Contracts with Variations
North Lanarkshire Council · 30 November 2022
Back to Finance and Resources Committee — 30 November 2022 and its agenda
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North Lanarkshire Council Report Finance and Resources Committee Does this report require to be approved? ☐ Yes ☒ No Ref JMcG/JMcK Date 30/11/22 Contracts with Variations From James McKinstry, Head of Asset and Procurement Solutions E-mail mckinstryj@northlan.gov.uk Telephone 07939281102 1. 2. 3. Executive Summary In accordance with the Council’s Financial Regulations, this report notifies the Committee of contracts completed between 1st April 2022 and 21st October 2022, where the expenditure levels have exceeded the contract award levels by greater than 5% or £25,000. Recommendations It is recommended that the Finance and Resources Committee: • acknowledges the content of this report and the accompanying appendix. The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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1. Background 1.1 The Councils General Contract Standing Orders (the ‘GCSOs’) outline financial approval thresholds for contracts for goods, works and services. This report details Works (construction contracts) for above £5,000 but less than £2,000,000 where funding has previously been approved in line with GCSO’s. 1.2 The Councils Financial Regulation, (13.4) Significant Variations, details the threshold of variances where reporting is required. 1.3 The Head of Asset and Procurement Solutions is required to notify Committee on a periodic basis of any such contracts containing variations as identified by the criteria in 1.1 above. 2. Report 2.1 The Councils Financial Regulation state, any variations where the outturn/expected costs exceed the tendered contract price by the higher of £25,000 or 5%, or where the outputs/outcomes achieved by the expenditure differ from those originally envisaged, shall be reported by the Executive Director or appropriate Officer to the relevant Spending Committee at the earliest opportunity. 2.2 Contracts awarded by the Head of Asset and Procurement Solutions under the £2,000,000 Committee financial approval threshold for works in the period 1st February 2021 and 31st March 2021 containing variations are detailed in Appendix.1. 2.3 Due to the nature of construction contracts a flexible approach is required to manage contract deliverables and desired outcomes and typically this is achieved by the inclusion of a contingency allowance to address unknown quantities or abnormalities. 2.4 Any construction works undertaken within the Council’s portfolio may encounter issues that can result in additional costs after work has commenced. The global pandemic resulted in additional costs associated with the nationwide restrictions on construction works, whilst the war in Ukraine drove up the cost of construction materials including the price of steel and timber; asbestos is problematic and costly to address, especially within the Council’s ageing property estate. The rerouting of service provisions is another contributing factor with other expenditure being attributed to health and safety issues including addressing fire stopping issues, rot treatment, contractual claims (exacerbated by COVID19). Additional client instructions being added to the contract following contract award will also increase the overall contract sum, but it should be noted that the scope of these instructions will be within the parameters of the original tender documents and; rates will be a direct drawdown from those already provided or a benchmarking exercise is undertaken to demonstrate value for money. 3. Measures of success 3.1 Contracts support the delivery of Council and service priorities. 3.2 Robust contract monitoring with detailed documentation outlining variance’s that is fully transparent and auditable.
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3.3 Contractors supplier management processes, fully aligned with the Councils Financial Regulation, GCSO and procurement legislation. 3.4 Contracts containing variances are managed by the Council and are compliant with Financial Regulations, GCSOs and procurement legislation. 3.5 The Council’s Contract Register and budgetary monitoring systems are kept updated by services and management information is comprehensive and accurate. 3.6 Best Value is both demonstrable and achieved. 4. Supporting documentation 4.1 Appendix 1 – Summary of construction contracts containing variations. James McKinstry Head of Asset and Procurement Solutions
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If yes, please provide a brief summary of the impact? All variances will be managed from the current 5 year Capital Plan. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact
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Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed?
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Appendix 1 – Summary of construction contracts containing variations Project Title Final Out- turn Tender Amount Variation Reason Re-roofing - Muirhouse Primary School, Motherwell £504,657 £478,224 Additional essential works to roof finishes were required, including renewal of the existing fascia's and soffits and their underlaying support timbers. Motherwell, Our Lady High School - PE Changing Facilities, £504,292 £384,284 On-site investigations confirmed problems with the existing underground drainage system, resulting in unavoidable renewal and repair work to the affected system lines. Other additional works included installation of additional firestopping at wall heads and new structural bracing for internal walls at high level. Motherwell, Forgewood Bin Project £173,160 £132,726 Complex localised access issues resulted in payment of additional time charges. Additional works were also required to regrade kerb lines with existing road finishes. Motherwell Library - Electrical Rewire and Redecoration £479,407 £446,626 Price fluctuations for materials were agreed, mostly around copper prices which had spiked around this time. Additional Nursery Provision: 1140 Hours Programme -Shawhead Primary School, Coatbridge (LLEY17099) £613,000 £577,808 Extension of time required due to delays in sourcing products as a direct result of Covid and additional drainage requirement to address the increased capacity to school, Airdrie - Chapelhall FLC - New Build- (LLEY19049) £1,321,137 £1,259,221 Covid alterations and additional localised minor works required at the request of Care Commission including; screens to reception desks, Virgin media cabling & ducting, small power & data changes, addition of push plates to external gates. Airdrie - Petersburn FLC - New Build- (LLEY19045) £1,730,834 £1,705,039 Covid alterations and additional localised minor works required at the request of Care Commission including; screens to reception desks, Virgin media cabling & ducting, small power & data changes, addition of push plates to external gates. Motherwell - Netherton FLC - New Build- (LLEY19051) £1,337,147 £1,310,140 Covid alterations and additional localised minor works required at the request of Care Commission including; screens to reception desks, Virgin media cabling & ducting, small power & data changes, addition of push plates to external gates. Wishaw - Bonkle FLC - New Build- (LLEY19050) £1,986,793 £1,954,762 Covid alterations and additional localised minor works required at the request of Care Commission including; screens to reception desks, Virgin media cabling & ducting, small power & data changes, addition of push plates to external gates. Wishaw - Coltness FLC - New Build- (LLEY19046) £1,745,398 £1,685,320 Covid alterations and additional localised minor works required at the request of Care Commission including; screens to reception desks, Virgin media cabling & ducting, small power & data changes, addition of push plates to external gates. Clydeview School Relocation to Daisy Park Centre £721,174 £493,674 A post tender request was received and approved to broaden the scope of works to accommodate the ASN review and address capacity issues. The contract programme was also condensed to remain aligned with school term time resulting in additional out of hours payments.