Agenda item

[Report of the Director for Housing, Regeneration and Planning.  To be introduced by the Leader of the Council]

To seek approval for the award of a contract to carry out bathroom pod replacement and external major works on Noel Park estate for 126 purpose built dwellings on Gladstone Avenue occupied by both tenants and leaseholders.

Councillor Chandwani left the meeting for the consideration of this item.

The Leader introduced the report which sought approval for the award of a contract to Engie Regeneration Ltd “Engie”, to carry out external major works on Noel Park estate for phase 2, a variation to the original contract award value and for the issue of a letter of intent to Engie, this will be for an amount up to, but not exceeding £1,012,644 which would enable detailed design work to be undertaken in advance of the contract being finalised.

The Leader advised that there was a typo in recommendation 3.1 of the report in that the value of the increase was £5,115,697 and not £5,116,697 as published in the papers.

The Leader made reference to paragraph 2.5 of the report and apologised to leaseholders for the quality of communication and engagement on the project and hoped that the revised proposals struck a balance of fairness to leaseholders and Council tenants.

The Leader and the Assistant Director for Housing responded to questions from the Cabinet and Councillor Barnes:

-           All contract costs were fixed.  The only way that costs would increase would be if more work was carried out.

-           Officers were confident that the programme was sensible and that timescales would be met.  However if there were any delays, these would be a matter of months and not years.

-           In regard to paragraph 8.11 of the report, it was not accepted that the Council or HfH had failed to carry out necessary repairs and maintenance to ensure resident safety. 

-           In regard to roof repairs, it was anticipated that a good number would need to have works carried out.  It made practical sense to carry out these works whilst the scaffolding was in situ, so surveys would be completed and approvals for works sought where required.

-           The lifespan of the new PODs would be minimum 60 years.

Further to considering exempt information at item 20 it was,

RESOLVED that Cabinet

1.         Approve a variation of the original Contract to Engie Regeneration Ltd by increasing the value from £16,342,419 to £21,458,116. This is an increase of £5,115,697 to enable the completion of Phase 2 works in accordance with Contract Standing Order (CSO) 10.2.1 (b).

2.         Note that of the original contract, £11,331,675 was approved for phase 1 by cabinet in January 2021.

3.         Approve the award of contract for Phase 2 of the works on the Noel Park Estate to Engie Regeneration Ltd up to the value of £10,286,961, inclusive of fees (£160,520), for the replacement of bathroom pod extensions in accordance with Contract Standing Order (CSO) 9.07.1 (d). This includes bathroom suites and associated works, renewal of kitchens, roof replacement and repairs, window and door replacement, rewiring, boiler replacement and central heating installation works, fire protection works, brickwork and concrete repairs and external decoration, where required and for works in leaseholder owned properties to be completed in line with work detailed in the section 20 notices.  

4.         Approve the issue of a letter of intent for an amount of up to, but not exceeding, £1,012,644. This represents 10% of the contract sum and will enable detailed design and planning work to be undertaken in advance of the contract being finalised.

5.         Consider observations made by leaseholders in response to the Section 20 consultation with leaseholders regarding the scope of works and estimated charges, as set out in section 8.

6.         Consider the results of consultation on the proposed offer to cap service charge payments as set out in section 9, to approve the proposed associated estimated expenditure as set out in the exempt report, and to note that Council officers will exercise discretion in reaching a final settlement where appropriate in individual cases.

Reasons for decision

The properties identified in Noel Park Pods Replacement and Major Works Project Phase 2 need their bathroom pod extensions replaced. This includes bathroom suites and associated works, renewal of kitchens, roof replacement and repairs, window and door replacement, rewiring, boiler replacement and central heating installation works, fire protection works, brickwork and concrete repairs and external decoration. This will enable the essential safety works to be completed for all properties and for the rented, Council owned properties to be brought up to the Decent Homes Standard in line with the Borough Plan objective 3.

Homes for Haringey requires Cabinet approval for the award of this contract which is deemed to represent value for money. This is following a tender process undertaken with Haringey Council’s Procurement team via the London Construction Programme (LCP) Major Works (MW14) framework.

A compliant tender process was carried out in accordance with the framework terms and conditions which incorporate price and quality. The evaluation process was based on 60% quality and 40% price. The recommended contractor Engie Regeneration Ltd scored the highest in relation to these criteria in the associated Lot 3 (NH3) Housing. Lot 3 enables 8 contractors to review and submit tender proposals ensuring we have value for money across the marketplace.

At the first stage tender an estimate of £16.1m was submitted by Engie, following further surveys of the properties, adjustments had to made to the programme (see 7.15 for details).  Following the final surveys carried out on site in June 2020 the final contract proposal was put forward at approx. £21.048m. The main increase was the recommendation to replace all the existing main roof coverings to the properties in Gladstone Avenue and the need to remove the AIB asbestos panels prior to lifting the existing pod structure over the property.

In response to representations by leaseholders about the significant scale of estimated service charges relating to this contract, officers have prepared proposals to cap charges as a basis for a settlement with leaseholders.  The detailed rationale for making settlement offers to leaseholders are set out in section 9.

Alternative options considered

An alternative option would be for Homes for Haringey to use third party industry frameworks or a compliant tender process to deliver the construction works on the Noel Park Estate. Homes for Haringey sought support and advice from Haringey’s Strategic Procurement team and determined the London Construction Programme (LCP) Major Works framework as being the optimum route to the market. This was due to the LCP framework being leasehold compliant, value for money and offering speed of access to quality-checked contractors.

The Council undertook an analysis in February 2020 to compare the costs of a permanent modular built extension against a traditional brick-built extension. This is the primary alternative to the use of a modular solution. It demonstrated that excluding decanting costs, it would cost an additional £7,308 per property to install a traditional brick-built extension as opposed to modular extensions. The choice of traditional brick-built construction would also increase the related costs for all properties as the decant period could be circa 3 months, due to the requirement to decommission the bathrooms. The cost of decanting tenants would be borne by the project. However, leaseholders would have to make their own arrangements and non-resident leaseholders may also incur loss of rental income as they would likely be required to vacate rented properties during the period of the works. In such circumstances leaseholders may claim against the landlord for their costs and loss of income. Decanting residents, while necessary in some cases, does also cause disruption to the lives of the residents, especially those with school age children.

The pods are now beyond the end of their useful life. If the Council does not undertake the proposed works, it will not be able to deliver the planned capital investment works to bring these properties up to the Decent Homes Standard, in accordance with the Asset Management Strategy 2020-25.

By committing to effective consultation with the affected leaseholders, this should enable the delivery of phase 2.

Phase 2 is to be delivered as an addition to phase 1. All mobilisation works undertaken during phase 1 will be utilised for the delivery of phase 2 preventing additional associated costs. Although, phase 1 and 2 will be delivered by separate contracts, it is recommended that the works are conducted by the same contractor to ensure consistency, value for money and a high standard quality of works.