Cork County Council facing €1m bill for major project overspend

Authority may face bill due to €839,000 overspend on Kanturk fire station and €118,000 budget overrun on Youghal flood works

Cork County Council has acknowledged failings and said it intends to introduce a new financial management system. Picture: Denis Minihane

Cork County Council may have to find almost €1m from its own coffers to fund significant cost overruns on two major projects.

It is facing the bill due to an €839,000 overspend on the new Kanturk fire station and a further €118,000 budget overrun on the Youghal Front Strand flood mitigation works.

Details of the overspend are contained in a new report by the Local Government Audit Service. 

It also notes that the system for managing housing rents has “limitations” and “control weaknesses” that should be addressed as a priority.

The council has responded to the report, acknowledging failings in the system, and said it intends to introduce a new financial management system to allow “proper management” and controls to be put in place.

For Kanturk fire station, opened in May 2022, the original budget cost was €1.86m, to be funded by the Government.

At the time of the audit last year, management said total expenditure incurred to date on the project was €2.7m, a 45% increase, not including land costs of a further €400,000.

It blamed “unforeseen ground conditions” and the impact of Covid-19. 

The audit said the council had applied for €839k in grant funding to meet the extra cost. However, the audit authors said that if that is not secured, "the council may be required to fund this shortfall from its own resources". It said the project should be reviewed in order to "identify lessons learned".

The original budget cost for Kanturk fire station, opened in May 2022, was €1.86m, but at the time of the audit last year, total expenditure was €2.7m, a 45% increase. Picture: Cathal Noonan

For Youghal flood mitigation works, the project's final cost was €304,000 against a budgeted cost of €186,000.

It blamed "unforeseen" factors including poor ground conditions, invasive species, ecological costs, and provision of suitable fill material “which all fed into cost escalation”.

“Management has accepted there were shortcomings in the project appraisal stage and that the nature of the site merited a more thorough assessment,” the audit said, adding that a formal post-project review should be carried out to ensure lessons are learned so as to avoid the risk of "financial exposure on future similar projects".

Such an assessment would have produced a more realistic estimate of costs at the outset.

"It is recommended that a formal post-project review of this project is conducted to ensure that any lessons to be learned are identified and to mitigate the risk of financial exposure on future similar projects," it said.

The audit also noted a “significant number of claims for additional costs” by the contractor for the €280m N22 Baile Mhúirne-Macroom road development.

Council chief executive Tim Lucey said that the county engineers team is carrying out a formal review of the Youghal works to identify and understand the shortcomings.

“This will be used as a case study of the risks associated with the appraisal of smaller projects,” he said, and it will be incorporated into the "lessons learned database".  A similar review is being carried out in relation to Kanturk, he said.