Sunk costs: Suffolk writes off £8.3m as it halts bridges project

23/01/2019
Chris Ames

Suffolk County Council is set to scrap plans to build three bridges on the River Orwell in Ipswich, despite having already spent £8.3m in development costs.

Dropping the scheme also means the council will lose the promised £78m of potential Government funding allocated to the works.

A report on the Upper Orwell Crossings project to the council’s cabinet recommends stopping the project with immediate effect, on the grounds that the council has been unable to obtain the additional funding of up to £43m required.

The main bridge would have crossed the river below Wet Dock island

A review by Jacobs last autumn had identified a significant cost increase, after which the project was ‘paused’.

The report to councillors states: ‘The estimated cost in the Outline Business Case was £96.649m. The Jacob’s Report has confirmed that the latest estimated cost falls between the range of £121.553m to £139.785m.

'Given that the current DfT [Department for Transport] contribution is £77.546m and the Council previously committed to the DfT that it would underwrite a local contribution of £19.103m, this leaves an additional capital funding requirement of up to £43.136m.'

It adds: ‘The report is urgent so that the existing project can be stopped and the existing project team structure disbanded so the County Council ceases, as soon as practicably possible, to incur cost.’

The main planned bridge would be cancelled outright, while the council will continue to seek funding for the two smaller bridges onto Wet Dock Island, one of which would involve the refurbishment of an existing bridge.

The report acknowledges that ‘the DfT funding of £77.546m to the project will be lost to Ipswich if the project does not proceed’.

In addition, the council report notes that £3.6m revenue and further £4.7m of capital funding has been spent (or committed) on the project.

It states: ‘If the existing scheme is stopped the Upper Orwell Crossing capital spend will have to be written off to revenue and funded from a revenue reserve. The total Suffolk County Council expenditure on the scheme will be approximately £8.3m (subject to final closure of the account).’

The report adds: ‘The largest component of the spend which has occurred is the use of external experts and contractors (c£7.3m) and covers items such as external members of the project, ground investigation and insurance. The second largest item is the in-house project team itself (£520k)’.

Matthew Hicks, council leader and cabinet member for economic development and infrastructure, said: ‘We are still prepared to commit financially towards the costs of building the two smaller bridges, providing we can find significant funding partners to work with us and up to a maximum of £10.8m, which respects the overall commitment we made in 2016 towards the local contribution, less the costs incurred to date.

‘It is very disappointing that we have been unable to secure any additional funding for the Upper Orwell Crossings and that the existing project will have to stop with immediate effect. We have exhausted all funding opportunities including The Department for Transport, HM Treasury, local businesses and other stakeholders.’

The council said the cost increase was ‘due to a range of factors including ground investigation costs, changes in bridge design post consultation and unforeseen procurement costs’.

The council’s cabinet will consider the report next Tuesday (29 January).

Highways has approached the DfT for comment.

Highways jobs

Definitive Map Manager

Cambridgeshire County Council
£32,825 - £35,401
This role is based within the Highways Service at Cambridgeshire County Council and provides an unusual and... Cambridgeshire
Recuriter: Cambridgeshire County Council

Bridge Park Operations Manager

Brent Council
£38,799 - £41,706 p.a. inc.
This is an exciting opportunity to play a key role in managing the operations and contributing towards the... Brentford (City/Town), London (Greater)
Recuriter: Brent Council

Assistant Engineer

Cambridgeshire County Council
£21,074 - £30,756
A great opportunity for someone looking to start or develop a career in Highways Engineering including the... Cambridgeshire
Recuriter: Cambridgeshire County Council

Head of Strategic Transport

Cheshire East Council
£64,000 - £75,000 + benefits
We’re committed to “working for a brighter future together” – and we expect you to be too! Cheshire
Recuriter: Cheshire East Council

Regeneration Manager

Mole Valley District Council
£52,895 - £57,143 FTE
This is a great career opportunity to specialise in town centre regeneration and repositioning. Dorking, Surrey
Recuriter: Mole Valley District Council

Technical Services Officer (Mechanical)

Kirklees Metropolitan Council
£36,876 - £38,813
This is an exciting and challenging time for Kirklees and we want to expand our team to manage and deliver construction... Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council

Road and Footway Asset Engineer

Kent County Council
£28,925 per annum
An exciting opportunity has arisen to join the Road and Footway Asset Team as an Asset Engineer. Kent
Recuriter: Kent County Council

Head of Waste

Lincolnshire County Council
£65,651 - £70,725
As Head of Waste, you will be commercially focussed and forward-thinking. Lincolnshire
Recuriter: Lincolnshire County Council

Assistant Director

Reading Borough Council
Up to £92k
It’s the ideal time to take the lead on our modernisation agenda, and deliver growth in the trading of our front line services. Reading, Berkshire
Recuriter: Reading Borough Council

Assistant Director – Highways

Lincolnshire County Council
£82,264 - £107,878
Come and lead the future agenda for our highways services. Lincolnshire
Recuriter: Lincolnshire County Council

County Highways Manager

Lincolnshire County Council
£55,503 - £60,578
Seeking a highly motivated leader and an excellent communicator, who has a proven ability to build relationships and trust, leading by example. Lincolnshire
Recuriter: Lincolnshire County Council

Local Highways Manager (East) - Lincolnshire County Council

Lincolnshire County Council
G12 £43,662 - £50,430
Seeking someone who combines excellent technical knowledge with a dedication to the customer. Lincolnshire
Recuriter: Lincolnshire County Council

Download your Highways App

Google App Apple App

Highways on Fridays

Latest Issue

latest magazine issue

Latest Issue

The ALARM survey 2019

Game over for flyovers?

Traffex, Parkex and Cold Comfort Scotland previews

View the latest issue

Latest Video