Agenda Item 8
Paper 12/12
THE NATIONAL OPERATIONS CENTRE AND
OFFICE ACCOMMODATION IN GLASGOW
Purpose
To seek approval to enter into a building contract with BAM for the construction of the National Operations Centre and Office Accommodation at Stepps.
Background
A new national Operations Centre and Data Centre will support enhanced technology and IT capabilities through the creation of a single centralised Intelligent Control Centre. This state of the art facility is a key enabler in sustaining and enhancing OPA performance and achieving operational efficiencies. The new office facility will promote SW as a Great Place to work and deliver carbon reduction and energy savings. It will replace the time expired accommodation at Balmore Road.
Following BAM`s appointment asPreferred Bidder in August 2011 the detail of the design is now sufficiently developed to enable SW to conclude a construction contract. The contract will be a NEC 3 Option A (Lump Sum). There have been no material departures from the design outlined at Preferred Bidder stage with improvements in areas identified by the project team.
Risks have been more fully assessed and covered within the contract or within a contingency provision. The key risks identified are delay in third party consents including detailed Planning approval, building warrants and Scottish Power carrying out early cable diversion works. Detailed design approval was granted on 18 January 2012.
Both SW and BAM will work together in partnership with North Lanarkshire Council to support Community Benefit and targeted training and employment initiatives (eg modern apprentices).
Energy is a key opex cost and sustainability feature of the new building. At the time of writing this report, energy modelling demonstrates the projected difference of 37.6% improvement in electricity consumption and 52% improvement in heat loads for the new building when compared to Balmore Road in kW terms. There may be further improvements before the contract is finalised as the thermal model for the building is being updated. BAM will share the risk that this level on consumption is not exceeded for 6 years through an Energy Share Agreement.
The Project Team are working with BAM to select appropriate products from the Energy and Water Efficient Technology Product List which attract tax relief and will enhance SW`s Capital Allowances.
Land purchase is completed.
Financial Summary
BAMBid advised Aug 2011 / BAM Contract Price
Risk Adjusted Bid/ Bid price / 15,001,150 / 14,901,201
Contingency / 1,095,640 / 1,062,897
Total including Contingency / 16,096,790 / 15,964,098
Contingency % / 7.3% / 7.1%
BAMs current economic standing is satisfactory to SW.
There has been a continuing assessment of BAMs cost and scheme against KEIR as Reserve Bidder to ensure continuing commercial tension and compliance with procurement rules. Debriefings have been given to the unsuccessful bidders and the fourth ranking bidder(DAWN) has requested further clarification of the evaluation process and objected to some aspects of the scoring of its bid. A detailed response has been provided andthe formal 10 day standstill periodwill now be observed before any decision to enter into a contract(which will in any event not be beforeBoard approval of BAM's appointment).
An opinion letter from our external Legal advisers Dundas and Wilson on the content of the contract and procurement process is attached at Appendix 1.
Timetable
Bidders have intimated a start on site date on 20 February 2012 with key dependencies on achieving the necessary third party consents. This is in line with our programme for completion of the building to enable a move to take place mid 2013 and links to the timetable for the ICC.
Recommendation
It is recommended that the Board approve the Commercial Director to enter into the building contract in the sum of £14,901,201.
Chris Banks
Commercial Director
APPENDIX 1
See attached Letter from Dundas & Wilson, Solicitors.
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