HIGH demand in the construction industry and mistakes in a contract caused the Rose Hill Community Centre’s cost to spiral by nearly half a million pounds, a report has found.

Senior councillors at Oxford City Council ordered an investigation after approving a £478,000 increase of the budget from £4.286m to £4.764m in September.

They were warned that without the rise, plans for the centre would have to be scaled back.

Rose Hill city councillor Ed Turner, deputy leader and executive board member for finance, said: “The report identified important areas where we need to improve and I will be meeting with officers imminently to discuss how we are going to do that.

“We want to learn from this, but we make no apologies for wanting the best possible community centre for Rose Hill.”

Thames View Road resident Peter Wilkinson, 71, said the building was “direly needed”.

He added: “People here could not really afford to have anything less than what was promised.”

A report produced by the council’s auditor, PwC, said the budget overran because high demand in the construction industry drove up prices.

But it also said staff on the project team made mistakes when advertising the construction contract and had not kept track of rising costs.

Only two firms bid for the contract and both requested more than the approved £4.286m budget, despite expectations that competition would drive the price down, The report also said concerns were raised about the number of changes made to the contract while it was being advertised, as well as the number of requests for clarifications from bidders.

“The majority [of requests] focused on errors, ambiguities or omissions within the original tender package,” it said.

It also speculated that the number of changes and queries could have put some bidders off, or even resulted in “higher than expected tender values, based on a perception of a high risk opportunity”.

One of its recommendations said a “bidders’ day” for interested companies could have revealed the budget issues earlier on. It also said there was a need for “clarity and understanding” about roles on the project team.

Head of finance, Nigel Kennedy, said officers were now trained to be “clear on project roles and responsibilities” and that a new process for all projects worth more than £100,000 had been put in place for before they were tendered.

Audit and governance committee vice-chairman Jean Fooks said: “Construction costs did go up, but this is still a particularly bad case and I will be asking officers questions about it.

Construction of the new centre started in November and the building is expected to be finished before the summer. It will bring several existing services under one roof and also house a community gym, a kitchen and a new office for the police.