Its ammunition comes from last month's National Audit Office report into 15 theatre, gallery and arts centre projects. The report demonstrated that major lottery-funded schemes had more than fulfilled doom-and -gloom predictions of being overdue and over budget. Seven were behind schedule, six were more than 10% over budget and eight had gone cap in hand to the Arts Council to ask for additional lottery funding.
The main question Hewitt will have to answer is whether the Arts Council's project appraisal and monitoring procedures are robust enough to deal with complex projects overseen by inexperienced clients. The evidence in the NAO report is decidedly mixed, with case studies demonstrating that monitors have been late in providing information or too inclined to take clients at their word without making independent checks.
Construction is an inexact science, and even the best monitored projects can fall victim to skills shortages, lengthening lead times or client U-turns. In other words, not every problem can be laid at the council's door. However, the NAO report still identified worrying shortfalls in its monitoring of major projects such as the Victoria Hall and Regent Theatre in Stoke-on-Trent, and London's Royal Court Theatre and Royal Opera House.
The Arts Council has accepted the main thrust of the report, and argues that past and ongoing changes to its procedures will answer most of its criticisms. However, the Public Accounts Committee will be urging it to ensure that the monitoring process is completely watertight before the grant distribution process enters its second phase.
Capital Programme I, which has so far distributed more than £1bn to more than 2000 projects, is being wound up, to be replaced this autumn with Capital Programme II. Details of how this will operate are not due until later this summer, but since it will reflect the reduced share of lottery funds the Arts Council has to distribute, CP II is likely to set tougher standards for lottery grant applicants.
When the council began distributing grants in 1995, its monitoring procedures were agreed to be fairly sketchy. "When the lottery process began, monitoring probably wasn't as rigorous as it could have been," says Geoff Seeff, director of QS Widnell. One lottery-funded theatre client recalls that a system of "self-monitoring" was in place, whereby he was simply required to fill in a form once a month.
The council subsequently employed a panel of construction consultants to monitor how grant recipients are spending their money. Firms including Gardiner & Theobald, Davis Langdon & Everest, Widnell, and Jackson Coles supply staff to work for the council on a day-rate basis, attending one or two project meetings a month and filling in monthly progress reports. They then report back to the council's 17-strong team of lottery project officers. Their fees average £400-450 a day.
What do project monitors do?
The remit of the consultants is hard to pin down. Monitors are not project managers, since responsibility for delivering the project lies with the client and its team of specialists. But despite the NAO's description of them as the "eyes and ears" of the Arts Council, monitors are not just passive observers and note-takers. In meetings, they might be expected to come up with a range of options or suggest alternative strategies. "It's the monitor's role to make observations, but they can't cross the fence and start to run the project," says G&T partner Peter Sanders.
It’s the monitor’s role to make observations, but they can’t cross the fence and start to run the project
Peter Sanders, Partner, Gardiner & Theobald
In some cases, the building monitors are joined by specialist business case monitors, charged with looking at partnership funding arrangements and revenue forecasts. But, as the NAO report makes clear, the monitors' efforts are not always enough to identify problems before they threaten the programme and budget. Examples of projects in which building monitors had difficulty in extracting timely information from the client include Sheffield's National Centre for Popular Music and Stoke-on-Trent's Regent Theatre and Victoria Hall; partnership funding crises arose on the Royal Court Theatre, Sadler's Wells Theatre and the Royal Academy of Dramatic Art.
In these complex projects, delays in the construction process and funding crises are often closely interrelated. A weakness of the Arts Council's system identified by some building monitors is the indirect link between the monitors and their business case counterparts – communication has to be relayed through the Arts Council's heavily burdened project officers. "The links [between the two types of monitors] could be closer. We do work with them but it's one area that could be improved," says Widnell's Seeff.
Other monitors and consultants make the point that the Arts Council could draw lessons from its sister distributor the Heritage Lottery Fund, which divides its construction projects into low- and high-risk categories, depending on their size and complexity. It then uses this assessment as the criterion for allocating its monitoring resources. The contrast between the two distributors' approaches is even starker considering that projects funded by the Heritage Lottery Fund are typically refurbishments with lower risks than new build.
Architects involved in Arts Council-funded theatre projects point out that they are among the most complex of building types, with a predisposition to problems in the final furlong. Bland Brown and Coles was architect for the redevelopment of Cambridge Arts Theatre, and partner Barry Brown describes how, in the final months, "the contractor wanted to pour people on to it to finish it off, but that means the finishes and carpet get mucky. Then, people doing fine wiring are trying to concentrate while someone else is jack-hammering bits of concrete."
As with Sadler's Wells and the Victoria Hall and Regent Theatre in Stoke-on-Trent, claims and confusion can often breed in such an atmosphere. Brown believes that earlier involvement from the project monitor would have helped in the Cambridge project, and the council has revised its procedures to reflect this since the project was completed. However, the frequency of problems in the latter stages of lottery projects suggest that the council could still benefit from re-examining how it spreads monitoring resources over the life of the project.
Another issue raised by designers is that the nature of the procurement route can mean monitors are struggling right from the start. "A number of jobs seem to get on site with various forms of management contracts, where you start before you know what the costs are. A traditional contract is the easiest to monitor – it's unrealistic to do the job properly [using construction management or management contracting] if you're looking at 80 packages," says an architect involved in one problem-ridden project. Schemes carried out under such contracts include Sadler's Wells, the Royal Court Theatre and Salford's Lowry Centre.
As the architect acknowledges, the clients' rationale for choosing construction management or management contracting is that it can be quicker and is more likely to deliver a project by a given date than the traditional route. But he says the council and its monitors – which are sometimes asked to advise clients on the form of contract – should be aware from the outset that non-traditional contract forms may require greater monitoring resources.