regard that as satisfactory?
It is an inevitable consequence of the state the project was in at the time.
Is that in terms of not having a fully agreed design and cost plan in place at the time of the handover?
You are right, we did not have that. We did not manage to reach that point until this spring. Is that satisfactory? I would have liked it to have taken less time. I am not saying that that period was desirable and so, to that extent, it is not satisfactory. However, it is important to understand that the project has moved into a new phase in the past few months, in which we can undertake such analysis. That was not possible last autumn. Without a fixed design and a cost plan associated with it, it is very difficult to undertake the incremental reporting to which you refer.
In practice, what arrangements were put in place to ensure that the corporate body was told of the consequences of the changes that it was seeking?
I have described those arrangements. The corporate body was left in no doubt that making the building bigger would make it more expensive.
When the corporate body made the decision, was it told how much more expensive it would be?
No, for the reasons that I have outlined. The corporate body did not institute the construction of a bigger building; the SPCB instituted a redesign—on paper. The SPCB did not commit to building that until after the proposal had been taken back to the Parliament in April. If the SPCB had set about building a bigger building, you would be making a fair criticism, but the corporate body did not do that. Rather it asked the design team to come up with a new design to meet the requirements. That design was then costed, subjected to the Spencely review and put to the Parliament. Only then did the corporate body go ahead. Those were the arrangements.
Can you do the same exercise for us as Mr Muir Russell promised? Can you provide a breakdown of the costs that you feel were the responsibility of your team and the corporate body after June and those costs that where the responsibility of the team operating before June?
I cannot answer for the team before June 1999. I can write to the committee and set out how the figure of £62 million increased to £108 million; in terms of the full project costs those figures are £109 million and £195 million. That is my responsibility and I am happy to write to the committee about that.
That would be very helpful. I am going to pull this section of questions to a close. I want to move on to the project management phase because I expect many issues to flow into that from the handover phase.
I want to ask about the skills base of the project team that you inherited. Last week, Mr Russell gave evidence on the people involved in the project team. The committee raised questions about the apparent absence of a really senior construction professional. What is your view of the skills of the project management team that you inherited? Did you notice any gaps? Furthermore, did you at any stage identify the problems that the Auditor General has highlighted?
No. I do not entirely subscribe to the Auditor General's view, although it is perfectly valid. There were no obvious gaps. We had a project sponsor and even the Treasury guidance makes it clear that the project sponsor does not necessarily have to be a construction professional. Nevertheless, our project sponsor was an experienced administrator with some construction experience. Our project manager, Martin Mustard, had a great deal of construction experience; his two assistants were construction professionals; the client adviser, John Gibbons, was an experienced architect; and there was a range of other people in the team. The team certainly seemed well balanced and well qualified.
Did you come to that conclusion over a period of time, or did you assess the project management team on the day that you inherited it and decide that you were covered?
I did not do that on 1 June, because I was doing a lot of other things. Indeed, I should put my hand up and say that I was doing a lot of other things over that period, and a fair criticism might be that I did not pay enough attention to the situation. However, I certainly took a bit of time over the summer to assess the team with the project sponsor and, even with that more mature consideration, I did not find any obvious gaps.
Would it have helped to have had some kind of assessment of the project team at the point of handover? As you explained, the handover procedure seems to have been fairly informal. Although that seems to have been a key element of the project management team, there was still no status report, audit of skills or anything like that for you to consider on 1 June.
That certainly would not have done any harm. I never thought to seek that at the time.
So there was no written assistance about the skills mix in the project management team. You seemed to say earlier that, at that point, you were not particularly aware of the nature of the construction management contract and so perhaps were not fully aware of all the risks that might have arisen during the project. A lot of the problems seem to stem from what happened at the handover. Is it fair to conclude that, at handover, you had no status report to work from?
With the benefit of hindsight, perhaps I should have asked for such reports, as they might have made me more aware.
Is it also fair to say that those reports might have crystallised some of the potential problems and reduced the delays that were inevitable as you went on a voyage of discovery of some of the risks that you had been left with?
I agree with you up to the point where you take me on a voyage of discovery. I know that you do not mean that maliciously, but it is not a very fair representation of the situation. It is important to bear in mind the fact that the project team was striving hard both to keep the project moving forward and to respond to the client's needs. If you want to represent that as a voyage of discovery, that is fine; however, it was clear to me before we embarked too much on such a voyage that the type of contract that we had allowed us to do so. If we had had a fixed design that was to be built for a lump sum, we would have been in far deeper trouble.
Are you quite happy with the present project management team's mix of skills? Are there any problems with personnel or the general skills mix that you might need to address?
The project team is an excellent team, and has done a very good job in difficult circumstances. I have restructured the team. You could read that back to me and say that perhaps I should have thought about that earlier—I would accept that as a fair point.
Would you characterise what you have described as fairly major or significant change?
I would describe it as significant; it is more than just marginal change, yet I would not describe it as major.
You had to make all the changes in the light of the experience that you gained. You had no crib sheet to work from at the start. You had to gain the experience of knowing where additional skills were needed before you were able to institute the changes.
Yes. I have certainly gained a lot of experience on this project—that is for sure. I am not sure whether a crib sheet would have highlighted the need for additional skills in this case. It would have been a help to have thought of that sooner, and something might have stimulated me to think about it sooner—a crib sheet might have set me thinking.
As you said, you had a lot of other things to think about in June and July last year. At that stage, everything was new for us all, and we might all be forgiven for forgetting to do one or two things at that time. In any case, it is interesting that you had to make those changes.
Yes, and if the Holyrood progress group is added to the mix, we have the political control, the independent advice and the project team. There are no guarantees with this project; only a fool would sit here and give guarantees, but a good management set-up is in place.
The Auditor General recognised the wide range of responsibilities that you have as the clerk to the Parliament. Euan Robson has also just acknowledged that. With hindsight, do you think that the responsibility for the client role and for the Holyrood project should have rested with you? Should an officer have been handed the responsibility, with a duty to report to you?
The Auditor General's comment was very fair, but I have thought about that question a lot and the answer is no. We tried to bring together the needs of the Parliament as an organisation, for which, it is correct to say, I am responsible, and to deliver a building to house it.
Are you saying that it has been advantageous to have one person overseeing the whole service and being able to draw together all the competing interests?
The Auditor General made a fair comment, but I believe that the balance of advantage was with the set-up that we had.
What arrangements did you make for reviewing and monitoring the management of the programme?
The Holyrood project sponsor was a member of my senior management team, which meets every week. The project featured on some agendas, but not on others. Every week, I meet each of the directors individually to review progress in the directorate of clerking and reporting, the communications directorate and so on. I had weekly meetings with the Holyrood project sponsor to review progress on the project. At a general level, I kept in pretty close touch with what was happening.
How much detail were you given at those weekly meetings?
Not a huge amount. As a result of this process, I have delved into the detail of the project more than I would normally. A balance must be struck between allowing someone at director level, who is a pretty senior person, to get on with their job without undue interference, and satisfying oneself that one knows enough. The meetings were at a fairly high level.
How often did you meet, and report to, the corporate body?
Somewhere between once a fortnight and once a month; it varied. The SPCB aimed to set aside a meeting every fortnight just to discuss Holyrood. Usually that proved not to be feasible, because the corporate body had a huge number of things on its agenda. However, the corporate body would normally consider Holyrood issues once a fortnight. It certainly never went more than a month without discussing the project, apart from during recess periods. I would say that, on average, Holyrood was discussed once a fortnight.
With hindsight, do you think that the corporate body, with all the other interests and work that it had, was the right group to have responsibility for the project?
The corporate body is a very able group of people. However, we have learned from the Holyrood progress group that if people can devote a day every fortnight—which is a huge amount of time for an elected member to set aside—to Holyrood and nothing else, that makes it much easier to deal with. The members of the progress group have certainly found that, and it has been tremendously helpful from our point of view.
Before the progress group was set up and before the Spencely report was published, was the corporate body starting to think that it did not have enough time to devote to the project and that it needed to consider other forms of accountability?
As I said in response to a question from Brian Adam, as early as the summer of 1999 the corporate body considered whether it should have independent advice. It also considered whether it should set up a sub-group to manage the project, even though the Scotland Act 1998 did not provide for that. The members of the corporate body rejected that suggestion on the grounds that the project was such a big responsibility that they should all share it. They felt that it would be unfair to delegate it to one, two or three of their number. When John Spencely came up with his proposal, the members of the SPCB signed up to it pretty readily, seeing it as a sensible move forward. It is human nature for people who have been given a responsibility to want to take it on and make a success of it, rather than to try to offload on to someone else. The SPCB had thought about different structures, but it was keen to take on the responsibility and to deliver what the Parliament had requested of it.
You said that a large part of the difficulty that you encountered in managing the project resulted from the fact that there was not a settled design. Last week, Dr Gibbons told us that the architects
Before you answer the question, Mr Grice, could you say what responsibility or ability the corporate body had to renegotiate the architects' fees?
We inherited a contract. As members know, one can renegotiate only bilaterally. The fee was calculated on a percentage basis. Obviously, the corporate body took an interest in that. In defence of the design team, I should point out that the extra design work that it did was real extra design work. It was not like adding an extra 1,000 ft to an office block or a supermarket. The Auditor General has confirmed that 75 to 80 per cent of the design had to be re-evaluated. That is a huge amount of work. The design team also made a huge number of presentations to the corporate body, members and others, which is not regarded as part of a design team's normal work. We were getting value from the architects outwith their work on the design.
I did not accuse either the late Señor Miralles or RMJM of spinning out the process to enhance their percentage fees. I was suggesting that, perhaps at the outset, as part of the management organisation of the project, it would have been better for the design team to share the risk, because it was responsible for the development of the brief. The brief kept developing, and the architects were part of that.
I see what you mean.
I want to make quite clear what I am saying. Basic mistakes were made and, like everyone else around this table, I am trying to work out why the mistakes were made, who made them and whether they are likely to be repeated.
That is a good point on which to bring this part of the meeting to a close. We will resume at a quarter to four.
Meeting adjourned.
On resuming—
We will move on to aspects of cost reporting. Mr Grice has, to a greater or lesser extent, answered some of the questions that arose over cost reporting, so I ask members to keep their questions fairly brief. Mr Grice, if you feel that you have already answered a question, please feel free to say so. We will try to gallop along. I would like to bring the meeting to a close at half-past 4, as several members have indicated that they have other commitments.
Mr Black has described this project as being uniquely challenging and important, so we would expect that the cost reporting would be of a very high standard. Exactly what arrangements were in place for cost reporting to the corporate body? In practice, what cost reporting took place?
Forgive me if I am repeating myself, but this project has been in two phases. Since achieving a settled design, at stage D, with a budget and cost plan to match, we have been able to report—as we are doing now, via the progress group—whether tenders coming in are above or below what was expected, and to say what remedial action we will take. The process is detailed and, I like to think, quite sophisticated.
Do you therefore agree with the statement in Mr Black's document that the cost reporting was not systematic? Do you feel that the corporate body was left in some difficulty because of that?
It was not systematic because it was not possible to be systematic. I do not think that the corporate body was left in difficulty. It would have been essential for the body responsible to have accurate, regular and frequent cost reports if we had been—as we are now—constructing the project at a rapid rate. However, that was not the case last autumn: we were instituting a redesign. When you are redesigning, there is little to report cost against.
So you believe that it was not necessary to have systematic cost reporting.
I believe that, at that time, it was not possible. It is possible now, and it is being done.
You are saying that it was not possible?
It was not possible, because we did not have a settled design and we did not have a settled cost plan. There was no basis on which to do the cost reporting, as there now is.
I would like to take you forward to the second half of 1999, when various estimates from the cost consultants prompted an immediate review of the health of the project. Why did you not advise the corporate body of the figure at that time?
I will explain that decision, which was my personal decision. When the project team came to me with that figure, my first reaction—and I still think this—was that it was completely unacceptable. My second reaction was to ask where the figure had come from.
I want to be clear about this. You decided that it was not necessary to advise the corporate body—the body of politicians that is, in effect, responsible to the Scottish Parliament for the issues around the Scottish Parliament building—that costs were escalating?
No. We told the corporate body that we had had unacceptable cost estimates. The corporate body was in no doubt that we had significant cost pressures. I set about clarifying the basis of those costs and taking action to deal with them, so that I could report to the corporate body at a future date with information about where the figure had come from and whether it was reliable. On the basis of the advice that I had, I had no confidence in the figure. It was only proper to have some action in hand. That was overtaken by the feasibility redesign, which took place in November. The judgment that I made was made in September.
Did you say that you had no confidence in that figure?
That is correct. I did not.
So we paid specialist cost consultants £2 million to research the costs, but you were not confident about that figure?
There is a difference between lacking confidence in one cost report and lacking confidence in the firm of cost consultants. I have great confidence in Davis, Langdon & Everest, which is a good firm of cost consultants, but I did not have confidence in that figure. The firm can cost only what it has been given, which returns to the point about the state of the design. The design was not settled, and the cost consultants can quantify only what they have. In particular, there was an additional 4,000 sq m in the drawings, which the firm costed, but for which nobody could account. That was a huge disparity.
Did they ask you?
Excuse me. Mr Martin is still asking questions.
No.
Sorry.
We now move on to August 1999, when the costs were predicted to be as much as £115 million. That prediction prompted an immediate review of the health of the project. Why did you not advise the Parliament then, when you had specific information?
What would we have advised the Parliament? We would have had to advise it that the design had become less fixed—John Spencely picked up that point. At that time, we were just reaching the end of the chamber redesign. Clear pressures were coming through that the building would not be big enough, and we had a cost report that had a problem and reflected some uncertainty. I do not think that returning to the Parliament with a lot of questions and maybes would have been responsible.
I am sorry for staying on the same point, but it is important. Did the corporate body know at that time? Did it raise any concerns about the fact that you had not advised it and not conveyed the information to it?
The corporate body did not ask specifically what the number was.
That raises another question, into which I will not stray. Did the corporate body raise concerns with you later about the fact that you had not reported that information to it? Are there any minutes to which you can refer us?
No.
Are there any conversations to which you can point?
No. I told them what I told them at the time. The corporate body and I have not returned to that. Obviously, in the context of the Auditor General's report, I have discussed matters with the corporate body, as you would expect me to. I explained again to it why I took the action that I did, and it accepted my explanation. I am not saying that the corporate body agrees 100 per cent with my explanation, but I gave my reasons again, more recently, and I think, or at least hope, that it understands why we took the action that we did.
Paragraph 3.50 on page 41 of the report says:
All the hats that I wear. I suppose that the primary motivation at the time was to try to get the project into some kind of settled state, where we could report with a degree of confidence on the design, cost and programme. We could not do that at the time. One comes across a huge amount of information on any given day on any subject, but especially on a major building project such as this, and it is always a question of judgment. One certainly does not offload everything. Even with the close order that the progress group maintains with the project, we must still agree with members of the group what we will pass on and what we will not pass on, and the basis on which they want it. There is a judgment to be made.
I take that point. Paragraph 3.50 seems to criticise the project management for not reporting the cost overruns. Did project management think that, by making you aware of those cost estimates, they were making the corporate body aware of them?
No. They thought that they were making the chief officer of the Parliament aware, and they sought my approval to take certain actions, which are the ones that I have just explained. They wanted my advice on the judgment call that I have explained to you. I think that they felt, and rightly, that it was a judgment that I should make, as opposed to them.
There seems to be some doubt about the reporting mechanisms. Who set those mechanisms in place and how did they come about? Were there suggestions from the project team about how you might go about it, or was there Government guidance from elsewhere, following standard practice? Did you discuss the reporting mechanisms with the project team when you took it over, or did things just roll along as they had been doing prior to the handover?
I am trying to cast my mind back. I think that the project sponsor put forward specific proposals to the corporate body about how it would get information on the project. That covered a range of things, of course: not just notional costs, but all the issues surrounding the project. My recollection is that there was some discussion and that a standard set of reporting was proposed and agreed to. That is the basis on which we moved forward.
Could we have a note of any records that were kept of an agreement on the reporting mechanism?
I am not sure that I could dig any out, but I shall read back through the minutes and see if there is anything illuminating in them. My recollection is that there was some agreement very early on about the basis of reports that the corporate body would get, and it seemed reasonably happy with that. The fundamental plank of those reports was a report from the project sponsor to the corporate body.
This afternoon, you have referred on a number of occasions to the fact that there has been a substantial increase in the area of the building. You have given explanations for that and said how difficult it has been. However, the reality is that there has been almost a 50 per cent increase in the unit cost. How did the management exercise control over the underlying design changes that occurred?
The sequence of events is important. Value engineering is a technique that has been used at specific points in the project to deal with problems. In the new phase of the project, we are now trying to make it more integral and more of a day-to-day thing. That device can be used to drive down costs and re-examine them and we have certainly used it in the past. Beyond that, however, you need to start with a design that you are happy with, consider the cost, and ask yourself whether you are prepared to live with that cost for that design. If the answer is yes, you move into the scheme.
We are aware from the report and the evidence that we have heard that one of the major contributing factors to the increased cost is the higher standard of materials that are to be used. What specific evidence can you give us that the increases in the cost really do represent value for money?
It is difficult with a unique building such as this. One assurance that I can give is that we have a major firm of cost consultants with a high reputation. They have advised us that nothing has been wasted or missed.
I am interested that Portcullis House has come up. It is probably the best example of a public building that has gone way over budget, but perhaps we can leave that.
We have taken the opportunity at any formal break point in the project to renegotiate fees. I do not think that I can hold out any prospect that the fees will be substantially lower than they are now. The design team has undertaken significant and proportionate work. The Bovis fees relate very much to time on site. They are called fees, but they are mostly reimbursed costs, and we cannot really argue with that. You look perplexed, Mr Barrie.
I am perplexed by the phrase "bogus fees", which would suggest—
I said Bovis. I meant Bovis Lend Lease (Scotland).
Sorry. That is why I was perplexed.
We have tried to renegotiate fees, but I would be misleading you if I gave you to understand that there was a real prospect of negotiating those fees down significantly.
Were you able to reduce the fees to the lead architects after Señor Miralles died? I presume that his fees reflected the fact that he was taken on as a signature architect. As far as I know, his wife is not counted among the signature architects. She is now named along with RMJM as a lead architect. Was there a renegotiation of fees to reflect the changed status of the lead architects?
No, I am afraid that it does not work that way. Yes, Señor Miralles was the lead architect. I did not set up the original contracts, so I am making a supposition. I think that fees were negotiated with EMBT/RMJM, which is the company created by Enric Miralles, Benedetta Tagliabue, Brian Stewart and Mick Duncan from the two firms. I do not think that the reason Miralles was named as lead architect was anything to do with fees; it was to ensure that what we got was a Miralles building and not a Mick Duncan building, which is not meant as an insult to him. When Miralles died, we had the concept—and even at stage D, which was more than a concept—of what a Miralles building was.
I think that you have answered the question to the full extent of your abilities.
The Auditor General's report was critical of the project's insufficient accounting for risk. When you took over the project in June last year, there must have been a number of risk elements that could have delayed the delivery of the project and increased its cost. What did you do to assess those risks, and how you would deal with them if they arose?
One of Martin Mustard's jobs has been risk management. Would it be all right if I asked him to answer?
Please do.
Risk assessment has been an continuing part of the project. Two risk assessment workshops were held last year, which identified risks at a strategic level. That is one part of the risk analysis. The other part was through DLE, the cost consultants, which looked specifically at design risks.
So you have made the mechanisms more robust. Why did you believe that there was a need to do that?
This is almost circular—we come round to the same things—but not to bore you, the settled design and cost plan now provide the basis for proper risk assessment.
Last week, we heard from the permanent secretary at the Scottish Executive about his interpretation of the Treasury guidance on risk assessment. What is your interpretation of the importance of that guidance, and how did it relate to the project when you took over in June last year?
The Treasury systems for risk assessment are extremely good. Over the years I have found that most Treasury guidance is extremely good, but I would also agree that it is guidance, and there are many ways of developing risk analysis. For example, in the Treasury guidance there is a particular type of risk assessment, but there are lots of effective variations across this industry, and other industries, that are equally as good. I share the view of the permanent secretary that Treasury guidance often is good, but it is still guidance. It is not a standard or a rule.
I appreciate what you say, but it was evident from the Auditor General's report that he believed that there was a shortfall in the project's risk assessment. The Treasury guidance is clear about the importance of risk assessment in cost accounting and project management from the start of a project. Do you agree with that guidance, and is that one of the reasons that you have now implemented much better risk assessment? Was it that risk assessment was missing, which you have now remedied?
No. In the previous phase of the project, not having a settled design and cost plan prevented applying the most robust form of risk assessment. Now we have a settled design and cost plan, and from now on in the risk assessment will be extremely tight.
If I remember, the risk that crystallised in November 1999 was that the area specified in the design brief was going to be 10 per cent less than experience showed was actually needed. That problem took six months to sort out. It was costly and disruptive. Surely it would have been better value for money to allow for a more generous area at the outset to reduce the impact of last-minute changes, which are always expensive to implement?
If I understand the question, it is whether you should add space at the outset. That is a fair point, but it requires a judgment to be made. When you are undertaking anything, but especially a major building project, you do a brief. The Auditor General was reasonably happy with the way in which the brief was put together, but he was less happy with the lack of risk allowance in it.
Given that the contingency of 10 per cent clearly was inadequate, because we ended up with 47 per cent, does that show the value of a formal risk analysis as opposed to the technique that you used? You chose not to accept what you recognised as good Treasury guidance. With hindsight, would the more formal risk analysis approach to space have given us a much more robust project from the beginning?
You used the word "formal", but that is not right. The risk assessment was formal, in the sense that it was part of the management process. The point that Martin Mustard made, and which I endorse, concerns what risk you are assessing at the time. You are trying to assess a design risk and come to a view on the appropriate design. That is not easy. Risk assessment is educated guesswork; it is not a science. It was part of the process, and it was undertaken last summer, so it was built in.
We will move on to the current state of the project.
The deadline for completion is December 2002 and, we hope, within the target of £195 million. I refer you to paragraphs 1.36 to 1.38 of the Auditor General for Scotland's report. The report states that meeting the financial target of £195 million will be a challenge because of estimating uncertainty and inflation risks. You are to review this in the light of tendering major works packages. What are those major packages and what are the results of tendering so far?
The major packages immediately in sight are the substructure at the east end of the site, the superstructure at the east end of the site and the cladding packages. Martin Mustard could probably give you a precise figure, but those account for tens of millions of pounds. The cladding package will be for the MSP block. It will give us a great deal of intelligence as to what the market is likely to supply for the rest of the site because the cladding is essentially the same throughout it. Those are the major packages. As each comes in, it is evaluated. Now that we have a package-based cost plan we can look precisely at what the package should be and whether it is over or under.
Are there any tender results to comment on?
None of the real biggies.
So we cannot answer the question.
It is a bit early.
Would it be appropriate, convener, to ask if we, as a committee, can be given details of these major packages as they crystallise and as information about tender values becomes available in the next few months?
It would be appropriate, if Mr Grice could arrange for that.
Yes. It would have to be on the basis of commercial confidentiality, but I would be happy to do so.
For the purposes of the Audit Committee, pluses and minuses would be useful and not commercially confidential. If we needed other information lying behind that, we should probably discuss that with you and the lawyers to see what is acceptable in the light of commercial confidentiality.
I will give you anything we can. I could tell you the value of those contracts because that is relevant. It is instructive to know if it is £30 million, as opposed to £1 million, plus or minus 2 or 3 per cent. Martin Mustard might be able to give more detail.
Substructure east is the first biggish package; the cost plan allowance is about £5.8 million. We should have some information on that soon.
Mr Grice, does that mean that you will not have been able to get reliable advice from your cost consultants about the total estimated construction costs?
No. That is not true.
Is where you are at the moment, which seems a little imprecise to me, consistent with the £119 million that has been allocated for construction costs within the £195 million?
Yes is the short answer to that.
Thank you, we like short answers.
We think that there is now an agreed cost plan.
There is.
We were given that information last week. Is it in full form, or is it heavily conditional and heavily qualified?
It is in full form.
Did the client agree to it?
It is a package-based cost plan. It has gone down a further level, as we have identified the works packages within it; it adds up to £108 million, not £119 million, because we keep the contingency aside from that.
What is the latest advice from the construction manager about the possibility of the project being completed by the deadline of December 2002?
The construction manager is still reporting that December 2002 is the date of completion for the building.
Will we be able to move into the building then? Will the fittings have been completed as well?
The fit-out period will follow that. One of the diagrams in the Auditor General for Scotland's report indicates that.
When will the building be ready to accommodate MSPs and parliamentary staff?
I expect around about April 2003.
The progress group is examining that. Elements of the building, such as Queensberry House and the MSP block, will be finished much earlier than that, so it might make sense—although we will have to evaluate the cost—to commission some of those parts of the building earlier. Some of the fit-out commissioning could happen on parts of the site when other parts of the building are still being finished. That would compress that period. The progress group is examining that, but has not come to a view. I dare say that it will do so over the next few months.
I hope that it does not happen, but if you were to experience building delays what contingency plans do you have? Have you built in flexibility to allow you to absorb delays?
Martin Mustard could talk in more detail about how the programme is put together.
Is the type of contract that you have more useful in managing the project better, especially if delays occur?
Although the potential downsides of the project have already been highlighted, one of the main advantages of the contract is that it gives you tremendous flexibility in that respect. That could be quite a considerable advantage at this phase of the project.
The Auditor General's report made a number of recommendations. Do you agree with them, particularly recommendations a and b about risk assessment and management; and have you implemented them?
Yes.
Have they all been fully implemented?
They have either been done or are in train. However, although the recommendations have been extremely helpful, I will say in defence of the project team that I would like to think that we would have been doing most of them anyway. That said, the recommendations provide a helpful checklist for the progress group. I am happy to submit as evidence my own copy of the report's recommendations, which I have annotated with "Done" or "In train".
It would probably be helpful if you could drop us a note of where you are with recommendations a to h.
Perhaps in conclusion, what lessons for future major projects have you learned from this experience?
That is always a difficult question, especially when it is asked halfway through a project. However, there are clearly lessons to learn. The way we restructured the team has provided a more dedicated client control. Furthermore, we have learned lessons about reporting and risk management that I hope we are now putting into practice.
I have a question about the cost packages. Is the superstructure on the east end of the site the Parliament building itself?
Yes.
You said that that would cost seventeen point something million pounds. Does that figure come from recent market testing?
Yes.
How does that figure relate to the original estimate?
I would have to go back to previous cost reports to work that out, as the previous estimates were elemental rather than package based. That £17 million is package based and purely for the frame of the building.
I take the point about the pluses and minuses as read, because that concerns the management of the project. However, with current inflation, particularly in the building industry in Edinburgh, can you be absolutely confident about that figure?
That is part of our risk assessment and part of what we allocate to that particular package as a contingency to allow for such elements.
Do you allocate a percentage for contingencies?
I am sorry; we are not going to wander along that path any further. Mr Adam can have one very brief final question.
My question is in a similar vein. We have a final figure of £195 million for the total package for which the Parliament is responsible. To what extent has allowance been made for aspects such as construction costs and inflation in Edinburgh, which are currently unique? Can the contingencies contain those costs?
Allowance has been made as part of risk. We recognise with the Auditor General that there are a number of risks, one of which is inflation, and we have to manage that. However, it is worth putting on record the fact that, although Government procurement policy is to deal with constant prices—in this case, with March 1998 prices—the Holyrood progress group is clear that £195 million is a cash target. Furthermore, the group is clear that, if the project is brought in at that price, that will be less in real terms than £195 million. However, the group feels that it provides the right approach and discipline to manage inflation. As the Auditor General pointed out, the contingency is there if necessary, although it must cover other eventualities.
Do not open that can of worms.
Well, the SPCB made an important decision to procure on a global basis. One reason for doing so is the recognition that the Edinburgh construction market is pretty tight at the moment. Using a massive company such as Bovis and procuring on a worldwide basis gives some guard against that situation—without getting into issues of sandstone and granite.
Mr Grice, Mr Mustard, thank you for your evidence to the committee.
I should make one point. The SPCB considered seeking independent advice, not an independent audit. I think that I was quite careful to make that distinction.
I will change the clerk's note, although I hesitate to do so.
We also asked Mr Grice to provide as much information as he can on how much of the additional costs happened before and after the handover.
I think that is correct. We asked Muir Russell the same question.
As I said, I entirely accept the question and can—and will—do my best to answer for what happened after the handover. However, it is somewhat harder to speculate on what happened before, although I will certainly have a look at the matter.
Thank you.
Meeting continued in private until 17:07.