Outside firm caused cost blow-out

A budget blow-out in the University of Otago's upgrade of Toroa College was caused by a $1.335 million mistake made by a staff member of an external quantity surveying company.

Further details of the blow-out were revealed at yesterday's university council meeting.

As of the end of June, the cost of the project had ballooned to $3.925 million against a budget of $3.01 million.

Council member Roger Tobin asked at the meeting whether the ''significant error'' meant a review of how the university costed building projects was needed.

In reply, chief operating officer John Patrick said the mistake was made by a staff member of an external company.

''The quantity surveyor has been spoken to and our understanding is that the staff member that made the mistake no longer works for [the firm].''

He was unsure if the staff member's departure was as a result of his work on the project.

Mr Patrick said the university picked up the mistake last November, after the project was approved in August based on the mistaken cost estimate.

After the $1.335 million mistake was found, the university ''immediately set to find cost savings'' and the blow-out was reduced to $748,000, which meant the project was still commercially viable.

Without the cost savings, the project, which involved adding 20 rooms and a large common space, would not have been commercially viable, he said.

Because the mistake was found after its last council meeting for the year, the difference was funded from vice-chancellor Prof Harlene Hayne's ''discretionary capital fund'' as an ''approved over-spend''.

A further $250,000 was added from the university's accommodation services budget after it was decided to upgrade additional rooms while contractors were on site - meaning, in total, it was ''about $1 million'' over budget.

Both Prof Hayne and council member Judge Oke Blaikie commented on how pleased residents were about the upgrade when the council visited the college last month.

''They were just immensely grateful for what had happened,'' Judge Blaikie said.

The university yesterday declined to reveal the name of the external company.

vaughan.elder@odt.co.nz