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Council audit of Red Dragon project shows failings

A review by internal auditors has revealed that the Red Dragon housing project in Newtown had significant failings in managing the project.

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By Richard Williams


A review by internal auditors has revealed that the Red Dragon housing project in Newtown had significant failings in managing the project.

The new £3.5 million housing development on the former Red Dragon public house and Maesyrhandir Youth Centre site in Newtown had significant failings, an internal audit report has shown.


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    The report reveals that there was a siloed approach from officers which allowed tasks, such as the creation of a project bank account, to drift or fail. There was also issues around ownership and oversight of the project and a lack of contract management training.

    We reported in November 2023 that thousands of pounds are still owed to Powys firms after the developer, R L Davies and Son went into administration in February 2023.

    The internal audit report also highlights that concerns were first raised about R L Davies in March 2022 when the Deputy Head of Finance raised concerns after their statutory accounts for 2022 were submitted late.

    It wasn't until November 2022 that these concerns were acted upon and the Council "was slow to respond to the potential risk displayed within the accounts and there was a lack of co-ordinated approach from the services".

    Insufficient oversight

    The report also shows that auditors found "insufficient oversight of risks and warning signs throughout the project" which resulted in fragmented project ownership. The lack of a centralised data management system across service areas also "hindered transparency, direction, and awareness of project issues for decision-makers".

    The findings show that there was no electronic signed copy of the contract which could be located, either in the Legal team or the Housing Service.

    Project Bank Account

    The report reveals that a project bank account (PBA) for the project should have been setup, but this responsibility lay with the contractor. There was a lack of following up and monitoring by the Council in ensuring this was created.

    The PBA allows sub-contractors to be paid directly from the Council, ensuring that if the principle contractor goes into administration that funds provided by the Council are protected.

    Auditors have recommended that a series of actions take place to ensure that the issues are rectified for future projects. These include:

    • Signed contracts to be electronically scanned and distributed by Legal Service
    • Additional clauses added to contracts relating to project bank accounts
    • Development of process chart setting out service and function responsibilities throughout the commerical lifecycle
    • Implement contract management training programme
    • Implementation of a new contract management framework
    • New processes around supplier financial risk management including the use of credit checks to ensure financial security
    • Clear signed off minutes of project board meetings

    The Council's Governance and Audit Committee will consider the report at their meeting on the 18th April 2024. The report can be found here.

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