*HC 18/22
Members received a verbal update on the Springhill
Project. In summary, the lead officer
informed that:
-
conditional approval had been granted by
the Development Management and Licensing Committee in December
2021, with the tender issued on 25 April 2022 with a deadline for
submissions being 7 June 2022;
-
the current construction industry
challenges. Members noted that the
availability of suppliers was currently being affected by the
unprecedented challenges facing the construction
industry.
These were being brought about by the
effects of: rising inflation; the ongoing conflict in the Ukraine;
Brexit; the Covid-19 Pandemic; rising
energy prices; and the UK ban on the use of rebated
diesel. Given these challenges,
officers included the offer of a ‘Contractors Day’ on
10 May 2022 in order to quickly gauge the likely level of
interest. Unfortunately, only two
contractors registered for this event – one of which only
being suitable for the demolition element of the
project. This provided an early
indication of the potential difficulties in securing a contractor
and these concerns were proven to be accurate when the closing date
of 7 June 2022 passed with no submissions being
received;
-
six contractors had formally opted out of
the process. Upon closer inspection,
the reasons cited for opting out had included:
o
the challenges associated with the site
(size, access etc);
o
the adjacency to the highway location
requiring road closures and management;
o
inflationary costs of materials (a risk
on the supply chain) creating cashflow
challenges for small and medium sized firms;
o
insufficient resources at this time;
and
o
an inability to meet
requirements;
-
the Southern Contractors
Framework. Given the importance of
advancing the Springhill project, officers have commenced
discussions with the Southern Contractors Framework and the
following potential steps have been identified to be
pursued:
o
the ability to issue an expression of
interest through the Southern Contractors Framework lots;
then
o
if interest was gleaned; then the Council
could undertake a two-stage process: Step 1 – based upon some
general rates and quality questions; and Step 2 – the
negotiation phase;
Since all other potential options would involve the
project being paused, officers were of the view that the Southern
Contractors Framework was the only available option to pursue at
this time;
-
viability issues. Given the current economic climate, officers
confirmed that they would continue to review the business case to
account for income and cost avoidance.
In discussion, the highlighted challenges were
recognised by Members and the need to take into account, as part of
any viability assessments, the significant rising third party
accommodation costs were also stressed.
It was then RESOLVED that the verbal
update be noted.