The first item on the agenda is the committee's on-going scrutiny of the Holyrood building project and consideration of the September monthly report. We have before us witnesses from the Scottish Parliamentary Corporate Body and the Holyrood progress group: Robert Brown MSP is a member of the Scottish Parliamentary Corporate Body; Paul Grice is clerk and chief executive of the Scottish Parliament; Mr John Home Robertson is convener of the Holyrood progress group; and Sarah Davidson is project director of the Holyrood project.
You will not hear statements from anybody else—just from me.
I thank Robert Brown both for that statement and for the additional information that we have received from the corporate body.
In the August letter, we were told about the problems with the light-well area and the staircase. Is the design now complete?
Yes, the design is complete.
So there is no design work that is now incomplete.
That is correct—
And there is no design work that is incomplete for the whole Parliament.
That is correct. As we have explained on previous occasions to the committee, construction issues on site sometimes require the contractor to ask the design team to clarify what is meant in a particular area, but the basic design of all the areas is complete. It is the manufacture and the installation that are currently being programmed.
I am sure that that will be welcomed.
I do not think that we can give a precise answer to that question at the moment. As Fergus Ewing will readily appreciate, there is interlinkage between the different contractual elements, so it is quite difficult to sort it all out precisely. What I can say is that the figure of £100 million that has been quoted is, I think, likely to be not a million miles off the sort of area that we are talking about when the costs of bomb proofing have been added to the cost of delays and all the incidental contractual implications that have been referred to.
That figure was fed to the press, I presume by some spokesman for the Parliament. I note that you say that the figure appears to be correct. What puzzles me is that, right from the outset, the building would have had to have security and bomb-proofing measures. Since the Brighton bombing and so on, there have been security threats of all types, so the need for security in public buildings was not new. How come we suddenly hear four years later that £100 million is attributable to bomb proofing? Surely the security services, coupled with the Labour Government and the civil servants that work for it, should have established what the security requirements were right from the start.
There are several elements to that. As you rightly say, the issue about blast proofing and security arrangements has existed from the start. As I understand it—although I am subject to correction by the technical side—the requirements have not in themselves changed, but two important elements have come into play: one is the increase in emphasis on security following 11 September and the issues associated with that and the second is the physical testing of the individual components in the Parliament building, which in many instances are not, as you will recall, off-the-shelf things from B&Q, but are separately manufactured. Those components had to be tested—the story on that was given to the committee on previous occasions—and a whole series of issues have flowed from that.
Robert Brown has covered most of the points that I would make. It is certainly the case that, whereas the blast consultant might previously have been happy to rely on desk assessments, he has wished to make every test an actual physical test—what is called a destructive blast test. As we have explained in the past, the development of blast-proof structures is an iterative process, in which designs need to be presented and passed before they can go into manufacture. That has resulted in individual components' being much more complex and highly developed than had been the original design intention.
I appreciate that both witnesses are seeking to be candid after a fashion, but what has been said today directly contradicts what was said previously. Today, we have heard that the security standards "have not changed". In the advice that we received from the SPCB in September 2002, it was said that the security requirements were "ever-changing". Those two statements flatly contradict one another. Perhaps following some reflection after today's meeting we could have a proper explanation of the whole story about the security requirements. We need to know how it is that we now find that there will be a cost of £100 million or thereabouts for something that should have been foreseen at the outset. If the witnesses could clarify the matter now, I would be extremely grateful. Perhaps they could let us know on what date or dates the security requirements were interpreted more stringently.
That is clearly an issue that the Fraser inquiry and perhaps the Auditor General will wish to look at very closely. In many ways, that is probably the best forum to pursue the detail of this complex matter.
My questions relate to other issues, but is it all right if I add some information to this part of the discussion?
Yes.
In December 2002, the Presiding Officer informed me in answer to a parliamentary question that the specifications for anti-blast, security and other such measures had not been changed. The guidelines had been laid down by the security services and incorporated into Cabinet Office instructions.
That question has at least two partial answers, which will probably be amplified by the detailed analysis of all the packages that will happen in due course. First, almost irrespective of when the contracts were let, the detailed design and development in packages such as the windows package, which saw the greatest development in relation to bomb-blast proofing, have taken place over the past 18 months to two years.
We must therefore conclude that any estimate that the Finance Committee or the Parliament received was pie in the sky. After all, your cost consultants could not have foreseen what would be required to test such individual and unique structures, yet the Parliament was only told about—and voted on—estimates that you supplied.
It is correct to say that the cost consultants' estimate of the cost of a package at any one time is based on their understanding of the design of the package at that stage. Where a package's complexity or specification changes over time, the cost consultants' estimate has necessarily to change along with that.
I will not embarrass you by pointing out the number of times when you said that you were sure the costings were accurate.
Although I have a number of questions that are related to an issue that I raised at a previous meeting, I want to ask a supplementary on this matter. I have some sympathy for Fergus Ewing's point. After all, people have been trying to blow up houses of parliament since Guy Fawkes's time—the idea that we might have security problems is not exactly novel.
The £195 million budget, which was the basis for the original cost plan, was based on a construction cost of £108 million. According to normal practice in the building industry, that figure was set at a base date—in this case, the base date was 1998. However, it was recognised that the construction management method of letting contracts—where the client directly lets the contracts over a period of time—would mean that there would be an inflationary factor. One would assume that, in a contract with a base date of 1998 that was not let until 2000 or 2001, the price that one would use as the standard for measuring would have changed over time.
As Margo MacDonald has just pointed out, we are talking about a unique design. How can you have a
Since we began this exercise three and a half years ago, the indices have varied by only a couple of percentage points. The index of inflation is relevant only up to the point at which the contract is let, and enables those who let the contract to judge any tender prices that are submitted against a realistic estimate of how much should be paid for a particular contract instead of against a figure that is some years out of date. As I have said, that issue is slightly separate from the increases in package costs due to delays, changes in scope due to bomb-blast proofing considerations and so on.
I have a supplementary question about security. You have already said that many security aspects were factored into the original equation. However, I still find it very difficult to understand how up to 25 per cent of the total cost can be attributed to security measures. It is not as if we did not know about such things before. After all, we have experienced terrorism in these islands for the past 30 years. Indeed, Westminster has been mortared in that time. It is not as if the threat was not understood long before 9/11. I find it extremely difficult to understand how security has led to such massive and continually increasing costs, especially given our experience of terrorism in the UK.
I do not want to repeat what I have said, but one of the principal issues lies in the design of the components. An entirely separate discussion could be held about the way in which buildings are designed and located in this kind of security atmosphere—indeed, I suspect that such a discussion will be held in due course. However, from what we have seen, there is absolutely no doubt that it has been a huge challenge for individual trade package contractors and the architects to translate particular designs to meet the specifications in terms of fixing and installation as well as manufacturing.
I will turn to one of the key questions in the whole matter, which is the so-called rolling contract. Anyone who builds an extension to their house or adds on a kitchen gets a set of cost estimates. As ordinary, humble individuals, we understand and expect that the estimates will disappear if we make changes to the building. Most people realise that a contractor will drive a horse and cart through the whole estimate if they keep on making changes.
A good bit of the answer to the question has been contained in discussions we have had at previous committee meetings. I accept that new members face difficulties in getting to grips with the complex issues that have gone before. The corporate body—humble individual members—took over the project in June 1999. We had very similar queries in mind—hindsight is a great thing. We have never been comfortable with the form of contract that we inherited as a number of the difficulties that we have experienced are linked to it.
Certain aspects of the cost of the design have been publicised this week, from which we have been able to see that the cost of the toilets has doubled and the cost of joinery work in the chamber has more than doubled. Those are not new packages. Surely the costs must have been taken into account at the beginning.
Sarah Davidson will deal with those particular points. I repeat the general point that I made earlier, which is that the changes were not client driven but were made at the detailed design and manufacturing level. They have emerged from the necessities of the design, so to speak.
A significant proportion of the additional costs of those packages are the costs of delay and prolongation. Therefore, they are slightly different additional costs.
I am talking about costs that have doubled, or more than doubled in some instances.
In some instances, a very significant on-cost resulted from delay. The ability to make changes is a feature of project management in terms of trying to achieve the programme. Clients need to be sufficiently in control to make changes. Robert Brown alluded to the fact that the Parliament took advantage of that ability after the project was handed over to ensure that the building fitted the Parliament's requirements.
We need to move on.
I have three questions; one is technical and the other two are substantive. The technical point follows up on inquiries that were made at the last meeting about the current status of the contracts that the Parliament has signed. The corporate body helpfully wrote to the committee confirming that 64 contracts have been signed off by the Parliament, the vast majority of which are to be settled over the coming months.
Do you mean contracts that were inherited from the Scottish Office?
Indeed.
That is most easily done in writing. It is not a problem for us to do that for the committee.
I will move on to my substantive questions. I accept that the corporate body has made conscientious efforts to contain costs. Over the years in which it has undertaken the project, the corporate body has been reliant on professional advice. Foremost among that advice was the Auditor General for Scotland's report of 2000, the first paragraph of whose recommendations reads:
Before Robert Brown answers the question, I want to clarify something that Wendy Alexander said. We are not being asked to authorise any further expenditure this year.
That is absolutely right.
This point may be more for the Auditor General to deal with in the next stage of his inquiry than it is for me, but the field work was undertaken and that report was made immediately after the corporate body agreed what is called stage D, which is the scheme design. At that stage, information on the complexity and buildability of much of the design was significantly inferior to the information that we have now. Some of the most interesting questions that the inquiries of Lord Fraser and the Auditor General will ask will be about what happened between that stage and now. However, the problems were a product of the time. Information was based on the best understanding that the cost consultants, the construction manager and the architect had at the time of what the next stage in building would be. That understanding turned out not to be the case.
Did you want to raise a further point, Wendy?
I wanted to ask a question on a different matter—the immediate issue of claim settlements—but I am happy to leave it just now if others want to pursue the present line of questioning.
You may ask that question now and then I will bring in Jim Mather.
I want to probe the process of reviewing claims and their settlement. I know that there are 64 contracts and I think that 50-something have yet to be settled, as they will be. In a letter in August, the Presiding Officer outlined the process for us, saying:
I am happy to confirm that there has been no change of policy at all. I am sorry if the wording of the letter is perhaps slightly ambiguous. The cost consultant is the lead actor on behalf of the corporate body in assessing and analysing claims. To do that, he must go to all those other parties to gain information. Crucially, he must go to the construction manager to understand site management. That is important when considering in detail disruption claims—as in the second figure in the Presiding Officer's letter of yesterday. Disruption or resequencing of the programme usually occurs when the construction manager takes a decision—on site, on a given day and in particular circumstances—that the programme has to be managed slightly differently. Records of that, and justifications, are crucial to the settling of claims.
The Auditor General's report says that the construction manager settles all construction work contracts. Of course, that might be true, formally. I accept the project director's view that cost consultants will look into these matters. Given the length of time that the cost consultants have been involved and how intimately they are associated with the process—and the same goes for Bovis Lend Lease—does any potential conflict of interest arise in the securing by the corporate body of value for money in the settlement of outstanding claims? As we have seen, those claims are now rising by 200 per cent or more. In the negotiation process, do the construction manager and the cost consultant have the requisite independence?
The contractual requirements on both of them are clear. A reasoned justification for all claims is presented in detail to the project team. The justification is checked very carefully for us before we pay a claim on behalf of the corporate body. I am satisfied with the process.
As Wendy Alexander says, those people are intimately involved. We absolutely require their assistance in finalising all such matters.
I understand that the Presiding Officer has indicated that he is disappointed that certain cost increases have been missed by the cost consultants. If that is true, do you plan to look back over this whole episode to find out whether the cost consultants missed other costs?
I do not recall that the Presiding Officer's letter said that.
In some of the documentation that I have seen, the Presiding Officer expresses disappointment that the cost consultants have missed certain costs.
I stand ready to be corrected, and I would obviously be happy to follow this up with Mr Brocklebank, but I think that what the Presiding Officer has expressed on previous occasions is disappointment with the failure to predict the sudden rise in overall costs. We discussed that on our previous visit to the committee.
To follow up on Wendy Alexander's question, is there a system of delegated authority from the corporate body to the project team for decisions on settlements?
Yes.
Is there a figure attached to that?
Not to my knowledge. As Sarah Davidson has explained, the process is clear. The cost consultants have lead responsibility. Of course, they must take advice from Bovis in particular, and sometimes from the architect, to enable them to challenge and scrutinise. They then report to the project team, which will also scrutinise. Things are normally signed off at project director level.
There are levels of delegation but I cannot remember off the top of my head exactly what they are.
So are there no circumstances, whatever the size of the claim, in which things might come back to the corporate body for a decision?
As you will remember from your own time on the corporate body, it is always possible, whatever the financial delegations, to have a provision for officials with qualms—whether people in the project team or, indeed, myself—to refer a matter back to the corporate body.
The corporate body has insisted on receiving monitoring information so that we can see any patterns. The detail of claims is clearly a matter for professionals to decide on. However, if matters of principle arise, we would expect them to come back to the corporate body. That has always been the way in which we have operated.
I would like to add one point in reply to Wendy Alexander's question on perceived conflicts of interest among consultants when settlements are paid. The recent agreement on fee capping has major implications. Before that, it might have been perceived that a consultant would get an extra fee out of a higher payment to a contractor, but that no longer applies as a result of the fee capping.
I have in front of me an unpriced copy of the contract with Bovis. It contains a section on conflicts of interest. As Mr Grice will know, it says that Bovis had to
Not to my knowledge.
Could that be confirmed?
I repeat, not to my knowledge. You would need to check back—
Could you come back and tell us, "There has been none," rather than giving an answer that is, of course, cleverly ambiguous.
It is not cleverly ambiguous. I am saying that I have not been told of any conflicts of interest. As Scottish Parliament clerk and chief executive, I expect that I would have been told. I will check back. It is not a cleverly ambiguous answer, Mr Ewing; I am trying to give you a straight answer. I will check with more junior members of the project team and, of course, if any conflicts of interest have been reported, I will let you know straight away.
As Wendy Alexander mentioned in her questions, we are dealing not only with a potential conflict of interest for a contractor who has had years to build comfort relationships with other contractors or consultants; that contractor will also have a track record of decision making. As I implied in earlier questions, the cost consultants are contractors every bit as much as O'Rourke is, and they can be judged on the quality of the advice that they have given on the basis of which the Parliament must take decisions. Who provided today's figures for the trade package comparisons?
They are from the September report.
The cost consultants, Davis Langdon & Everest—DLE—provided the figures.
The cost consultants provided the figures. How often are you provided with such reports, Sarah? I have two quite different reports that refer to exactly the same trade packages and I could quote you the numbers in the trade packages. In some cases, the difference between the two lots of figures is millions.
I get fortnightly reports from the cost consultants to the progress group. Those reports break down each package into its cost-plan value, its current value, any anticipated changes and an estimated final cost.
I am anxious that we do not go down that route because Margo MacDonald has figures that the rest of us do not have. That puts us at a disadvantage.
I did not supply members with the figures in case they were unreliable. That is why I tried first of all to determine how often the figures are provided and on what basis. I will confer with Sarah Davidson and supply the committee with the list that I have, if that helps.
That would be helpful.
It would be helpful to have an explanation. Then, if there is a problem, we can deal with it.
The SPCB reported to us in December 2002 that money was to be spent on accelerated working. There is no mention in the report of any expenditure on accelerated working. Was there any accelerated working? Did you spend up to the limit? Why has it dropped off?
We dealt with that matter last time in the report to the committee.
So there is no accelerated working now.
No. It was an option at the time that might have helped to speed things along, but it was always to be a decision that the SPCB would take at a later point. As a result of the various developments since then, we decided that accelerated working would not have been of particular assistance. None, or very little of the money, was spent on accelerated working.
That is correct. Among the remaining risk money that is set against the fit-out packages, there is still a certain amount of money that could be used later to accelerate the final stages of fit-out if that was felt to be necessary or appropriate.
How much was laid aside for accelerated working?
I think it was about £5 million at that stage.
I thought that it was £10 million. Anyway, was that money moved into other columns?
Any money that was not used was moved to other columns or else it remains in that package for acceleration.
Right, we were talking about—
Margo—
I have one more question.
One more and that is it.
Well, actually, I have loads of questions, but I will ask only one.
I allow you only one question.
Can you confirm that Select Plant Hire, which is a considerable contractor, is a wholly owned subsidiary of O'Rourke?
I do not have that information.
The companies share the same headquarters, so I assume that Select Plant Hire is a subsidiary. Were you not aware of that? The issue is about the times that cranes are on site and the reasons for that.
I am told that that company is a subsidiary of O'Rourke.
I just wanted to confirm that. As I say, there are a few matters that I want to confirm.
I want to build on Margo MacDonald's point about the reporting of costs. I have scheduled an appointment with Sarah Davidson to produce a statement that reconciles the position on a single sheet of A4. There will be a column to show the opening costs as per the Auditor General's figures from March 1998. The statement will then build in the inflation component and the other increases and, finally, it will reconcile the £401 million. The statement will be exceedingly helpful and I look forward to having that meeting and putting the position on the record.
No one will deny that.
I expected you to agree with that.
That issue goes beyond the remit of the Finance Committee and the SPCB; those decisions come from on high. Whether the Finance Committee feels that it should deal with that matter further is a matter for the committee, but we, as the management group of the Parliament, cannot deal with it.
Another principle is involved. All five projects have been amended to be fit for purpose, but only four of them have been underwritten and paid for by the taxpayer. We are dealing with an issue of fairness. I raised at an earlier meeting the matter of what happened to Ferranti in the 1960s. Ferranti was involved in a cost-plus contract with the Ministry of Defence that ran over budget. The MOD was bailed out, tanks were still bought and soldiers were still paid.
That issue goes far beyond the remit of the SPCB. Paul Grice will say something about the matter to which you refer.
I was grateful to Mr Mather last time for pointing us in the direction of Ferranti. We managed to uncover one of the original auditors as well as the audit reports. We have had a useful discussion. Mr Mather put his finger on it when he mentioned the cost-plus contract. The key lesson that was learned from the Ferranti example, and which has been learned from the current contract, is that overheads, staff and other costs under the non-competitive, fixed-price contracts are almost what one would call a closed-book policy. I have sought and received reassurances from the project team that, before we agree a final settlement, our cost consultants will have the right to examine books where appropriate so that they can check the position in relation to all the issues that placed the Government in a difficult position over the Ferranti contract. It was useful to research the Ferranti contract. On the Holyrood project, the lessons have been learned about cost-plus contracts. I cannot comment more widely.
Moving on from that point, I have re-read the Auditor General's report. It strikes me that, in June 1999, the Treasury recommended that the construction management route should be used only where there was a clear value-for-money case for doing so. In June 1999, there was an emphasis that public bodies should be moving to prime contracting, which was a new, radical procurement model that the Treasury had encouraged public bodies to explore since 1999. Why then, in June 1999, was there no attempt to renegotiate from a construction management formula to a prime contracting model?
We dealt with that at the last meeting. I was concerned about that matter at the time and later, when I asked the team what our position was. As I am not a professional in that respect, I did not know about the change in the Treasury guidelines until I saw the Auditor General's report. I am not sure whether professionals on the team were aware of it. The fact remains that, although some thought was given to renegotiating the contract at the time, we were in a contractual position and we were subject to the instructions of Parliament, which had taken several decisions on the matter.
Robert Brown has just said that, although the Treasury guidelines changed in June 1999 to advise specifically against using the construction management type of contracts, the Parliament was contractually bound at that point and therefore not in a position to change course and follow the guidelines. However, I would like to point out that the contract—the unpriced copy of which I have in front of me—was not signed until around October 1999. Therefore, it did not exist or apply in June 1999 and its obligations were not created at that point. The only way in which what Mr Brown has said could conceivably be factually correct is if, prior to the signing of the full contract, there had been a letter of consent that had the effect of requiring the parties to enter into the full contract. As far as I know, the letter of intent is one of the many documents that has not been made public. Will Robert Brown confirm, however, that the full contract was not entered into until after the advice of June 1999 and that, therefore, it is quite possible that Lord Steel could have embarked on a different course that would have ensured that we would not be in the fine mess in which we find ourselves?
We are beginning to stray into Audit Committee territory and starting to discuss things that have been raked over to a degree already.
I would have to examine the circumstance properly to give a detailed answer, but I think that there would have been a letter of intent committing the SPCB to the construction management route.
I remind members that the focus of today's meeting is the report that we have in front of us. Although it is interesting to follow some of the issues that are being raised, they are issues for the Audit Committee, not necessarily for us.
We have had an interesting hour this morning. I did not come into politics to listen to platitudes and excuses and to be patronised by Robert Brown as being one of the four new members who should be brought up to speed by him on matters relating to this fiasco.
John, you are here to ask questions, not make political speeches.
I have sat here patiently for an hour and I had to vent my spleen and express the way that people out there feel.
My question is supplementary to John Swinburne's comment. The last time I asked about the accuracy of the figures, they seemed to be accurate to within £500 either way. In the discussion that we had on that issue, Ms Davidson said that the intention was to bear down on the contingency figures and Mr Grice said:
After our previous meeting with the committee, we spent some time discussing the issue of ranges and trying to think of the best way in which we could bring that kind of consideration to bear on the figures.
I understand what you are saying, but I am asking you to give us an estimate of what the total cost would be in the worst situation, if there were the maximum amount of delays and if we were unable to pull any of the costs back in. I appreciate that everyone is working to ensure that that does not happen, but what is the nightmare scenario, apart from the building never being completed at all? We need to consider the worst-possible situation if we are to work out how well we are doing.
We cannot do that. We have consistently reported the figures that the cost consultants have given us based on certain programmes. We cannot go beyond that. Numbers are bandied around and, although one could make up a number, all that we have a rational basis for are the figures that we are giving you, which are the estimate of professional cost consultants based on a certain programme.
I appreciate the fact that you cannot pull such a figure out of the sky. The problem is that the cost consultants have got it horribly wrong already. I do not have a huge amount of confidence in their £19.7 million, because their £18 million was not right last time.
Publishing the risk register all the time, which we as a public agency must do—and it is right and proper that we do so—carries inherent risks. It tends, and has tended in the past, to be a self-fulfilling prophecy if it is perceived that money is swilling around—that is the perception that we do not want. The only way of drawing a line under the costs is to complete the job. If we could get the contractors off the site and take possession of the building, we could draw a line under the matter that way. That is what we want to do and that is what would be in the best interests of the whole Parliament.
I am surprised that no one who is associated with the project seems to be living in the real world. If you do not have enough money in your purse, you cut your cloth accordingly. Why not brick up windows instead of having them cost hundreds of millions of pounds? That might not be beautiful, but it would be sufficient for the small number of MSPs who attend the debates. So there you go.
That is one suggestion.
The corporate body has always been concerned, on the instructions of Parliament, with cost, programme and quality. There is no point in our having spent all that money and arriving at this point just to do something ridiculous at the end to finish the project.
Another £100 million is neither here nor there.
Do not barrack the witnesses, John.
The building has to be finished and made use of.
We talked a wee bit about the timetable and the issues associated with the delay. You talked about the way in which you are splitting the additional costs into two packages. Have you factored in the costs of continuing to use the parliamentary headquarters and the chamber or does that come under a separate budget?
We will be coming to the committee at the end of October with a bid for next year. I will be happy to talk to you about that in more detail then. We have a migration budget, which will fall in the next financial year, as opposed to the previous one—we had thought that it might fall between the two. Under end-year flexibility, we hope to carry it forward.
I turn to the claims that are likely to be made in this context. Are contractors liable for other costs that might arise out of their delays, such as the cost of knock-on effects on other companies, or do those additional costs fall on the corporate body and the Parliament?
That has to be sorted out. In principle, claims can arise and settlement of claims will be part of negotiations as we proceed. The detail of that is quite complex, given the need to investigate what the causes of delays were—there are probably a number of different complex causes in certain instances, so there are issues to deal with. In principle, the answer to your question is yes, contractors may be liable.
I have what might be a technical question—I am not certain. As regards fitness for purpose and so on, we can judge the physical work that is undertaken by the building contractors. How do we judge the quality of the information that you have been given, which has provided the basis of your decision making? If we come to the conclusion—as I think most of us have this morning—that the cost consultants might have given contradictory advice or advice that is difficult to follow, how do we judge the quality of it? Does the Auditor General for Scotland do that?
The Auditor General will have access to all the papers that we have and, through us, to all the papers that our consultants have. We would expect the Auditor General to have a view on any judgment beyond that which we would take ourselves.
The Parliament has its own lawyers and specific advice will be drawn on as required during the process. There are a number of levels at which the advice might be considered.
Have you been asking the lawyers for their advice on that aspect of the contract until now?
I do not want to go too much into this line of questioning. Advice has been taken from the Parliament's lawyers on various aspects as they have arisen. The Parliament's lawyers are involved closely in the contractual developments as they take place. They have devoted considerable time to a number of issues.
That leads me on to my third question, which is about the management capacity of existing systems to deal with a combination of issues, such as the running of the Parliament, the process of migration and dealing with complex legal issues and other issues over the next year. Has the corporate body had any thought about how those issues might be managed more effectively, given the stresses and strains that are likely to emerge?
There is no doubt that the project already places an enormous demand on a number of key staff, particularly those in the project team, but also other parliamentary staff—no doubt even the committee's clerks get caught up in it. That process will intensify over the next year.
Obviously that is a crucial issue, which we hope to hear about in so far as it has a bearing on our issues.
I apologise to the committee and to the witnesses for being late. I hope that I will not duplicate what has been said already. I want to develop the convener's question and ask whether you have considered the line of management for the decision-making processes from now until completion. The committee would like an assurance that the project from now until next July will be managed in a way that is designed for closure. There should be a clear sense that you will enter possible litigation proceedings confidently and that the migration of the Parliament will be seamless, so that none of our constituents is affected. That is the goal. Is it time to consider again the observation in the Auditor General's report that there should be a split between the function of chief executive and that of project manager?
You have lost me on your final point.
I refer to paragraph 3.66 of the Auditor General's report, which states:
The corporate body, the Audit Committee and others considered that issue three years ago. One can debate the matter but, as I have said before, in any organisation there needs to be one official who takes final responsibility. That is my aim. Of course, the Scottish Parliament is a large and complex organisation. Directors are responsible for the clerks, the official reporters, the researchers, security and other staff. My task is to run things through others. In two-headed organisations, there is a great danger that people will blame each other and not take responsibility. I did not accept the point that the member raises when it was made and I do not accept it now.
It is worth adding that, both off its own bat and in accordance with the Auditor General's report, the SPCB has very much strengthened the team on its own side to deal with a number of issues in light of developments. That is partly the way in which the matter has been managed.
My question follows John Swinburne's point. I understand why you do not want to give any more hostages to fortune over the project's eventual overall cost. However, I wonder whether you can help us a little. Back in June, you were prepared to say that you were 95 per cent certain that the costs and time scale then would be adhered to. If you cannot give us the ultimate cost, will you project in percentage terms how much closer to completion we are on this occasion?
I was very careful to say that those percentages were based on advice that I had received through the various structures. That advice has been the subject of an exchange of views between the SPCB and a number of key players.
That is a lengthy way of saying, "Once bitten, twice shy".
I do not really have much to add to Robert Brown's comments, other than to say that we developed with Bovis the notion of using percentages as a way of getting better clarity and understanding of the programme. With hindsight, I do not think that that approach was particularly helpful. As Robert Brown has mentioned, the significant point is that we now have contractor commitment to and resourcing of the current programme, which gives us greater confidence. However, we will proceed with caution.
I realise that some of the issues that we are dealing with are complex. One of the difficulties is that the largest risk factor relates to some of the longest-standing contracts that will need to be negotiated and signed off in the coming months. Robert Brown said a moment ago that he thought that renegotiation had been considered at some point. I think that that response is slightly different from the one that we received at a previous meeting. I would be grateful if you could write to us on the matter to ensure that the record of the previous meeting and this one is accurate. Of course, any such response would refer only to the SPCB's role; I realise that you cannot speak for others.
We should certainly have consistency. However, I must remind members that we do not want to stray into the Audit Committee's territory, and some of those questions are clearly for that committee to ask.
I recollect that I said that we had thought about the possibility of cancelling the contract and starting again. I do not think that we discussed renegotiating the contract, even if it had been possible to do so. Paul Grice has already said that he will check the precise contractual position on the matter. However, I think that the issue is for the Audit Committee rather than for this committee.
I want to ask about claims. We have already heard of a case in which, after successful negotiations, there has been a reduction of £1 million. Obviously the contractor in that instance submitted a bill that was inflated by £1 million. That happens in business. I acknowledge that any such negotiations must be conducted in private—no one is suggesting that it would be anything other than foolhardy if that did not continue to be the case. However, after those negotiations are completed, a huge amount of public money is paid out. I seek an assurance that, once claims have been adjusted, settled and agreed, we will find out which contractors have submitted what will then prove to have been artificially inflated or unjustifiable claims. That will ensure that the public, who are paying for the project, find out what has happened behind the scenes and whether a contractor has habitually claimed in excess of their ultimate entitlement. Will all of that be kept secret, as it has been for the past five years?
Despite occasional insinuations made by others about this issue, the SPCB has made it clear that it is endeavouring to be as open as possible within the constraints that operate on this matter. We have also said—and this is the next item to be dealt with under this heading—that we will produce the key figures on the eventual settlements at the end.
I accept some of that, but not the rest. The Auditor General has already said that it will be business as usual, which means that documents will not be made public, but can you tell us the identity of the contractor that claimed £1 million more than ultimately was agreed?
I think that that is in the public domain already. I am sure that it has been mentioned—
Well, can you tell us, now that we are here?
It was a company called Ballast Construction Scotland, which was doing work on Queensberry House.
My next question was about Ballast. I do not mean to amuse the committee, but there is an entry for removing pigeon droppings and then taking off the roof. Presumably, the droppings were on the roof. Did you clean it first?
If you want to send them to me, I will happily look at them.
Sarah Davidson's "proceed with caution" comment probably sums up the perception of what the management will be from now until July. I have a question for Robert Brown and the corporate body. If I were in the outside corporate world and I were the chairman of the board, I would be looking for closure—to use an American phrase. I would be looking for a clear indication of a transparent closure programme, but I do not think that such a programme exists. I do not know how we can have confidence, now that we are not even going to be putting out the risk estimates, because that is too risky, or the percentages, because we are not going down that road again. We do not seem to have much more of a grip on the process than we had before, at a time when the project is going to get a lot more complicated.
I do not think that the project is going to get more complicated. With any luck, most of the design and programming complexities are behind us. The issue of the light-well area is complex, but it is fairly well analysed and known about, and it is now a question of the sequencing of work. The problem is that if something goes wrong with any of the bits and pieces that have to happen in that crucial area, that will impact further down the line and cause further delay. The programming information as I understand it—like yourself, I am not a professional—is such that Bovis, as our advisers, and others are reasonably confident that they will be able to achieve the programming. Is that a fair summary, Sarah?
Absolutely. I would not want any suggestion to remain that my team or any of the construction or design teams that are working on this project are anything other than 100 per cent focused on closing down the remaining areas of work. The programme as produced by Bovis is entirely focused on moving across the site and closing down first the MSP building, then Queensberry House, then all the packages on the east side. If they are not closed down, the building will never be finished. I would not expect us to be anything other than focused on that. All our teams are divided into groups of people who are focusing on individual packages with a view to finishing them. Speaking personally, I find any suggestion that we are anything other than concentrating on that to be entirely misleading.
The problem is that you do not have the deadlines or percentages or figures to back that up. I do not think that anyone doubts the commitment of all the witnesses. Everybody who is part of the project has been entirely committed to it. The difficulty is whether the structure and programme are in place to implement it.
A very detailed structure and a very detailed programme are in place. If we have been led into any difficulties in the past, it is because, in an attempt to explain things, we have tended occasionally to over-simplify a complex process. The Bovis programme comprises an immense number of interrelated, complex programmes, all of which are shared with and understood by the individual trade-package contractors. Completion and achievement of the trade packages is key to completing the programme.
I do not want to cut off Jeremy Purvis, but I have a suggestion. One of the characteristics of the reports that we have received is that they have focused relatively narrowly on changes in the cost pattern. It might be useful for the next Presiding Officer's report to include a focus on the management plan that is in place to take the project to completion. It would be helpful for us to have further information on that.
I am happy to agree to that on behalf of the corporate body. The request fits very much with what Paul Grice said about the move from what could be called the current programming and building arrangements into the migration scenario and the management of that stage. In any event, the emphasis is going to change.
That information would be welcome.
I seek a point of clarification from Sarah Davidson. How many MSPs will be accommodated in the building?
All MSPs.
All 129. In the near future, when fiscal autonomy is transferred to Scotland, we will probably need about 150 MSPs. We will do away with all the MPs going south of the border—
I think that—
Will we be able to accommodate those additional MSPs? Are we going to build portakabins to hold the additional MSPs?
I think that the question could be said to be rhetorical.
Is Mr Swinburne inviting us to build an extension?
I want to get one or two technical issues out of the way. One of the figures that concerns me a wee bit is the £50.3 million figure for fees—the capped lump sum. The figure seems to differ from the fees figure that we were given last time, which was £63.6 million. Could you explain the difference?
I will write to clarify, but the difference is largely due to the fact that, for clarity's purposes, we removed site organisation costs from the figure and have expressed them as a separate line. The convener will find that line after the fees line. We did that because, according to the programme and the specific requirements for facilities on site, site organisation costs will continue to be liable to some measure of fluctuation. We wanted to make it clear that the fees figure will not change again. We separated the figures to make that clear. The site organisation costs, plus the reduction in fees, should account for the total cost. As I said, I will clarify that in writing so that the record is clear.
That would be helpful. It would also be helpful to have amplification of the figure of £14.6 million that you added to the construction reserve. You talked about that in your opening statement, but I would like to have more information on the figure.
That would be slightly more difficult to do. As the convener appreciates, the only further information that we could give would be to break down the figure contractor by contractor. The corporate body is understandably anxious about those figures, as it does not want to run the risk of them getting into the public domain. If that happened, it would give away the figures involved. The feeling at this stage is that the figure is best expressed as a total figure. As individual contracts are settled, the information that is given to the committee will clarify how the money has been allocated, but that will be a retrospective exercise.
Does the sum that you have allocated include moneys that might require to be spent when the building is tested or in the period following the testing of the building? Given that we are talking about a unique and complex building, we must expect a higher percentage of glitches in its operation. Where is the money coming from to sort that out? The Finance Committee will also be concerned about that money.
I should make it clear that those sums are allocated by the cost consultants, not by us. They are to cover prolongation costs. If any problems are identified when systems or parts of the building are tested, those would be the liability of the contractors concerned, not something for which the Parliament would expect to make financial provision.
However, those are also areas that could be subject to legal contest.
Absolutely.
Some of them might be. Fergus Ewing tells me that he would like to ask a technical question on fees.
A moment ago, the convener referred to the papers that we have before us. One of those papers states that the total fees that are payable to contractors are around £50 million. I have just checked the contract and, as far as the construction managers are concerned, their entitlement is to three things: the construction fee; the staff costs; and on-site management or organisation costs. Can you confirm to me that the total figure of £50 million incorporates all those elements and that there is no extra money that we have not heard about going to any of the contractors?
The figure that we have now agreed as a lump sum with Bovis includes its percentage fee and management costs. The third aspect is the site organisation costs, to which I referred a moment ago.
That is the £2.5 million.
Yes, the additional £2.5 million, on this occasion. Those are costs for which Bovis is directly remunerated; they include, for example, the costs of the people who provide the portakabins, the canteens, the toilets and so on. Those costs increase the longer that those facilities are on site. However, we are negotiating with Bovis to try to come to an economically advantageous lump sum in relation to those costs, now that we know what the programme is likely to be.
I would like to clarify that, as this is an important issue. We thought that the figures that we were given as the totals were the totals. Now we hear that extra money is being paid to Bovis and, presumably, the other contractors. Can we have a total total rather than an incomplete total, which is what you have provided us with up to now, even though we have been calling for this information to be provided for yonks?
In fairness, and with respect, that is not actually the situation. Perhaps Sarah Davidson can return to that issue to clear it up.
We would never have knowingly given the impression that we were seeking a lump sum in relation to site organisation costs, as we have always understood that those were costs that Bovis managed for us but which were reimbursed by the Parliament. We have negotiated a lump sum on the percentage fee that Bovis gets and on Bovis's construction management costs. Those two figures will not change. The latter of the two increased by £2.5 million this month, but we anticipate that that will be the final increase.
We are talking about outlays, in short, not fees.
That is right.
How did you calculate the figure of £3.9 million for fit-out? Do you believe that that figure is adequate for the costs associated with the process?
The £3.9 million is a transfer this month from the risk reserve into the construction cost and is all time related. It is the coming to fruition of additional costs that were envisaged for delay around nine months ago but which have not been claimed yet. In the most recent figures, there is still money for delay against the fit-out packages. In due course, there will be further transfers for delays later in the programme.
So that is not the total cost.
No, it is the transfer cost.
On consultant fees, I seem to recall that the Miralles architectural firm from Barcelona was among those who were slightly reluctant to cap their fees—in fact, it did not respond to the Presiding Officer's request for some time. Can you identify what part of the fees is going towards the architectural work and what part is going towards the Miralles firm?
The Parliament has a contract with the joint venture, EMBT/RMJM Ltd. The internal split of the fee between the firms is a matter for them and is negotiated by the three directors of that company. We do not know how much goes to the Edinburgh firm and how much goes to the Barcelona firm.
Can you tell us the overall architectural fee?
The Presiding Officer has committed to presenting to the committee information on the priced consultants' contracts. That will include the fee paid to the joint architectural company.
I will allow one more question before I wrap up this agenda item.
Robert Brown referred to legal fees. We all know the complexities that lawyers can get into, but are there hidden costs, as yet unexposed, in all the legal complexities that the Executive has to pay for? At our next meeting, could you give us a list of the legal fees since the beginning of the project?
That is really internal to the SPCB budget, but Paul Grice will specify that more clearly.
If it would be helpful for the next meeting, I will be happy to provide information on external legal advice that we have brought in and paid for. Just as we have clerks and official reporters round the table here as part of the parliamentary staff, we also have a legal department. That department has been involved, but that is part of the normal running costs of the Parliament. However, I will provide information on external legal advice.
We may have provided that information before.
I should be clear and say that such costs are met not by the Executive but out of the Parliament budget.
Meeting suspended.
On resuming—