Prime Minister Malcolm Turnbull has demanded an independent audit of the refurbishment of The Lodge amid concerns that repeated changes to the project during the Abbott era may see the total cost blow out to a staggering $15 million – five times the original forecast.

Mr Turnbull and his wife Lucy moved into the prime minister’s residence in Canberra two weeks ago, after a refurbishment originally commissioned in the Gillard/Rudd era was finally completed.

The blowouts at The Lodge have been an ongoing source of controversy within the public service, amid rumours of continuing interventions by senior figures in the government which led to repeated contract variations.

While the published figures for the rescoped renovations have risen from $3 million to $9 million, it is believed the number has now increased to $12 million and there are fears it could reach $15 million.

Project review

Sources say the Department of Finance engaged the firm Projects Assured in late January to undertake an independent project review amid concerns about how variations to the original contract were made.

At the same time, it is understood the Department of the Prime Minister and Cabinet engaged heritage and environment lawyer David O’Donnell to oversee the review process and report back for a capped fee of $20,000, by the end of this month.

The terms of the review focus on multiple contract variations between September 2013 and last year, and seek to “determine the percentage of costs which can be reasonably attributed to latent conditions, design omissions or increase in scope”.

The review is also to establish “the process by which additional scope (not identified as a latent condition) was approved and how decisions were made to increase or change scope, where approval resulted in an increase to the contract”.

Kevin Rudd and his family moved out of The Lodge in September 2013, after Labor lost government, and Mr Abbott never moved in while the work was undertaken. The original cost estimate published was $3.1 million. But the original contract and costs were amended more than 15 times during 2014 alone.

Information blocked

The Canberra Times reported in May 2014 that Mr Abbott’s office had blocked the release of information on the project, telling Finance Department officials not to provide any explanation for giving “purposefully vague responses to requests for information from the newspaper”, including a site visit to report on progress.

One senior bureaucrat said Mr Abbott’s staff could be concerned about privacy or a poor reaction to the information being made public.

The paper reported that the Finance Department official instructed a colleague via email: “Just say the visit has not been approved and you are unaware of the reasons. Don’t identify PM & C or the PMO as the decision makers, just leave it vague.”

Work to repair the slate roof, remove asbestos, upgrade security features and replace electrical wiring and climate systems began shortly after Mr Rudd moved out.

Subsequent delays were blamed on “significant heritage issues and required approval processes”, reportedly related to the search for bathroom and toilet fittings and 1920s-style floor tiles that met strict heritage requirements.

The Abbott government remained highly resistant to attempts to find out more about the work, the Finance Department telling the Canberra Times last year that its freedom of information request would cost $67,825 to access 980 pages of documents in one year alone – which explained why refurbishment works were a year behind schedule.

There were yet further changes to the scope of works to include security systems, “functionality and liveability” improvements to living areas and bathrooms, work on rundown external guard houses near the property’s walls, and new balcony balustrades.

The renovations also included new light fittings, a new kitchen, replacement of insulation, upgraded plumbing, and internal and external painting.

By the time the work was completed, there was also a new “luggage lift”, soft furnishings, outside toilet facilities and a new shed for the gardeners.

A spokesman for Mr Turnbull referred all inquiries on the matter to the Department of the Prime Minister and Cabinet.

This story first appeared in The Australian Financial Review. Read it here or follow the Financial Review on Facebook.

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