Guided bus delay will affect Cambridgeshire County Council's cash flow says audit chief

Friday, January 22, 2010
12:49 PM

By John Elworthy THE county council admitted today that disagreements with them and the contractors building the guided bus way will affect the authority s cash flow. Talks over the costs of building the bus way remain unresolved and this resolution pr

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By John Elworthy

THE county council admitted today that disagreements with them and the contractors building the guided bus way will affect the authority's cash flow.

Talks over the costs of building the bus way remain unresolved and "this resolution process is likely to be protracted, having cash flow implications for the council".

The difficulties were revealed by Helen Maneuf, head of audit and risk management at the council, whose update will be reported to next Friday's meeting of the audit and accounts committee.

Ms Maneuf said that under the contract payments a 'pain/gain' mechanism is used to divide over or under spends between the client and the contractor once the contract is complete.

Final costs of the bus way cannot be calculated until this 'pain/gain' mechanism comes into force and for this to happen all parties need to reach agreement on the final target price.

"In order to reach this final target price it will be necessary to resolve a number of compensation events (which have cost implications) not yet agreed," says her report to councillors.

"This resolution process is likely to be protracted, having cash flow implications for the council. We have therefore recommended robust management of this risk area going forward."

Ms Maneuf says that in respect of financial management, her team noted the need "for full financial disclosure will increase in importance as the project nears completion". Her review highlighted, for instance, a required correction in the VAT treatment of "delayed damages invoices".

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