Agenda item

Report of the Director of Placemaking and Housing.  To be introduced by the Cabinet Member for Council Housebuilding, Placemaking and Development..

The Cabinet Member for Housebuilding, Placemaking and Development introduced the report which sought approval to increase the value of previously approved construction contract for Lealand Road, and to increase the client contingency sum.

In response to a question from the Cabinet, it was confirmed that there were three major components to the cost increase – connection to the sewage pipe was further away than originally anticipated, so the cost to connect was higher; diversion of a pipe not picked up by ground surveys; and some additional works to the adapted property.

Further to consideration of exempt information,

RESOLVED to

1.         Approve a variation to the 10^th June 2021 Contract Sum as set out in the Exempt Report Appendix 2 and to approve the contingency sum set out in the Exempt Report Appendix 2 for NFC Homes Ltd to complete the new build works and provide a total of three new homes at 1A-C Lealand Road. This accords with Contract Standing Order 10.02.01 b) (Cabinet to approve extensions and variations above £500k).

2.         Approve the revised total scheme cost set out in the Exempt report Appendix 2.

Reasons for decisions

On 9^th July 2019, Cabinet included the plot adjacent to 1 Lealand Road into the Council’s housing delivery programme. This scheme subsequently received planning permission on 17 November 2020 and a GLA compliant start on site was made in August 2021 which facilitated the drawdown of the first part of the GLA subsidy for this property. 

Unchartered pipes alongside contaminated ground was found on site. This required the area to be decontaminated and the services to be rediverted. The building contractor had submitted a claim for the works and extension of time. Following negotiations with NFC Homes a settlement sum has been agreed.

The works related to the unchartered pipes were unfortunately unforeseeable. Prior to the construction period, a full package of intrusive ground investigations alongside a review on statutory service drawings was conducted on the site. A total of two trial pits and two boreholes were drilled to depths of three and ten meters. Initial samples indicated a small likelihood of pollutants with a remediation strategy put in place to manage these known risks. The sample locations were positioned to provide a general spread across the site.

However, with intrusive ground surveys there are areas where investigations are not carried out with a possibility of further discoveries during the constructions period. As such unchartered pipes that were not present within any ground survey or any statutory record drawings were later discovered during the construction stage. This required the identified area to be decontamination and the pipes to be rediverted.

External groundworks were required to enable the site to be connected to the local drainage. Initial assessments had estimated the connection to be a short distance from site. It has subsequently been identified at a distance of thirty-five meters from site. Further build works on the curtain wall are due to commence for the front entrance of the building. Additional allowance is required to agree and finalise a settlement.

The issue related to the sewage connection unfortunately also fell outside our usual site due diligence. On the vast majority of Council sites, the sewage connections tend to be inside the site boundary and sewage connections have not resulted in additional costs. However, this is a learning experience for the housing delivery team, who are now reviewing their development procedures in relation to this point.

Further adaptation works were completed to meet the needs of the resident awarded the wheelchair unit as specified by the Occupational Therapist. The bespoke adaptations have been costed and assessed by the Council’s appointed Employers Agent and confirm the works represent value for money in the current market. This ideally should have been picked up as a specific item in the original contract award but had not been included as this project was procured as the Bespoke Homes Programme was being set up at the same time.

The development procedures are being modified to ensure that costs for the bespoke homes programme are part of our development scheme appraisals and where possible specific adaptations are part of our construction contracts. It is important to note though specific costs and adaptations are not always known at procurement stage and in these scenarios an average cost will be included.  

Scaffolding has been erected to allow completion of the brick work on the flank wall, located on the west side of the building. A settlement agreement has been reached with the adjoining owner to provide access onto their land to enable the contractor to complete these works.

The additional elements outlined above are a consequence of further requirements that have surfaced during the construction period and sit outside the contract. These additional elements enable the development to achieve practical completion and have been set out in Appendix 2.

Independent evaluation by the Project Team’s Cost Consultant confirms that the new contract price represents value for money and is in line with current market trends.

Alternative options considered

It would be possible to terminate the Contract to develop this site for Council homes. However, this option was rejected as it does not support the Council’s commitment to deliver a new generation of Council homes. As the Scheme is already on site the Council will be left with an incomplete building and further additional costs as a result of delays in retendering and completing any remaining works. 

The Council could have completed bespoke adaptation works following practical completion. This option was reconsidered following the recent establishment of the bespoke programme to design and adapt properties pre-construction stage. This prevents a void loss period and the need for another contractor to conduct further extensive adaptation works on the new homes post completion.