Finance Committee, 25 Nov 2003

Meeting date: Tuesday, November 25, 2003

Official Report 179KB pdf

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Scottish Parliament Building Project

I welcome members to the 15th meeting of the Finance Committee in the second session of Parliament. I also welcome members of the press and public and I remind everyone to switch off all pagers and mobile phones.

We have received no apologies for absence, so we will move straight to the first item on the agenda, which is the committee's on-going scrutiny of the Holyrood building project and consideration of the October and November monthly reports. Members will recall that, at our meeting on 28 October, we agreed to defer taking evidence on the October report until today, so that we could consider the November report at the same time.

We have witnesses representing the Scottish Parliamentary Corporate Body and the Holyrood progress group. Paul Grice is the clerk and chief executive of the Scottish Parliament; Robert Brown is a member of the SPCB; John Home Robertson is convener of the Holyrood progress group; and Sarah Davidson is the Holyrood project director. Committee members have a copy of the November report and they should already have a copy of the October report. They will also have a copy of a letter from Paul Grice that follows up various issues that the committee has raised. I offer Robert Brown the usual opportunity to make his opening statement.

Thank you, convener. This time round, I have little to say on the finances; no substantial changes in costs have been reported since our previous appearance before the Finance Committee. The committee will know that the final cost is closely related to completion within the current time frame of the plans. The completion of the MSP block and of Queensberry House, expected in the next week or two, is significant. Much as I enjoy appearing before the committee, I think that I can now say that, if we are not yet at the end of the process, we are certainly at the beginning of the end.

I hope that the committee will feel that the SPCB has been helpful—within the constraints that are placed on us—in responding to requests for further information. The hurdles to be overcome between now and mid-March—in particular, work that will lead to the sealing of the external link with the chamber—are crucial. Getting work on the light well out of the critical path will determine whether we can meet the finalisation date that we are aiming for. We are happy to take any questions that the committee may have on the reports and other documentation.

I will pose two questions to start off with. The November report says:

"There is a degree of slippage being reported, but Bovis are working to accommodate this so that it does not impact on the overall target completion date of July."

Can you elaborate on that? How confident are you that the target date can still be achieved?

As the report says, there is slippage in the work in a number of building areas. For example, there is slippage in the tower areas, where delays in the installation of windows have meant that work on internal finishings has not proceeded as fast as we had hoped. Some of the delays run concurrently, so we cannot add up all the delays to get a total figure. There are delays of between two and six weeks in different areas. Bovis Lend Lease Ltd is examining ways in which work can be resequenced in those areas so that the overall completion date can be held to. As we have explained to the committee before, there is a degree of scope for resequencing within individual packages. Once the externals have been completely sealed, there will be a good deal of scope for using acceleration measures to fast-track the internals. We have seen that being done very effectively in the past few weeks in the MSP block and Queensberry House.

As Robert Brown says, there are hurdles to be overcome. We cannot say with absolute certainty here and now that it will be possible fully to absorb all the slippages, but Bovis is hopeful that it will be. We will continue to report monthly to the committee.

Have you identified the key barriers to achieving the July completion date? Has Bovis given you further information on its degree of confidence that the July date will be achieved?

As the report indicates, there are major targets in the critical path that will have to be met, such as progress in the chamber and in the light well. Bovis has made it clear that completing external works to a degree that allows it to proceed safely with internal works will be key. It has not indicated that we have hit an insurmountable barrier or a brick wall; it is still examining the situation and has told us that it believes that the completion date is still achievable. It will report to us again in mid-January when it has carefully scrutinised how successful the measures that it has been implementing have been. We will review the situation again then. However, at the moment, Bovis is making it clear that it is still working towards the summer date.

One of the cusp points mentioned in the report seems to be the taking down of the crash deck in the chamber. The date given is mid-January. I presume that, by mid-January, Bovis should be able either to give you firm information on whether that has been achieved, or to indicate the possible implications if it has not been achieved.

Absolutely. The scope for working over the Christmas period is being explored in order to give greater confidence of meeting that date.

The report includes information about times in order to show the key targets that we have to meet if we are to keep the critical path not critical—if that is the right way to put it.

The report says that towers 3 and 4 are well advanced. In September, you expressed confidence that they would be finished by the end of February. Are they still on target?

I do not have the figures with me, but my recollection is that work on internal finishings in the towers has slipped by about three weeks. The completion date will depend on what, if any, acceleration measures are worth adopting. As we have discussed with the committee before, judgments have to be made all along about when and where it is worth accelerating work on an area. If the completion of the towers is not critical to the overall completion, there will be no particular advantage in working hard to pick up those two or three weeks. That is a matter of judgment. However, the partitioning and creation of individual offices is well advanced.

The report mentions crucial milestones that have to be reached in order to meet the completion date that we all hope you will be able to achieve. Are you confident that those milestones will be reached by the middle of January?

I have no reason to think that they will not be reached. Bovis has told us the dates that it is working to and those dates are shown in the programme of works.

Bovis still thinks that the dates are achievable.

Absolutely.

I want to be absolutely sure about this. If you do not achieve the mid-January date for the removal of the crash deck, will you be unable to hit the July date?

We cannot say that for certain, although we can say that it would be a great deal harder to do so. Part of what Bovis does, as construction managers, is to programme and sequence works. That is both a fine art and a high science. It is Bovis's job to work out how we can get past problems. There is no doubt that, for the currently planned sequence of events to roll out as expected, the deck will have to come down by mid-January. However, Bovis has not said that the whole game will be off if the crash deck does not come down by then. We can be absolutely certain that, if there are delays in that respect, Bovis would consider very carefully how it would be possible to recoup that time.

The removal of the crash deck is certainly a very important milestone. At the end of January, we will be before the committee either—I hope—saying that the crash deck is down or talking about what, if any, mitigation strategies can be used to deal with the fact that it has not come down. However, at the moment the signs are good.

I have a question for Robert Brown based on information that went into the public domain last week in response to a question from John Swinburne. As we know, the estimated cost of the building is just over £400 million. We have also been told that approximately £100 million has been spent on proofing the building against bomb blasts. That indicates recognition of a possible threat—indeed, there was publicity about that in The Scotsman yesterday. However, it emerged last week that the building is uninsured. Does it not seem somewhat contradictory that we spend £100 million on proofing the building against bomb blasts and yet the Scottish Parliamentary Corporate Body has apparently decided that the building does not require to be insured?

I think that Fergus Ewing is well aware that Government policy is to self-insure on such matters. In fact, I think that that is also the policy of several councils. That is nothing to do with the building's being uninsurable or insurable; it relates to the fact that the Government has resource across the board to deal with such matters instead of paying premiums to insurance companies. The practice is commonplace and is applied in other parts of the Government in Westminster and in Scotland.

That may be the case for normal buildings, but no one would call the new Scottish Parliament building normal. As we have spent a quarter of the total cost on bomb proofing, it is odd—if not reckless—not to insure the building. Is the House of Commons insured?

I do not know, but I think that it is probably dealt with on the same basis as the new Scottish Parliament building.

Might the corporate body wish to examine that urgently?

I have no difficulty with our doing that. The answer is probably fairly easy to obtain. However, I repeat that for a series of valuable buildings in the Government domain in Westminster and in Scotland, the policy is one of self-insurance, for good reasons.

I understand the general point, but there is a difference between a building that houses the ministry for paper-clips and a building that the authorities have overtly acknowledged could be a target. In these febrile times, one recognises that thinking.

I will move on to the comments in Paul Grice's letter about the Daily Mail article that was published after a journalist spent time undercover at the site. I appreciate that the parliamentary authorities might feel somewhat unhappy about the Daily Mail coverage, but the reply is not especially informative about the substance of the journalist's criticisms. I can understand that a bit of Daily Mail bashing might be the source of pleasure, but the journalist was providing a service and made fairly serious allegations.

As Mr Grice's letter says nothing about the substance of the allegations, will he give a detailed response now, in particular to the allegations that materials have been wasted regularly, that timekeeping records are suspect and regularly abused and that work has been redone, which adds to the expense? Those are three fairly serious and highly pertinent allegations to which Mr Grice has not responded.

I reiterate the point in my letter that such articles are a huge blow to the highly dedicated work force on the site. It is deeply regrettable that much of the reporting, which was largely of anecdote and hearsay, was presented in an unhelpful way. We expect the people in the work force to work extremely hard to complete the building. That is an important point.

As I have said to the committee, notwithstanding the manner of the reporting, we sought Bovis's reassurances straight away. We received reassurances that work is of a high quality and that effort is made to avoid waste. I understand that when work occasionally has to be redone, if that is the contractor's fault, it is undertaken at cost to the contractor, not us. To my knowledge, the timekeeping systems are monitored carefully and are as good as those on any site.

As I said at the time, we pursued those matters with Bovis and received assurances. As part of its contractual obligations to us, it is Bovis's responsibility to deal with such matters. Bovis assured us that the allegations had no substance.

You are saying that the allegations are without foundation.

That is what Bovis told us and I have no reason to disagree. I tend to take more seriously the advice of professional project managers than that of undercover journalists. I am not sure what the journalist's construction experience was. We sought and received reassurance from Bovis.

I visit the site regularly. If someone read the Daily Mail article then spent hours wandering around the site, they would not recognise the allegations in the article. What we see on the site is hundreds of people working extremely hard and to a high standard on a difficult building. It is important to give the workers down there credit for what they do.

Obviously, we accept that. We all welcome the fact that the work force raised a substantial amount of money from a charity football match for a local school.

I, too, have visited the site—most recently a couple of weeks ago. However, that does not put me in a position to conclude whether the allegations, which were made by somebody who spent several days on the site, have foundation.

I will make a final point about the process. The chief executive tells us that he investigated the allegations by asking Bovis whether they had any merit. However, Bovis might have an interest in the question whether the allegation has any merit that work has been redone, for example. Is any process that is independent of the construction manager available to investigate the allegations or any other similar allegations, or does the chief executive rely entirely on the response from the construction manager?

What counts is what has implications for the Parliament and the corporate body. Contracts are in place under which contractors deliver bits of work, for which they are paid if the work is done right and not paid if the work is not done right. A goodly bit of the Daily Mail article related to matters that were between subcontractors and their people. As Paul Grice said, when work has had to be redone on the odd occasion—I understand that that has not happened often—if the fault lies with the contractor or with workmanship that is within its control, that work is undertaken at the contractor's cost. The Parliament need not make a detailed investigation of all the press reports on such matters.

We also have our own project team, which is on the site regularly and is in a far better position to report to us about what is going on at the site and the general impression than is a reporter who probably lacks construction experience and who was on the site for a short time. It is important to separate the wheat from the chaff and to deal with matters that have implications for the Parliament, rather than matters that are on the edge of all that and have nothing directly to do with us.

I am interested in the schedule of trade packages in Paul Grice's letter, which shows cost-plan allowances and current trade contract values. The data are all present, but my criticism is that they are not very comprehensible. Earlier, I produced a schedule that totalled the figures and drew out the variances and other matters. It would be more helpful to have something that showed running totals and allowed us to make a proper comparison.

It would be equally useful if the data were reconciled with the schedule in annex A to the Presiding Officer's report, so that we understood what was happening and what component was represented by the current construction commitment. That is about the audit trail and understanding the data. The information that has been provided is interesting but relatively incomprehensible.

We talked about exactly that issue before we came to the committee this morning. We recognise that the table at annex B to Paul Grice's letter grew out of something that was required for a different purpose. Robert Brown asked this morning to what extent we could tie in the table with the model of reporting regularly to this committee. We will examine that. It is hoped that the next full report will contain something that is much more comprehensive and on which the read-across from annex A to the Presiding Officer's letter to the trade packages is clear.

As Paul Grice's letter mentions, we hope to pick up the point that a committee member—I forget which one—made at a previous meeting about tender information that we have not previously given. We could probably use a table to give the number and range of tenders. That will take a bit more work, but it is perfectly possible to provide.

I had a discussion with the convener before the meeting started. I could not remember whether we had been given explanations of why certain costs had escalated to the extent that they have. I am talking about matters such as the cost of windows in the MSP block. Although it was pointed out to me that we have had some oral or anecdotal evidence on the matter, it would be extremely useful if you could remind the committee why some items have more than doubled in cost and why we have got to this stage. That would save us coming back and constantly asking you for information that we should probably have remembered from an earlier meeting.

What I thought we might do when we redraft the table, which could be done more quickly than a package-by-package analysis, is to show broad areas where there has been an increase—we would indicate where a certain package has been particularly affected by time or bomb blast, for example, so that members could tell at a glance where such issues have had an impact. If members then want further, more detailed information on individual packages, we could provide that on an ad hoc basis.

That would be helpful.

You have helpfully given us part of the timetable and the deadlines for the remainder of the project. Assuming that each of those deadlines is met, we will be on course for the July target. However, what steps will be taken if targets such as that for the removal of the crash deck in the chamber are not met? Will the contractors reorganise and accelerate the work or would the failure to meet the targets be seen as a major breach of contract? Would the moneys involved have to be recouped down the line through legal action? When will such decisions be made?

Those issues are dealt with on a case-by-case basis. On the example that you have given of the crash deck in the chamber, the project team would expect to receive a report from Bovis after the Christmas recess, which is about when that work should be complete, indicating whether the work has gone to programme or whether there has been a delay. If the work has gone to programme, we assume that the programmes that we have from Bovis will roll out as planned; if there has been a delay, Bovis's contractual responsibility as our programmer is to make proposals to us on the ways in which that time might be recouped or the ways in which the processes that follow on from the delay can be replanned, resequenced or remanaged. As I said, it is for Bovis to come to us and set that out. It may be that the proposals would involve a measure of acceleration in some places. If that acceleration has additional costs attached to it, it is for the client to decide whether it wants to commit those costs.

You are right to allude to the possibility that, if there are delays—either on that item or others—because a contractor has failed to do something properly, there is always the opportunity for set-off or recovery of moneys from that contractor. As we have said to the committee before, the reality is that many of the delays in the project have been knock-on consequences of problems that have arisen elsewhere, so it is not always clear cut where financial liability lies. However, that does not mean that the issue is not carefully looked at in the whole process.

What I am getting at is that, although we hear the language of targets that have to be met, the explanation that we hear subsequently is that a target does not have to be met, because there is no agreement with either the managers of the project or the contractors to meet that target and the work can be accelerated or rescheduled. We have also heard in the past that those targets have to be achieved if we are to meet a subsequent deadline, which is now set at July, but that there may be reasons why we cannot meet the deadline. My difficulty is that, although we hear determined language about meeting targets, nothing backs you up in enforcing that.

You are right. What you eloquently describe is the nature of construction management. Something that both the committee and those of us at the official end are constantly wrestling with is that, although Bovis is on our side and is working with us to try to achieve targets, it has no contractual obligation to meet a certain date. That is the nature of our contract with Bovis.

What Bovis has to do for us—working alongside us and understanding our objectives—is to programme the works in an achievable and manageable way in order to meet the final deadline. You are right to say that, when we talk about targets that must be met, we are saying that hurdles must be crossed at a certain point in time if we are to achieve our programme target or programme ambition. You are correct that the nature of the contracts are such that there are not contractual obligations on Bovis to meet certain dates.

Have you received any legal advice that extra contractual agreements can be reached with any companies so that July is a deadline and, if that deadline is not reached, there will be significant penalties? Have you had discussions with the chairmen of each of the contracting companies or have you had legal advice that further agreements can be made? What confidence can we have now—other than the percentage confidences that you used to give us about completion—that you will focus everybody's mind on paper? I do not know whether such agreements are possible. Have you received advice on that?

The way in which the contracts are established means that each individual contractor works for the Parliament rather than for Bovis, so that the contractual relationship is between us and the individual contractor. Were we to wish to give Bovis the power, as it were, to ensure a completion date, we would have to change completely the basis of all the contractual relationships so that the contractors worked for Bovis. There is no doubt that that would come at a very high cost. Our view is that the way in which Bovis is managing the package contractors towards completion on a highly complex building is the best way of achieving the targets that we are aiming at. We have not asked for any specific legal advice on whether we should change the basis of those contracts. The professional advice of the project team that we are working with is that we should not seek to do that.

It is obviously a little late in the day to seek to renegotiate such contracts. The timetable points that Jeremy Purvis mentioned are very much in the minds of members of the progress group. We receive reports when we meet every fortnight. If there is evidence that a contractor is having difficulties and things are running late, we interrogate and investigate ways in which the work can be accelerated and how other contractors might be able to help. That is our job; we are examining the matter constantly.

Have there been discussions with the people who managed the millennium dome? They set a deadline that had to be achieved.

Please do not compare the Scottish Parliament building with the millennium dome.

Unfortunately, almost all of my constituents do. The relevance of the dome is that a deadline was set for its completion. I do not know whether you have had discussions with those in government who had a relationship with the contractors on the dome project.

We are faced with the stark situation that, if the July deadline is not met, there will be significant problems on top of the ones that we have had already. The Finance Committee must have confidence that extremely robust measures are in place to ensure that all the people with whom you deal are clear that the deadline must be met.

The trouble is that, once the construction contract method has been put in place, it rules the way in which we go. If we were starting the project again, we might well not go down that track because of the experiences that we have had, but we must face the issues within the current context.

The central issue is not so much legal advice—Jeremy Purvis makes quite a good point on that—as professional advice. The professional advice that we are receiving is that, given the point that we are at, the existing contracts are the basis on which we should move forward and the cost of moving from those arrangements into one of guarantees—even if that could be done; there are question marks about whether it could be—is not something that is worth taking on board now. We must bear in mind the complex interrelation between different parts of the programme and the complicated situation that arises from knock-on effects. It is the nature of such a complex site that we have to face those problems.

I am not sure about the dome; I do not know whether we can say anything about that.

We hope that, by the end of January, when we get to the next stage in the process relating to the key points that have been identified, you will be in a position to show us that the range of uncertainty has significantly diminished and indicate how much further you expect it to diminish month by month until we get to July. That is the essence of what the committee is looking for.

For all sorts of reasons, including the public interest, there is considerable pressure—both public pressure and other pressures—on everybody who is involved in the project to get on with it and finish it as quickly as possible. Everything is in place, in that Bovis and the contractors are working hard to reach the dates in question and, as a result of the professional advice that we have received, we do not think that any different contractual arrangement would improve matters.

We are currently discussing with Bovis proposals for incentivising particular contractors for completion, arrangements for the release of potential and so on. We are very much alive to such issues.

With hindsight, everyone in the country is well aware of the total naivety of politicians and civil servants in awarding a contract without time-scale limitations and penalty clauses. However, I will put that aside and accept that it is water under the bridge. When will the building ultimately be complete? Is there any possibility that the completion date will be brought forward and that all of us will be given a tremendous lift and surprise by your beating your own deadline?

We cannot make such a promise at the moment. The Presiding Officer's letter makes it clear that we have discussed January as a key date for taking down the crash deck. Beyond that, the next key date is March, when the back of the chamber will effectively be completed. If we hit that critical target, which is right on the critical path, people can get inside it and begin to work fast on the fit-out. We have seen what Bovis can achieve in the MSP block and Queensberry House when it can work in that way. If we reach that milestone, I expect that we will be able to talk in very confident terms if we come to a committee meeting in March. If we do not reach it, we will obviously report in different terms.

Currently, we are targeting next summer not just for completion but for migration, as it is obvious that the summer recess would be the best time during which to move the Parliament. The summer recess would provide the best opportunity for moving without disrupting work, and for ensuring that the building functions as we want it to function when we move in. Those are major considerations for us. We constantly bear in mind the interplay between the completion of the building, elements of the building—there are around 10 individual elements, as members probably know—and migration, and we are working hard on a handover strategy to ensure that the building is not only finished but commissioned and works effectively to meet the requirements of members and the huge numbers of members of the public whom we expect to visit.

I understand that the aim is to complete certain things by March. If that is done, we could talk to the committee much more confidently than we can today. However, there is no merit in our promising today things that we cannot do—to do so would be no more than speculation. I can say that we are still planning a move next summer on the basis that the building will be completed in time to enable that to happen.

What is the worst scenario? How much later would the very worst scenario be beyond the date when you all plan to put on your jackets and go home? What is your final date?

We have always worked on the basis of the information that Bovis has given us and I have not been given a worst-case scenario. My speculating on such matters would not be particularly helpful.

On behalf of the committee, I welcome Mr Zaluszky and the delegation from the National Council of the Slovak Republic, who are here to observe the Finance Committee in operation. [Applause.]

I wonder whether a Parliament building is being built in Slovakia.

It is always gratifying when we are visited by colleagues from a newly independent country.

I would like to continue the questioning about deadlines. Are Sarah Davidson, Paul Grice and Robert Brown arguing that there are no performance deadlines at all in the construction management contract?

The construction management contract does not contain a date by which the building must be complete. Bovis is required to give the best programme advice to the client and to programme the works, but the contract does not say that the building must be delivered by a specific date.

My recollection is that the completion date for the building was originally specified as some time in 2001. From the outset, a date was specified as to when the building would be complete. Why was that date not put into the contract? Why were the construction managers not under a legal obligation in the contract to procure trade packages that would be completed in accordance with a timetable and schedule of works that enabled them to ensure that the work was completed on time?

Before someone answers that question, it should be remembered that there are issues that fall within the responsibility and remit of the Finance Committee and others that fall within the responsibility and remit of the Audit Committee. Perhaps some of the issues in Fergus Ewing's questions fall into the latter category.

Most of the issues that Fergus Ewing has asked about are not matters for which the Parliament has responsibility. As he is well aware, the initial contracts on arrangements with Bovis, construction methods and so on were set up by the Scottish Office.

I am sorry, but that is wrong. I will take a step back to demonstrate that that is simply incorrect. Following representations that I made at some length to the Presiding Officer that the contracts between the Parliament and the contractors should be made public, which culminated in a meeting at the end of June, the Presiding Officer agreed that they should be. Incidentally, I would be grateful if we could be told when we can see those contracts. I understand that we will be able to see them when amendments to the contract dealing with fee adjustments have been completed, but I would have expected those to have been completed by now.

An unpriced copy of the principal contract with Bovis has been provided to the Parliament and I can tell Mr Brown that that contract was not signed until October and November 1999, which was after the Parliament came into being and when Mr Purvis's colleague, Lord Steel, was Presiding Officer. I presume that Lord Steel approved the signing of that contract, but this is patently a matter for the Parliament, as the contract was not signed and legally entered into until October 1999. There must have been letters of intent before then, but they have not been made public either. Therefore, on the face of it, the Parliament entered into the major contract with the construction manager. Are you really saying, then, that the Parliament has no responsibility in the matter?

I am saying that the binding letter of intent was in place prior to the Parliament's taking over the matter. For what it is worth, we have said that that letter will be made public.

It will be made public at the same time as the contracts for the minutes of variation—I think that I have already made that clear in a letter.

Formalities to complete the finalised formal contract might have been completed later, but the key issue is that the contract was entered into by the Scottish Office before the formation of the Parliament. However, the convener is right. The matter is one for the Audit Committee. The rights and wrongs of that matter do not affect the issue that we must consider at this point.

The convener did not interrupt Sarah Davidson when she gave evidence about features of construction management, so it is germane to probe assertions that have been made. I simply ask whether it is really being put to us that an inherent defect of construction management contracts that cannot be remedied is that deadlines cannot be inserted into them. I find that hard to swallow.

Construction management involves a variety of pros and cons in respect of the terms on which it is taken on board. We have previously discussed such matters. Many of us who have had to live with the matter are well aware of the difficulties that we face. Whether we would face such difficulties under another form of construction management agreement is another matter.

Whether we like it or not, the reality is that we inherited a certain form of contract and we have to work with it. Sarah Davidson has explained some of the implications of the form of contract for how we work. We are where we are and we must deal with the matter on that basis. It is for the Audit Committee and the Fraser inquiry to consider whether we should have entered into the contract in the first place.

With respect, my question was fairly simple. Is it impossible to insert into construction management contracts deadlines that require work to be completed within a schedule?

The point goes back to the nature of the construction management approach. A series of contracts is involved. In this case, we have a contract with Bovis, which is the construction manager, and separate contracts with the design team, the cost consultants and, crucially, a range of package contractors. There is no single contract, as there would be if we had a single contractor. Each contract contains terms and conditions for the delivery of its various parts, whether that means pouring concrete or providing professional advice. Where appropriate, timelines will be agreed with the individual trade package contractors, but that is not the case with consultants such as Bovis and EMBT/RMJM because the contracts with them that we inherited are for the provision of professional advice and other services.

I am grateful that Mr Grice has at least clarified that the trade package contracts contained deadlines. My question is fairly simple: have any of the trade contractors breached their deadlines and, if so, have they coughed up for any extra costs resultant therefrom?

The question goes back to a point that we have discussed a number of times with the committee, which is that the packages are complex and interrelated. Even in this meeting, Sarah Davidson has answered the question. If it can be shown that a trade package contractor has failed to perform and if that is the fault of the trade package contractor alone, it is clear that offset or the recovery of moneys would be pursued. If, as is more often the case, the failure to perform is the result of a much more complex set of circumstances, it is enormously difficult to prove that that is the fault of one trade package contractor.

We are constantly on the look out for failures. One of the principal responsibilities of our cost consultant, Davis Langdon & Everest, is to advise us whether there is an opportunity for offset when it comes to the final settlement of accounts. As we have reported previously to the committee, we take every opportunity to offset when such opportunities come along. However, relatively few of the package contracts have come to the final settlement stage. We have undertaken previously to provide information to the committee on that issue, when there are results to report—that is, when there is a final outturn cost on a trade package. That situation has been the subject of detailed discussion with the committee and it has not changed at all.

The line of questioning is interesting and I am not convinced that we have discussed this specific issue before. Mr Grice, given that you have advised us that you and your colleagues are

"constantly on the look out"

for failures to perform on the part of trade package contractors, have you found any such failure thus far and, if so, did that result in the Parliament receiving a proper discount or refund in respect of the payments that had been made to the defaulting contractor?

Bovis's responsibility is to manage the whole contract on our behalf. The cost consultants' responsibility is to examine cost, which includes, as I said, the settlement of final accounts. The approach is not to look for failure, but to finish the building.

On a point of order, convener—

Can I answer the question please, Mr Ewing?

That is what I am hoping for. I asked a specific question.

I am attempting to answer your question. If you would do me the courtesy of allowing me to answer, that would be helpful.

We have explained the approach before. Our construction manager is responsible for managing the trade package contractors, although the architects also have a role in that. If the construction manager believes that there has been a failure in the quality of the work or negligence on the part of a trade package contractor, that would be reported to us and the cost consultants would come into play. At present, I am not aware of any failures that fall into that category, but part of Bovis's and DLE's job is to be constantly on the look out for such failures. I assure the committee that the corporate body and I have sought assurances from Bovis and the cost consultants that they will continue to pursue that part of their job vigorously.

I say again that the emphasis is on trying to finish the building, which requires the management of a complex set of relationships and contractual positions. I assure the committee that the thrust of the work of the corporate body, the Holyrood progress group and the on-site consultants is towards that end. We take seriously failures to perform and any possibility of guarding the public purse through the corporate body's responsibilities. That position is no different today than in the past. I am afraid that the situation is difficult and complex and does not lend itself to simple yes and no answers.

You have already given us a written response on some of those issues.

I have indeed.

I seek more explanation from Sarah Davidson. When talking about possible methods of catching up with slippage, you mentioned incentivisation, which usually means overtime or extra money being spent somewhere. We talked earlier about the work force's morale; I can think of few things that would improve morale more than the prospect of a fair bit of overtime between now and March. Is there provision for such extra expenditure in the figures that you have given us today?

If overtime is used, it will be as part of a strategy for completion and not as a bung for workers.

I did not suggest that it would be a bung.

If overtime has to be used, it will not be as part of an incentive strategy, but as part of a completion strategy. That is an important distinction. The figures that have been reported to the committee in the past contain a contingency sum that includes—from memory—around £5 million that could be used for targeted acceleration. For example, in the past few weeks, Bovis found that too many workers were working in one place at the same time in Queensberry House, so a period of 24-hour working was adopted, which meant that people worked at different times during the day. That cost additional money, but the money had already been identified and set aside.

At some point between January and March, the client will have to take a decision, according to progress on the targets that we have been discussing, on whether targeted acceleration with additional costs is helpful or merited or is a good investment of money in the site. We hope that any such acceleration could be accommodated from within the current budget, although we will have to consider that issue in due course.

I am not familiar with the detail of the incentivisation that has been considered, but it includes early and staggered release of retentions to contractors as individual areas of work are certified as being properly complete.

The ultimate bottom line with incentives is that there are usually extra costs somewhere along the line. You have identified around £5 million that might be available for that, but the cost could be higher.

Extra costs would not necessarily be involved; we might release retention moneys early rather than give additional money. Bovis is exploring those matters, but in a public sector atmosphere rather than in a commercial atmosphere, which means that any additional expenditure would have to be fully justified.

Migration has been mentioned in passing, but we have not spoken about how the planning for migration is going. If we assume that the crucial deadlines will be met and that the building will be ready in July, how confident are you that we will be ready to start operating from the beginning of September?

If we hit the deadlines that are set out in programme 7A, I am confident that we can migrate successfully. That means moving on to the site the entire parliamentary operation, including the technical systems, the data equipment and, crucially, the people who are required to support parliamentary work. The deadlines in programme 7A are for completion in June—one or two of them slip into July but, fundamentally, the buildings will be finished in June.

I reiterate that some of my staff are already on site examining information technology and other issues. We will install and commission locally what we can, but we cannot carry out site-wide commissioning until everything is finished. The crucial issues are familiarisation for staff and ensuring that systems, when commissioned, deliver what we want. The major new challenge is dealing with substantial numbers of visitors. Obviously, they will be welcome, but that will require a lot of effort to ensure that we get it right.

I say again that, given that we hit the deadlines in programme 7A, the migration programme is extremely robust.

Has there been any shift in the anticipated cost of migration?

There has been no shift since I reported to you last.

What is the position on the building's rateable value?

Again, there has been no shift on that since we reported to the committee previously.

The previous Finance Committee raised the issue of the opening ceremony, but there was nothing on that in the SPCB budget. Can you give us any further information about anticipated costs?

I believe that there is something in the contingency for that. That is my understanding but, as I reported to you previously, no decisions have been made yet on the nature of the opening ceremony and therefore what the budget implications would be. I will check, and, if we have not included a sum for that in the contingency, I will write to make that clear. However, I am pretty confident that we have and I therefore do not expect any additional expenditure above the budget for 2004-05 to cope with an opening ceremony. Ultimately, decisions about the nature of the opening ceremony will be taken at a high level, and, if we need to revisit the matter, we will report back to the Finance Committee.

I hope that you will report back before hard and fast decisions are made.

There is money to cope with an opening ceremony in the general contingency—I will double check that and write back to you if I am wrong—so I do not expect at the moment that we will have to come back and ask for any more money in the global running costs to cope with it. If the position is different, I will write quickly to correct that statement. Also, if an opening ceremony that could not be afforded within that contingency was planned, I would take forward what you say about coming to the committee in good time.

I thank the witnesses for giving evidence this morning. I am sure that we will see them again.

I look forward to that with pleasure, convener.