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Seven-year hospital upgrade in North Wales cost over £60 million more than originally approved

07 September 2020
  • Complex £171 million programme of asbestos removal and refurbishment at Ysbyty Glan Clwyd was completed successfully only a few months later than planned

    Our report sets out the key factors contributing to the significant increase in project costs

    Following two asbestos-related incidents in 2010, the need for action to strip asbestos from Ysbyty Glan Clwyd became considerably more urgent, driven by statutory improvement notices issued by the Health and Safety Executive. Early in 2011, Betsi Cadwaladr University Health Board (the Health Board) applied to the Welsh Government for capital funding to remove the asbestos and refurbish the hospital.

    In 2012, the Welsh Government agreed funding of £110.4 million. The complex process of stripping asbestos and removing some 300,000 tonnes of contaminated waste from the site of a ‘live’ working hospital was successfully completed in 2019, only a few months later than planned, but at a cost of £170.8 million, almost 55% more than the original approved budget.

    Our review found that:

    • The Health and Safety Executive’s 2011 deadline for the Health Board to provide a plan to remove asbestos from the hospital created challenges for both the Health Board and the Welsh Government.
    • Weaknesses in the business cases were not fully addressed by the Health Board and the Welsh Government before the final business case was approved.
    • Significant deficiencies in the Health Board’s governance and management of the project were identified in 2014, when it became clear that the capital funding provided by the Welsh Government was insufficient to complete the project.
    • The project has cost the Welsh Government £53.2 million more than the original agreed funding. The Health Board has also provided a further £7.2 million from its own resources.
    • Both the Health Board and the Welsh Government have taken steps to strengthen their approaches to managing and approving capital projects.
    This report demonstrates the fundamental importance of good governance and robust oversight of complex capital projects. Whilst the complex refurbishment has been delivered largely on time, the very significant cost overrun might well have been avoided if concerns about the original business case had been properly addressed at the outset. The lessons learned by both the Health Board and the Welsh Government from this project are of relevance to all Welsh public bodies engaged in major capital programmes.

    Notes to Editors:

    • The Health Board and its contractors have successfully completed the complex process of stripping asbestos and removing some 300,000 tonnes of contaminated waste from the site of a ‘live’ working hospital. At the same time, the project has enhanced facilities at Ysbyty Glan Clwyd that will provide patients and staff with a better experience and environment. The additional facilities include:
      • state-of-the-art operating theatres and departments;
      • a new emergency quarter;
      • new wards and the refurbishment of existing ones;
      • a new pathology department;
      • a new critical care unit;
      • refurbished x-ray and outpatient facilities; and
      • a new catering department.
    • As a factual account, this report draws no conclusion about the extent to which the project represents value-for-money to the public purse.
    • The Auditor General is the independent statutory external auditor of the devolved Welsh public sector. He is responsible for the annual audit of the majority of the public money spent in Wales, including the £15 billion of funds that are voted on annually by the Welsh Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £7 billion) and to local government (over £4 billion).
    • The audit independence of the Auditor General is of paramount importance. He is appointed by the Queen, and his audit work is not subject to direction or control by the Welsh Parliament or government. 
    • The Wales Audit Office (WAO) is a corporate body consisting of a nine member statutory Board which employs staff and provides other resources to the Auditor General, who is also the Board’s Chief Executive and Accounting Officer. The Board monitors and advises the Auditor General, regarding the exercise of his functions.
    • Audit Wales is the umbrella name for the Auditor General for Wales and the Wales Audit Office. Audit Wales is a registered trademark, but it is not a legal entity in itself.

    Related Report

    The Refurbishment of Ysbyty Glan Clwyd

    View more