Councilors in Cornwall have been warned that some major projects may have to be scaled back or scrapped due to rising construction costs.
With inflation hitting all industries, the authority has seen the cost of construction projects rise dramatically in recent months.
As a result, the council has already had to scale back some elements of the proposed road linking St Austell to the A30 and warned that other plans, including the development of the Penzance Creative Cluster, will also be considered.
A report to the Cabinet of Council today laid bare the extent of the problem saying council had gone back to government to seek additional funding to cover increased project costs for the A30 link road. The scheme was recently approved by the government, which will provide £78 million for the new road.
However, when the council asked for more money to cover the extra costs of the project, the government refused; instead, the cost will fall on the board. The council also said that some elements of the project, including traffic calming in nearby villages, may now be scrapped due to financial pressures.
The Report to Cabinet states: “An assessment of the effects of the two-year inflation on the contractor’s price and changes in law has been made and mitigated where possible, but this has resulted in an overall increase in costs. The government was asked to finance this increase, but at a meeting of its investment committee on April 14, this was not supported.
“The government has asked Council to support the price increase that we have agreed as a priority under the motorway’s capital programme. There is also some reduction in scope and deferral of follow-up work until after project delivery, which reduces budgetary pressure for major work and minimizes financial pressure on the Board.
The Local Democracy Information Service asked the council what the additional cost was, but the council did not comment. We also asked what the impact of “reducing the scope and postponing additional work” would be.
In response, the council said: ‘Through commercial discussions with our contractor, we have been able to maintain the integrity of the main drawing and maintain the planned cost within our overall budget.
“The reference to narrowing the scope is to complementary measures, such as traffic calming in surrounding villages and roads, which will no longer form part of this funding program.
“However, the council will monitor the effect of the new road when it opens and remains committed to providing appropriate complementary measures, if necessary, within the funding available at that time.”
The board was also asked about the wider impact of cost increases on projects, it said: ‘We aim to ensure that all of our projects take cost increases reasonably into account. However, the entire construction industry is being impacted due to issues such as rising fuel costs, leading to unprecedented cost increases that could not have been anticipated, which is why the program Council’s fixed assets is being revised.
At a meeting of the council’s Economic Growth and Development Oversight and Review Committee yesterday, councilors raised concerns about the rising cost of building the council’s projects.
Tim Dwelly asked if the council had taken into account the additional costs due to rising construction costs in ongoing capital projects such as the Penzance Creative Industry Workspace and the Auxiliary Market. cattle of Liskeard.
He said: ‘The figures do not reflect the running costs found by this council. Are we going to find the money to do these (projects)? »
Phil Mason, Strategic Director for Sustainable Growth and Development, said: “Money is key in terms of extra costs in construction, you’re right that projects are coming in more expensive than we anticipated. when we set up these projects.”
Mr Mason explained that the council results board would make decisions on how the council would proceed, adding: ‘We will look at a program if it has increased and look at how much that is, is that a good report quality-price and do we want to continue with that. The Cabinet, squarely, will make those judgments with the results delivery board.
But Mr Mason warned that the council could not just keep increasing the size of its capital program to cover projects that had already started, as there was also a need to fund new projects.