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‘Lessons to be Learned’ From Major Road Project Hit by Cost Increases and Delays

A major scheme to upgrade a key South Wales road holds ‘important lessons for future Welsh Government projects’, according to the Auditor General.

Whilst the costs of upgrading part of the A465 have been largely contained since 2020, the overall story is one of significant cost increases and delays, says a new report.

The project to upgrade 8km of the Heads of the Valleys Road between Gilwern and Brynmawr is called ‘Section 2’. The project has overcome significant engineering challenges and is part of a wider scheme to upgrade 40km of the A465.

The upgraded Section 2 has been ‘open’ since November 2021. However, the Auditor General says that some limited construction activity is ongoing and ‘negotiations to resolve defects and define the final construction activities have been difficult and prolonged’.

The Welsh Government and Costain have disagreed about the extent to which the road is complete. Costain has argued that as the road is operational, a completion certificate should be issued under the construction contract. The Welsh Government has disagreed with this position given certain construction activity is ongoing.

The Welsh Government is now projecting a cost to the public purse of around £327 million, up slightly since the Auditor General’s interim report in February 2020 and much higher than earlier projections. This equates to 46% (£103.5 million) more than anticipated when construction began.

However, financial risks have now reduced given the advanced stage of construction and the projected cost remains within the uplifted budget of £336 million approved in March 2019.

The project is already delivering some benefits, although the Welsh Government plans to report more fully on them. Basic road safety data suggests a reduction in road traffic collisions. The project also included setting up a construction training academy and it has received awards for construction excellence, business in the community, and protecting habitats.

The report notes that, despite these benefits, the disruption caused by road closures has raised complaints from drivers, residents affected by diverted traffic and local businesses.

The Welsh Government says it is learning lessons from the project by changing its construction contracts and reviewing its indicators of contractor performance.

Auditor General Adrian Crompton said:

“The A465 is an important part of Wales’s transport network, but the work to improve this section has been difficult for the parties involved and for the local communities affected. Although expected costs to the public purse have been largely contained since my interim report in 2020, the overall story of the project is one of significant cost increases and delays.

“It remains vital that the Welsh Government applies lessons from this project as it delivers future schemes, and one test of that will be the impact of changes already made to its contracting arrangements. And while construction activity is largely finished, the Welsh Government still has work to do to report more fully on benefits from the project, building on evidence to date.”

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