Agenda item

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

The Cabinet Member for Council House Building, Placemaking, and Local Economy introduced the report which sought approval, to complete the delivery of six new homes for London Affordable Rent on Council Land adjacent to 318A White Hart Lane, N17. The scheme would provide six new homes towards Haringey’s pledge to build 3000 Council homes by 2031. Detailed planning permission was granted on 21 September 2020. Works started on site on September 2021. However, following repeated underperformance and entry into a Creditors Voluntary Arrangement by the appointed contractor, Cosmur Construction Ltd, the Council terminated the contract in April 2023. Subsequently, the process to appoint a new contractor to complete the development had been underway since late Spring.

Cabinet was asked to approve the appointment of contractor A to complete the building of these new Council homes.

Following consideration of exempt information at item 28,

RESOLVED

1.   To approve pursuant to the Council’s Contract Standing Orders (CSO) 9.07.01d, the appointment of Contractor A (named in the exempt part of the report)to undertake building works to complete the provision of six London Affordable Rents at land adjacent to 318 White Hart Lane for the contract sum of £1,811,630.00.

2.   To approve the works contingency sum, and an increase in the total scheme costs, as set out in Appendix 2.

3.   To approve a letter of intent up to a maximum value of £181,163 being no more than 10% of the contract sum.

Reasons for decisions

The land adjacent to 318a White Hart Lane was approved by Cabinet in July 2019 to be included in the Council’s housing delivery programme. The scheme has subsequently been granted planning consent and a works contractor, Cosmur Construction Ltd, was appointed to build the scheme in July 2021. The project encountered a number of delays due to the Contactor’s poor performance. The Council terminated the contract and took back possession of the site which currently has a partially constructed building. A tender process was initiated in late spring 2023 to appoint a new contactor to complete the development of the six London Affordable Rented homes.

The Council seeks to performance manage all Contractors by continual vigilance by the Council’s Project Manager and the oversight of both Employer’s Agent and Clerk of Works to every New Homes Build Project.

This continuous monitoring, allied to frequent Site Meetings and both formal and unannounced Site inspections, ensures that the Council is able to obtain value for money on all New Homes Projects by reducing waste on site in terms of time, materials and labour costs, and works collaboratively with our appointed Contractors to build sustainable partnership working, which enables problems to be solved in a manner that ensures the best and most cost effective outcomes for the Council and our future Tenants.

This partnership working relies on trust and transparency on both sides of the working relationship and, regrettably, this was not an approach adopted by the previous Contractor who chose not to openly identify their corporate problems and instead mistakenly relied on the Council lacking proper professional diligence.

This working practice was quickly identified by the Council Team, including the external and independent Employer’s Agent and Clerk of Works and despite more frequent site meetings and discussions at Director level with the Contractor, their poor performance led, ultimately, to their abandonment of the site in mid – Construction, followed, shortly afterwards, by their entry into a Company Voluntary Arrangement (CVA). A CVA is used when a limited company is insolvent, it can use a CVA to pay creditors over a fixed period.

The Council always seeks to determine a Contractor Company’s financial health by due diligence at the time of entry into the Contract, hence the reason for Contract terminations to be a, very rarely used, last resort. In this case the financial checks were satisfactory at the date of the Contract, but the extraordinary levels of labour and materials inflation experienced in 2021 and 2022 as a consequence of Brexit and the War in Ukraine, had an extremely adverse effect on the finances of the Contractor in this case and the Council, having taken independent legal advice, was forced to adopt this very unusual step.

Contractor A has been selected via a formal tender process to undertake these works. The competitive nature of the Tender and the evaluation of the Tender returns (more particularly described below) has involved Council Officers in additional due diligence and detailed technical clarification to ensure that best value for money can be demonstrated and achieved and, if approved, Contractor A will be subject to the continuous monitoring and performance assessment described above until the new homes have been delivered and occupied.

The Council’s New Homes Employer’s Requirements have two principal objectives: 1. To ensure that the next generation of Council Housing is built to the highest standards of design, engineering and specification and 2. That the new Homes will be as fuel efficient as possible and will be readily capable of economically viable maintenance throughout their lifespan of not less than 80 years. These are the tests to which all Contractors are put, and the Strategic Procurement Team have been vigilant in ensuring that all of the compliant Tenderers for this Project were subject to these tests of quality and performance which are scored separately and rank equally with the price mechanism against which each Bid is evaluated.

Alternative options considered.

It would be possible not to appoint a Contractor to complete the development of this site for the Council. However, this option was rejected because it would leave a partially constructed building on the site and would not support the Council’s commitment to deliver a new generation of Council homes.

 Additionally, a failure to complete the partially constructed development would lead to a further burden of cost being placed on the Council’s Temporary Accommodation portfolio and supporting Services and would have potential for some reputational damage to the Council. This was not considered to be a viable, value for money option for the Council which can, by the appointment of Contractor A, continue to deliver a high- quality scheme at a competitive cost.

The Council could decide not to appropriate the land for housing purposes upon practical completion of the building works. This option was rejected because it would prevent the Council from being able to offer up these homes for occupation as social housing, thereby not supporting the delivery of much needed affordable homes.