Finance Committee, 28 Jun 2005

Meeting date: Tuesday, June 28, 2005

Official Report 282KB pdf

---

Scottish Parliament Building

Agenda item 3 is consideration of the latest report on the Holyrood building from the Presiding Officer. Members have copies of the report. I welcome to the meeting Duncan McNeil, who is a member of the Scottish Parliamentary Corporate Body; Paul Grice, who is the clerk and chief executive of the Parliament; Graham Rennie, who is consultant project manager for the Holyrood project team; and Dave Ferguson, who is a Holyrood project adviser. I invite Duncan McNeil to make a brief opening statement, after which we will proceed to questions.

Mr Duncan McNeil MSP (Scottish Parliamentary Corporate Body) First, I apologise sincerely for being late, which is not a good start. Previously, Robert Brown could use his train as an excuse, but I have no such excuse.

The convener will be surprised to see me here, although not as surprised as I am. I am standing in at short notice for Robert Brown, who has led for some time on the corporate body in respect of the issue that we will discuss. We thank him for doing so and wish him well in his new job.

Members will not expect me to be particularly helpful this morning, but a corporate body team is in attendance. I am sure that they will be able to answer questions and will turn a weakness into a strength. If the team cannot do so, written responses can be provided in due course.

Members of the committee would echo your congratulations to Robert Brown on the new role that he is likely to take on board. I invite questions from members.

I have a question that is not directly about the report, but which is on a matter that is of interest to me. Yesterday, there was a lot of press speculation about refurbishment of the members bar and about large sums of money being involved. Obviously, I do not know whether the speculation is true, but in which budget would that refurbishment be accounted for?

I confirm that the speculation is true, but whether the work could be called refurbishment is another matter. In December last year, we decided to invest a relatively small amount of money in response to a lot of debate about the members' restaurant area. As a result of that investment, we hoped to maximise use of the area and to increase access to it for more people by breaking it up into three areas, which would include a bar area and a middle area. Currently, pass holders and their guests can access the area and are doing so, as members know—the area is very busy on some days—but we decided to try to create three distinct areas to encourage better use of the area and better access to it. Paul Grice can help with the other details.

The expenditure will not be accounted for in the project budget. We expect, now that the Holyrood project is over, to have a relatively small on-going capital budget that will cover information technology capital and any improvements. As Duncan McNeil said, the work in question will not be refurbishment, because the area does not need to be refurbished. The corporate body thought that the area could be developed, so the expenditure will be on that. The money will be accounted for in this year's expenditure under the facilities management heading.

So the expenditure will be part of facilities management expenditure and we will have the opportunity to scrutinise that capital budget in time under the usual budget process rather than through the Holyrood project process.

Exactly—that is correct.

I want to get the headline stuff out of the way first. On a related point, I heard reports yesterday that alleged that a reason for the restaurant's having done so badly—and, indeed, for the adjoining area not doing particularly well—is that members of the press have boycotted the bar area because they are not allowed into the restaurant. Is it time to reconsider the judgment that we should keep the press out of the restaurant area? I ask that question from a financial point of view and because members of the press apparently have copious sums of money to spend on food and drink.

General issues are involved. The corporate body is addressing financial issues to do with how much should be spent on subsidising the various catering arrangements in the Parliament, from the coffee to the canteen area and the members' restaurant. We are aware that we must do something to make things cost effective and we will make proposals.

Although a case is being made that greater use of the members' restaurant would lead to a dramatic improvement in the financial situation, that is simply not the case. We have a subsidy; the irony is that the more people who take advantage of the subsidy the more the cost inflates. We have to use other ways and means of addressing the matter and we are considering them seriously.

Members of the press, like all pass holders, have access to the members' restaurant area. MSPs have priority access on Tuesdays, Wednesdays and Thursdays, but all pass holders have access to the bar and restaurant area; the press choose not to use it.

I was not concerned before, but I am now. It sounds almost like Inverness airport: the more people who use the place, the worse off we are. You did not mean that, did you?

No. Paul Grice will come in in a minute, but it is a simple fact that we as an employer and as a provider of facilities in this public space decided some time ago that there would be a level of subsidy in the catering areas. The tea and coffee that you get anywhere in this building have an element of subsidy.

Which is, in effect, per cup. That matters, because if there is a fixed sum, the more that is sold, the less the loss, but if there is a per unit subsidy, the more people who use the facilities, the more we pay.

Paul Grice can deal with the detail.

Duncan McNeil is right: it is not as simple as saying that having more people use the facilities will reduce the running costs. First, I echo what Duncan said: the Scottish Parliamentary Corporate Body is focused on running costs, one of which is the cost of catering, and has put a lot of effort in and commissioned a lot of work from officials on that issue, because it is complex. The way that we support running costs and the current structures required careful examination. I hope that the committee will understand that I cannot pre-empt the final decision that will be taken by the corporate body. The corporate body will want to announce its decision in due course. It has looked closely at all the costs associated and the prices charged and will come forward with ideas as to how we can reduce them. Clearly one wants there to be high usage of the areas but, to echo Duncan McNeil's point, high usage of itself does not necessarily reduce the cost. The corporate body has considered the pricing structure as well as other issues. A package of measures is required, which is how the corporate body has approached the matter.

I have a question about snagging. You claim in the report that there are 840 snags outstanding, which is remarkably precise. One of the problems that have surfaced is the level of heat in the building. How much is that a snagging issue and how much is it a design issue, which might need to be reconsidered? Should there be air conditioning for example?

It is not really a snagging issue. There are one or two snagging issues involved, for example with some of the windows. As you know, the Parliament was designed as a low-energy building, which means that there is no mechanical ventilation, and it requires a natural air flow. This week in particular I have facilities management out working intensively with members in the MSP block to ensure that we use the building properly and maximise opportunities, because certain things will help air flow. At the end of that process—which we need to give the most time we can to work—we will consider other matters.

Part and parcel of having a low-energy building is that we will get a wider range of temperatures than we would get with an air-conditioned building. The design intent is that we will get a natural air flow. I want to give that the maximum opportunity to work. We accept absolutely—and this is not restricted to members—that some areas of the building are hot and uncomfortable and we are obviously not happy with that. People must have a decent working environment. We are trying to work with the building to get it working to its maximum capacity. If that were still not good enough, then of course the corporate body would be prepared to consider other measures. However, we would be reluctant to compromise significantly on the low-energy approach that we have made a great deal of and which remains our ambition. However, of course that has to be balanced with providing members, their staff and parliamentary staff with a decent working environment.

Given that this is the last week before the recess, there is a big effort this week to try to work with members to ensure that we have extracted the maximum amount of data that we can. If that process proved to be unsuccessful or unacceptable, then the SPCB would be prepared to look at other measures. However, I could not say at this point what those would be.

The difficulty, of course, is that if you cannot get the information this week that you require in order to make progress, we will not have the building in full use thereafter to make the proper assessments. Therefore, I presume that we could go through the same period next year with relatively little change from the present. What measures do you think you will be able to take to address the heat issue before it recurs, presumably in early summer next year?

I am told that our FM team will try to get round the MSP block this week. I am aware of the fact, of course, that members are around over the recess as well. However, this is obviously a good opportunity to do that exercise and we hope that we will gather enough data. Much of the process is about gathering data. However, although the heat of the building is a general issue, there are also specific issues in specific rooms. We are talking to members and their staff to try to understand what their issues are. There is also the consideration that individuals have different comfort zones. Some people are reasonably okay with a warm temperature, but others are not. It is a personal issue and much of the process is about trying to understand that. However, I am confident that we will gather enough data.

I hope that well before this time next year we will have fully understood the building and got it operating as well as we can. I hope that that will be good enough to provide reasonable working conditions. If it is not, I am sure that by then we will have agreed with the SPCB any additional measures that we need to take.

As the Presiding Officer's report says, I asked previously whether we could have more detailed information on the processing of final accounts. I should probably put on the record the fact that the committee would appreciate that further information in the spreadsheet that you mentioned. It would certainly be useful to get that in due course.

I may be able to give you an update on that. As the Presiding Officer's report says, the first batch of final accounts has now come in. Bovis has promised us the next batch by around the end of this week. I agreed with colleagues this morning the format of a report to you, which we can adjust in the light of any comments that you make. We will get that to you over the summer when we have processed the latest batch of Bovis accounts. I hope that that will give you about 20 accounts to look at, which will be a meaningful number for the first time. That information will give you a package number, the name of the contractor, a description of the work, the estimated final cost and the agreed final account and will allow the committee to begin to track how we are getting on, which I know the committee is understandably keen to do. I would be happy to commit to provide that to the committee over the summer once we have processed the latest batch of final accounts from Bovis.

That would be helpful. I wanted to ask another question about fees, but Jim Mather wants in on this issue.

I want to follow up on what has been said. The report says:

"HPT is monitoring Bovis's performance closely against the revised programme."

Is anything being done differently now that you are getting to this stage? For example, are the timescales for review meetings changing?

The one real change that we made—Graham Rennie can say more on this because it was done with his strong encouragement—is that we closed down instructions to Bovis on any additional works, whether they were snagging related or otherwise, so that Bovis could concentrate on the final accounts. We wanted to give Bovis a clear run at it. We have done that and we agreed a revised schedule with Bovis that has monthly targets. We met in May and obviously there are a couple more days to go in June. My team met Bovis yesterday afternoon and got an assurance that Bovis would hit the June deadline as well. We are starting to see things coming through. The accounts are fairly historical; nonetheless, Bovis is beginning to hit the deadlines. There are signs of movement.

Obviously, I must remain cautious because we must hit all the deadlines to get the accounts moving. However, we have now also achieved practical completion, which was a major step forward. I know that the committee was interested in that. There are signs now that we are starting to hit deadlines. I will be interested, of course, in seeing how the final accounts span out. I am still getting reassuring views from the cost consultants, but until we have signed the final accounts, clearly we cannot be absolutely sure. That will allow us a tracking method.

My team is taking close order and is able to do that because less emphasis is on issues such as snags. We have lifted the level. Stewart Gilfillan, who is my director in charge of the matter, now has regular meetings with the managing director of Bovis. On both sides, we must focus on the matter. Like us, Bovis recognises that we must process the final accounts. Some difficult accounts will arise towards the end of the process, but we must get some through so that we can focus on them.

You now have a monthly review sequence.

Exactly—we have a monthly schedule.

Is an end date envisaged?

I think that the schedule runs to the end of this calendar year.

As we approach the first anniversary of taking over the building, are its revenue costs for heating, lighting and cleaning different from those that were expected?

Those costs are broadly in line with our estimates.

There is no variation.

It will take a full year to gather all the data and some ups and downs will occur. I expect to be in a better position to give a more precise answer when we appear before the committee to talk about our budget round. The committee took a close interest in the matter last time. I expect to be able to give precise historical data and to look ahead to the 2006-07 and 2007-08 budgeting round to discuss our estimates with the committee.

The matter remains one of strong interest to me and the corporate body. The building is big and complex and the cost of running it is of considerable interest. The Parliament is a low-energy building not just because that is proper environmentally but because minimising the energy that we use has significant financial consequences, which is why we remain interested in sticking to that.

That is probably as much as I can say today. We would be happy to have more detailed discussion in the context of the budget round.

Are you in a position yet to provide a full and final accounting of the sums that went to the architect Enric Miralles and his widow, Benedetta?

We could probably give a pretty accurate estimate of the fee that was paid to the joint venture company. Strictly speaking, it is for the joint venture partners—RMJM and EMBT—to say who got what, because a private agreement exists in the company. I cannot give a figure off the top of my head.

Will you report back on that?

I could give the committee an idea. Dave Ferguson might have the figure to hand.

We can certainly provide the figure to the committee, although I do not want to publicise it at the moment. Members should be aware that until the project is completely finished, other costs are always likely. It is always possible that other work will be needed but, at the moment, no further costs arise from EMBT/RMJM.

Were the company's costs not capped?

Yes.

Is it still clocking up costs?

The costs are still capped.

Why would further work be done?

More work might be needed to finish the work off. We might want EMBT/RMJM to do a piece of work for us that does not deal with a design fault but that relates to snagging, for example. That would be time charged and a cost would be agreed. That is minor, not major, stuff.

We should be able to give the committee a reasonably good estimate of the global figure to the joint venture, if that would help. The Enric Miralles and Benedetta Tagliabue proportion of that is a matter for that company.

It would be useful to extend that to Bovis and to have a sense across the board of where the capped-fees figure has been held to and how much additional work has required to be undertaken.

We are in the middle of one or two negotiations. When they are concluded, I will be happy to try to give a report. In the case of Bovis, the bulk is site organisation costs, but a fee element is involved. I would be happy to give the committee a note on that. Davis Langdon is also involved in that, so we will include it for completeness.

My question is about the continuing work that impacts on the building's appearance, such as landscaping work and some of the scaffolding, which I presume is for remedial work. Some of that seems to have gone on interminably, in comparison with what we were led to expect was the completion time. Has that extension of time had cost implications for us?

Any scaffolding that is here for remedial works is paid for via the trade contractors whose remedial work is being undertaken, so the answer is no. Most of the scaffolding that remains runs around the canopies and the landscaping. That is finished with for construction works but will be there until the end of the G8 summit.

Given that the time was nearly up and that I was aware from other responsibilities that the police would take some measures, I agreed that it was sensible to run the two elements together. Members should therefore expect that immediately after G8 finishes, all that scaffolding will come away and the whole landscaped area will be available for public and other use for the remainder of the summer.

Are direct costs to the Parliament associated with the security arrangements—particularly the fences outside Queensberry House and some other installations? If so, will you quantify them?

I understand that Lothian and Borders police are meeting the cost of the fence and the general policing arrangements.

About nine months ago, there was some controversy about the external element of claims management or claims investigation and assessment. How has that worked? Are you satisfied that the arrangements that you put in place have been effective?

That has two streams. On the executive side, we have brought in an external claims specialist, whose appointment has worked extremely well. He has much experience and I have come to value his expertise. As he came new to the project, he brought a fresh eye, which was helpful in combination with the contribution of colleagues who have been on the job for a long time. He has helped us to set the strategy and will review the big packages—the 10 packages with the highest value. His advice was to start where the money has gone. He is working on that and is in the middle of that process, which is going well.

The other element is the post-completion advisory group, which Dave Ferguson chairs. That has helped to set the strategy and will be a sounding board. Hitherto, the group's job has been to set the strategy, but now that final accounts are flowing through, we will use it to ask questions. I attended a bit of the group's meeting last week, when the project team gave a presentation on final accounts. That was a good opportunity. It was helpful to listen to a range of professionals asking questions and helping the understanding of the final accounts process. That is working well, but the bulk of that group's job is to come, as final accounts flow through. As we hit the 10 or so big final accounts, I expect the post-completion advisory group to continue to perform its role, which is to make comments and to advise me or the corporate body. I am reasonably happy with that.

We have completed questioning, so I thank the witnesses for appearing. We look forward to seeing you again in a few months' time.

I do not know about that.

I do not know whether you are looking at Duncan McNeil or me, but thank you.