Agenda item

-        Strategic Director of Environment and Development Services to report.

Councillor Smith, Cabinet Member for Regeneration and Environment, introduced a report by the Strategic Director of Environment and Development Services, which outlined the strategic importance of the A57 Worksop Road Sheffield Road Major Highway Scheme Improvement, progress on which was suspended by the Government following the General Election in anticipation of the Comprehensive Spending Review (CSR).  It outlined developments since late October, 2010, following the Comprehensive Spending Review, the options available to the Council, including options for the scheme itself.  It also set out minor amendments to the scheme, revised scheme costs and associated quantified risks contained within the estimate together with potential sources of any other contingency funding.  It sought to gain Members’ support ‘for a best and final’ offer to the Department for Transport (DfT) for an amended scheme that still had significant benefits at a lower cost than the scheme previously proposed.

The report set out in detail:-

·              Developments Since late October 2010.

·              Scheme Options Considered.

·              Proposal.

The reduced scheme had an estimated cost of £14.7 million. This was based on construction during the financial years 2012/13 and 2013/14, with the pre-ordering of utility equipment diversions in April, 2012. Comment from the DfT regarding the best and final offer, indicated that any requests for additional funds over those previously approved, in this case £12.77 million, would not be looked on favourably. The Geographic Programme funded by Yorkshire Forward was no longer available. A £2 millon contribution from the Council, i.e. the same commitment as previously, meant that the slightly reduced and amended scheme was affordable with both the Council and the DfT making almost identical contributions as previously.  It was proposed that the Council’s best and final offer bid to the DfT be practically the same as the previous DfT commitment to the scheme, namely £12.7 million.

The funding for the proposed reduced scheme would, therefore, be as follows:-

DfT contribution                                                          £12.7 million

RMBC contribution                                                     £ 2.0 million

Total                                                                            £14.7 million

As noted above, discussions have been held with the DfT regarding the reduction in the benefits to cost rates (BCR) resulting from the amendments to the scheme, and particularly the effect that this may have on the schemes status within the ‘Supported Pool’.  Whilst the scheme continued to return a high BCR, and informal discussions with the DfT have been positive, there was a small risk that the Minister may not accept the revised scheme due to the reduction in the BCR value.

The amended scheme would require amendments to the existing planning approval granted in 2009. The risk remained that the CPO and SRO previously made towards the end of 2009, and which would require modifications, would not be confirmed at a local public inquiry still to be held. However, in the case of both the planning approval and the CPO, the amended scheme required a reduced land take from that previously proposed due to the removal of the proposed subway from the scheme proposals.

All the risk of any overspend in the delivery of the scheme lay with the Council, as did the risk of any Part 1 (Land Compensation Act 1973) claims subsequent to the scheme being completed, however this was now normal practice associated with the procurement of major highway schemes.

Included in the estimate was a quantified risk assessment figure of approximately £1.9 million – effectively a contingency against increased cost. Furthermore a significant sum was included in the estimate for land acquisition including diminution in value/injurious affection and associated fees, for those properties that were directly affected by land acquisition.

The Council’s strategic partner for civil engineering scheme had estimated the cost of the scheme since the DfT announcements and confirmed the cost estimates used in this estimate. They also indicated that other savings may be achievable at the time of tender when more time was available to look at alternatives to the specified materials and to undertake negotiations with land owners.

The estimated cost also included an inflation element, even though market conditions for the construction industry were perceived to be very competitive (and likely to continue to be so in contrast to the current Retail Price Index and Consumer Price Index).

It was also intended to utilise the support and experience of South Yorkshire partners to ensure that the scheme was deliverable at this level of investment, both prior to construction and once construction was underway.

Ultimately however, the scheme was a major civil engineering project and risks did remain. However, it was anticipated that with sound risk management procedures and the quantified risk assessment figure, these could be contained within the available budget.

Resolved:-  That a ‘best and final offer’ bid to the DfT for the implementation of an amended  scheme, with the bid to seek £12.7 million funding from the DfT and £2.0 million from the Council’s own capital programme be approved.

(The Mayor agreed to exempt this decision from the provisions of the call in procedure on the grounds that it is urgent to allow the best and final offer bid and documentation for this important scheme to be received by the DfT by 4th January 2011)