Government agency stripped of Niels Bohr Building control

The Danish Building and Property Agency, which manages and leases buildings to institutions like the University of Copenhagen (UCPH), has not been able to manage the construction of the Niels Bohr Building and other major construction works.

The Niels Bohr Building, according to the latest calculation, will cost DKK 1.3 billion more than originally planned, at a total price of  DKK 2.9 billion.

This is according to the auditors Ernst & Young in a report (in Danish) published on 1st November.

The investigation – an “external scrutiny”, as the ministry calls it – was commissioned before the summer when it became clear that the budget and schedule had been overrun on several of the Building and Property Agency’s projects, including the Niels Bohr Building and the (now almost completed) Maersk Tower. At the same time, the Agency had been tied up in legal disputes over all ongoing major construction cases at the University of Copenhagen.

Instead of the Building and Property Agency, the Danish Road Directorate is now to ensure that the existing construction projects are completed. At the same time, the Director of the Building and Property Agency has resigned.

After the University Post and since then the news site Politiken have written about the problems with the Niels Bohr Building, pressure has increased on the Building and Property Agency and its politically responsible Minister for Transport, Building and Housing Ole Birk Olesen (LA).

The Minister is to explain the problems in parliament

Ole Birk Olesen is to explain the delays and cost overruns in a closed session of the parliamentary finance committee, where questions will include one from the committee’s vice-chairman, the social democrat Benny Engelbrecht:

»Will the minister explain the role of the Building and Property Agency in the light of the cases of cost overruns on buildings at the University of Copenhagen, including whether he considers that the role of both the property owner and property administrator is appropriate?«

As for the last part, the minister will be able to answer that the Agency no longer owns certain projects, as they now reside with Road Directorate.

However, it still leaves the question of who will pay for the expensive buildings. According to the so-called SEA scheme, which the University of Copenhagen as a tenant of the state is subject to, the university will pay the bill – through its rent payments – no matter how much the Building and Property Agency exceeds its budget.

However, UCPH has (often) protested against this scheme, and, Chairman of the Board Mads Krogsgaard Thomsen recently informed the Agency that UCPH will »claim compensation for overruns / additional costs after May 2018, imposed on the University of Copenhagen as a result of the situation with the Niels Bohr Building,« writes Politiken.

Even before the threat of a lawsuit against the Building and Property Agency, UCPH has made it clear that it might never take over the Niels Bohr Building.

The Building and Property Agency, however, has played hardball and announced that UCPH has contractually committed itself to renting the Niels Bohr Building for 10 years. This dispute is not automatically solved just because the Road Directorate assumes responsibility for construction.

UCPH management had »no comment« 1st November to the news on the Building and Property Agency.

New message from the minister

The University Post asked the Minister of Transport who it is that will pay the bill for construction projects with cost overruns.

Ole Birk Olesen says to Politiken on 2nd November that UCPH does not have to pay the majority of the additional costs for the Niels Bohr Building.

»Part of the cost overrun is due to the fact that the university has required some changes to the construction, and the university has to pay for this of course. But that’s not most of it. The largest part of the extra bill comes from having to replace a contractor and carry out new plumbing and electrical work,« says Ole Birk Olesen to Politiken. He puts no precise figure on how much UCPH does not have to pay.

Opening for ownership debate

The placement of responsibility for the debacle on the Building and Property Agency will give new ammunition to the UCPH management’s long fight to take over ownership – and responsibility – for the university buildings, which other universities like the Technical University of Denmark (DTU) have.

In 2015, all three governing parties were supporters of UCPH ownership. The Liberal Party, however, changed its position when the party came into government that year. The reason for the change of mind was a secret.

The current system, where the University of Copenhagen and other tenants lease their buildings from the state, brings in a half a billion kroner surplus – i.e. money for education and research that goes straight back to the treasury.

DTU has 1st November inaugurated a new DKK 1.1 billion research building which, according to the University Post’s information, was built on time and within budget.