A damning report from the Auditor-General has criticised Tauranga City Council over the failed Harington Street transport hub project.

In today's letter to council chief executive Marty Grenfell, it's stated that 'price was prioritised over ability” when selecting the tender for the project.

'There was no business case or any overall procurement plan for the project,” states Office of the Auditor-General manager inquiries Dave Lemmon.

The Auditor-General notes that elected council members had not settled on the final design and intended outcome for the project before procurement started.

They also state that no risk assessment for the procurement plan and no written procurement plan happened.

'Little if any consideration seems to have been given to the approach to procurement for the project overall,” states Lemmon.

Regarding structural engineering, the Auditor-General's office is critical of a process which saw the documentation and timeframe for the procurement of a structural engineer stretch over just 17 days.

'Some tenders appeared to have been evaluated based only on price and without assessing the tenderer's ability to meet the tender requirements,” says Lemmon.

However, the result has been the opposite.

'In the end, the council will have nothing to show for the money it has spent,” says Lemmon, at the start of the letter.

It was estimated that it would cost $9.8 million to demolish the building and restore the site. The council decided not to demolish the building, and instead on March 19 sold it to Waibop (Harrington) Limited, a subsidiary of the lead project contractor, Watts and Hughes Construction Group Holdings Limited for $1.

Selling the unused material and structural steel and the negotiated settlement of the construction contract resulted in a final payment of $200,000 to the Council.

Council CEO Marty Grenfell says he welcomes the letter and recognises the failures in the procurement and management of the project.

'Prior to the Auditor General's interest in this matter, we had commissioned two independent reviews and the recommendations from these, and the Auditor-General's letter, are in the process of being implemented,” he says.

'We have put in place a range of measures to improve project delivery, governance and procurement processes. This has included the disestablishment of a standalone Project Management Office and the transfer of direct accountability for delivering capital projects to the business units which will ultimately be responsible for the asset.

'Central to this reform is the new Capital Programme Assurance Division (CPAD) and new Procurement Policy.

'The draft Long Term-Plan has an extensive programme of capital projects and the creation of CPAD will support our project delivery with increased capability, expertise and confidence.”

Lemmon concludes his letter, 'I will be interested in what progress is made with the improvements to policies and procedures, especially as they relate to procurement.

'Although there is often pressure to complete projects quickly and for least cost possible, obtaining value for investments such as this one can require time, expertise, and the discipline of good procurement and project management processes.”

In March the council also initiated a complaint against the building designer with the sector's professional body, Engineering New Zealand, in relation to the failure to provide a compliant building design.