$99.6m blowout in cost of women's prison appals National

By Mike Houlahan

The Corrections Department pushed ahead with building the Auckland Regional Women's Prison despite not knowing what it was going to cost, official papers show.

The department's financial review shows indicative costs for building the prison were not signed off until three years after work on building the jail began.

The cost blew out from $58.4 million in April 2003 to $158 million.

Aspects of its construction, such as its underfloor heating and landscaping, have already caused controversy.

"These papers reveal Labour didn't have a clue how much this prison was going to cost until three years after construction started," National Party justice spokesman Simon Power said. "That is no way to do business with public money."

The prison, designed to hold 286 inmates, was opened in Manukau City last year.

The Corrections Department's financial review shows that the project's target outturn costs (TOC) - its estimate of costs - were not signed off until August 30, 2005.

Last year the State Services Commission investigated budget blow-outs in the building of the Otago and Spring Hill prisons, which saw $598 million needed to finish the jails when $458 million had been set aside in the 2005 Budget.

Its report criticised Corrections for not establishing indicative costs for the jails before construction began.

Mr Power said it was bad enough that the costs for Spring Hill were not known until 20 months after earthworks began, and 17 months in the case of Otago, but it was three years before the cost of the Manukau jail was established.

"Most commonsense Kiwis would get a concrete price when they are building a new home or business. Not so for Corrections."

Rising costs in the construction sector and decisions to increase the number of beds in the prisons have been cited as factors in the cost overruns. The number of beds in Auckland Women's Prison was expanded from 150 to 286 to cater for more prisoners.

Corrections decided not to delay construction until costings were done because the prison was urgently needed, the department's chief financial officer John Ryan said. The delay in doing the cost estimates was because of the design changes needed to increase its capacity.

"While a target outturn cost may not have been in place, an agreement was in place with contractors ... pending finalisation of the TOC and the collaborative working arrangement, which set maximum levels of expenditure while the TOC was under development.

"Despite this change in size the Auckland Women's Prison project was successfully delivered within a few weeks of when the smaller facility was originally intended to be delivered."

Mr Power said if the rise in the prison's capacity was the main reason for its construction cost increasing by $99.6 millon, that meant each extra bed had cost around $732,000. "That seems completely over the top and unacceptable for the increased cost in building these extra beds."

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