The council is reviewing the way it deals with private contracts

The Audit Commission probe has revealed serious errors in the way managers handled the doomed �1.2bn deal.

The project was suspended last summer when the district auditor was alerted to the conduct of the council officers in charge of awarding the contract.

His report says project management was inadequate and unprofessional.

Spiralling bills

Some �2.1m of taxpayers' money was spent on preparing the Asset Management Project, which has now been shelved.

Investigators found inadequate records of when and how key decisions had been made.

Consultants were hired without proper terms of reference or adequate control of their costs, district auditor Ivan O'Connell said.

A bill for more than �237,000 was eventually paid to external financial advisers for work which had initially been estimated at �81,000.

The auditor did not criticise the original decision by ruling Conservative councillors to bring in a private company.

Management review

His findings were aimed at the way the council's senior managers failed to implement the plan.

One senior council officer was suspended last year and is still the subject of a separate internal inquiry.

There has been no comment so far from council leader Margaret Eaton, but interim chief executive David Kennedy has admitted mistakes were made.

He says the future of the plan, which would have seen 3,000 council staff switch to a private company, will be reassessed once all other matters have been dealt with.

A review of management structure and the way in which the council deals with the private sector has been launched.