[Report of the Director of Housing, Regeneration and Planning. To be introduced by the Cabinet Member for House Building, Place-Making and Development]
A report requesting agreement for additional costs for the delivery of new Council housing at Templeton Road.
The Cabinet Member for House-Building, Place-Making and Development introduced the report which provided an update on the projected outturn of the development and sought approval to increase the contract sum to be paid to the contractor to £3,302,356 due to additional cost. The scheme would provide 11 new Council homes and was one of the first direct delivery projects carried out by the Council. The Cabinet Member drew attention to a typo in paragraph 4.5 which contained incorrect figures and advised that the figures in the recommendations were correct.
There had been lessons learned so far from the scheme which would be taken forward in future developments.
In response to Councillor Palmer, the Assistant Director for Housing advised that around 200 homes out of the 1000 council home target would be completed and habitable by May 2022.
1. Approve a gross increase of £252,193 in accordance with Contract Standing Order (CSO) 10.02.1 b) to a total contract sum of £3,302,356 to be paid to Kind Diamond Consortium Ltd in respect of the Templeton Hall and Garage Site development contract.
2. Notes that the overall Project cost increased by a net amount of £118,866 due to savings that offset the gross sum of £252,193.
Reasons for decision
The Templeton site has been identified as a site for the direct delivery of new Council homes by Haringey Council. The scheme has been granted planning consent and is nearing completion. The contractor was appointed following a competitive tender process and is progressing well on site.
On 9 July 2019 Cabinet approved a total cost of £3,710,158 for the construction of eleven Council homes for Council rent at Templeton Road including the appointment of Kind Diamond Consortium Ltd to complete the construction for a total sum of £3,050,163 and additional on-costs of £659,995.
Since signing the build contract, it has been necessary to make a number of amendments for essential elements that had not been included in the contract. There are cost implications to a number of these amendments. The most significant single elements not included in the original contract are listed below.
The Council is legally bound to the contract as signed, and each of the amendments was for a necessary part of the construction process that had not been included in the initial contract as signed.
The cost of the amendments to the development contract can be offset against savings made on the additional on cost £659,995 and contingencies approved by Cabinet and built into the original appraisal, so that the net overall effect is an increase of £118,296, representing approximately 3.0%.
The principal increased cost changes have been:
· Basic Asset Protection Agreement with Network Rail
· S278 Highways Works
· UKPN – new electrical connection to the site
· NHBC Insurance
· Cadent Gas Main diversion on site
· LCP Framework Fee
The principal reductions in costs have been:
· Reduction is contingencies
· Reduction in fees
Alternative options considered
An alternate option of either stopping the scheme whilst an agreement was made with Network Rail, Cadent, UKPN and Highways or not agreeing to the increased costs and carrying out the works under a separate contract were explored, neither of these options were practical nor did they offer value for money.