To consider the attached report (CHB-001-2019/20).
The Housing Development Manager gave an update on the progress that had been made across each of the two phases of the Housebuilding programme that were on site (Phases 2 and 3), and the developments that would make up future Phases 4-6.
Burton Road, Loughton – 15 x 3 bed houses, 2 x 2 bed houses, 23 x 3 bed flats & 11 x 1 bed flats
This development was behind programme and had encountered several delays due to the following:
· The discovery of an unidentified live cable running across the site;
· Additional time spent remediating contamination across the site that had not previously been identified; and
· A fire in August 2018 to the upper floors of Block B which had extended completion to July 2019. There would be a phased handover of all of the houses and flats in Block A through April and May 2019.
The anticipated final account was currently £10,861,015.00 which represents a 10% increase upon the originally agreed contract sum. The additional costs relate to the diversion of the live electric cable, additional remediation costs, and additional offsite works that have been instructed on the main highway. The costs relating to the fire will be covered by the Contractor and their insurers with no implications for the Council.
Handovers at Burton Road have now commenced and the 17 houses are all occupied. The flats at Davis Court are due to be handed over on the 12th and 13th June 2019 with the flats at Churchill Court handing over in September 2019.
Bluemans End, North Weald – 2 x 3b houses, 1 x 2b Flat & 1 x 2b flat
The homes were handed over on the 26 March 2018 which was a total of 8 weeks behind programme. This was due to Thames Water delays in providing their connection.
The Final Account was agreed at £839,170.77 which was 11% above the originally agreed contract sum. These additional costs are made up of variations mostly relating to boundary treatments, the removal of unforeseen contaminated waste and removal of asbestos.
Stewards Green Road – 4 x 2b houses
The homes were handed over on the 13th December 2018 which was a total of 46 weeks behind programme. This delay was due to the discovery of asbestos in the hardcore material that had been used to form the sub-base of the new entrance road.
The final account was yet to be agreed but was anticipated at £852,921.00 which was 13% above the originally agreed contract sum. These additional costs are made up of variations mostly relating to boundary treatments and the removal of contaminated waste over and above what had been allowed for. The Council intends to pursue the Consultant for costs in relation to the additional works that were required to clear the previously unidentified hazardous materials.
London Road – 1 x 3b House
The home was handed over having reached practical completion on the 7 March 2018 which was as per the agreed programme
The Final Account was agreed at £262,507.93 which was 11% above the originally agreed contract sum. These additional costs were because of variations to the specification, the most significant additional costs being the change in heating system required and PV installation.
Parklands, Coopersale – 2 x 2b Houses & 1 x 1b Flats
The homes were handed over having reached practical completion on the 10 October 2018 which was a total of 20 weeks behind programme. The delays were due to the design of the gravity fed drainage system and associated increase in ground levels.
The Final Account was agreed at £763,848.98 which was 7% above the originally agreed contract sum. These additional costs were made up of variations, the most significant being the increase in levels across the whole of the development to allow for a gravity fed drainage system.
Springfield and Centre Avenue – 1 x 3b House, 5 x 2b Houses & 2 x 1b Bungalows
The homes were handed over having reached practical completion on the 7 January 2019 which was a total of 28 weeks behind programme. This was due to delays at the end of the programme where external works and boundary treatments took far longer than had previously been anticipated.
The Final Account was agreed at £1,650,655.23 which was 17% above the originally agreed contract sum. These additional costs are made up of variations, the most significant being the provision of a gravity fed drainage system and treatments to the site boundaries.
Centre Drive – 1 x 3b House
The homes were handed over having reached practical completion on the 8 November 2018 which was a total of 19 weeks behind programme. This was due to delays at the end of the programme where additional surface water drainage works had to be undertaken.
The Final Account was agreed at £355,188.00 which was 18% above the originally agreed contract sum. These additional costs are made up of variations, the most significant being the additional surface water drainage works required.
Queens Road, North Weald – 10 x 3b Houses & 2 x 2b Houses
Due to the nature of the site a package of initial enabling works needs to be completed, including the relocation of a UKPN substation before construction works could commence.
A letter of intent was issued to Storm Building Ltd up to a works value of £250K to undertake the enabling works. The enabling works were expected to take three months to complete.
The main construction works were originally expected to commence on the 5 March 2018. However, due to several factors including the discovery of a significant volume of asbestos under the concrete slabs to the garages and delays in completing the relocation of the substation, the start on site this was delayed until the 7 January 2019. Anticipated completion of the project has been delayed until August 2020.
In terms of project costs, there was already a forecast of an overspend of £388,864.00 above the originally agreed contract sum, an increase of 17%. The cost increases were mainly due to:
· The discovery of asbestos for which an additional £125,000.00 was negotiated with the Contractor for removal costs; and
· Delay to the start date post tender to the sum of £157,532.41. The contractors original tender was based on a start date in October 2016 and commenced in August 2017.
Phases 4, 5 and 6
Work had now commenced on the delivery of Phases 4, 5 and 6 with a number of planning permissions already enacted, garages demolished and planning conditions relating to contamination being approved.
In considering how best to approach the procurement of the construction contracts it was agreed to package up the sites in terms of size and geography to take advantage of economies of scale. This had meant that Phases 4, 5 and 6 has been broken down into 9 packages. A schedule of these packages was attached at Appendix 1 to Agenda item 6.
Detailed design development was currently progressing on all 9 of these packages with the furthest progressed (Packages 1,2 and 3) expected to be tendered in July 2019 with start on site anticipated in September 2019.
The design development period is longer than would normally be expected as we have asked the Architect to undertake further work to de-risk the scheme to take into account the lessons learnt from Phases 1, 2 and 3. This additional design period will also give us more cost certainty on each development.
Councillor J Philip asked why phasing on scale and location in package 8 included Loughton and Waltham Abbey, which were not in the same location and this did not make sense putting one Loughton unit with 4 Waltham Abbey Units.
The Housing Development Manager explained that package 8 consisted of 5 single unit developments and whilst they were not in the same location, packaged together they would appeal more to the contractor.
Councillor Avey stated that there were significant delays on all of these projects and asked if this was normal for these projects to see these kinds of delays.
The Housing Development Manager advised that the delays were longer than anticipated due to the eagerness of contractor, when establishing their original programme and setting out their costs, they were quite keen to be competitive and that could sometimes lead to them estimating a bit more positively than they should have done originally to win the work. I have since spoken to the contractors and advised them that we would like to see more realistic timescales and costs. This was all part of our learning curve and I would say that these delays were not normal.
Councillor A Patel referred to Phases 4, 5 and 6, paragraph 23 of the report where the Architect had been asked to undertake further work to de-risk the scheme to take into account lessons learned from previous Phases due to contamination of land and service issues. Therefore in terms of contamination when preparing the costings on a proposed scheme would the Architects do their own site analytical work before putting together a proposed costing, do we request to see any of this information before or just rely on their cost to ensure that they are compliant.
The Housing Development Manager advised that in the past the contractor, taking into account the information he was given as part of the contract documents, would put aside a sum for decontamination and asbestos removal that was to be undertaken, but from what we have previously seen that sum is not adequate once they have found out the level of asbestos contamination. Going forward the Council would now do their own site investigations to establish clearly the level of contamination and the make-up of the soil so we can design and de-risk what is underground.
Councillor A Patel expressed concern that the Council would be put at risk in terms of being held to account if the Council hadn’t foreseen the potential contamination on the land, at the moment the onus is with the Contractor but if we carry out more analytical work then they could ask us for costs.
The Housing Development Manager advised that the risk would lie with the consultant who provided the report rather than the Council and would always look to deal with it through pursuing the consultant for costs.
Councillor A Lion referred to the risk analysis and asked how would the Council mitigate those risks and push the pressure back on to the suppliers to actually deliver on time. How do we mitigate those risks and push the onus back on to the suppliers.
The Housing Development Manager advised that the contractors have been advised within the framework that they should be accurate with submitting both price and programme.
Councillor A Lion asked should the Council not be putting financial penalties on the contractors and if they don’t deliver on the said date we could collect those penalties, every week the contract falls behind the Council are losing money by not being able to rent the properties. How do the Council mitigate those risks and push the onus back onto the suppliers to actually deliver on time and within budget.
The Housing Development Manager advised that previous conversations with the consultants and the contractors it had been made clear they should give accurate costings and times, which was within the framework. There was an option within the contract to enforce penalties but the Council had an ongoing relationship with the contractor and would like to start on the basis of a position of trust to deliver on the programme and at the price agreed. Previously our development agents have not always given the Council the best advice.
Councillor J Philip stated that in Appendix 1, 6 of the schemes had gone past their planning approval expiry date and 2 expire at the end of the week. What have we done or are doing about this.
The Housing Development Manager advised that 5 of the schemes that had passed their planning expiry date had been enacted upon and those sites had been cleared, they would be going out to tender in July 2019 and be on site in September 2019.
Future packages were in the process of enacting and those planning permissions with the exception of Thatchers Close, Loughton this package was about to be resubmitted for planning permission.
Councillor S Heap asked for a delay in Phase 4, Hornbeam Close (site B), he stated that the residents were not ready to move out of their garages as they had been promised reallocation but to date this had not happened, they were last contacted by the Council in 2017 telling them this would happen but they have now had a 12 day notice to quit with no reallocation. He stated that he was aware there were some empty garages in site A and asked for a small delay for the residents to be reallocated.
The Housing Development Manager stated that the difficulty he would have at this stage would be to delay as it would run the risk of a failure to enact the planning permission, he further added that he was working to tight timescales in terms of investigating the condition of the garages before they were demolished. He would look at this scheme again and if he was able to delay it would be a very short period of time.
Councillor Heap stated that a short delay would help them and asked when was this phase due to go out to tender as it was not due to run out of permission until August.
The Housing Development Manager advised that this site would go out to tender in November/December 2019, in order to allow works to be started on site before March 2020.
That the contents of this Progress Report on Phases 2 - 6 of the Council Housebuilding Programme be noted, and presented to the Cabinet in line with the Terms of Reference.
Reasons for Decision:
Set out in its Terms of Reference, the Cabinet Committee was to monitor and report to the Cabinet on an annual basis progress and expenditure in relation to the Council Housebuilding Programme. The report, Agenda Item 6, sets out the progress made over the last 12-months.
Other Options Considered and Rejected:
This report was on the progress made over the last 12-months and was for noting purposes only. There were no other options for action.