Parliamentary News Release

041/2003

Tuesday 10 June 2003

PARLIAMENT SECURES CONSULTANTS’ AGREEMENT TO CAP HOLYROOD PROJECT FEES

Consultants working on the Holyrood project have today agreed to cap the overall level of professional fees associated with the completion of the new Scottish Parliament building.

The news follows a meeting between the Parliament’s Corporate Body and the main Holyrood consultants, at which the Presiding Officer George Reid called for the external professionals to consider a reduction in the monies they receive as a matter of responsibility to the public purse.

The outcome of today’s meeting was stressed as being only the first stage in a detailed process that must take account of legal obligations entered into by the Scottish Office. However, the Scottish Parliamentary Corporate Body has stated in a letter to the Finance Committee this evening that its aim, before Parliament rises for summer, is to have in place a clear and robust position on cost, fees and programme.

The text of the Presiding Officer’s letter to the Parliament’s Finance Committee is as follows:

“As you know, the Corporate Body met this morning to consider the Cost Consultant’s latest report on the Holyrood project. We examined the issues carefully and sought detailed answers from the Construction Manager, Architect, and, of course, the Cost Consultant. I am therefore now in a position to make an initial report to the Finance Committee.

The last report to the Committee, (made in February), reflected the Construction Manager’s confidence about the team’s ability to achieve a target completion date of November 2003. The Committee should be aware that the programme has continued to target this date ever since, up to and including the most recent report received by the Holyrood Progress Group last Wednesday. What is clear, however, is that this target relies on considerable adjustments made to the original programme sequence in order to maintain the pace of delivery. To date we have only been able to discuss these changes at a strategic level with the Construction Manager, but I anticipate that we will be able to provide the Committee with more detailed information very shortly.

We did determine from our discussions this morning that the additional estimated costs result from the ongoing complexity of the building work now underway on site, principally the need to compress and re-sequence tasks to respond to difficulties which arise.

In detailed terms, in the light of today’s discussions led by the Corporate Body, I am able to report the following. The £37.7m increase in the overall target figure reported last week comprises £18.75m of predicted construction cost; £6.1m of fees; £8.25m for site running and construction management costs; and £4.6m of VAT on the above.

The £18.75m construction cost element includes £600,000 which is an anticipated increase to the separately funded landscaping works, again due to delays. Of the remaining amount, £9.95m has been allocated to specific trade packages to cover the costs of compressed working, disruption on site and prolongation of contracts associated with re-programming works. A further £5m has been identified as an additional contingency that may be required to resolve issues associated with the complexity of the design during the final stages of construction and £1.7m is reported to be required to cover the longer presence of tower cranes and scaffolding on site as a result of resequencing as well as additional general builders’ work. Prolonged working in Queensberry House and MSP accommodation accounts for the final £1.5m.

Given the link between the projected increase in cost and programme, the Corporate Body sought advice, (as it has previously), on whether delaying completion would help reduce costs. The unequivocal advice from the construction professionals is that further delay would in fact exacerbate the problem. The Corporate Body has therefore instructed the Project Team to proceed in line with the latest Bovis programme. However, the complexity of the task in hand and experience to date indicate the need for ongoing caution in relation to the programme. We will be continuing to monitor the situation closely in conjunction with the Progress Group.

Members will share my anger, not only at the scale of the increase but the manner in which it has emerged: in a period of less than five months since we heard such confident assurances from our key consultants on both cost and programme. As the Committee is aware, the method of construction chosen at the outset by the Scottish Office requires the programme and cost risks to be borne by the client, namely the Scottish Parliamentary Corporate Body.

The Holyrood Project Team, members of the Holyrood Progress Group and Corporate Body continue to work extremely hard within the terms of the contract arrangement to keep costs to a minimum, bearing in mind the need to preserve quality and the fact that they do so against the backdrop of a highly complex building design.

The Committee will note that a significant part of this additional reported cost is fees. We have today secured the agreement of all the consultants to cap their fees to the end of the project, in the public interest. That cap will include a reduction in fees in respect of the latest projected increase in cost. We will report to you in more detail on the progress of these negotiations at the earliest opportunity.

These recent developments add further weight to the First Minister’s call for an inquiry. I certainly support the need to examine and learn lessons from the Holyrood project. We must also ensure that the building is completed as quickly as possible and to move in as soon as practicable thereafter. That is the best way to contain continuing uncertainty over costs. The final push to completion will require all the resources available to the project team, construction manager and design team to be focused completely on the job. The challenge is therefore to meet the proper demand for transparency and scrutiny without jeopardising the completion of the project.

This letter provides Committee members with the first update on negotiations on fees that are now underway following today’s SPCB meeting. The Corporate Body will meet again within the next two days to analyse further the information received today from the consultants. Following this, I will write again to the Finance Committee.

The Corporate Body fully recognises the great importance of this issue and the right of the Finance Committee to take evidence on recent developments and we would like to arrange this at the earliest opportunity, at a time to suit your Committee.

My overall aim is to have a clear and robust position on cost, fees and programme before the start of the Summer recess. Only once that is established will we have a clear way ahead to the completion of the project.

I am copying this letter to the Finance Minister.

Given the considerable interest in this matter, I am sure you will understand why I feel that it would be appropriate to release the text of this letter to the media.”

For further information the media contact is:

Eric MacLeod: 0131 348 5389
email: eric.macleod@scottish.parliament.uk

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