V & A construction cost calamity

Wouldn’t you just know it? After the mega cost overruns on the Scottish Parliament and the Edinburgh trams project, you might have thought that the process of estimating construction costs for the Dundee V & A would have been given microscopic attention to detail. If it was, then the microscope must have been badly out of focus. Instead of the original £45m, construction costs are now estimated at an eye-watering £80.1m. Ouch. If my estimate is correct, this isn’t far off double the original amount.

Let’s be honest, that amount always seemed optimistic for such a prestigious project. It would barely cover the signing of a top flight Premier League football player. Nonetheless, to be so far out of the box smacks of words like piss up and brewery or ashtray and motorbike.

Who actually made the original estimate? Perhaps I’m a simpleton, but didn’t the architect have some idea that his plans might come in due north of £45m? And who checked the detailed costings before signing off on the deal to go ahead with the architect’s vision? We shouldn’t forget that the building has already been shifted inland to save precious cash.

The process of spin, obfuscation and buck passing will now kick off in earnest. Dundee City Council leader Ken Guild put a brave face on the shock news: ”The mood we find in Dundee is not a concern about an increased price. This is a capital cost, not a revenue cost, which can be spread over a longer period, so it has no direct effect.” Right, that’s clear then. Or is it? Why am I reminded of former Prime Minister Harold Wilson’s claim about the “pound in our pocket” not being affected by the (then) humiliating devaluation of the pound in 1967?

The fact is that increased spending has an opportunity cost. More spending on the V & A means less spending on schools and hospitals. At a time of high unemployment and food banks in Dundee, many will question the worth of this project.

I’ve been a big supporter of the V & A, and I hope it goes ahead. As a former economic forecaster I understand the risks and uncertainties associated with peering into the future. Estimates are never precise. But the gap between the original and revised V & A costing is jaw dropping, verging on calamitous. Ordinary punters like you and me, who ultimately finance the lion’s share of this project’s costs via general taxation, have a right to know why the mistake happened.