Public spending on The Picture Palace, a not-yet-completed arthouse cinema in Galway, has run €2.1 million over budget, bringing State expenditure pledged to the beleaguered project to €8.4 million.
The Government’s financial watchdog said there was no overall oversight arrangement in place for the project from the outset, despite the involvement of a variety of public agencies.
The Comptroller & Auditor General found in its 2016 annual report that while the project was sponsored by a private entity, “the State bore the financial risks, which crystallised when the project ran into difficulties”.
The cinema has experienced significant delays and cost overruns since it was first proposed in 2006. Construction was originally expected to begin in 2007 and to take two years to complete. It will not now be completed until January 2018.
“Despite provision of financial assistance from public funds totalling €8.4 million, the cinema is not yet available to the public,” the watchdog said.
Element Pictures, the production company behind films such as The Guard and the Oscar-winning Room, has taken charge of completing and managing the cinema.
The watchdog recommended that the Department of Culture review its approach to projects where the key risks are carried by the State.
“Where projects do not progress as expected, or serious shortcomings are identified with the project sponsor, early action needs to be taken,” said the watchdog.
Funding for the project has come from the department, Galway County Council, the Irish Film Board and the Western Development Commission.
Element Pictures has committed €850,000 to the project and is also repaying a €650,000 loan provided by the commission to the project.
The Irish Film Board has increased its commitment to the cinema to €1 million from an initial €400,000.
After construction began in 2009, the project experienced significant delays caused by severe weather conditions at the outset, unforeseen ground conditions, insufficient project management and structural instability of a neighbouring property.
The department considered several options, including terminating the project, after it encountered difficulties in 2010 and 2011 but decided to proceed on the basis that this would deliver the best value for money for the taxpayer, the watchdog found.
The comptroller recommended that lead funders in such projects ensure that there were “adequate formal oversight mechanisms in place and operated where a variety of funding agencies are involved.”
The department, he said, has agreed to take steps to improve oversight of projects, including training staff to take early action to prevent cost overruns when there are delays and regular management reports to be provided and reviewed.