Scottish Parliamentary Corporate Body

Report on the Holyrood Project 

Session 1 (2000)

ANNEXE 1

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.

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.

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:

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: