Agenda item

Report from the Executive Director of Regeneration and Environment.

Recommendations

That Cabinet:

1.    Approves the revised budget of £12.02m for the Wath Library scheme, including an increase of £2.04m to be funded from unallocated Local Regeneration Grant, as set out in Appendix 1. 

2.    Approves the revised budget for the Rotherham Markets & Library scheme, increasing the total project budget to £46.84m, representing an additional £5.95m, funded as set out in Appendix 5.

3.    Notes that the revised budgets reflect the completion of the detailed design, resolution of construction stage risks and the establishment of a more robust and deliverable position for both projects.

4.    Notes the intention of the Chief Executive to commission an investigation into the development and delivery of the Rotherham Markets & Library project which has resulted in the cost increase noted in Recommendation 2.

Consideration was given to the report which provided a summary of the challenges encountered during the delivery phase of the Wath Library and Rotherham Markets and Library schemes. These challenges had resulted in increased costs and the need to revisit aspects of scope and delivery. Cabinet were asked to approve an increase to the budget allocations for both projects, reflecting the outcome of detailed design development, construction stage risk resolution and updated cost forecasts.

In July 2024, Cabinet approved the delivery of a new Wath Library. The scheme for Wath Library was developed with the aim of transforming a prominent site in one of the Borough’s principal settlements, with high quality place making in order to restore the cultural heart of the town centre, increase footfall, boost the local economy, and restore a sense of pride within the community.  The scheme included demolition of the existing Library and the creation of a brand new Library to deliver a modern, inviting, and inclusive community facility. The redevelopment was designed to enhance the visitor experience between Biscay Way and the High Street to encourage visitors into the town centre.  The scheme was approved at Planning Board in October 2024 and demolition of the old Library began in February 2026.

At the July 2024 meeting it was reported to Cabinet that the total scheme cost was £9.9m. In July 2025 the Council appointed Tilbury Douglas as the preferred contractor to undertake Stage 4 designs.  Having refined the scheme costs, a cost increase of £2.04m had been identified. Cost increases were largely due to:

·       Increase in demolition costs of around £800k, largely due to the presence of previously unidentified and significant levels of asbestos.

·       Percentage fee increases as related to increase in construction costs.

·       Inflationary increases aligned with an extended delivery window due to delays in tendering, contractual negotiations, design and cost assessments.

·       Additional design fees to reflect the requirement for more extensive design work.

Prior to approaching Cabinet, an extensive analysis of potential value engineering options had been carried out, including considering the Library Service’s brief to identify opportunities to reduce operational and construction costs. The outcome of this work was a potential option for a smaller building footprint and changes to the external design. However, these alterations would have required a full redesign and new Planning approval, causing significant delays to the project. In addition, an increased level of design costs meant that the alternative would not deliver value for money due to the significant reduction in amenity space.

A summary of the resultant cost and budget implications in relation to Wath Library was provided in Appendix 1.

In 2017, Rotherham’s Town Centre Masterplan identified 7 major development opportunities, all aimed at creating a more diverse, vibrant and attractive town centre that drove increased footfall. Within this vision, which had now been substantially delivered, Forge Island and the Markets and Library were identified as the 2 catalytic major projects for Rotherham, anchoring the western and eastern approaches into the town centre respectively.  Future plans were now being developed for Rotherham Gateway, which would improve the northern approach to the Town Centre via Effingham Street, and exciting plans for new housing would complete the southern approach to the Town Centre along Sheffield Road and Westgate.

The Markets complex was recognised as a key anchor in the Town Centre, both for its historic significance and the potential to be a modern, attractive destination to draw people back into the heart of the town. The Markets occupied one of the most prominent and strategic positions in Rotherham Town Centre. The relocation of the Library into this area, the creation of a health hub, the proximity to Rotherham College, the Interchange, and key pedestrian routes cemented this part of the Town Centre as a community, enterprise and service hub, creating a unique opportunity to create a cohesive cluster of essential services, leisure, and social spaces.

The scope and costs for the project had been reported to Cabinet throughout the development of the Scheme. The last reported cost in March 2024 was £40.89m. The scope as reported previously was set out in paragraph 2.11 of the report submitted. Over the course of the project’s development, a number of challenges had arisen which has rendered the achievement of the agreed scope undeliverable for the current agreed budget. Further, the delivery of the Outdoor Covered Market and Library had continued, in line with the agreed contract, resulting in insufficient budget to complete the project to the agreed scope. 

The challenges encountered related to:

·       Delivery Challenges (paragraph 2.15 to 2.16 of the report)

·       Project Specification (2.17 to 2.18)

·       Value Engineering (2.19)

·       Provisional Sums (2.20)

·       Health & Safety and Compliance (2.21 to 2.22)

·       Design (2.23 to 2.25)

·       Unidentified Cost Elements (2.26)

·       Contingency (2.27)

·       Governance and Resourcing (2.28)

·       Eastwood Lane (2.29 to 2.30)

·       Public Realm and Events Space (2.31)

·       Enabling Activity (2.32)

Taken together, these challenges had resulted in additional costs to the budget previously agreed at Cabinet and, therefore, a recommendation was made to increase the project budget by £5.95m. A summary of the resultant cost and budget implications in relation to Rotherham Markets and Library was provided in Appendix 5.

While the challenges encountered for both Schemes were summarised throughout the report, the Chief Executive of the Council had agreed to commission an investigation into the development and delivery of the Rotherham Markets and Library project which had resulted in the cost increases.

During the meeting both the Leader and Councillor Williams expressed their frustration at the current situation. They both stated that it was not acceptable, and they understood the anger felt. However, both stressed the need to deliver the projects.

The report was considered by the Overview and Scrutiny Management Board who advised that the recommendations be supported. They also made 3 additional recommendations:

-       That future capital monitoring reports include a clear narrative for the Rotherham Markets and Library scheme explaining how key risks have changed, how contingency has been used, any new cost pressures, and the actions taken to manage them, so Cabinet and Scrutiny can see whether the project was genuinely stabilising.

-       Request that the Chief Executive’s investigation into the development and delivery of the Rotherham Markets and Library project, focusing on causes of cost increases be conducted by an independent external organisation and the findings be presented to Overview and Scrutiny Management Board at the appropriate point.

-       Notes that the Chief Executive has commissioned a separate independent end-to-end review of the capital project processes with a focus on large scale development projects with a view to identifying learning and developing recommendations on how to embed best practice going forward and that the findings be presented to Overview and Scrutiny Management Board at the appropriate point.

Cabinet accepted all 3 additional recommendations.

Resolved:

That Cabinet:

1.    Approve the revised budget of £12.02m for the Wath Library Scheme, including an increase of £2.04m to be funded from unallocated Local Regeneration Grant, as set out in Appendix 1.

2.    Approve the revised budget for the Rotherham Markets and Library Scheme, increasing the total project budget to £46.84m, representing an additional £5.95m, funded as set out in Appendix 5.

3.    Note that the revised budgets reflect the completion of the detailed design, resolution of construction stage risks and the establishment of a more robust and deliverable position for both projects.

4.    Note the intention of the Chief Executive to commission an investigation into the development and delivery of the Rotherham Markets and Library project which has resulted in the cost increase noted in Recommendation 2.

5.    Agree that future capital monitoring reports include a clear narrative for the Rotherham Markets and Library Scheme explaining how key risks have changed, how contingency has been used, any new cost pressures, and the actions taken to manage them, so Cabinet and Scrutiny can see whether the project was genuinely stabilising.

6.    Request that the Chief Executive’s investigation into the development and delivery of the Rotherham Markets and Library project, focusing on causes of cost increases be conducted by an independent external organisation and the findings be presented to Overview and Scrutiny Management Board at the appropriate point.

7.    Note that the Chief Executive has commissioned a separate independent end-to-end review of the capital project processes with a focus on large scale development projects with a view to identifying learning and developing recommendations on how to embed best practice going forward and that the findings be presented to Overview and Scrutiny Management Board at the appropriate point.