Agenda item

Officers introduced the report, which was seeking agreement to increase the award of the contract with City Axis Ltd for Lordship Lane New Nursery works as allowed under Contract Standing Order (CSO) 10.2.1.b and CSO 16.02.

The increase was needed to support funding for: requirements arising from the Planning appraisal, to meet Council objectives on sustainability and to meet the market costs of rising materials.

In response to questions, the following was noted:

·         City Axis was a design, build contractor, and build being undertaken was in a SIP style which brought together timber panelling in a lamination fashion. This achieved better insulation and enabled heat retention. It was reiterated that these were not panels used on housing blocks and they did not contain cladding material such as aluminium.

·         A full background was provided of the close engagement and consultation with the School Head and Early Years lead on the design and build of the Nursery. This included how there had been revision to the designs following changes in management of the school. Assurance was also provided of the close involvement of a client side designer who had expertise of nursery builds.

·         It was also noted that this project was particularly unique in terms of progression and cost. Also the known operational and management challenges of the school had inevitably had an impact.

RESOLVED

That pursuant to Contract Standing Order 16.02 :

To approve a variation of the construction contract for Lordship Lane New Nursery to CityAxis Ltd in the sum of £243,574.84, giving a varied contract value from £1,143,688.61 to £1,387,263.45.

To approve an increase to the contingency allowance totalling 12.5% from £114,368.86 to £173,407.93 offering a varied award value up to £1,560,671.38. The contingency will be managed under strict change control governance

Reasons for decision       .

Following the appointment of CityAxis Ltd some internal design changes were requested by the Client, Haringey Schools and Learning, increasing the scope of the works, to support the developed needs of the school curriculum and community. This required re-design of the internal spaces within the new nursery building, in full collaboration with the School’s senior leadership team, providing a revised package of employer’s requirements to be priced by the contractor. An increase has been realised during this period on material prices which has been taken into consideration with this variation.

The Cabinet Member approval (received on 9 November 2021) to award the construction contact, was subject to receipt of planning approval, which was received on 24 January 2022. Draft planning conditions were included in the tender package for the contractor to price following some pre-planning consultation, as approval was not yet available. The issue of the planning decision with associated conditions resulted in an increase in project scope, with elements to the conditions that had not previously been allowed for (specifically related to ecology and sustainability). The full planning permission with conditions was issued to the contractor, to price the uplift and variance to deliver the full planning approval and manage its conditions.

The Children’s Services Capital Programme Budget is sufficient to cover this contract increase.

Alternative Options Considered

Do nothing – a decision not to support the increase in the value of the construction works contract will result in delays in completing urgent condition and replacement works, would leave the school with inadequate facilities to meet curriculum requirements, further disruption to children’s education and would risk the loss of a large portion of Salix Public Sector Decarbonisation Grant, see paragraph 6.4.

Re-tender – an option to cancel this procurement exercise and re-tender the new nursery works was considered with Strategic Procurement, Legal and Finance. However, as the previous tenders were returned in September 2021, it is believed due to construction inflation, changes in market rates, reduction in suppliers, material shortages and increase in material costs and the impact of the war in Ukraine, that a re-tender would likely incur substantial cost increases as realised in the market over recent months. It is also believed that these increases would be higher than those being witnessed for this variation. Re-tender would substantially lengthen the delivery programme and would not meet the Salix (Public Sector Decarbonisation) Grant spend deadline, see paragraph 6.4. The extended delivery programme would also create further disruption to the school environment into their 2022-23 academic year, prolonging the impact to their external play areas. In addition, a re-tender would risk challenge from CityAxis Ltd and expose the Council to reimbursement of any costs incurred as part of the procurement exercise and notification of acceptance of their tender.