Procurement Efficiencies: Monitoring and Evaluation of Devanha Phase 2

4 Programme Management

4.1 The Devanha Offer of Grant (Communities Scotland 2007) set out targets and details of funding for Devanha Phase 2. The overall programme was innovative in agreeing total spending over a four year period. Table 4.1 shows the total four year grant award of £115,088,139 including an "inflation risk allowance".

Table 4.1 Total HAG Allowance

Source: Devanha Offer of Grant (2007)

4.2 Within this overall amount, Devanha had to set out annual expenditure programmes based Scottish Government Grant Planning Targets (GPTs). Annual expenditure targets were controversial in that Devanha wanted greater freedom to plan over the four years. However, they are useful in helping Devanha and Scottish Government monitor progress to ensure that spending for the programme as a whole is on target and to guide Devanha in planning individual site starts and spending profiles.

Programme Management under a New System

4.3 Figure 4.1 shows difficulties experienced in the first year of the programme with delays to site starts resulting in lower expenditure than had been anticipated. The picture looked worse in relation to the single year expenditure because many projects scheduled to start in autumn 2007slipped to the end of the financial year or into the next. In all, the underspend in 2007/08 was in the order of 56% (around £10m from a GPT of £17.738m).

Figure 4.1: Project Starts in 2007/2008

Source: Taken from Devanha Monitoring & Evaluation Report Round 1 October 2008 (Based on Data Capture Forms Returned By Devanha May 2008)

4.4 The delay and consequent initial underspend was due to greater than anticipated time taken in agreeing "validated" costs for the projects. High inflation in the construction sector in the North East resulted in more detailed discussions between Scottish Government and Devanha over validation of individual project costs. This occurred at a time when all parties were developing new procedures and there were delays on all sides; Devanha were developing a consistent format in which to collate data, CWC was developing its validation process and Scottish Government was refining the authorisation process.

4.5 New, more streamlined approval procedures resolved this difficulty in later tranches of project approvals. The new system, agreed by both Scottish Government and Devanha increased the focus on cost control, allowing for some variation in costs from targets for projects but enabling streamlining of tranche approvals where no project was more than 10% above target and the tranche as a whole met the target.

4.6 By June 2009, Devanha had significantly turned around its performance in programme delivery. Forty five of a total of 51 projects were on site or complete, with the first 12 at practical completion or final completion stage. Devanha had addressed the major programme delivery problem but this led to a different problem with insufficient grant funds available for the large number of projects on site during 2008/09. Devanha could have spent more than its GPT and there was a requirement for it to front fund some development.

4.7 Devanha had overcome its initial problems as a delivery vehicle and by 2010 all projects were on site or complete. At the time of writing, only the final large project at Donside in Aberdeen has not reached at least practical completion.