Issue - meetings

Report of the Strategic Director of Adult Care, Housing and Public Health

Recommendations:-

1.    That approval be given to the proposed revised funding profile for the Site Clusters Programme as set out in Appendix 2, which includes an overall increase to the project budget and a net additional impact on  ...  view the full agenda text for item 126

Further to Minute No. 24 of the meeting of the Cabinet and Commissioners held on 16^th July, 2017, consideration was given to the report which detailed how the Site Clusters innovative development model was increasing and accelerating the amount of new housing and providing a range of additional benefits  ...  view the full minutes text for item 126

Cabinet Portfolio:                 Housing

Strategic Directorate:           Adult Care, Housing and Public Health

Consideration was given to a report submitted by the Strategic Director of Adult Care, Housing and Public Health which was due to be determined by the Cabinet on 18 March 2019 concerning proposed amendments to the Site Cluster programme which was increasing and accelerating the amount of new housing in Rotherham. Members noted that, at the point of reporting to Cabinet in 2017, the total scheme cost could only be estimated. Given that the sites concerned were extremely challenging and extensive ground remediation work had been necessary to make them developable. Other unforeseeable costs had arisen from utilities diversions and an industry-wide increase in the cost of materials and labour. The report to Cabinet in July 2017 stated that in order to protect the Council from exposure to a situation where the amount exceeded the amount authorised, the development agreement provided the Council with the ability to reduce the number of units built on the final site. The report indicated to Cabinet that the authority needed to decide whether to reduce the programme to ensure the original budget was not exceeded, or to increase the budget to enable all 217 homes to be built, and Rotherham to receive the full range of benefits afforded by the partnership. The report recommended the latter approach.

It was reported that the Council and its Employer Agent, Rider Levett Bucknall, had challenged and scrutinised all costs presented by Wates and a range of efficiencies had been identified. The remaining risks had been analysed and a realistic maximum price had been calculated. If a decision was reached to increase the budget, there would be two further options to consider. One option was to continue with the current contractual arrangements. If any savings were identified, the final cost could potentially fall below the revised budget figure. However, the Council would bear the costs associated with any further risks that materialise for example as a result of the UK’s exit from the European Union or adverse weather conditions. Alternatively, the Council could renegotiate the contract to a fixed, guaranteed maximum price contract, which would ensure no further risk of cost increases for the Council. This was the recommended approach.

Members were encouraged to see due diligence being undertaken in the management or the project, with measures devised to manage the risks associated. Whilst risk appetite was high at the outset of the project, it was evident that things had not progressed as had been intended and the approach now was to minimise the risk associated with the programme. Members sought assurances that the risk appetite had been lowered in the light of this experience and whether there was a commitment to pursue fixed price contracts in future. In response, the Cabinet Member for Housing indicated that a lot of lessons had been learned from this experience. The approach had been adopted as the Council was directly delivering homes and there was commitment the authority’s leadership to make sure that they were built. It was accepted that  ...  view the full minutes text for item 181