Part 20: Our overall comments on construction and implementation

Inquiry into the Mangawhai community wastewater scheme.

In this Part, we set out our overall comments on how KDC managed the construction and implementation stage of the project.

It is important to start by acknowledging that the Mangawhai community now has a reticulated wastewater system that is operating effectively. After initial "teething problems", any practical problems appear to be occasional and relatively minor. The treatment plant is big enough to cope with expected population growth.

The NRC has not been able to provide us with any data to show whether the water quality in the Harbour is improving yet. We note that it may take some time for water quality to improve. KDC should work with the NRC to ensure that this monitoring is done, so that the community gets information about whether the scheme has achieved its purpose.

However, it is clear from the events documented in this Section that KDC did not monitor and manage the construction process adequately. There is no need to repeat the detailed concerns we have already outlined in previous Parts. In this Part, we simply make a few overall points.

We were very concerned to see how loose the contract monitoring and management were and how little attention KDC paid to the steps built into the contract to protect the Council from the risk that the scheme would not be constructed properly or would fail to operate as intended. It is largely because of the quality of EarthTech's work that the scheme operates well and has had few performance issues in the last four years of operation, rather than contractual processes designed to protect KDC.

We also have significant concerns about the way in which funding and financing matters were dealt with. In KDC's files, we found no systematic monitoring and reporting of the overall costs of the project against a budget. We are also very concerned about the way in which KDC entered into swaps and transactions.

The relevant parties were clearly all working hard to construct the scheme but made little effort to be clear about exactly what was being built and at what cost. This type of approach is not acceptable for a major public sector project. The PPP context did not remove the need for the Council to be in control of the overall project and for it to be able to publicly account for what was being done.

Given the level of community concern about the project and its affordability, the need to be able to account to the community for exactly what the money was being spent on and why should have been a priority for the Council and its advisers. The poor records and informal decision-making show that this was not the case. We did not anticipate that we would effectively have to reconstruct many of the records of financial transactions and other decisions from scratch while we carried out this inquiry. Appendix 5 summarises the information that we have been able to compile. We regard that information as totally inadequate.

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