Let’s analyse how and why a theatre in Wales is experiencing cost escalation. The Pontardawe Arts Centre refurbishment which is now estimated to cost double the initial budget.
On the go? Why not listen to podcast episode where I discuss the article (click this link for the episode). You can listen on most platforms!
The Value of a Library – The Cost of Everything
The picture of an industrial town in the UK is about transition. The wonderfully ornate, red brick buildings from the early 20th century, towering frontages with the name and established date emblazoned and embossed into the brick arch over the double fronted, solid wood and stain glassed doors.
The building is usually flanked by attempts at regeneration. From the 1960s grey concrete to the early 21st century glass houses with faded white rendering. You might even have a few factories still about, thin metal tubes dominating the skyline, and huge brick walls, preventing you from seeing where these pipes eminate from.
A lot of these towns are struggling, the economy moved away from industrial production a long time ago, but these redbrick halls connect the place and the people to their history. So let’s talk about one such town and how it is regenerating the community using the redevelopment of its theatre.
What was the budget cost?
The Pontardawe Arts Centre is run by Neath Port Talbot County Borough Council in the Welsh Swansea Valley.
It opened in 1909, complete with a theatre, but after its heyday and since the 1980s it was derelict. It was given a new lease of life as an Arts Centre when it was officially reopened in 1996.
In November 2019 the Neath Port Talbot Council commited to building a purpose built 70-seat capacity cinema at the Pontardawe arts centre. The expected investment cost was £600,000, the council putting up 300k and the Arts Council for Wales the other 300k.
In early 2018, before the investment decision was made, the Arts Centre funding was cut by 36%. In the article it states that the budget cost was based on estimates by consultants employed by the Arts Council for Wales in 2019. The estimate of 600k was based on a basic feasibility study.
What caused the cost escalation?
The architectural development followed in September 2020, and the estimated project cost increased to a very specific £1,317,076 plus £100k for contingency. The council agreed in July 2021 to spend another 600k on the project. There was no mention of schedule, of when the project is likely to be finished.
The cost isn’t just to deliver the cinema, the scope includes remodelling the arts centre building. Although, this is more complicated than first thought at feasibility stage. Some scope was missed out completely including breakout spaces, ancillary toilets and external landscaping and removal of existing services.
Interestingly, the article goes on to talk to the council’s director of education, leeisure and lifelong learning in which he states that council officers did not think the original budget estimate would be enough to deliver the project “but the arts council were insistent that if they were going to put their capital funding in then they wantd to do it their way and that’s what had to happen.”
Another compelling line from this, which is worth giving some thought to:
“Our technical boys always thought that the budget cost was never enough but we did have to tow the line from the Arts council if we were to secure their funding”.
Who defined the requirements, and the scope? There are two different investors, the local council and the arts council for Wales. Did they have the same objectives from the project? The local council suggested that in order to get the funding they had to give in to the demands AND THE NUMBERS of the arts council. I haven’t seen the counter from the Arts Council on this, but I think that they would have a different story.
Is the new estimate realistic?
With a not quite 10% contingency, and an estimate that is already nearly a year old before they have started on building, I wonder what the result of further cost escalation would do to the funding?
Unfortunately there are not charts or data tables, just the headline numbers. So, no attempt is made to understand whether this is so expensive, or relatively cheap. There are notional comments made about bringing opportunities to local youth to get involved in theatre and the arts, and some about a boost to the local economy. The economic value is therefore not quantitatively expressed, but is discussed in terms of the social benefits of having such a facility in an area which is short on opportunities.
The only explanation as to why the numbers went up are that things were missed in the scope originally, and that the “numbers weren’t produced by us.” As an estimator I know that the scope can change quickly, especially if an early estimate is optimistic and not carried out with an understanding or agreement of the requirements. Underestimating the complexity of the job seems to have been a problem as well.
To see the tensions between the two funders is really interesting, because they both want the project to happen, and that may have been the cause of the underestimation – some sort of optimism bias?
What do you think? Is the project likely to see another cost increase? What do you make of the decision-makers approach to cost in this example? Leave a comment below.
- The Wales Online article: Link
2. The South Wales Guardian article: Link
Keep up to date
Follow the podcast on Twitter @costofpodcast
Join the LinkedIn page: Link
Share this post: