It was originally expected to cost $4.5 million.
However, by the end of July last year the cost of the Arch Hall Fire Station had risen alarmingly to $8.13 million, according to the latest Auditor General report.
The fire station, which was closed in January 2014 for renovations, reopened its doors late last month.
Among the reasons given by Auditor General Leigh Trotman for the near doubling of the construction costs were changes in the scope of the project, extension of the project timetable, and $60, 000 in interest resulting from late payments on the part of Government.
The required approval process was also not followed, costing $2.79 million.
In fact, the audit found that only $0.76 million, or just over 21 per cent of the $3.6 million in overruns, was submitted for, and received the required prior approval, by the Permanent Secretary in the Ministry of Home Affairs.
“This failure to have a large number of variations properly approved would have impacted on the ability of the Permanent Secretary, as the Accountant Officer, and the Senior Officer responsible for the project, to identify significant increases in project costs, especially since the variations were not being disclosed as such on the majority of payment certificates.
“It would also have impacted on the Permanent Secretary’s ability to recognize the resulting depletion of funds, and the need to seek Cabinet approval, as well as additional funding for the proposed variations in a timely manner,” the Auditor General added.
In terms of late payments, as of July 21 last year the authorities had failed to make 21 payments within the timeframe required by the contract, resulting in interest charges of $60,036 and suspension of the project in accordance with notice given by the contractor around July 12 last year.
The auditor general also took issue with the method of accounting used, warning that it was in contravention of Rule 177 of the Financial Management and Audit (Financial) Rules, 2011.
“This . . . would have caused an overstatement of the expenditure for the financial year in which the funds were expensed, while causing a corresponding understatement of expenditure in the ensuing year.
“This action is incorrect and was used to avoid re-budgeting for the expenditures in the new financial year. It was also a deliberate attempt to circumvent the Financial Rules,” he added.
Therefore, while the Quantity Surveyor’s Projected Financial Account as at July 29, 2016 showed a total cost of $8.13 million, the Auditor, in recalculating the account, came up with a total of $7.61 million, which is $0.52 million less than the submitted total.
The Auditor General also called for the adjustment to be made before payment of the final balance.
In response, the Permanent Secretary in the Ministry of Home Affairs said the ministry noted and accepted the observations made in relation to the special audit of the extension of the Arch Hall Fire Station project.
However, the official pointed out that neither the Fire Service nor the ministry was aware of the amounts to be paid or the periods for which the related work was done.
“As a result, the funds were accrued at the end of the financial year to pay the contractor for any outstanding invoices.
“I wish to assure you that the Ministry of Home Affairs will be guided by your advice and will seek to remedy those deficiencies in the management and oversight of its capital works projects that gave rise to the problems identified.
“In particular, measures will be implemented to closely monitor the timelines of projects and the costs associated with each period, thus complying with the Financial Management and Audit (Financial) Rules, 2011,” the Permanent Secretary said. (KJ)