Meeting documents
Cabinet
Wednesday, 13th July, 2005
APPENDIX 2
Opportunities and risks arising from the different options for the main scheme contractor appointment
Option 1 - Principal contractor operation (long term contract with specialist subcontractors)
Opportunities
This option avoids any perceived risks identified with simultaneous multiple contractor occupancy of one site (confused management, H&S, agreement of completion, high overheads)
Risks
There would be no diversity of supply to carry on works quickly if contractual difficulties occurred and the contract was terminated (e.g. insolvency, legal wrangling, spiralling costs, delays, problematic completion).
Knowledge built up on the scheme could be lost following a change of contractor.
Single contractor may not have the skills and experience to undertake technically complex elements of work on the scheme and attempt to undertake the elements without this appropriate knowledge, experience and equipment
Option 2 - Staged release of multiple packages (one main contractor on site at a time) Performance to be monitored and future packages awarded if completed packages are deemed satisfactory. The main scheme works could be split into logical packages and combined into one overall tender package to give a single cost for the entire works (as requested by EP). This would work in the following way:
A7 Tenders sought from suitable contractors for the complete works packages based on 2 options - Cost 1 - on a staged release of each package; Cost 2 - commitment to the whole works in total (potential cost saving)
A7 The Council would have the option to review the contractor's performance at the end of each stage and exercise 2 options - Satisfactory - the Council negotiate next staged contract with contractor; Unsatisfactory - remove contractor / remaining works tendered to wider market
Opportunities - This type of contract would allow the Council to review and terminate the appointment in case of contractual difficulties and re-tender the remaining works packages to the wider market.
Risks - if the contractor was not performing, the council would have to go through an extensive process of re-tendering to change contractor.
There would be no diversity of supply to carry on works quickly if contractual difficulties occurred and the contract was terminated (e.g. insolvency, legal wrangling, spiralling costs, delays, problematic completion).
Single contractor may not have the skills and experience to undertake technically complex elements of work on the scheme and attempt to undertake the elements without this appropriate knowledge, experience and equipment
Option 3 - Design & Build. This has been discounted for reasons of excessive risk and inappropriate contract type. There is a high risk of an emergency triggering a massive compensation event in a design and build contract - this would be unacceptable. There will always be a small portion of design and build in any scheme of this size and nature, but to apportion all detailed design to a new construction company given the unique sensitivities involved is financially unsound and a potential Health and Safety risk.
Option 4 - multiple contractors. The aim of this would be to achieve diversity of supply and have appropriate technical capability available throughout the main works.
Opportunities:
A7 Diversity of supply in case of insolvency or contractual problems
A7 Single tender process and tender assessment
A7 Efficient /better match and use of appropriate technical skills to scheme requirements
A7 Constant availability and comparison of competitive rates between contractors
A7 Allows competitive and meaningful project stages through the scheme to minimise costs and reduces the council's financial risk exposure
A7 Reduces risk of a single contractor being able to manipulate the contract rates for sectional package release
A7 Ability to retain current contractor and his particular skills on the scheme
A7 Specialist contractors can be awarded technically difficult work packages
A7 On site induction available for contractors if incumbent is reappointed for part of the scheme
A7 Separate site and package release is possible e.g. Grey Gables work, Bat chambers from Byfield and Ralph Allen Yard, surface site investigation from Corporation yard, etc
A7 Scheme may be completed faster at lesser cost
A7 The prime mover for the scheme, overall risk to health and safety, may be reduced earlier
A7 In addition, this still allows for the delivery of the scheme by option 2 if preferred.
Risks:
A7 Consultants may find preparation of tender documents and tender assessment resource heavy because of the additional detail required
A7 Increased fees for the consulting PM / QS given an increase in contract and site management with multiple contractors
A7 There may be pressure on Firs Field footprint to accommodate more equipment and cabins, although double stacking of office accommodation may relieve this issue
Although the concept is not proposed, the following risks may occur in addition to the above where multiple contractors are tasked with carrying out works in the same area underground. As in `management contracting', effective management and programming will manage and minimise the likelihood of these risks occurring :
A7 High potential for disputes if contractors carrying out the same kind of works under different contracts
A7 If required, shared use of site compound, drift and batching plant could be a potential cause of dispute
A7 Complicated multiple litigation in case of delays or contractual problems