I welcome members of the press and public to the 12th meeting of the Finance Committee in session 2. I remind members and everyone else that pagers and mobile phones should be switched off. All committee members are present this morning.
On this occasion, I will say very little. The itemisation of progress in the Presiding Officer's letter speaks for itself and the programme and the likely cost projections remain pretty much as they were. There is some scope for manoeuvre on the programme; acceleration works are possible if they are required in crucial areas, although, as the Presiding Officer's letter indicates, pressure is being maintained on everyone to remain focused on achieving completion on schedule. I do not think that I need to stress to the committee the importance—because of the various time slots—of meeting the summer date.
You will recall that, in our most recent discussion, there was still uncertainty about a number of contracts that you advised us would need to be let by March or April to be able to achieve completion.
Do you mean on migration?
Not particularly on migration, but generally. At the most recent Finance Committee meeting at which the matter was discussed, it was difficult to say that the contracts would definitely be commenced in time to ensure that migration was possible in the summer. Given that it looks as though there is no change in overall cost and that we are on course for migration in the summer, I presume that the contracts that were not signed at that point are now under way. Can you confirm that?
Yes. I can say specifically that two contracts have been mobilised: the mechanical and electrical maintenance contract and the catering contract. The corporate body has agreed a strategy whereby we have a set of mobilisation dates and those two contracts are the ones with the longest lead times. They were mobilised on schedule about two weeks ago.
Point 3 in the report states:
To deal with the final point first, it has always been the case, as has been stated in our recent reports to you, that any delay in completing on target will have prolongation cost implications—obviously, those depend on the length of the delay. We are very hopeful that that difficulty can be avoided.
On the point about acceleration, the straight answer is that we want to do as little acceleration as possible because it costs money. If it is necessary to accelerate at any particular point to fit in with the requirements for migration and flitting, that will be done, but we do not want to do so just for the hell of it.
I understand the reticence to put precise figures on any matter if that could lead to an increase in costs, but some of the answers that you have given are rather general. Given that we have moved from February to April, I would have hoped to have quite strong quantification of the extent to which the risks that existed at an earlier stage have been dealt with and can be assessed properly, as well as an assessment of the remaining risks, on the assumption that the project will be moved through to completion. You ought to be able to give us harder information than Robert Brown's statement that you are very hopeful that the project will be completed on schedule.
That is a little unfair—my statement was stronger than that. I ask Sarah Davidson to provide the committee with details.
You are right to recognise that the report that we made in February was based on the cost consultants' then assessment and quantification of the risks associated with the programme to completion. We are still working with that programme, although—as the committee knows—adjustments are made to it pretty much on an hourly basis. The bottom line in the annex to the cost report identifies between £6.8 million and £9.1 million of what is called programme contingency. Any money that is required for acceleration will be drawn from that sum.
In November and February, we were told that the real blockage to completion was the famous light well. Has the blockage associated with that now been dealt with? Have future contingencies that might arise and that could cause problems been identified? Previously unidentified issues, such as blast proofing and the light well, have caused difficulties.
We are past the point of having to deal with major construction issues. In recent months, we have managed the problem of the light well with considerable input from the highest levels of the contractor in question and it is no longer what one might call a show stopper. It has been and will continue to be difficult, but it is now difficult in a manageable way.
You are saying that Bovis's construction management role is moving towards the final phase of implementation and that the Parliament's management of operational processes will come on stream. There is a risk associated with that, as over the next five or six months two systems of project management will be in place at the same time. Have you made sufficient provision and planning arrangements to ensure that the dual operation will be managed successfully? In the next progress report, can you give us information on the management regime that will operate to ensure that everything goes smoothly?
I am happy to consider what we can provide in the next report, but I reassure the committee that we have put a great deal of thought into the matter over a long period—we have an implementation unit whose sole job is to pull together the issues that you mention. Indeed, we recognised some time ago the point that you raise. Finishing the building is just the end of the beginning—we need to consider how we move forward operationally. Last week, the implementation unit sat down with the project team and Bovis to consider in very great detail the integration of the completion of the building with migration—the moving in of furniture, the installation of equipment and the commissioning and testing of systems. We have a very detailed migration plan, in which migration of all the main services is set against the construction programme. The plan will be kept under constant review from now until the end of the project and we have put considerable effort into it.
I point out that, here, "FM" means facilities management.
Or floor manager.
Migration is a big issue for us, but there has been careful planning and teams are in place and working together. The key is to co-ordinate Bovis's effort to finish the building and the effort of the implementation unit and FM to use the building. There is a risk associated with that, but we are managing it as proactively as we can.
Can you confirm that the costs that have been provided to us today have been agreed and approved by both the construction managers and cost consultants?
The costs that are reported to the committee come from the cost consultants—they are not our figures, but the cost consultants' figures.
Sarah Davidson mentioned that major construction problems are in the past. I take it that that applies to all the works packages.
That is certainly our hope and expectation.
We all hope that migration can be completed in accordance with the timetable, because any delay would lead to further expense. However, some of the works packages are far from complete. How many packages are incomplete? Which packages, if any, still give cause for concern?
Part of the difficulty in answering that lies in the definition of the term "completion". Strictly speaking, a package is not complete until the final account has been presented and signed off. The vast majority of our packages are still in a pre-finished state.
The point that I am trying to get at is this. It is good news that major construction problems are in the past. However, in his evidence to the Fraser inquiry, Mr Grice referred to the new Museum of Scotland contract. He alluded to the fact that, as we all know, problems can arise that may not be of major importance but that can cause delays, because they make it impossible for work to be done in the complicated sequence that we have heard about. I hear that 30 packages or more are incomplete, which seems an extraordinarily high figure at this stage of the contract, as Hugh Fisher said in his evidence to the Fraser inquiry not so long ago. What worries me is that small problems may arise—as they have in the past—and lead to delay, which will mean that there is a failure to achieve the migration timetable.
That is absolutely possible in the sense that such risks are being managed all the time. It has always been the case that those kinds of problems might arise. One of the things that we buy from Bovis is expertise in managing risks and minimising them as far as possible. I am not aware of anything that could be the kind of risk that you are talking about, but such a risk could, of course, always arise.
The convener referred to the light well as a problem area; it has been worked through and given a lot of attention. Another contract that has given rise to difficulties over a period of months is the Drawn Metal Ltd contract for fitting windows. That has been associated with blast problems, which date back a long time. Happily, I understand that the last of the windows have now been fitted. That is a major step that has now been passed. The problem had been on-going but it is one example of a big issue that is now complete.
I am pleased about that. We are all going in the same direction.
Sarah Davidson has made the point that we are not currently working round the clock. Difficulties can arise in these situations. There is certainly pressure to finish—there are no two ways about that. It is in everybody's interest that that should be the case, but it is not at the expense—as I understand the reports that we have been getting—of the quality of the finish. We do not anticipate any significant issues in that respect, but that is not to say that issues cannot arise. Until the work is all finished and done, the project remains uncompleted and we cannot give the committee a total guarantee. However, all the evidence that we are giving the committee today is along the lines that we do not anticipate significant problems of that kind in finishing. I hope that that remains the position to the end. I do not know whether Sarah Davidson wants to add anything.
The reason why acceleration is not currently happening around the clock is that Bovis advises us that it would be difficult to do that at this stage and to maintain quality when many people are working in different areas. Our construction manager was also the construction manager at the Museum of Scotland and he tells us that we are in a much better position than he was at the museum this number of months out. If members can take some comfort from that, that is something.
I take much comfort from that, given what I know about what happened at the new Museum of Scotland, but that is a matter for another day.
As you rightly say, that is an issue of paramount importance. The key point is that we need an occupation certificate to move in. We will not get an occupation certificate if the building is not safe and we will not move in if we do not get an occupation certificate. There is a control. Part of the facilities management effort that is being put in is consideration of the health and safety regime at Holyrood. I give you the assurance that we will not move in without an occupation certificate; to get such a certificate, we have to satisfy fire safety standards and all the other important health and safety issues.
Are you satisfied that such a certificate will be forthcoming?
It is on the critical path. We will not move in without the certificate. As you say, we have to achieve that; there is no question of moving in without an occupation certificate.
Have you met officials regarding health and safety?
As you probably know, in this case the issue is not handled by the local authority, because of the position of the Crown; it will be handled by Cairns, which acts on behalf of the local authority. There have already been discussions with Cairns and with fire people, because safety is one of the key concerns. We are trying to anticipate the issues so that we can address them. I reiterate that the occupation certificate will give me—as the accountable officer—satisfactory evidence on health and safety. Without that certificate, we will not move in, so we must achieve that—it is absolutely at the centre of the critical path. I hope that that is enough of an assurance for you.
I am grateful for that assurance. It is no less than what I expected to receive, but I wanted to flag up the matter at this point in case, for example, it emerges next month that concerns are arising from your on-going discussions with the officials that you mentioned.
The progress group is receiving a report tomorrow from the architects, whose responsibility it is to present all the building, area by area, to Cairns to sign off. By this time next month, we should be in the position to be much more satisfied that that is being taken care of.
Like other members, I am encouraged by what I have heard so far, but I am still somewhat concerned. In the Deputy Presiding Officer's recent meeting with our parliamentary group—I am sure that she has met all the other political groups, too—she said that we were on target to go into the new building in September. She was talking about the arrangements that have to be made over the summer so that we and our staff are all ready to move in in September. At the meeting, I said to her that we all hope that that will happen, but asked about the alternative if it does not. I think that I am right in quoting her as saying, "There is no plan B—we will move in in September." My concern is that that is slightly at variance with what Mr Grice is saying to us now. He is saying that, if we do not get the certificate, we will not move in in September. Is there a plan B?
At this point in time, when a plan B does not appear to be necessary, we are not producing a plan B. As both Sarah Davidson and Robert Brown have made clear, we are managing the issue proactively. We have undertaken risk reviews and we will continue to look at the matter on that basis. If we ever reach the point where we feel that things cannot be done, of course we will produce a plan B.
We all hope that we are working towards that target. However, if for any of the reasons that have been outlined this morning the target is not met, I presume that the next opportunity to move would not be until next year, because there is no other recess of a reasonable length during which the problems could be resolved, if such problems arise. I do not want you to spell this out in detail and I do not want to undermine the plan to move in in September but, realistically, I believe that, if we do not make September, it will be January next year.
No. That is entirely speculative. To be honest, there are too many variables. As I have said, there is no plan B. We are focusing on the summer. If that proves impossible, we would look at the situation. I would not, in those unlikely circumstances, immediately concede a date as far away as January. We would need to look carefully at the whole issue.
My final question relates to something that was said at our previous meeting, at which I raised the vexed question of the cost of the toilets and the fact that a Scottish contractor had not been given the chance to tender for that contract, which has turned out to be extremely expensive. At the meeting—which was on 26 February—you said that you would get back to the committee with a written response on the issue, but I have not yet seen such a response.
I am aware of that issue. We owe you that response and you will receive it shortly.
The opening ceremony is referred to at the end of the Presiding Officer's letter. I have two concerns about the ceremony. One is the point that Fergus Ewing raised in the context of the Museum of Scotland. That is not the only case in which the date set for an opening ceremony has had consequences for the completion of a building. The overriding consideration can become meeting the opening ceremony date. The second concern is the character of the opening ceremony. In a previous meeting, the Finance Committee expressed the view that we do not want an extravagant opening ceremony. It might be better to have a ceremony that reflects all the circumstances of the construction of the Parliament building and that does not involve further substantial expenditure.
Within the SPCB's budget, financial provision for the opening ceremony has existed for a while. However, the corporate body has not yet received a report on the matter and has therefore not made decisions on it, although the points that you make are very much in our minds. It is clear that the opening ceremony will be modest but appropriate. I cannot say much beyond that because we await the Presiding Officer's announcement on the matter. After that, we will be able to consider the issue in more detail. The corporate body will advise the Finance Committee of the details of the proposals as soon as they are available and of decisions that have been made.
I understand what you are saying, but a difficult situation would arise if the announcement is of a more expensive opening ceremony than was allowed for in the amount that the corporate body laid aside. We should ensure that the amount that will be spent is in line with the amount that was laid aside and that it does not exceed it.
Nothing in what I said suggested that anything different from that will happen. The corporate body has laid aside money in its budget for the ceremony and other matters and the intention is to fit within those figures. Nevertheless, we must discuss the proposals from our officials, provide our input, make decisions and allow the Presiding Officer to report thereafter. That is the way in which to tackle the issue. I am giving reasonably firm assurances that the ceremony will not be an extravagant event: I repeat that it will be modest but appropriate. I think that the Finance Committee will be satisfied on the points that it has made previously, of which we are conscious.
Members of the committee will recall that, about 18 months or two years ago, a tender was issued for the aborted opening ceremony. Will a similar tender be issued for an event organiser to provide advice for the ceremony? Robert Brown said that officials will make proposals. Will a tender be issued for an outside consultancy and, if so, what will the budget be?
We are taking a slightly different tack this time. For the reasons that Robert Brown gave, I would prefer not to say much more. As the Presiding Officer intends to make an announcement on the issue, I do not wish to speculate ahead of it, not least because he has not yet discussed the matter with the corporate body. We took stock after the last time and we are taking a slightly different approach. Obviously, we will bring in expertise as we need it, but the lead will be taken by an official in my team, who has been working hard and has been in discussions with various parties. When the Presiding Officer has made his announcement, it will be easier to discuss in detail the ceremony and how the budget will break down and I will be more than happy to do so.
So there is no budget for outsourcing the management of the process to event managers—the budget is simply for the preparation of the opening ceremony.
I am in a difficult position because we have not yet discussed the matter with the corporate body. We must get a view from the corporate body because, ultimately, it makes the call on anything to do with expenditure. We will go to the corporate body shortly, after which I will be able to say more. However, I can reassure you that, after the last one, we took stock. We will bring in expertise when we need it, but we will look to do so as economically as possible and, as Robert Brown said, to produce the most appropriate ceremony. The Presiding Officer has taken views on the issue and he will make proposals to the corporate body. He hopes to make an announcement shortly, once he has discussed the matter with the corporate body.
For clarification, by "the last one", you mean not the opening ceremony in 1999, but the issuing of the tender for the opening of the Holyrood building.
Yes. As you say, we made a start and had to shelve the plans when the programme overran. However, we have also tried to learn lessons from the ceremony in 1999, which was extremely successful. We have revisited that to consider what went well and what might have been improved. Although the events are different, there has been an opportunity to learn from the experience in 1999.
Concorde will not be available on this occasion.
I will change the topic from the sublime to the ridiculous. The matter that I want to raise is minor but has had a fairly high profile in the media since last we met; it is the question of the fridges in the MSP offices and the associated procurement process. I ask the elected members of the progress group whether they were aware of the plan to have a fridge in each office. Did the progress group discuss whether that was an appropriate requirement? Why were members not given a choice about whether a fridge was an appropriate fixture, as we had in respect of desks, tables and whiteboards, which were discretionary matters?
The straight answer to that question is that we have not discussed the issue in my time. I cannot remember any discussion about the provision of fridges. The fit-out for the MSP offices was agreed early in the process. It included the obvious furniture—such as storage units, desks and chairs—as well as fridges. The issue has never been on the agenda since I took over as chairman of the progress group.
In the early days of the Scottish Parliamentary Corporate Body—which goes back four or five years, so you will forgive me if I am a little vague about the details—we made significant reductions in the specification for the MSP rooms. If I recall the matter correctly, when we inherited the project from the Scottish Office, the offices were to have sinks and various other arrangements. Considerable savings were made in the specification. I recall that, at that time, we also cut the number of car-parking spaces—the corporate body in those early days thought that the number was excessive. Those were among a number of cuts and reductions in the specification that were made at that time.
I accept happily that the decision was taken by the corporate body a number of years ago, and I presume that the elected politicians were aware of it at that stage. However, given the escalating costs, it is a matter of regret that at no point in the intervening years did anyone associated with the project query whether that aspect of the fit-out was necessary or raise the issue for the progress group to review at some stage. I make that observation given the extensive negative publicity that has been associated with a fridge being compulsory in every member's office, and a procurement price that does not seem to be hugely competitive. I will leave it at that, unless anybody wants to make any further observations.
The matter never particularly crossed our radar. I take Wendy Alexander's point: we have had lots of interesting publicity over the years and we never know what the media will light on next but, to be frank, the presence of a small fridge in each office paled into insignificance when compared with the scale of the some of the other problems with which we in the progress group were struggling.
I return to the question of whether there is a plan B and to timing. Paul Grice's evidence today seems to me to contradict what I believe the Presiding Officer said previously, which was that if we were not in the building by September, the next date at which we could move in will be January. That is my recollection of what the Presiding Officer said, but it is completely at odds with what the chief executive has said today, so I ask Paul Grice to comment on that.
I would be happy to do that. I do not believe that I have ever contradicted the Presiding Officer and I do not intend to do so if I can avoid it. I stand by what I said to Mr Brocklebank—who pursued a reasonable line of inquiry—and I hope that Fergus Ewing accepts why we are adopting that line. I am a bit reluctant to speculate on what the Presiding Officer might have meant, but I think that he was seeking to drive home the importance of focusing on the summer and on the major consequences of not achieving the move in the summer, which I do not dispute.
Have the cost consultants provided an estimate or estimates of the costs of delay if completion is not on schedule? I ask that question while being cognisant of the fact that estimates of the monthly costs of delay have been provided previously. My recollection is that the monthly cost was estimated to be a minimum of £600,000, although I presume that removal of the cranes will reduce that substantially. Have the cost consultants provided estimates of the costs of delay—if they have, we have not seen them—in particular of the monthly cost of delay?
The short answer is no—they have not provided any such estimates and there are two reasons for that. As has been explained on previous occasions, the cost consultants can only cost a programme. The cost of delay would be different depending on whether the delay was a week, three weeks, a month or longer, and the only way that such a delay could be costed is with a timescale.
I understand that answer—for which I am grateful—and the line of argument. My difficulty, which I raised the last time the committee discussed the matter, is that we are by implication approving more acceleration measures to achieve completion.
No.
At least, there may be acceleration measures.
If necessary.
One suspects that there will be—at least, I do. However, if the September completion date were not met, the additional amounts of money that had been spent on acceleration would have been wasted. Is that the case?
The decision on whether to take acceleration measures lies with the project team, acting on the advice of Bovis and the cost consultants. We would, therefore, approve an acceleration measure only fairly late on, and if we thought that it would have the required effect. We are always weighing risks when we take such decisions, but the fact that we have taken very few acceleration measures to date when we are only a few months from completion gives a fair degree of reassurance that we are not throwing money away.
I am not suggesting that throwing money away would be authorised, because it obviously would not, and I appreciate that the judgments are difficult—no one would suggest otherwise—but I am not comforted that we will achieve the timescale. I hope that we will, but I am not persuaded that we will, because there is so much incomplete work and so much that is yet to be done.
Provision for such claims is made in both those figures. All the money in the reserve and in the programme contingency is set against individual packages, except the pool that is left over for acceleration measures. All the claims that we expect to relate to loss and expense through prolongation and delay are discussed weekly by trade-package contractors, Bovis and DLE, who therefore have a good understanding of what contractors are claiming for.
Do you mean that the adjudication mechanism has not been used?
I understand that one small amount of money from some time ago is about to go to adjudication—it does not relate to a live package.
I will pursue the point to try to achieve more clarity. If a contractor wanted to pursue adjudication, they would be entitled to do so. By raising the issue, I do not mean to suggest that anyone should not do that—the opposite is the case. The procedure exists to prevent abuse of subcontractors and small companies by companies that have more muscle. I hope that my remarks will be seen in that light.
I do not want to give a misleading answer. The money that is sitting in the construction reserve against individual packages is additional to the money that is in the current commitment against individual packages. A considerable part of that is yet to be confirmed in the settling of final accounts. Until it has been agreed finally, even the money that appears in the commitment line could reduce or be supplemented by money from the construction reserve. Assumptions are made in the construction commitment line about money that is allocated to individual contractors for loss and expense over time.
I just want a specific figure, please. Perhaps you cannot provide it now; I presume that you cannot because you did not expect to be asked for it. However, the question will not go away. On the contrary, we will return to it. It would help to have the answer to my question about what the total allowance for loss and expense is. It is obvious that it would be wholly wrong for you to reveal the figure for each contract, because that might jeopardise negotiations that are taking place.
Exactly.
I make it clear that I acknowledge, understand and agree with the need for that. However, that should not prevent us from being told the cumulo figure, because it relates to a large number of contracts and would not reveal any commercially confidential information. We are entitled to know the total, but not the provision for each package. Will you provide a budget line on that? I suspect that the argument will run and run and I would not be surprised if the figure is exceeded substantially.
Fergus Ewing answered his own question. If any of today's witnesses published figures that led contractors or subcontractors to think that a pot of gold had been budgeted for, that would be taken as an invitation to try to dip into that pot.
It is known that the pot exists because you have said that it does. I have said clearly that I am asking for the disclosure not of each element, but of the total. Will you provide that information?
I am happy to examine the issue and come back to the committee about it. I am sure that we can provide a general indication. As Fergus Ewing acknowledged, we do not want to compromise negotiations. I am sure that we can come back to the committee to throw some light on the matter.
It would be remiss of us not to acknowledge the great work that George Reid has done to get a grip on the project and to shake some sense into it, unlike the previous incumbent. George does not have a plan B, but I think that the previous incumbent had a plan Z and that he went through the whole alphabet.
I will get back to John Swinburne on that. Some exaggerated statements have been made—I will put it no stronger than that. It is fair to say that the Parliament building is Scotland's building; it is for the people of Scotland. Many people will visit the building and close attention is being paid to how best to accommodate the estimated 700,000 visitors a year and how best to use what we all accept is a very expensive building.
I thank the witnesses for attending and for giving evidence. I am sure that we will see you again.