COUNCIL chiefs are taking a reality check as they weigh up the risks linked to the Weymouth Pavilion redevelopment.

A snapshot of the current situation makes for grim reading as Weymouth and Portland Borough Council officers consider the effects of the weak housing market and the possibility of developer Howard Holdings not being able to fund the development due to the economic climate.

They are also considering the risk the development may not be completed by its target date of 2012.

The potential pitfalls are listed in a risk management report which is drawn up regularly for the benefit of councillors so they have a true picture of where the project stands.

The report identifies current risks, makes an assessment of their impact and likelihood, and lists what counter-measures have been put in place.

There's encouraging news in the report too as it reveals a provisional agreement has been reached with Network Rail over the removal of a section of the harbour tramway.

And Condor Ferries has agreed in principle to take a minimum five to 10-year lease of the new terminal facility, the report says.

It also acknowledges that the ferry terminal could be redeveloped separately in the future if Condor ever did pull out of Weymouth.

Internal audit manager Dave Hill will remind councillors that the assessment is a "snapshot" and the report must be updated regularly.

He points out in a report that in order to reduce the risks to the council, the vast majority of the financial risk has been passed on to its development partner, Howard Holdings.

Furthermore, experienced legal advisors and property surveyors have been appointed from outside to support the council, plus officers have taken on board recommendations from the Audit Commission which conducted a review recently.

Among the planning risks considered is a possibility agreements are not reached over the affordable housing provision.

The report says sites around Weymouth have been put forward but not yet legally secured by Howard Holdings.

Responding to planning process issues the report says although the development brief has been approved the planning application due to be submitted in early August has been delayed.

Discussions have been held with officials over whether the plan will be "called in" by the Government.

The development risk of Howard Holdings dropping out is reduced because it has a co-funder, real estate investment management group Europa Capital, to share the risks in the pre-application. But the current state of the housing market and development finance market increases this risk, the report says.

This is also considered when weighing up the possibility that Howard Holdings may not be able to fund the development.

But the partnership approach to funding involving Europa Capital may alleviate problems in the housing and development markets.

It is also acknowledged that there are significant signs' of the housing market weakening and there is a risk units will not be sold before the planned completion date of 2012.

Regarding the World Heritage Centre planned for the site, the report says discussions are under way to secure grant funding in the event it loses revenue, but it could always be used for commercial leisure if funding is not forthcoming.

If the council did not have a contingency plan in place there would be a "significant delay" resulting in the scheme not being achieved until after 2012.

The council's Audit Committee which meets next Tuesday will review the risks and pass on its comments.