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AGENDA ITEM NO. 8
REPORT TO:Executive Board
REPORT NO:CEnO/08/10
DATE: 23 March 2010
LEAD MEMBER:Councillor David A Bithell
(Environment and Transport)
LEAD OFFICER:Chief Environment Officer
CONTACT OFFICER: Alan Guest (Tel:729610)
SUBJECT:Wrexham Crematorium: Provision of new Cremators and Mercury Abatement Equipment
WARD:All
- PURPOSE OF THE REPORT
To adviseMembers on the progress in the programme to replace the current cremators at Wrexham Crematorium, including the provision of flue gas abatement equipment, and to seek approval to proceed with procurement works to enable the scheme to be completed within the required timescales.
- EXECUTIVESUMMARY
2.1By December 2012, 50%of all cremations nationally,must be subject to mercury abatement in the form of flue gas filtration. All new-built Crematoria are required to comply with the new limits from opening and must be fitted with mercury abatement plant. All existing Crematoria are required to fit mercury abatement plant when the existing facilities are subject to substantial change.
2.2For existing Crematoria, only 50% of cremations nationally, need be subject to mercury abatement by December 2012, provided that those Crematoria that do not abate contributed to the costs borne by those Crematoria that do.
2.3On 9 May 2006, the Executive Board considered the report of the Chief Environment Officer (CEnO/09/06 refers) and approved,in principle,a project to replace the existing cremators at Wrexham Crematorium, with the inclusion of filtration plant sufficient to abate 100% of cremations.
2.4Notification has been received from Consultants that some of the existing gas and electrical supplies to the Crematorium may not be sufficient for the new equipment. To enable cremator works to commence on site with a minimum of delay, it will be necessary to place orders with Statutory Undertakers for gas and electrical supplies to be upgraded prior to the commencement of the main contract works in January 2011.
- RECOMMENDATIONS
3.1 To approve the transfer of the project from the Capital Preparation Pool to the Capital Programme at a total estimated cost of £850k to be funded by £600k GeneralCapital Fundingand £208k reserve from the accumulated environmental surcharge levy on cremations and the balance of £42kfrom the WITS (Wrexham Invest to Save) Fund, repayment to the WITS Fund will be made in 2012/13.
3.2To approve the Contactor procurement strategy for the scheme, utilising JCT Intermediate Form of Building Contract with Contractor’s Design.
3.3To authorise the Chief Transportation and Asset Management Officer, to proceed with the tender process and award the contract to that Tenderer who submits the Most Economically Advantageous Tender (MEAT).
3.4Toapprove that ordersbe placed with Statutory Undertakers, where appropriate, for upgrading gas and electric supplies, prior to the main contract works commencing in January 2011.
REASONS FOR RECOMMENDATIONS
To enable the installation of new cremators and abatement equipment to proceed in accordance with the identified programme.
John Bradbury
Chief Environment Officer
4.BACKGROUND INFORMATION
4.1In 1995, the Government issued Guidance Notes [PG5/1(95)] under the Environment Protection Act 1990, which resulted in all Crematoria fitting new cremation equipment capable of controlling and monitoring the emissions of pollutants into the atmosphere. DEFRA reviewed and replaced PG5/1(95) with new Guidance Notes [PG5/2(04)] which were issued in December 2004. This new guidancewassubsequently amended by Additional Guidance Notesissued in January, May and December 2005.The effect of the new Guidance Notes is not only to impose more stringent limits on those pollutants previously controlled, but also to introduce limits on other pollutants, principally mercury.
4.2DEFRAhas determined that, by December 2012, 50%of all cremations nationally must be subject to mercury abatement in the form of flue gas filtration. All new-built Crematoria are required to comply with the new limits from opening and must be fitted with mercury abatement plant. For existing Crematoria, only 50% of cremations nationally need be subject to mercury abatement by December 2012, provided that those Crematoria that do not abate contributed to the costs borne by those Crematoria that do.
4.3 There will be a need to replace the existing Cremators at Wrexham Crematorium by 2012 as they will become obsolete (manufacturers life expectancy of the current model of cremator in operation at Pentrebychan is 15 to 20 years from installation in 1997), the guidance notes state that the need to replace existing cremators would entail the mandatory fitting of flue gas filtration equipment.
4.4Following a report to Executive Board in May 2006, approval in principle was given to a capital project to replace the existing cremation plant at Wrexham Crematorium during or after 2010, and prior to 31 December 2012, with two new cremators including flue gas treatment, control equipment, and software. Approval of the project was subject to the Executive Board accepting a comprehensive project report with updated estimates of expenditure, funding and revenue implications in accordance with the Council’s Project Management Guidelines (paragraph 4.4.4.2).
4.5 In accordance with the Project Management Guidelines, the indicative estimated cost of £850k for the project reported in May 2006 has been reviewed and the current total estimated out turn cost of the scheme, at the pre tender stage, remains unchanged.
4.6 Funding for the project is provided by £600k General Capital Funding approved under the Council’s process for allocation of capital resources to priority projects, and the balance of £250kfrom a reserve accumulated from an additional levy of £25 per cremation from 1 April 2007 to 31 March 2013. As at 31January 2010, this levy had accumulated £118k towards the target of £250k. It is estimated that a further £132k will be accumulated from February 2010 to March 2013. A Project Cost and Funding Statement (Toolkit 6) is provided in Appendix 1 in accordance with the Project Management Code of Practice.
4.7 Revenue savings are likely to accrue in the future as a result of the more efficient fuel consumption of the new cremators and the greater reliability of thecremators. Quantification of any savings will not be possible until the successful contractor has been appointed.
4.8 The estimated programme of works determines that the project will be completedin the financial year 2011/12, this is 12 months in advance of the end date for levying the £25 surcharge per cremation, that is March 2013. This will result in an estimated shortfall of £42k towards the estimated total project cost of £850k. Assuming the recommendations contained in the report are approved by Members, an immediate application to the WITS (Wrexham Invest to Save) Fund will be made to cover the shortfall in funding. Repayment to the WITS Fund will be made in 2012/13.
4.9The Council has a partially exempt VAT status as a result of its income being generated from a mixture of non-business, taxable and exempt activities. This means that up to 5% of the total Input Tax recovered by the Council can be attributable to exempt status activities in any one financial year. In terms of value the Council currently recovers in the region of £420k of Input Tax from exempt activities, against a ceiling of £620k. Cremations are an exempt activity for VAT purposes. High levels of expenditure, and resultant high levels of Input Tax recovery, in any one year on cremators has the potential to take the Council over its partial exemption limit, such a breach has the effect of the Council having to pay back all Input Tax attributable to exempt activities in that year to HM Revenue and Customs. It is proposed to phase the capital spending over two years 2010/2011 and 2011/2012 to mitigate the impact on the partial exemption position.
4.10In line with the Council’s Procurement Code of Practice, an advertisement has been placed on the Buy4Wales website requesting applications from suitable and qualified companies who wish to be considered for inclusion on a select tender list of contractors for the works.
4.11Six applications and pre-qualification questionnaires have been received and all are deemed acceptable to be included on a select tender list. Subject to the approval of Members, Transportation and Asset Management officers will proceed with the scheme with a view to sending out tender documents inMay 2010. If the tenders returned are within the approved capital provision, works are anticipated to commence in January 2011 and be completed with the new cremators fully operational by June 2011.
4.12During the programme of works the Crematorium will remain open with reduced capacity, the cremators will be replaced individually allowing one to remain in use.
4.13In preliminary discussions with manufacturers of cremation/abatement equipment,it was made apparent that the existing gas and electrical supplies to the Crematorium would need to be surveyed to ensure they were suitable for purpose. Notification has since been received from Consultants that some of the existing gas and electrical supplies to the Crematorium may not be sufficient for the new equipment.
4.14To enable cremator works to commence on site with a minimum of delay, it will be necessary to place orders with Statutory Undertakers for gas and electrical supplies to be upgraded prior to tenders being received. The cost of this work is included in the project estimate.
5. CONSULTATION
5.1 Consultation has taken place with the Lead Member for Environment and
Transport.
6. SCRUTINY COMMITTEE COMMENTS
6.1 This report has not been discussed by a Scrutiny Committee.
7. IMPLICATIONS
7.1Policy Framework - Approval for procurement works to commence is required under the Council’s Procurement Code of Practice.
7.2 Budget - Capital provisionof £600k, supplemented by an estimated reserve of £208k from revenueEnvironmental Surcharge income and contribution from the WITS Fund of £42k, has been included in the capital preparation pool for year 2010/2011 and 2011/2012. Under the Project Management Code of Practice,Executive Board Approval of a comprehensive project report is required before the project is included in the Capital Programme. It must be emphasised that the figures contained in Toolkit 6 shown at Appendix 1 are estimates at this stage.
7.3Legal - The replacement/abatement fitting programme complies with the requirements of the Secretary of State’s Guidance Note PG5/2(04) as amended.
7.4 Staffing - There are no staffing implications.
7.5Equalities/Diversity - There are no diversity implications.
Project Management Code of Practice /
Procurement Code of Practice /
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Name of Project: / Provision of new Cremators and Mercury Abatement Equipment
Department: / Environment / Chief Officer: / John Bradbury
Project Officer: / Chris Baker / Contact: / Alan Guest
All prices as at: / January 2010
ESTIMATED SCHEME EXPENDITURE PROFILE:
Total Cost £000 / Pre2010/11
£000 / 2010/11
£000 / 2011/12
£000 / 2012/13 £000 / 2013/14
£000 / After 2013/14
£000
Expenditure:
Land/Property Purchase
Contract Works / 850 / 425 / 425
Direct Costs
Furniture
Design fees
Other fees
Disbursements
Grants to 3rd parties
Other (please specify)
Sub Total
/ 850 / 425 / 425Income:
Grants
Contributions
Revenue budget contributions
Revenue reserve contributions
/ 208 / 208WITS (Wrexham Invest to Save Fund)
/ 42 / 42Sub Total
/ 250 / 250Total to be found from the Council’s Capital Resources
/ 600 / 425 / 175/ Check Total / Contract
Start / Jan 2011 / Contract Finish: / May 2011
NOTE:Excludes Client Costs