Decision details

A competitive procurement has been carried out followed by detailed scrutiny and evaluation of tender responses for the construction of the Pixash, Keynsham Recycling Hub. In order to secure programme certainty and mitigate risk of further cost inflation, due to the current material and labour market forces, a Limited Letter of Intent (LLOI) has been agreed with a preferred contractor. To protect the council's contractual position, this creates a financial commitment for advance site works, design development and discharge of planning conditions. This provides contractual certainty to commence early activity and place advance orders for steel (rebar and mesh) and secure supply-chain orders prior to the full scheme start, anticipated in March 2022, subject to full budget approval at February Council. In the event of being unable to enter into contract as planned, the council has agreed a cashflow spend of £1.1m for specific interim workstreams and termination costs. The LLOI overall is capped at £3.9m until March 2022, for the contractor as a FTSE100 company to comply under General Sox compliance and auditing.

Option: to not to go ahead with the advance works packages as described which would create the risk of significant further cost inflation, and the potential need for a re-procurement exercise. This is not recommended due to the current construction market which is experiencing very high levels of inflation and labour and materials shortages. The market is not currently predicting a levelling off or a decrease within the next 12 months. Delay in contract award in entirety will likely further increase contract costs and impact other related works and services, where prolongation of lease agreements and potential loss of grant funding are further risks to programme and cost.