Note: (DT) signifies a decision taken at Decision
Time.
The meeting opened at 2.30 pm.
1. Time for Reflection: The Very Reverend Gilleasbuig Macmillan,
Minister of St. Giles Cathedral, led Time for Reflection.
2. Ministerial Statement: The Minister for Children and Education made
a statement on Hampden.
3. Holyrood Project: Sir David
Steel, on behalf of the Scottish Parliamentary Corporate Body,
moved S1M-720That the Parliament notes
(a) the attached report of the SPCB on the Holyrood project (SP Paper 99)
together with
(b) the report by John Spencely attached as Annexe 1;
(c) the photographs incorporated as Annexe 2 which are available from the
Scottish Parliament Document Supply Centre;
(d) the revised budget of £195 million set out in Annexe 3.
Donald Gorrie moved amendment S1M-720.1 to motion S1M-720
Insert at end
"and, in order to be fully
informed when making a final decision on the location, design, specification and cost of
its permanent home, (a) directs the Scottish Parliamentary Corporate Body to present to it
in early June the scheme design for the Holyrood buildings prepared by the design team,
along with the most detailed possible plans, with evaluation and costs, prepared by
independent experts for (i) the St Andrews House/Royal High School site with new
build parliament chamber and (ii) the Mound site based on the acquisition of the New
College Campus and development of nearby buildings; (b) calls upon the Scottish Executive
to co-operate fully with the study of these options and to publish a report on financing
options for the parliament buildings; (c) approves the SPCBs proposal for a
progressing group to take on day to day responsibility for the project of creating the
Parliaments new home and (d) agrees to make a final decision on the permanent
Parliament buildings in June in the light of the information requested."
After debate, the amendment was disagreed to ((DT) by division: For 58,
Against 67, Abstentions 1).
Gordon Jackson moved amendment S1M-720.2 to motion S1M-720
Leave out from "(a)" to end and insert
"the report of the Scottish
Parliamentary Corporate Body on the Holyrood Project; approves its terms, and directs the
Corporate Body to establish a progress group comprising representatives of the Parliament
and relevant professionals to work with the Corporate Body to (a) finalise the design; (b)
complete the project by the end of 2002 within a total budget of £195 million, and (c)
report regularly, or as from time to time may be required, on progress including on
expenditure to date and estimated completion costs to the SCPB and to members."
After debate, the amendment was agreed to ((DT) by division: For 67,
Against 58, Abstentions 1).
The motion as amended was then agreed to ((DT) by division: For 68,
Against 56, Abstentions 2).
Accordingly, the Parliament resolved That the Parliament notes the
report of the Scottish Parliamentary Corporate Body on the Holyrood Project; approves its
terms, and directs the Corporate Body to establish a progress group comprising
representatives of the Parliament and relevant professionals to work with the Corporate
Body to (a) finalise the design; (b) complete the project by the end of 2002 within a
total budget of £195 million and (c) report regularly, or as from time to time may be
required, on progress including on expenditure to date and estimated completion costs to
the SCPB and to members.
4. Decision Time: The Parliament took decisions on item 3 as noted
above.
5. A701: The Parliament debated S1M-643 in the name of Lord James
Douglas- HamiltonThat the Parliament notes the more than 400 objections to the
upgrading of the A701 to dual carriageway and the case for a public enquiry so that the
views of the objectors can be properly considered.
The meeting closed at 6.13 pm.
P E Grice
Clerk of the Parliament
5 April 2000
SP Paper 99
HOLYROOD PROJECT
The Scottish Parliament Corporate Body reports to the Parliament as
follows:
Introduction
1. This report is intended to help our colleagues in the Parliament
reach a view on the future of the Holyrood Project. The Corporate
Body was handed full responsibility for the Project on 1 June. But,
given the importance of the project to the people of Scotland as well
as MSPs and the many people who use a Parliament building, it is only
right that the Parliament as a whole takes this crucial decision.
Summary
2. The following summarises our views and in doing so responds to
the key points in John Spencely’s report (which is attached
at Annexe
1). We take this opportunity to thank him and his team for
their hard work over the past 3 weeks.
3. Our principal conclusion is that, should the Parliament decide
to proceed with the Holyrood Project, it can be completed to latest
design (plans are attached at Annexe
2 – there will be a full presentation to Members early
next week); and delivered within a total budget of £195m. The design
and construction teams have advised that the building can be completed,
fitted and commissioned by the end of 2002.
4. Our report is aimed at addressing the concerns identified in the
Spencely Report and, perhaps more importantly, advising colleagues
on how we might best proceed from here with the Holyrood Project.
5. In particular we accept the challenge laid down in Section 9 in
John Spencely’s report. Specifically,
- the brief for the project should now be finalised.
We have attempted since June to respond to the understandable demands
from Members, staff and others for appropriate facilities in the
new building. We have also had strong representation from Historic
Scotland and others on Queensberry House. This has resulted in significant
redesign, in particular, in the debating chamber. To meet the cost
and programme described above, this process must now be concluded.
- the budget available is a matter for the Parliament.
If it accepts the estimate of £195m then the approved scheme design
– which is very close to completion (and on which Members
will be briefed before the debate) – will be delivered on
the basis of that budget.
- we have considered very carefully John Spencely’s
view that the project cannot be completed by the completion date
most recently reported to us ie the end of 2002. This depends entirely
on when our construction management team are given the go-ahead
to proceed on the basis of an approved scheme and budget. We would
aim to do so as quickly as possible after any vote to proceed with
Holyrood. And on that basis the clear target would be the end of
2002.
- the management and direction of and communication
within the Project can be improved. In particular, we recommend
acceptance of John Spencely’s proposal to establish a project
progressing committee to provide the time and expertise needed to
complete the Holyrood project.
- we have already received assurances as to the
working arrangements between architects, engineers and surveyors
and to the arrangements for handling future, detailed design work.
6. Finally, we advise colleagues that our best estimate, drawing on
John Spencely’s advice, is that the cost of cancelling Holyrood
would be a minimum of £25m, based on costs incurred of £30m and a
net site value of £2-6m. There is however in our view a significant
likelihood that this could be higher taking into account, in particular,
the risk of legal action to settle claims.
7. It might be helpful to consider the original brief for the project.
"The building the Scottish Parliament occupies must be of such
a quality, durability and civic importance as to reflect the Parliament’s
status and operational needs; it must be secure but also accessible
to all including people with special needs; it must promote modern
and efficient ways of working and good environmental practice.
It will be an important symbol for Scotland. It should pay tribute
to the country’s past achievement and signal its future aspirations.
It must be flexible enough to accommodate changes over time in operational
requirements. Quality and value for money are also key considerations.
The accommodation must allow Scottish Parliamentarians and their
staff to work efficiently harnessing the best of
modern technology
People must be able to see and meet their elected representatives
and watch the Parliament in operation. Provision needs to be made
to permit easy reporting and broadcasting of parliamentary proceedings
so that people throughout Scotland can be aware of its work and
decisions. Historic surroundings should be respected and the design
should be integrated with surrounding landscape and urban
context…"
8. What is clear from this is the true client is the people of Scotland.
We must, above all, aim to meet their aspirations for this hugely
symbolic
project.
Looking back: June 1999 – February 2000
9. As we approach this pivotal moment on the future of our Parliament
building, it is helpful to look back at how we have arrived at this
point taking into account advice from the project design team and
the key points in the Spencely report. On this basis, we will look
ahead at how the project should be handled should the Parliament decide
to proceed. When we first reported to Members on 9 June 1999, eight
days after taking responsibility for the project, the motion to establish
Committees had not yet been debated; the Official Report had only
reported 7 meetings of the Parliament and Introduction of the first
Bill was still almost 3 months away. Our responsibility was to translate
the Parliament’s needs into reality. However, in June it was
not possible to have a full appreciation of those needs.
10. The Parliament had approved a total budget for the project of
£109m. This included £62m plus £6m contingency for construction. It
also included a modest allowance for fit-out as well as fees and VAT.
We were aware that this budget did not include any risk allowances
though we had not established at the time exactly what they amounted
to. These are almost £16m which, together with "enhancement" (an allowance
for higher quality fixtures which might have been required), gives
a potential total construction cost of £89m.
11. It may well have been possible for the project as it then stood
to have been completed for a figure in the region of £109m. At the
time we accepted the £62m construction component of this as a challenging
budget. But clearly it assumed very limited design changes and no
delays.
12. Clearly there have been design changes and delays. Indeed we embarked
almost immediately after the debate – during which considerable
concern was expressed on the subject – on redesigning the Chamber.
It was clear to us that significant numbers of colleagues were unhappy
with the existing proposal. Given the critical importance of the chamber
to the Parliament we felt there was no option but to order a redesign.
The revised design reflects the express and practical needs of the
Parliament. The other principal issues which had to be addressed -
and which rendered the budget inadequate were redesigning the building
to meet the emerging needs of the Parliament and the unforeseen problems
of Queensberry House. These are all discussed in more detail below:
The emerging needs of the Parliament
12.1 It became apparent during the autumn that some elements of our
staffing provision were inadequate to meet the needs of MSPs, staff,
members of the public and the media. In particular, the workload of
Committees; the need to assist in the drafting of Members’ Bills;
research demands; IT support and the extent of the legislative programme
were among the pressures which led the Corporate Body to authorise
additional recruitment. At the same time Members and the political
parties were assessing the weight of their own duties and recruiting
staff accordingly. And the level of public interaction and media activity
(whilst, of course, welcome) was higher than anticipated. The design
team were consequently asked to consider how best to accommodate the
increased numbers. The total area has increased from 23,000 to over
30,000 square metres. Despite this, the costs per square metre of
the building have however remained relatively static.
Queensberry House
12.2 Our initial information about the condition of Queensberry House
was contained in a report commissioned from Simpson and Brown (1)
For the Secretary of State for Scotland,
December 1997 which concluded
that the House was in a fundamentally sound condition. However, furthermore
detailed investigations by the design team revealed that the structural
condition was actually not sound. The essential remedial works doubled
to £9.4m and an enhanced contingency of £1.4m was required due to
the continuing uncertainty on the building condition. It later became
clear that the original use envisaged for the House (and in particular
the ground floor) would not be acceptable to Historic Scotland and
designs required to be re-worked accordingly.
(1) For the Secretary of
State for Scotland, December 1997
Cost control
13. Trying to deal with costs has been a constant and consistent issue
for the Corporate Body. In total, 11 cost reports have been compiled
on the project – 8 of these were for the Scottish Office when
it was responsible for the Project. We have had 3 including a major
value engineering exercise in the autumn – which produced savings
of £13m. The most recent was set in train in February this year. As
a result of that report – which projected a possible building
cost of £125m – we took the view that Parliament must be alerted
to the facts and commissioned the Spencely Report to assist in that
process.
14. It is important to stress that – thanks in no small measure
to the skill and dedication of those working on the Project - the
project has developed considerably – and positively –
since June 1999 to the point that it will meet the practical needs
of the Parliament and could move forward to the next phase. Some illustrative
material associated with the revised design is at Annexe
2.
The Spencely Report
15. The re-design which had been undertaken took the project outwith
the boundaries of the June budget and programme estimate. A 30,000
square metre building cannot be delivered for the same cost as a 23,000
square metre one without seriously compromising on quality and the
time dedicated to re-design clearly diverted the Design Team from
their planned programme of work. We therefore sought to draw together
the detailed work on costings, (including the results of the most
recent cost-reduction exercise) and programme in order to enable us
to re-evaluate the required budget and time to completion before presenting
these to Parliament.
16. Given that the costs and programme were significantly different
from those we were handed in June 1999, we recognised that an independent
assessment of these estimates would provide additional reassurance
to members and for that reason retained John Spencely to provide independent
information about cost and timescale. We are indebted to Mr Spencely
and his team for their endeavours to get to grips with the complexities
of the project and for delivering their report within what was a very
constrained timescale.
Looking forward: February 2000 onwards
17. We hope it will be most useful to colleagues to address this primarily
by reference to the key points in the Spencely report on cost, programme
and management. We accept John Spencely’s essential point that
the approved budget must relate to the brief and, perhaps more importantly,
to the scheme design. Indeed the intention behind taking stock and
consulting the Parliament is to enable these to be reconsidered.
The brief
18. The basic brief is that signed off by the Scottish Office in November
1998. Clearly things have moved on a great deal since then and, as
reported earlier, the needs of the Parliament have changed significantly
since last summer once the Parliament was up and running. Revisions
have been produced to the brief to reflect these new demands though
in some instances – the debating chamber in particular –
the design team was asked to redesign within the terms of the existing
brief.
The scheme design
19. This now fundamentally meets the requirements of the Parliament
as described in the original brief and the various amendments produced
since 1998. But it has yet formally to be approved, as John Spencely
notes. It must be if we are to proceed and complete the project to
an agreed cost and timescale. Members will be briefed on the current
scheme design before the debate on 5 April. If the Parliament decides
to proceed, we will aim to sign off the scheme design as quickly as
possible thereafter. The design team have assured us that the remaining
detailed working will be completed in time for a scheme design to
be submitted by the end of April.
Approved budget
20. The current approved budget is £109m – which implies a construction
cost of £62m (plus contingency of £6m). John Spencely is therefore
absolutely correct to say it bears no relation to the brief or current
scheme design. The cost report we received in February suggested a
construction cost of £125m. In section 4 of his report, John Spencely
projects a construction cost of £126m. He translates this into a total
cost of £230m. Apart from fees, VAT and contingency – all of
which we agree must form part of the total budget – he includes
inflation. It is not common practice to include a separate inflation
allowance in government building procurement as all calculations are
made in cash terms to allow direct comparisons. We believe this is
the correct approach in relation to the Parliament building.
21. John Spencely goes on to conclude that savings of the order of
15%-20% can be made. This would produce a construction cost of £110-£115m
and a total cost of £185 to £196m (assuming VAT on fees is recovered).
We had already instigated a parallel exercise, prior to appointing
John Spencely, which has separately concluded that a construction
cost of £108 is achievable. Depending on the level of contingency,
this produces a total cost in the range of £190m to £195m. Included
within this total cost is a fit-out budget of £19m. The Spencely Report
endorses this figure.
22. Parliament is invited to determine whether it wishes the Holyrood
Project to proceed on a revised budget of £195m. Annexe
3 describes how the current approved budget of £109m moved
to £195 and gives a breakdown of that estimate. The Parliament must,
of course, decide whether it is prepared to proceed on that basis.
If it did, brief, design and approved budget would be consistent.
Programme
23. A great deal has already been achieved on the site. All the permanent
piling for the car park is completed; 12,000 cubic metres of concrete
has been poured to form the car park floor area and the columns supporting
the floor area above the car park. And the superstructure for the
MSP block is under construction off-site.
24. Mr Spencely’s reservations as to the expected completion
date of the project have been carefully considered. We understand
that this view was arrived at on the basis of a number of assumptions,
one of which was the cessation of all project activity for a period
of 3 months. We have received assurances from the construction manager
and the design team that the building will be completed by the end
of 2002. We accept the reassurances but we take seriously John Spencely’s
views. We cannot in reality give an absolute commitment until we have
signed off the scheme. Once we do so, we would report again to colleagues
with a firm commitment.
Quality and Value for money
25. Both are paramount. But it is especially important to deliver
on quality in the areas which will be used by the public, in particular
the Chamber and Committee rooms and main foyer. Considerable work
has been undertaken by our Quantity Surveyor in considering comparisons
with similar buildings and we are satisfied that we areworking within
reasonable estimates for the quality and size of building which is
envisaged. We note Mr Spencely’s comparison with Portcullis
House in this context which is costing more than £1,000 per m² more
than the MSP block.
26. Conscious of the need to achieve good value for money and in line
with EU procurement rules we have sought to source materials on a
global basis but wherever possible would hope to contract the manufacturing
work to Scottish companies.
27. Throughout this process we have engaged with the Royal Fine Art
Commission for Scotland; the City of Edinburgh Council; Historic Scotland
and similar organisations with a proper interest in the quality of
the building. The project has been well received by all these bodies
and we have satisfied them that the building is a fitting design for
its location. Any fundamental compromise on quality would not be acceptable
to these parties.
28. We note the Spencely Report’s recommendation in relation
to Queensberry House and understand and concur with its conclusions
on the expense involved. However, mindful of the historic importance
of the House and the role it plays in integrating the design with
its historic surroundings and urban landscape, as required by the
original brief, we believe that it is right to proceed as planned.
29. It is usual, as the design is being finalised, for this stage
in the design process to involve the Design Team and construction
manager in a rigorous process of simplification, design refinement
and improvement. This is now taking place and our own Quantity Surveyors
have confirmed that cost reductions consistent with a final cost of
£195m can be achieved without reducing the fundamental quality, in
line with Mr Spencely’s observations.
Contractual methods
30. The construction management approach – which John Spencely
explains in chapter 7 of his report and commends – has enabled
significant progress to be made on site notwithstanding the continued
development of the final design. We accept that the established method
offers us the flexibility to deliver each element of the building
at the best possible time and at the best possible price thereby contributing
to the achievement of the overall agreed programme and budget.
Communication and management issues
31. John Spencely notes that all conventional mechanisms for project
management are in place. But he criticises some aspects, especially
communication and makes suggestions on future management. We accept
that these matters should be addressed. Specifically, on management,
we accept the case for a group which has the time and expertise available
to it in taking forward the project. The SPCB cannot - indeed does
not wish – to divest itself of ultimate responsibility for Holyrood.
But, we would remit day-to-day responsibility for the project to a
progressing group.
32. While we regard working arrangements within the team as a matter
for them alone, we understand – in relation to John Spencely’s
specific recommendation - that the overwhelming majority of work at
the next stage will be undertaken in Edinburgh. On that basis we are
satisfied with the manner in which the Design Team (architect, construction
manager and Quantity Surveyor) are now functioning.
Fees
33. As Mr Spencely says, the fee agreement with the design team was
entered into on the basis of a £50m project. In line with normal practice,
negotiations will be entered into with each commissioned consultant
if the building costs increase to the levels now estimated.
Cancellation costs
34. We note the Spencely report’s comments on the current market
value of the Holyrood site based on the valuations of the Chief Valuer
for Scotland. These indicate that the market value might be of the
order of £2m -£6m (his "Scenario 2") on the assumption that £11m plus
fees etc is spent on Queensberry House. This is in line with our current
plans and therefore seems to us most realistic.
35. As Mr Spencely says, it is impossible to quantify the costs of
termination with any degree of precision. This is one area in which
it is impossible to cap costs and where taking risks can be very costly.
We believe therefore that the net cost of cancellation of Holyrood
would be upward of £25m. That is the £30m spent or committed to date
less, say, £5m site value. If we were budgeting for this cost, it
would be significantly more than £25m.
Remaining in the current ‘temporary’ accommodation
36. The accommodation on the Mound was acquired and fitted out specifically
to serve the Parliament for 2-3 years. The Parliament’s temporary
accommodation at the Mound and George IV Bridge is on short-term leases
from the Church of Scotland and the City of Edinburgh Council. It
is clear that longer term occupation – even assuming the owners
agreed to extend the leases – would involve significant expenditure.
37. There are significant statutory barriers to long-term occupation
(e.g. fire, building control, asbestos, disabled access) and remedial
works on these would be costly. Experience has shown that office standards
are inadequate and the dispersal of staff across several streets (and
7 buildings) is very inefficient.
38. The provision for public participation is particularly poor. We
cannot accommodate all those who wish to see Committees in action
and there is a similar problem in relation to the media whose attendance
is often rationed. Catering facilities are non-existent for visitors
and there are very virtually no facilities where Members can hold
private conversations with constituents.
Conclusion
39. It is now a matter for the Parliament’s own judgement and
the SPCB has set out the means to complete the project with costs.
Report
on
The Holyrood Project
to
The Scottish Parliamentary Corporate Body
by
John D Spencely
March 2000
Index
1. Introduction
2. My Terms of Reference
3. The Chronology of the Project
4. Review of the current estimates of cost
5. Review of the current estimate of time to delivery and occupation
6. Review of the value for money of the project
7. Review and comparison of the advantages of alternative contractual
methods
8. Review of the effect on cost and delivery of a reduced specification
9. Review of the effectiveness of communications between the Corporate
Body and the Project Team with recommendations
10. Report on the current market value of the Holyrood site
11. Report on expenditure to date
1 Introduction
1.1 I was appointed by the Scottish Parliamentary Corporate Body on
25 February 2000, in accordance with the Terms of Reference 1 - 5
as set out in section 2 below, to report by 27 March 2000. Terms of
Reference 6 and 7 were added during the course of the Review and I
was also asked to make recommendations under all Terms of Reference
and to consider options for future action as I thought fit. This is
my Report.
1.2 I appointed, with the Corporate Body’s consent, Neil G Thomson
Chartered Quantity Surveyor and Robert B Wilson Chartered Architect
and Director of Estates of the University of Glasgow as my Advisers.
1.3 My Review has been carried out over a three week period by me
and my two Advisers. We have interviewed each member of the Corporate
Body, members of the Project Team and the Design Team and representatives
of the Construction Manager, all of whom have been very helpful. We
have been given access to reports and minutes of some Project and
other meetings and have inspected the work in progress in the Architect’s
Edinburgh office and on site.
1.4 I am conscious that, in the very short time available, my appreciation
of the detail of the Project can only be a fraction of that held by
those who have been involved for the past two years or so. Nevertheless
my Advisers and I have independently each come to similar conclusions
as to the condition of the Project. These conclusions form the basis
of my Report.
1.5 The creation of a building to house the Nation’s Parliament
is a great enterprise. Those engaged in bringing this Project to fruition
are working in a situation and on a building which are unavoidably
more complicated than most, if not all, have ever experienced. Little
in their previous experience can have prepared them for this task.
We found an enthusiasm and dedication to the project at all levels,
tempered somewhat by the stresses and strains of recent events.
1.6 Nevertheless my appointment by the Corporate Body indicated that
all might not be well with the Project and my Review confirms this.
1.7 It would have been impossible for me to have fulfilled my Terms
of Reference without the help of the Valuation Office Agency on whose
professional advice I have relied in respect of the site value and
the Construction Manager on whose programming skills I have relied
on in assessing a likely completion date.
1.8 I owe special thanks to my Advisers without whose skilled assistance
my task would have been impossible and to whom I am accordingly greatly
indebted.
1.9 In this Report, the "Client" means the Scottish Parliamentary
Corporate Body; the "Project Team" means the Client’s Project
Sponsor, Project Managers and their team; the "Design Team" means
the Architect, the Engineers, the Quantity Surveyor and other design
consultants; the "Construction Manager" means Bovis.
1.10 My Report is provided to the Corporate Body to assist with its
review of the Holyrood Project. The estimates for the building and
fit-out costs have been provided by, or derived from information provided
by, the Quantity Surveyor and the Project Team. The expenditure figures
have been provided by the Project Team. I have not independently measured
the area of the building. I have not made any independent estimates
of, nor made market enquiries about, building or fit-out costs. I
have not made any independent check of the expenditure figures.
1.11 My views on the scope for potential changes to the costs of the
building and fit-out are based on my understanding of the current
proposals of the Design Team and the Project Team.
1.12 The actual potential for real and achievable changes is a matter
for the Project Team and the Design Team based on their knowledge
of the Project. Any confirmation of the budget or establishment of
a new budget for the Project is a matter for the Client based on advice
from the Project Team and the Design Team. Any approvals by the Client
of design or design changes and any approval of expenditure estimates
should be based on advice given to the Client by the Project Team
and the Design Team.
John D Spencely
MA BArch DipTP RIBA PPRIAS MRTPI FCIArb
24 March 2000
2 My Terms of Reference
My terms of reference are as follows:
1 To review the current estimates of cost and time to delivery and
occupation
2 To review the value for money of the Project
3 To review and compare the advantages of alternative contractual
methods
4 To review the effect on cost and delivery of a reduced specification
5 To review the effectiveness of communications between the Corporate
Body and the Project Team
6 To report on the current market value of the Holyrood site
7 To report on expenditure to date
and to make recommendations and consider options for future action
as I think fit.
3 The Chronology of the Project
3.1 The Holyrood site was selected in January 1998.
3.2 The Brief was produced in April 1998.
3.3 The Architect was appointed in July 1998.
3.4 The Architect’s Outline Proposals were presented to the
Client in October 1998.
3.5 The Brief was revised by the Client during the Outline Proposals
work stage.
3.6 The Architect’s Scheme Design, which accommodated the changes
to the Client’s Brief, was presented to the Client in March
1999.
3.7 Responsibility as Client for the project passed from the Secretary
of State of Scotland to the Scottish Parliament on 1 June 1999.
3.8 On 17 June 1999, the Scottish Parliament agreed the following
motion:
That the Parliament endorses the decision
to provide its permanent home on the Holyrood site and authorises
the Scottish Parliamentary Corporate Body to take forward the project
in accordance with the plans developed by the EBMT/RMJM design team
and within the timescale and costs estimates described in the Presiding
Officer’s note to members of 9 June 1999.
3.9 The Scheme Design was never approved by the Client
but the Design Team was instructed to proceed with detailed design in
July 1999.
3.10 A value engineering (cost reduction) exercise was carried out in
the summer and autumn 1999 by the Design Team. In October 1999 the Design
Team was instructed by the Client to change the shape of the Debating
Chamber and did so.
3.11 In November 1999 the Design Team was instructed by the Client to
implement some of the potential design changes identified in the value
engineering exercise, and to carry out a feasibility study on accommodating
203 additional staff.
3.12 In February 2000 the Design Team reported on the changes to the
design necessary to accommodate the additional staff.
3.13 In March 2000, after the commencement of my Review, the Design
Team was instructed by the Client to investigate the potential for reducing
the size of the building and the quality of the specification in order
to reduce the cost of the building.
4 Review of the current estimates of cost
4.1 This section reviews the history of cost reporting for the Project
and provides, at paragraph 4.5 below, an estimate of the cost of the
Project as I believe it actually stood in February 2000.
Costs have been reported throughout this Project under two main headings:
- basic construction cost
- fit-out and other costs
The fit-out cost and other costs includes
professional fees, VAT, site acquisition costs, demolition and furniture,
fittings and other
equipment not included in the basic construction cost.
4.2 The basic construction cost
4.2.1 10 separate cost reports, from the original site comparison
cost completed in December 1997 to the last feasibility cost check
on the plans current as at February 2000, have been produced by the
Quantity Surveyor. A value engineering exercise carried out in
the summer and autumn of 1999 by the Design Team culminated in a report
submitted to the Project Sponsor in October 1999.
4.2.2 These cost reports have been examined and the level of drawing
and specification information available at each stage for
costing has been established in discussion with the Quantity Surveyor.
4.2.3 The following table has been produced in order to plot the movement
of the basic building cost over the last two years. A
commentary follows.
Breakdown of |
|
Site
|
|
Yardstick
|
Stage C
|
|
Interim
|
|
Interim
|
|
Stage D
|
|
Stage D
|
|
Interim
|
|
Interim
|
Interim
|
Buildings/elements |
|
Comparison
|
Costs
|
|
Cost
|
|
Cost
|
|
Cost
|
|
Cost
|
|
Cost
|
|
Cost
|
|
Cost
|
Cost
|
|
|
|
DEC '97
|
|
23/10/98
|
|
03/11/98
|
|
11/02/99
|
|
04/03/99
|
|
26/03/99
|
|
25/05/99
|
|
30/08/99
|
|
27/09/99
|
14/02/00
|
|
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
|
£M
|
£M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assembly Block |
} |
44.93
|
} |
53.30
|
} |
53.98
|
} |
57.36
|
} |
54.70
|
} |
54.38
|
} |
54.61
|
} |
66.53
|
|
48.74
|
63.41
|
|
|
} |
|
} |
|
} |
|
} |
|
} |
|
} |
|
} |
|
} |
|
|
|
|
MSP Block |
} |
|
} |
|
} |
|
} |
|
} |
|
} |
|
} |
|
} |
-
|
|
20.54
|
22.98
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Queensberry House |
} |
|
} |
|
|
2.17
|
* |
1.79
|
* |
1.79
|
* |
1.79
|
* |
1.81
|
* |
1.86
|
* |
5.98
|
10.34
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car park |
|
} |
|
} |
|
|
2.09
|
|
2.42
|
|
2.72
|
|
3.12
|
|
3.45
|
|
5.22
|
|
6.50
|
6.89
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
East Basement |
} |
|
} |
|
|
Incl.
|
|
incl.
|
|
Incl.
|
|
incl.
|
|
incl.
|
|
incl.
|
|
7.62
|
8.30
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site dev/prep. |
} |
|
} |
|
|
1.54
|
|
1.83
|
|
1.85
|
|
1.85
|
|
2.29
|
|
2.79
|
|
4.97
|
3.36
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preliminaries |
} |
|
} |
|
|
7.47
|
|
incl.
|
|
Incl.
|
|
incl.
|
|
incl.
|
|
incl.
|
|
incl.
|
incl.
|
|
|
} |
|
} |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Externals |
|
} |
|
} |
|
|
Incl.
|
|
incl.
|
|
Incl.
|
|
incl.
|
|
incl.
|
|
incl.
|
|
incl.
|
incl.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub total |
|
|
44.93
|
|
53.30
|
|
67.25
|
|
63.40
|
|
61.06
|
|
61.14
|
|
62.16
|
|
76.40
|
|
94.35
|
115.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhancement |
|
-
|
|
-
|
|
-
|
|
-
|
|
3.11
|
|
4.13
|
|
4.13
|
|
7.39
|
|
incl.
|
incl.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingencies & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Design Reserve |
|
4.50
|
|
5.36
|
|
6.78
|
|
6.34
|
|
6.43
|
|
6.53
|
|
5.22
|
|
8.38
|
|
17.19
|
19.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Design risk |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assessment |
|
-
|
|
-
|
|
-
|
|
17.03
|
|
17.28
|
|
16.16
|
|
15.86
|
|
21.70
|
|
incl.
|
incl.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Art |
|
|
0.10
|
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
|
0.25
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Site costs |
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1.58
|
|
1.58
|
|
3.59
|
3.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
|
-
|
|
-
|
|
-
|
|
0.14
|
|
0.14
|
|
0.14
|
|
incl.
|
|
incl.
|
|
incl.
|
incl.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
49.53
|
|
58.91
|
|
74.28
|
|
87.16
|
|
88.27
|
|
88.35
|
|
89.20
|
|
115.70
|
|
115.38
|
138.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross area |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ex car park m2 |
|
16,470
|
|
21,299
|
|
21,396
|
|
22,905
|
|
23,098
|
|
23,214
|
|
23,214
|
|
27,329
|
|
27,329
|
29,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car Park m2 |
|
3,600
|
|
3,300
|
|
3,300
|
|
3,736
|
|
3,867
|
|
3,867
|
|
3,867
|
|
3,792
|
|
3,792
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross area m2 |
|
20,070
|
|
24,599
|
|
24,696
|
|
26,641
|
|
26,965
|
|
27,081
|
|
27,081
|
|
31,121
|
|
31,121
|
31,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* These figures excludes
M&E costs which are in the Main Building figures
|
|
|
|
|
|
4.3 Commentary on cost reports
4.3.1 The first cost estimate produced was part of the cost comparison
of Holyrood with other sites. It was based on a notional design produced
in December 1997. The basic construction cost was estimated at approximately
£50 million for a gross building area of 20,070m2. The balance area
(for circulation, plant rooms etc) used in the brief calculation was
20% of net area; this has proved to be an underestimate.
4.3.2 Once the design team was appointed yardstick costs were produced
by the Quantity Surveyor based on average rates for the different
types of accommodation and in October 1998 a new cost estimate of
£58.9 million was produced.
4.3.3 The winning concept design was developed in more detail over
the next 6 months, culminating in the Stage D cost estimate of 25
May 1999 of £89.2 million for a gross floor area of 27,081 m2 (including
approximately 40% balance area).
4.3.4 An amended budget of £62 million was approved in June 1999 based
on this estimate. This excluded the design risk assessment (i.e. design
uncertainty) and other costs totalling £27.04 million which had been
included in the £89.2 million estimate but which were not identified
in cost terms in the report to the Client.
4.3.5 Area and cost estimates produced in August and September 1999
showed a substantial increase in gross floor area to 31,121 m2 and
a rise in the basic construction cost to £115 million.
4.3.6 The value engineering exercise was conducted with the target
of achieving 25% savings. Potential reductions of £20 million in the
basic construction cost were identified of which £13.3 million were
accepted by the Client.
4.3.7 The area and cost estimates produced by the Quantity Surveyor
in February 2000 showed a further rise to a basic construction cost
of £138.49 million for 31,310 m2 gross floor area. These estimates
were based on the Feasibility Study prepared by the Design Team to
show how 203 additional staff could be accommodated. The reliability
of the cost estimate is uncertain, in my opinion, due to the short
time within which it was made and the limited information on which
it was based. Although the total gross area was only up by 200 m2
from the September 1999 figure, the (expensive) building area was
actually increased by 2,250 m2 partially balanced by
a reduction of (cheaper) car park area by 2,061 m2.
4.3.8 The effect of the changes to the Brief is that, in my opinion,
the Project design is less settled than it was in March 1999 and that
the estimate for the basic construction cost is less reliable than
it was in May 1999.
4.4 Fit-out and Other costs
4.4.1 In the latest report of February 2000 from the Quantity Surveyor
the costs excluded from the basic construction cost were as follows:
1. Site acquisition and associated costs
2. Building control and planning fees
3. Off site costs in respect of party wall disputes
4. Future legislative changes
5. Site and building investigation costs
6. Historic Scotland and archaeology contractor costs
7. Effect of discovery/excavation etc
8. Demolition costs
9. Hard and soft landscaping
10. Built furniture in MSP offices and Assembly and all internal furniture
and fittings, planting and equipment
11.Video Conference fit-out
12. Media room fit-out
13. IT hardware/equipment, data, video wall, video conferencing, telephones,
electronic voting etc
14. Official Building Models and wind tunnel testing
15. Inflation beyond March 1998
16. Professional consultants and Construction Management fees and
charges VAT
4.4.2 Project costs were reported to the Client in June 1999 showing
an original figure of £90 million and a revised figure of £109
million, as follows:
|
|
|
|
£ million
|
£ million
|
Site acquisition, demolition,
archaeology
|
5.0
|
5.0
|
Construction
|
|
|
50.0
|
62.0
|
Contingencies
|
|
|
5.0
|
6.0
|
Fees
|
|
|
|
10.5
|
14.0
|
VAT
|
|
|
|
12.0
|
14.0
|
Total site and construction
cost
|
82.5
|
101.0
|
Fit-out including loose
furniture & IT etc
|
|
7.5
|
7.5
|
Financial provision
required
|
90.0
|
109.0
|
It will be seen that the fit-out budget was £7.5 million. |
|
|
4.4.3 As part of this Review the Project
Team has, at my request, updated the fit-out costs, which include
an allowance for contingencies, as follows:
|
£ million |
Chamber |
2.00 |
Committee Rooms |
1.50 |
Catering Furniture |
0.50 |
Reception Areas |
0.25 |
MSP Block |
2.37 |
Queensberry House |
0.44 |
Towers/Canongate |
1.10 |
Miscellaneous |
2.31 |
IT |
2.85 |
Broadcasting |
2.63 |
|
15.95 |
* Allowance for Fees |
0.50 |
VAT 17.5% |
2.88 |
|
|
Revised Total
for Fit-out |
19.33 |
|
|
Note: *This
is a provisional allowance for ad-hoc advice to the Project
Team. |
4.4.4 This revised total is incorporated
into the estimate of total budget requirements in section 4.5 below.
4.4.5 The base date used by the Quantity Surveyor for estimating basic
construction costs is March 1998. Cost estimates have to be adjusted
for the effects of inflation from then to the tender dates for the
various work packages so that the estimates may more closely reflect
what may happen to tender prices. Such adjustments have not so far
been applied to the cost estimates for this project. This Report does
so.
4.4.6 Any prediction for future inflation is naturally uncertain.
In the assessment of future costs contained in this Review, the Building
Cost Information Service indices
produced under the auspices of the Royal Institution of Chartered
Surveyors have been used. This produces a figure of 5% building inflation
from March 1998 to October 2001 which has been applied to the construction
cost in the estimate of total budget requirements below.
4.4.7 The site staff and accommodation costs of the Construction Manager
for any period beyond January 2002 have not so far been included in
any cost report. This Report does so.
4.5 Total Current Budget Requirements
4.5.1 I believe that the total Project Budget requirement for the
scheme presented to the Client in February 2000 was as follows:
|
|
|
|
£ million
|
Site acquisition, demolition,
archaeology(including VAT)
|
5.00 |
Construction
|
|
|
126.00 |
Contingencies
|
|
|
12.50 |
Professional & Construction
Management fee
|
|
21.50 |
Construction Manager
Staff Costs (to January 2002)
|
2.24
|
Subtotal
|
|
|
|
167.24
|
VAT on £162.24 @ 17.5%
|
|
28.39
|
Fit-out (including VAT)
|
|
19.33
|
Inflation allowance
from March 1998 on Construction Works to end of Tendering period
|
9.40 |
Construction Manager’s
costs Extended to Dec 2003
|
6.50 |
Total
|
|
|
|
230.86
|
I understand that VAT on Professional fees may be recoverable. If
this is the case, the total would be reduced by approximately £3.94
million to a total of £226.92 million.
4.6 Costs allocated to other budgets
4.6.1 Some costs associated with the Project are, and always have
been, covered by separate budgets. These include, for example, landscaping
works between the Holyrood site and the Queen’s Park and the
costs of the Project Team staff and their site accommodation. Such
costs are accordingly not included in any of the cost comparisons
in this Review. I understand that they have been reported to the Corporate
Body by the Project T
5 Review of the current estimate of time to
delivery and occupation
5.1 The most recent estimate of time to delivery and occupation prepared
by the Construction Manager (reference Bovis Programme dated 11 February
2000) was as follows:
Delivery of building |
|
24 December 2002 |
Occupation |
|
25 August 2003 |
5.2 Taking into account the current state
of the design and the current instructions to the Design Team, I consider
it unlikely that these dates will be achieved.
5.3 On the assumptions (provided by me to the Construction Manager),
that a new Scheme Design, including a cost plan, will be approved
by the Client by 8 June 2000 and that Bovis are appointed to manage
the fit-out as well as the basic construction, more realistic estimates
of time to delivery and occupation are as follows:
Delivery of building |
|
25 August 2003 |
Occupation |
|
24 December 2003 |
5.4 It is clearly imperative that the Brief is frozen now and that
the Design Team proceeds immediately to produce a Scheme Design including
a cost plan to a Brief and a budget approved by the Client, so that
approval may be given to proceed with the Project by 8 June 2000,
or earlier if that is possible. Removal of the current uncertainties
and a reduction in the overall Project cost could result in an earlier
date for delivery and occupation. These are matters for consideration
by the Client and the Project Team.
5.5 The MSP Block is programmed for completion in June-July 2002 and
Queensberry House in March-April 2003. I recommend that the Client
should consider taking
occupation of these two buildings in advance of the final project
completion date, for three reasons. They would otherwise lie unoccupied
which is bad for buildings; current MSPs would be able to occupy their
office accommodation before the next election; and the overall capital
cost of the project would be reduced by relieving the project of the
Construction Manager’s costs for maintaining the buildings unused
for up to 18 months. The resulting saving would accrue to the Client.
Early occupation would require the current location of the main plant
to be reconsidered, but I am advised that this would not be an insurmountable
problem.
6 Review of the value for money of the project
6.1 In this section, I set out some comparative costs for guidance
and follow this by a discussion on value for money.
6.2 Cost comparisons
6.2.1 The current estimate of the cost of the three principal elements
of the project, on a rate per m2 basis, is
MSP Block |
|
£ 3,659m2 |
Queensberry House |
|
£ 4,061m2 |
Assembly/Debating Chamber |
|
£ 3,521m2 |
6.2.2 The MSP Block provides accommodation for MSPs and their support
staff. It may reasonably be compared with, on the one hand, high quality
Headquarters Buildings in Edinburgh and, on the other, Portcullis
House (the new accommodation for MPs at Westminster), as follows:
MSP Block |
|
£ 3,659m2 |
Headquarters Building |
|
£ 1,544m2 |
Portcullis House |
|
£ 4,742m2 |
It will be noted that the MSP Block is estimated by the Quantity Surveyor
at a rate which is twice as expensive as an equivalent Headquarters
Building in Edinburgh, but about 75% of the cost of Portcullis House.
6.2.3 Queensberry House provides office accommodation for the Presiding
Officer and reception facilities for MSPs. I have been unable to find
an equivalent project for comparison. It will however be noted that
it is the most expensive part of the project, albeit the smallest,
and that it is nearly as expensive as Portcullis House.
6.2.4 The Assembly/Debating Chamber provides meeting rooms for the
committees of the Parliament, the Debating Chamber and support accommodation.
I have not found an exactly equivalent building in the UK and have
accordingly chosen to compare it with the newly completed Museum of
Scotland, simply because this is also a complex city centre building
with demanding structural and servicing requirements.
Assembly/Debating Chamber |
|
£3,521m2 |
Museum of Scotland |
|
£2,587m2 |
6.2.5 The fit-out costs of the Project have been calculated as a percentage
of the basic construction cost to allow the following comparison:
Parliament |
|
13.3% |
Headquarters Building |
|
16.0% |
Museum of Scotland |
|
38.0% |
Information on Portcullis House is not included because the published
information is limited, and the Museum clearly has fit-out requirements
of a different order. The
comparison with the Headquarters Building favours the Parliament and
suggests that the fit-out standard is appropriate.
6.3 Comparison of basic construction costs
6.3.1 It may be helpful to show how these figures are built up.
TABLE 1
Comparative Analysis
: MSP Block
|
|
|
|
|
|
|
|
|
MSP Block
|
|
HQ Office
|
|
Portcullis House
|
Element
|
|
Rate/m2
|
|
Rate/m2
|
|
Rate/m2
|
|
|
|
|
|
|
|
Substructure
|
|
62
|
|
130
|
|
Incl
|
Frame Upper Floors &
Roof
|
)
|
|
)
|
|
)
|
|
Roof Finishes
|
)
|
1051
|
)
|
246
|
)
|
1178
|
Stairs
|
|
50
|
|
44
|
|
34
|
External Walls Windows
& Doors
|
|
1145
|
|
300
|
|
1723
|
Internal Walls &
Doors
|
|
243
|
|
50
|
|
396
|
Wall Finishes
|
)
|
|
)
|
|
)
|
|
Floor Finishes
|
)
|
|
)
|
|
)
|
|
Ceiling Finishes
|
)
|
265
|
)
|
165
|
)
|
307
|
Fittings
|
|
28
|
|
34
|
|
96
|
Services
|
|
720
|
|
475
|
|
1008
|
|
|
|
|
|
|
|
Preliminaries
|
|
95
|
|
100
|
|
Incl
|
|
|
|
|
|
|
|
Total Rate/m2
|
|
£3,659
|
|
£1,544
|
|
£4,742
|
6.3.2 In my opinion, the rates for the frame, upper floors and roof
finishes, the external walls and for the services would be worth reviewing
and the design and/or specification reconsidered if cost reductions
are to be pursued.
TABLE 2
ComparativeAnalysis:
Assembly/Debating
|
|
|
|
|
Assembly
|
|
Museum
|
|
Element
|
|
Rate/ m2
|
|
Rate/ m2
|
|
|
|
|
|
|
|
|
|
Substructure
|
|
155
|
|
156
|
|
Frame Upper Floors &
Roof
|
)
|
|
|
|
|
Roof Finishes
|
|
)
|
869
|
|
425
|
|
Stairs
|
|
62
|
|
201
|
|
External Walls Windows
& Doors
|
|
765
|
|
584
|
|
Internal Walls &
Doors
|
)
|
Incl
|
|
Incl
|
|
Wall Finishes
|
)
|
361
|
|
461
|
|
Floor Finishes
|
|
130
|
|
162
|
|
Ceiling Finishes
|
|
|
70
|
|
35
|
|
Fittings
|
|
98
|
|
Excl
|
|
Services
|
|
978
|
|
563
|
|
|
|
|
|
|
|
|
|
Preliminaries
|
|
33
|
|
Incl
|
|
Total rate/ m2
|
|
|
|
£3,521
|
|
£2.587
|
|
Total area/ m2
|
|
|
|
20,329 m2
|
|
12,803 m2
|
|
|
|
|
|
|
|
|
|
6.3.3 In my opinion, the rate for the frame, upper floors and roof
finishes would be worth reviewing and the design and/or specification
reconsidered if cost reductions are to be pursued. The rate for the
external walls may be explained by the complex building shape and
the rate for services by the sophistication of the communications
systems and security. They may be less open to review.
TABLE 3
Analysis of Queensberry
House
|
|
|
|
|
|
|
|
Element
|
Rate/ m2
|
|
|
|
|
|
|
Repairs & Restoration
|
|
1724
|
|
Building Works
|
224
|
|
Wall Finishes
|
|
358
|
|
Floor Finishes
|
|
199
|
|
Ceiling Finishes
|
|
211
|
|
Fittings
|
|
134
|
|
Services
|
1211
|
|
Total Rate/ m2
|
£4,061
|
|
|
|
|
|
|
Total Area m2
|
|
2483 m2
|
|
6.3.4 The repairs and restoration element is clearly a considerable
burden on this part of the project. In my opinion, the rate for the
services is unusually high and would be worth reviewing and the design
and specification reconsidered.
6.4 Overall value for money
6.4.1 Value for money is in the eye of the beholder; in this case,
the Nation as expressed through the collective voice of Parliament
in debate.
6.4.2 If the current estimate of the Project cost, at £230.86 million
or thereby (see section 4.5.1 above), is accepted as accurate and
affordable, then no more need be said by me.
6.4.3 However, if Parliament were to decide that this is too great
a price to pay, but that the Project should proceed, then it may wish
to authorise a lesser sum on the Project.
6.4.4 I would counsel against setting cost limits on individual buildings.
The current design proposals for many parts of the Project have, I
consider, potential for reductions, and to set precise limits would
place unhelpful restrictions on the Project Team and disadvantage
the Project. I recommend that Parliament should go no further than
setting a limit for the Project as a whole and some guidance is given
in section 8 below.
6.5 Building area and overall quality
6.5.1 Turning now to the building, as opposed to the Project as a
whole, I observe that cost is the product of building area and building
quality. And that value for money is the perception of what one is
getting for one’s money in absolute and relative terms. It is
possible to reduce the cost of a building by making it smaller and/or
by reducing the quality of materials and the quality and extent of
the built-in services and fit-out required for creature comfort and
support to the occupants.
6.5.2 Whatever quality is now thought to be appropriate in the light
of the reported costs, the Design Team has been working to meet the
requirement that "the building which the Scottish Parliament occupies
must be of such a quality, durability and civic importance as to reflect
the Parliament’s status and operational requirements" and that
must clearly be kept in mind if costs are to be reduced.
6.5.3 The area of the building is a consequence of the number of people
working in the building and of the functions which they have to perform.
This is of course a matter for the Client.
6.5.4 On the assumption that staff displaced by reducing the size
of the buildings have to be housed elsewhere, the Client may wish
to consider, before taking a decision on size reduction, where they
would be housed and at what capital cost, if any.
6.5.5 Furthermore, it is the experience of all organisations, old
and new, that moving into a new building usually reveals that more
space is needed than had been
anticipated. It would, in my opinion, be imprudent to reduce the area
below the maximum that the site can contain, if this can be afforded.
6.6 Changing the site
6.6.1 I have considered whether or not a change of site for the Project
would be productive of savings in the present design. I have not considered
the merits of other sites.
This was not in my terms of reference. However the present state of
the Project has nothing, in my opinion, to do with the location of
the site.
6.6.2 Changing the site would mean starting again. A new brief would
be required as the precursor to a new design. The present design could
not, in my opinion, be
transplanted unchanged. Time would be lost and this would cost money.
The money invested in the Project to date would be largely thrown
away.
6.6.3 For these reasons and on the basis of the information currently
available to me, I consider that there would be no advantage in moving
this design to another site.
6.7 Queensberry House
6.7.1 In my opinion, the expenditure on Queensberry House, at an estimated
£10 - £11 million, is not value for money when compared with the benefit
gained. On the
information available to me, the building is in poor structural and
physical condition. In my opinion, the interior contains little of
architectural (as opposed to archaelogical)
value and the interior spaces are neither grand nor memorable. The
current design requires removing most of the fabric of the building,
and creating a conjectural 17th century
external appearance built around extensively repaired external walls.
The construction will be largely 21st century.
6.7.2 This is, in my opinion, an inappropriate approach to providing
Parliamentary accommodation, which can in any case only be achieved
at great expense in this building. It would, in my opinion, be more
appropriate and cost effective to provide the accommodation within
a building clearly of the 21st century.
6.7.3 Nevertheless, the current approach may be considered essential
and I appreciate that the design and design approval processes may
have reached a stage of finality which to undo might cause real harm
to the programme. If this is the case, the same effect could be achieved
at lesser cost by building anew from new foundations and I recommend
that this be done.
6.8 The MSP Block
6.8.1 In my opinion, the cost of the facades of the MSP block could
be reduced by simplifying the design. This would also make the facades
easier to build and reduce the frequency of maintenance, without compromising
the integrity of the architectural design. I recommend that this be
done.
6.9 Other issues
6.9.1 It has not been possible to review the value for money of other
elements of the Project within the time available. It will be clear
from the tabular comparisons contained in sections 6.2 – 6.3
above that there are significant variances from the costs of elements
of other comparable buildings and I recommend that these should be
borne in mind by the Client and the Design Team.
6.9.2 The terms of the agreements between the various members of the
Design Team and the Client and between the Construction Manager and
the Client are commercially confidential. I have studied them, but
as they are conventional, I do not think it necessary to subject them
to analysis in this review.
6.9.3 I do however observe that they were entered into on the basis
of a £50 million project. No doubt, had it been appreciated at the
time of entering into these contracts that the building costs might
increase to the levels now estimated, other terms might have been
agreed and the Parties may wish to consider this matter.
7 Review and comparison of the advantages of alternative contractual
methods
7.1 This section is about alternative contractual arrangements for
the building works. It is not about alternative methods of funding
the capital required for the Holyrood Project, which I have not been
asked to consider and which are, in my opinion, irrelevant to the
present situation.
7.2 The current contractual arrangement, which was selected before
the Design Team was appointed but confirmed as appropriate by the
Design Team, is as follows:
- The building works are divided into a series
of individual "works packages", each for a recognisable element,
such as "foundations", "frame", "electrical services", etc.
- Each is put out to the market at the appropriate
moment, for suitable contractors to tender competitively. The most
economical is accepted and the work in that package proceeds. A
number of work packages will be in progress on site at any one time.
Clearly the work of individual work package contractors has to be
coordinated. A Construction Manager (Bovis) is employed by the Client
to do this.
- Each work package contractor is contracted to
the Client to carry out and complete his package in accordance with
the relevant drawings and specification.
7.3 This contractual arrangement may be contrasted with the "single
stage lump sum building contract", by which the carrying out and completion
of the entire building works are entrusted by the client to a single
"main contractor". The main contractor may (if he so wishes and as would
be normal) subcontract part or most of the works to subcontractors.
In this case, the main contractor and not the subcontractor is responsible
to the Client for carrying out and completing the works in accordance
with the drawings and specification. The main contractor coordinates
his own work with that of each of his subcontractors.
7.4 The principal reason for preferring the "construction management"
over the "single stage lump sum" contract is that the former does not
require the entire work for the whole building to be designed and specified
before any one "trade package" is let, whereas the latter does.
7.5 Other things being equal, a building project will be completed earlier
by using the "construction management" method because building can start
earlier.
7.6 Subsidiary advantages of the "construction management" method are
as follows:
- The construction manager is engaged before any
building work starts and while design work is still in progress.
The Design Team can accordingly use his expertise in building techniques
to inform their detailed construction decisions, and his expertise
in programming construction operations to inform the selection of
appropriate work packages and the timing of design decisions.
- Because each work package is tendered separately
in a logical progression, any variance from the budget for a particular
work package can be compensated by increasing or reducing the content
of subsequent packages. This can provide a welcome degree of flexibility
to the Client and Design Team, albeit that this will diminish with
each successive work package.
- Furthermore, as each work package is tendered
separately, advantage of market conditions for each can be obtained
at the time it is tendered.
7.7 The advantages and disadvantages, by comparison, of the "single
stage lump sum contract" are a mirror image.
- In place of a speedier start on site, leading
to an earlier completion, the client obtains a greater degree of
cost certainty.
- In place of separate contracts with each trade
package contractor, the client obtains a single point of responsibility
with the main contractor.
- In place of the market price for each trade package,
the client has to pay the main contractor’s price which is
the aggregate of the cost of his own work and whatever price he
places on the work of his sub-contractors. The client does not know
what the subcontractor is being paid. In a fierce market place,
potential subcontractors may be subjected to a dutch auction, forcing
down their prices to the advantage of the main contractor. The client
will not benefit from the dutch auction but may suffer from a reduced
quality of management and workmanship by the subcontractor.
7.8 There are several contractual variants between the poles of "construction
management" and a "single stage lump sum contract" which are not, in
my opinion, relevant in the present circumstances. The question which
I therefore consider is whether it is advisable to change from the present
"construction management" method to a "single stage lump sum contract".
7.9 A necessary precondition for a "single stage lump sum contract"
is a completed set of production information drawings and specification
before tenders for the works as a single package are obtained. I consider
the consequence of waiting for a completed set would be considerable
delay to the start, and therefore to the completion of the works.
7.10 The Project would lose the benefit of the expertise provided by
the present construction manager, and the knowledge of the Project which
he has accumulated since he was appointed in 1998.
7.11 Accordingly, I recommend that the contractual arrangements should
not be changed.
8 Review of the effect on cost and delivery of
a reduced specification
8.1 To reduce the settled specification for a project is to make a change.
Any change to a project has the potential to cause confusion (which
may lead to design error and/or uncoordinated design), delay and additional
cost. Most architects have had the experience of seeing changes instructed
to save money turning out unexpectedly to increase costs.
8.2 The timing of change is therefore critical.
8.3 In the Plan of Work adopted for this Project, the design programme
is divided into five work stages as follows:
Briefing
Outline Proposals
Scheme Design
Detailed Design
Production Information
8.4 In my opinion, this Project has not reached the end of Scheme Design.
Consequently, a reduced specification of materials should have the effect
of reducing cost more than the additional cost which might arise from
delay to the Project. Reducing the specification should, if it leads
to a simplification of the design of the building (in particular its
external appearance), also enable the building to be built more quickly.
8.5 To answer in another way, I suggest that any possible effect on
progress should not preclude consideration of a reduction in specification
if that were thought to be desirable for other reasons.
8.6 I have considered the scope for reducing the Project cost. This
is of course an exercise that can only be done knowedgeably by the Design
Team and the Project Team who are familiar with the Project design in
all its detail. I am confident from the discussions which have been
held with the Design Team and the Project Team that there is scope for
doing so and the cost comparisons in this Review support their view
that this is possible.
8.7 Such an exercise could, in my view, produce reductions in the order
of 15 – 20% from the current (February 2000) estimate of basic
construction cost and 10 – 15% from the current estimate of fit-out
costs. Achieving such reductions would produce the following results:
|
Target savings
|
£ millions
|
Building
|
20%
|
15%
|
Site acquisition,Demolition,
archaeology
|
nil
|
nil
|
Construction and Contingencies
|
£27.70
|
£20.70
|
Fees
|
£4.30
|
£3.20
|
Construction Manager
|
Nil
|
Nil
|
VAT
|
£5.60
|
£3.20
|
Inflation
|
£1.90
|
£1.41
|
Extended programme
|
Nil
|
Nil
|
Fit-out
|
15%
|
10%
|
Gross reduction
|
£2.90
|
£1.93
|
Total reduction
|
£42.40 million
|
£31.44 million
|
Achieving one or other of these targets would produce a basic building
cost of £110.8 - £117.8 million and an overall Project cost of £188.46
- £199.42 million.
If VAT can be recovered on professional fees as previously mentioned,
a further £3.5 million in round terms could be saved from these figures.
9 Review of the effectiveness of communications
between the Corporate Body and the Project Team and recommendations
9.1 Conventional management structures and management processes for
a government funded project are in place. The Design Team has adopted
the industry standard "Plan of Work" for its design work.
9.2 Management Targets
9.2.1 Nevertheless the Project has acquired three characteristics
which these management systems are designed to prevent, as follows:
- The approved budget bears no relation to the
current Brief.
- The current Scheme Design bears no relation to
the approved budget.
The Project cannot be completed by the completion
date most recently reported to the Client.
9.2.2 Thus the Client’s expectations for time and cost are not
being met.
9.3 Communications
9.3.1 There is an established route for communications between the
Corporate Body as Client and the Project Team.
9.3.2 Nevertheless the messages which are communicated are not always
understood and do not always lead to action being taken, when action
is clearly required. That the Client’s expectations for time
and cost were not being met has been known within the Project Team
for nine months at least.
9.3.3 Messages are not always communicated along the established route
and line managers are accordingly, on occasion, less well informed
about decisions taken further up the line than those whom they are
employed to manage. This is clearly destructive of effective management.
In particular, messages between the Client and the Design Team do
not always pass through the Project Sponsor and Project Manager. This
has led to misunderstandings and to instructions not always being
acted on. I have observed examples of both of these during my brief
acquaintance with the Project.
9.4 Management recommendations
9.4.1 I do not consider that the characteristics to which I refer
above are the consequence of the management structure or the Plan
of Work procedures and I do not, accordingly, think that changes to
the structure or the procedures are essential. Nevertheless some changes
to the manner in which management operates would benefit the Project,
as follows:
- Those responsible for communicating a matter
on which a decision is required must ensure that the need for the
decision is spelt out in the communication.
- Those responsible for decision making must allocate
sufficient time to make and communicate decisions effectively through
the correct channel.
- Where matters are to be discussed and decisions
made at a meeting, the relevant line manager(s) should be present.
Thus, the Project Sponsor and the Project Manager should be present
at any meeting between the Client and the Design Team. The Project
Sponsor should be present at any meeting between the Client and
the Project Manager.
9.4.2 Although I do not consider it essential that the management
structure should be changed, it would nevertheless be prudent for
members of the Corporate Body to consider whether it has the time
and expertise to perform the Client role on a day-to-day basis. If
it does not think that it has, there are two options which could be
considered:
- Specialist member
Appoint one member of the Corporate Body as the principal link with
the Project Team, spending more time than any member of the Body
has yet been able to do and
becoming in the process better informed and more expert in Project
matters.
or
- Project Progressing Committee
Establish a Project Progressing Committee to support the Corporate
Body in the delivery of the Project. I leave consideration of who
should serve on this to the
Corporate Body.
In either case the responsibilities of the Project Sponsor should, in
my opinion, remain unchanged.
9.4.3 I recommend that arrangements are made to facilitate a closer
working relationship between the Architect and Engineers and the Quantity
Surveyor.
9.4.4 I recommend that the future design work of the Architects should
take place only in one office, rather than being geographically split.
10 Report on the current market value of the Holyrood site
10.1 The site has been valued by the Chief Valuer for Scotland. His
valuations are based on what I consider to be reasonable assumptions,
but which have naturally not been market tested nor indeed checked with
the local planning authority. The determining factor is the investment
required for Queensberry House.
10.2 The Chief Valuer has provided three valuations for a mixed residential,
retail, office and hotel development of 25,000 m2, taking into account
the benefit of the work done on site and with three different assumptions
for Queensberry House, as follows:
Scenario 1: £5 million is spent on Queensberry House plus about £2 million
on professional fees, profit/risk, cost of finance and other ancillary
costs; no grant aid is available; the result is a £4 million loss on
the building, which has to be subsidised by the remaining development.
The current open market value of the entire site is estimated to be
between £8 million and £11 million.
Scenario 2: £11 million is spent on Queensberry House plus about £4
million on professional fees, profit/risk, cost of finance and other
ancillary costs; no grant aid is available; the result is a £12 million
loss on the building, which has to be subsidised by the remaining development.
(Note: the current Project estimate for
Queensberry House is £10 - 11 million).
The current open market value of the entire site is estimated to be
between £nil and £3 million.
Scenario 3: The full expenditure on Queensberry House is grant aided.
The current open market value of the entire site is estimated to be
between £12 million and £15 million.
10.3 If the local planning authority were to permit a development of
30,000 m2, these values are estimated as follows:
Scenario 1 |
|
£10 million to £14 million |
Scenario 2 |
|
£ 2 million to £ 6 million |
Scenario 3 |
|
£14 million to £18 million |
10.4 However, neither the Chief Valuer nor I consider that it would
be prudent to assume that this greater area would be permitted by
the local planning authority and I recommend that it be discounted.
10.5 If accounting conventions for expenditure by the Parliament meant
that grant aid to Queensberry House was effectively a debit against
the Project, then Scenario 3 would not be relevant.
10.6 I should emphasise the tentative nature of these valuations.
They have had to be made without the normal enquiries and investigations,
in a very short space of time.
11 Report on expenditure to date
11.1 The expenditure set against the capital budget to date is shown
on the spreadsheet below. The total is £20.907 million.
|
|
|
£m |
£m |
£m |
|
|
|
|
ex
VAT |
VAT |
Inc
VAT |
|
Site acquisition |
|
4.000
|
|
4.000
|
|
Demolition |
|
|
1.000
|
0.175
|
1.175
|
|
Archaelogical survey |
|
1.000
|
0.175
|
1.175
|
|
|
Sub-total |
|
6.000
|
0.350
|
6.350
|
6.350
|
|
|
|
|
|
|
|
Fees |
|
|
All individual figures
below arecommercial-in- confidence
|
|
|
Bovis |
|
|
|
|
|
|
Bovis (temp works) |
|
|
|
|
|
EMBT/RMJM |
|
|
|
|
|
RMJM Services |
|
|
|
|
|
DLE |
|
|
|
|
|
|
OAP |
|
|
|
|
|
|
Buro Happold |
|
|
|
|
|
Carillion |
|
|
|
|
|
|
Turner & Townsend |
|
|
|
|
|
Lime Centre Trust |
|
|
|
|
|
Sub-total |
|
8.006
|
1.401
|
9.407
|
9.407
|
|
|
|
|
|
|
|
Work Packages |
|
|
|
|
|
1610 |
Tower cranes |
|
|
|
|
2100 |
Piling & retention |
|
|
|
|
2200 |
Substructure concrete |
|
|
|
|
2300 |
Earthworks |
|
|
|
|
|
|
Sub-total |
|
0.000
|
0.758
|
5.092
|
5.092
|
|
|
|
|
|
|
|
Queensberry House |
|
|
|
|
|
|
Various works |
|
|
|
|
|
Sub-total |
|
0.011
|
0.002
|
0.013
|
0.013
|
|
|
|
|
|
|
|
Site preparation |
|
|
|
|
|
|
Store
stone |
|
|
|
|
|
|
Well probing |
|
|
|
|
|
Well
drilling |
|
|
|
|
|
|
Sub-total |
|
0.038
|
0.007
|
0.045
|
0.045
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
20.907
|
11.2 The expenditure for March 2000 is expected to be around £3.5
million including VAT. The value of contracts let to and through Bovis
is £17,778,286 including VAT. This includes the value of contracts
let to or through Bovis for which payments have been made as shown
on the spreadsheet.
11.3 The contracts let do not represent committed expenditure. If
the Project were to be cancelled, the various construction and professional
contracts would, in general terms, entitle the contractors to reimbursement
of their earnings to the date of cancellation plus the reasonable
costs of closing down their various operations.
11.4 I cannot say what the costs of termination would be with any
degree of precision. Much would depend on when this was done and,
in my view, the manner in which it was done. However, if the Project
were cancelled in early April 2000, a budget for the costs incurred
as a result, including expenditure already incurred, would sensibly
be in the order of £27-£30 million.
11.5 Relating the site valuations to the predicted cancellation costs
shows that there would be a debit in the order of £16 - £30 million.
Annexe 3
IMPACT ON BUDGET OF CHANGES MADE JUNE 99 TO FEBRUARY 2000
Total cost estimate at June 1999 |
|
109 |
Cost of including additional space |
|
28 |
Queensberry House |
|
7 |
Cost of increased contingency |
|
6 |
Cost of increased fees and site
organisation |
|
13 |
Additional VAT |
|
11 |
Additional fit-out |
|
12 |
Cost of delay |
|
7 |
Complex building shapes (to satisfy
planning, site and design conditions) |
|
2 |
TOTAL
|
|
195 |
SUMMARY OF ESTIMATED COSTS AS AT 28 MARCH 2000
Site acquisition, demolition and
archaeology |
|
5.0 |
Construction estimate |
|
108.0 |
Contingencies on construction,
fees, site organisation costs & VAT |
|
62.5 |
Total site and construction
costs |
|
175.5 |
Fit out (incl VAT and fees) |
|
19.5 |
|
|
|
TOTAL |
|
195.0 |
Appendix
(Note: this Appendix does not form part of the Minutes)
Subordinate Legislation
Affirmative Instrumemnts
The following instrument was laid in draft before the Parliament on 5
April for approval by resolution
The Town and Country Planning (Fees for Applications and Deemed
Applications) (Scotland) Amendment Regulations 2000
laid under the Town and Country Planning (Scotland) Act 1997
Negative Instruments
The following instruments were laid before the Parliament on 31 March
2000 and are subject to annulment
The Environmental Protection (Disposal of Polychlorinated Biphenyls and
other Dangerous Substances) (Scotland) Regulations 2000 (SSI 2000/95)
The Designation of Nitrate Vulnerable Zones (Scotland) Regulations 2000
(SSI 2000/96)
laid under the European Communities Act 1972
The following instrument was laid before the Parliament on 4 April 2000 and is subject to
annulment
The Radioactive Substances (Basic Safety Standards) (Scotland) Regulations
2000 (SSI 2000/100)
laid under the European Communities Act 1972
The following instrument was laid before the Parliament on 5 April and is subject to
annulment
The Census (Scotland) Regulations 2000 (SSI 2000/102)
laid under the Statutory Instruments Act 1946 as read with article 3(3) of
the Scotland Act 1998 (Transitory and Transitional Provisions) (Statutory Instruments)
Order 1999 superseding section 3(2) of the Census Act 1920
Other Documents
The following documents were laid before the Parliament on 31 March 2000
and are not subject to any Parliamentary procedure
Criminal Injuries Compensation Authority Third Annual Report 1998-99 and
Accounts for the year ended 31 March 1999 (SE/2000/31)
laid under the Criminal Injuries Compensation Act 1995
Criminal Injuries Compensation Board Thirty Fifth Annual Report and
Accounts for the year ended 31 March 1999 (SE/2000/36)
Committee Reports
The following Report was published on 31 March 2000
Education, Culture and Sport Committee, 3rd Report 2000: Report on
Subordinate Legislation (SP Paper 101)
The following Reports were published on 5 April 2000?
Local Government Committee, 5th Report 2000: Report on Subordinate
Legislation (SP Paper 102)
Subordinate Legislation Committee, 14th Report 2000: Report on
Subordinate Legislation (SP Paper 103)
Justice and Home Affairs Committee, 2nd Report 2000: Report on
Subordinate Legislation (SP Paper 104)
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