Item No North Wiltshire Schools PPP PFI Project

Document Sample
Item No North Wiltshire Schools PPP PFI Project Powered By Docstoc
					WILTSHIRE COUNTY COUNCIL                                           AGENDA ITEM NO. 11

13th MARCH 2008


Purpose of Report

1.     To provide Members with an interim progress report on the service and key contract
       issues relating to the Private Finance Initiative (PFI) project identified by the
       Children’s Scrutiny Committee at the meeting of 25th July 2007.


2.     In October 2000 following a comprehensive tender procedure, the County Council
       entered into a 32 year contract with the White Horse Education Partnership (WHEP)
       for the provision of three fully serviced secondary schools accommodation at
       Chippenham (Abbeyfield), Malmesbury and Wootton Bassett.

3.     The Project Agreement was entered into under the Government’s PFI and included
       the design, build, finance and operation of the three schools. The school sites are
       leased to WHEP for the 32 year project duration; WHEP then ‘lease back’ the
       accommodation to the County Council and is in effect the ‘Landlord’ to the schools.

4.     Children’s Scrutiny Committee received the latest WHEP annual report relating to the
       fourth full year of service covering service for 2006 at its meeting of the 25th July
       2007. In considering the report a number of service and key contract issues were
       identified. This report provides an update on progress.

Main Considerations for the Council

5.     The items identified by the Committee were considered to have implications in both
       the proper running of the schools and possible value for money of the overall
       contract. The issues are outlined below with an indication of progress made:

       Key Concerns

       (i)    Management Fee Rise

       The WHEP Director, Ian Bolden, has discussed the matter with Secondary Market
       Infrastructure Fund (SMIF) and with Land Securities Trillium who recently acquired
       SMIF. It is confirmed that the fee is consistent with other PFI projects. The charge to
       WHEP is 15.5% on capital cost of projects which includes the service provider’s fee.
       There is no fee on ongoing lifecycle charges and no fee on Facilities Management
       charges over the whole of the concession period. In addition the fee is waived when
       the capital cost is under £3000 (which is the majority of items) and has also been
       waived when the funds for an item have been raised by charity, parents groups or
       similar. There is scope for the £3000 to be raised to reflect the level of RPI increase
       since institution of the value of the waived fee in 2004. The fee has also been waived
       on rentals for the portakabins in use in Wootton Bassett and Abbeyfield reflecting a
       very large saving and effectively reducing the fee on these items to approximately

CM08721f                                      1
       (ii)    Poor Air Circulation

       Air circulation is not a significant problem during the winter months. However, it is
       anticipated to be an increasing problem over the years due to the impact of climate
       change. The design of the rooms currently meets both the Project Requirements and
       the relevant Building Bulletin. WHEP is currently monitoring some rooms where
       problems have occurred and have worked with schools to introduce air condition
       where appropriate.

       (iii)   Completion Certificates

       Progress has been made regarding securing the original commissioning reports and
       these are now with Currie and Browne. A number of outstanding issues relating to
       the site leases remain and a meeting was held on the 29th February to try to resolve
       these. A verbal update will be given at the meeting as a number of items have been
       reverted to WHEP to resolve and agree.

       The additional impact of this outstanding issue is that WHEP is currently
       unable to re-finance the project. The refinancing of the project may bring
       financial benefits to the County Council by way of a shared agreement in the
       original contract.

       (iv)    The Mound – Malmesbury School

       The school has allowed the students to use The Mound following the issue of
       guidance from the DCSF which states children should be allowed outside and not be
       over protected. The school have liaised with the County Council’s health and safety
       advisor regarding this and to date there have been no reoccurrences of accidents
       recorded. In addition the school has adopted new techniques to manage The Mound
       by planting donated bulbs to deter inappropriate use of the area. The school
       acknowledge that the summer term will be high risk time, when the ground is hard
       and more use of the area will be made.

       (v)     Roof Leaks

       Repairs to leaks have been completed and damaged ceiling tiles have been replaced.
       A small leak still remains in a store room at Malmesbury School. This has been
       repaired a second time and continues to be monitored. A change of roofing
       contractor has achieved, what appears to be, an end to the problem. All schools are
       continuing to monitor for leaks and any unavailability should be logged with the
       helpdesk to enable appropriate dedications to be made.

       (vi)    Flooding of Car Park – Malmesbury

       This has been closely monitored at regular site monitoring inspections. To date the
       monitoring officers have not been notified of any reoccurrence of the flooding since
       the drains have been cleared by GSL.

       (vii)   Project Meetings

       Regular contact is now made with a representative from each of the three schools by
       the contract monitoring officer at the time of site monitoring visits made to each
       individual school; the frequency of this is six times a year. In addition six meetings a
       year have now been introduced between the council and Global Solutions Limited
       (GSL) to which schools are invited to attend if they so wish.

CM08721f                                       2
       Table 1 below details the agreed meeting schedule. Where meetings are held six
       times a year, these are alternated monthly between other meetings of the same
       frequency, resulting in the unavoidability of some meetings being held during the
       school recess. The communication strategy for these meetings works on an
       ‘escalation’ basis, i.e. if at one level an issue is not resolved it is escalated to the next
       level of authority.

           TABLE 1

           MEETING                             FREQUENCY         ATTENDEES
           Full Site monitoring inspections;   6 per year        Council Contract Monitoring
           contact made with school                              Officer
           representative, followed up in a
           full written report
           Project Review Meetings hosted      6 per year        Council
           and arranged by WHEP                                  Schools
                                                                 GSL representatives
           Operational Facilities              6 per year        Council and GSL
           Management Meetings                                   representative (schools invited
                                                                 to attend if they wish)
           Annual meeting                      1 per year        WHEP Board Director
                                                                 Council Project Director
                                                                 Council Responsible Officer
                                                                 School representative

       (viii)    Malmesbury School – Food Technology Room

       This issue has been successfully resolved and the food technology room walls were
       painted during the October 2007 recess. Initially only the splash back areas were to
       be painted. However WHEP exceeded this and re-painted all the walls in the food
       technology rooms.

       (ix)      Abbeyfield School – Playing Fields

       This is being treated as a continuing latent defect. Vertidraining was carried out in
       the summer 2007 and despite this water logging continues to be a problem. The
       school have registered the playing fields as unavailable and financial deductions are
       currently being sought from WHEP.

       WHEP has received commissioned a professional sports turf drainage contractor to
       report on the problem and suggest remedial action. This continuing latent defect has
       now been escalated to the annual Directors’ meeting for resolution.

       (x)       Malmesbury School and Abbeyfield School – Gas Boiler Flues

       This has been resolved and WHEP has undertaken the necessary improvements. All
       installations now meet legislative requirements.

       (xi)      All Schools – Chewing gum on carpets

       The schools have worked together with GSL and chewing gum is banned in all three
       schools. However it is still brought into schools. Chewing gum damage has reduced
       at Wootton Bassett School, but continues to be a problem at Malmesbury and
       Abbeyfield School.

CM08721f                                         3
       Since the installation of new carpet in The Street areas of the schools, gum deposit is
       less prominent on the new carpet tiles as the colour is more practical. Gum removal
       continues to be a challenge to GLS in sourcing an effective product for removal which
       does not remove the colour of the carpet and leaving a stain. This will continue to be

       (xii)   Extension Updates (Abbeyfield and Wootton Bassett Schools)

       Legal Agreements and contracts for the projects have been completed and work
       continues on the construction of the two buildings. The latest reports from the Project
       Managers indicate that both buildings should open on time and within the agreed

6.     Improved monitoring introduced following the July meeting of this Committee has
       meant that a number of issues have been identified and resolved over the past few
       months. A number of more serious items have also been identified and will be
       escalated to the Project Directors’ Meeting for resolution.

7.     Community involvement and use of the school facilities outside of normal school use
       continues to be a concern to the individual schools and the wider community.
       Although WHEP has previously stated their willingness to work with schools to
       improve usage, there is currently little evidence of this actually occurring. One
       obstacle appears to be the cost of the facilities where, although comparable to other
       schools, WHEP will not automatically discount rates for community groups. Recent
       correspondence with Ian Bolden confirmed “GSL (now G4S) has researched the
       greater use of facilities. In general response from the community has been very
       limited. Wiltshire College used Malmesbury School site free of charge last year for
       some community learning projects and some clubs had sporadic pitch use in all
       schools above the regular customers but clearly the demand is not there for use of
       halls and classrooms and drama spaces. Wootton Bassett school piloted community
       IT classes. The government’s desire for Extended Schools usage will be supported
       by WHEP, but the initiative must come from the schools themselves. WHEP will
       always try and “piggy back” activities to reduce the overheads of hiring rooms when it
       is possible.”

8.     The emerging national agenda for Extended Schools and more vocational course
       highlights the need to force this item firmly on to the Agenda for further discussions
       with WHEP. A meeting was held on 29th February and Officers will update the
       meeting on progress made. One suggestion from WHEP is for schools to involve
       them in early discussions regarding Annual Development Plans. This issue is also on
       the Agenda for discussion at the Project Directors’ meeting to be held on the
       14th March. A school representative will be in attendance.

Environmental Impact of the Proposal

9.     None, however the environmental impact of the school buildings are monitored as
       part of the contract. The environmental performance of the new 6th form
       accommodation at Abbeyfield and Wootton Bassett Schools was considered at the
       planning stage.

Risk Assessment

10.    A full risk assessment was carried out at the time of the letting of the original contract.
       Risks associated with the Capital works projects at Abbeyfield and Wootton Bassett
       Schools have been fully evaluated as part of the Project Plan.

CM08721f                                        4
Financial Implications

11.    None as a direct result of the recommendations. The Financial performance of the
       contract will be considered as part of the Annual Review process.

Legal Implications

12.    None as a direct result of the recommendations but if WHEP are unable to resolve
       outstanding Latent Default the County Council may wish to resort to the Arbitration
       and Legal provisions within the main Project Agreement.

Options Considered

13.    The contract is being delivered to the required standards and within the agreed
       budget, therefore no other option has been considered.


14.    The services provided by WHEP continue to meet the requirements of the Project

15.    This report highlights a number of key issues which are subject to ongoing
       discussions with WHEP. In particular, issues relating to the latent defects outlined
       above are the subject of ongoing discussions with WHEP; resolution to the latent
       defects is proving to be prolonged, complicated by the fact that liability is challenged
       between the parties involved, i.e. WHEP, GSL and the original builders of the
       schools, Bilfinger & Berger. The Council continues to monitor these issues and
       schools are aware of the system in place to log unavailability which would result in
       deductions being made from payment due to WHEP which would add to the pressure to
       get things resolved.

Reasons for Proposal

16.    To provide the Committee with an interim report on service and key contract issues
       arising from the contract annual review relating to the PFI project as requested in July


17.    That:

       (i)     The progress on resolving key issues outlined following the meeting of the
               27th July 2007 be noted.

       (ii)    Consideration be given as to whether the comments on the performance of
               WHEP be forwarded to the Cabinet Member for Procurement ICT and
               Partnerships, prior to receiving the Annual Report later this year.

Report Author
Head of Procurement and Contract Management

The following unpublished documents have been relied on in the preparation of this
       PFI Project Agreement and Contract Monitoring information

CM08721f                                       5

Shared By: