Original Estimates for Terminal Were ‘Optimistic’

A report into the Liverpool ferry terminal debacle has concluded that decisions were rushed and the original estimates were over optimistic.

The report, published today, follows a review by the Public Accounts Committee of Tynwald.

That investigation found that a scheme priced at £50m or more would’ve proved harder for the DoI to get Tynwald approval.

In April 2015, it was estimated that a new ferry terminal in Liverpool could be built for £18m but by December 2021, this cost had spiralled, landing the taxpayer with a bill of £70.7m.

In its report, the PAC, chaired by Juan Watterson SHK, said that they believed those initial estimates were ‘optimistic’ but did note that two tenders for the scheme were in the region of £25m.

Recognising that the spiralling costs of the scheme has been the greatest source of discontent, the PAC said: ‘A scheme priced at £50-£70 million at the outset would have been a far harder political ask for the Department of Infrastructure, even in light of the strategic link and public popularity of the Liverpool link.’

It added: ‘Whilst some of the cost increases were unavoidable, most notably Covid-19 which added around £4m. The process for setting a sufficient, and realistic, contingency budget is one of the areas we recommend is in need of review.’

The committee has also concluded that ‘it is hard to provide a value for money assessment for this project’ and that ‘it is almost impossible to know, even with the benefit of hindsight, whether the right amount of money has been spent’.

The need for a new terminal came about as the lease with Peel Ports, which owns the site of the existing Pier Head landing stage, was coming to an end in December 2016 and Liverpool City Council had plans to expand its cruise liner facilities in the area, meaning the Steam Packet, which does not own the new site, had to find a new base for its Liverpool operations.

Recognising this and the overwhelming public demand for a continued service to Liverpool, with which the island has had a largely unbroken annual service with since the formation of the Steam Packet in 1830, the committee said these issues were ‘significant factors ‘which limited the department’s options and affected the decisions being made during this early stage of the project’.

However, it added: ‘From the evidence we have seen it is difficult to understand why alternative location options were still being considered in 2018. Given the Thames Head report, although commissioned after the fact, appears to support the earlier decision that Princes Half Tide Dock was the only realistic option at that time it was perhaps a distraction and unnecessary use of resources.

‘We conclude that, while it may not have changed the recommendations approved by Tynwald, work on identifying replacement options began far too late; it is not clear why work was not scheduled further in advance.

‘The imminent threat in December 2016, of the end of the IOMSPCo agreement with Peel Group for the use of the existing landing stage, led to this important strategic decision being rushed.’

The report does make clear that the Princes Half-Tide Dock site was the only feasible site by 2018 when Thames Head was brought into the scheme but that if the specialists had been brought in earlier than alternative considerations may have been made.

That report however suggested that the island would be better served by ending the fast-craft service to Liverpool and suggested that a review of socio-economic needs of the island might be better served by two smaller RoPax ferries.

Thames Head also considered that Sandon Dock, just under a mile closer to the river mouth may be a viable place for the Steam Packet to dock but ultimately ruled it out due to service needs of the company and passengers.

The PAC has also criticised a lack of political oversight of the scheme.

Chair Juan Watterson SHK said: ‘The Isle of Man Ferry Terminal in Liverpool was a project with a rushed delivery timescale, which was inadequately planned and proved to be hopelessly ambitious in its initial budgeting.  Our comprehensive report provides an account of the project’s early stages and sets out how a capital project estimated at £18m, will escalate to around four times its initial cost.

‘Whilst many of the factors in this project were unique: Covid-19, location, and complexity, there are definitely things that can be improved, as reflected in our recommendations. This story is not yet over, but the Committee has fulfilled its obligation to Tynwald and the Manx taxpayer in examining what happened and in identifying what we expect to see to improve value for money in future projects.’