Agenda item

            The Director of Property and Projects submitted for the Committee’s consideration the undernoted report:

 

“1.0      Purpose of Report

 

1.1        To provide Members with an update on the Social Investment Fund and the implications and emerging resource requirements for the Council in terms of delivery of capital projects.  It should be noted that this paper focuses on capital projects – however there are also a range of revenue projects which are being funded which the Council will need to consider in the context of other programming taking place across the city.

 

2.0        Relevant Background Information

 

2.1        Members will be aware the Council was informed before Christmas that Belfast had been allocated £37million out of the £80million Social Investment Fund broken down as below.  When the draft area plans were submitted each zones was asked to rank their ten projects in terms of priority.  This was used as the basis for determining which projects will receive funding. 

 

Zone	Overall all	Priority projects to be funded
Belfast North Zone	£9million	2 capital projects (including 2 clusters) and 2 revenue projects
Belfast South Zone	£8million	4 capital projects (including 1 cluster) and 1 revenue project
Belfast East Zone	£8million	3 capital projects (including 2 clusters) and 2 revenue projects
Belfast West Zone	£12million	4 capital projects and 3 revenue projects

 

2.2        The first announcements in relation to approved SIF projects were made at the start of February.  This included 9 projects in the Belfast area (4 capital and 5 revenue projects).

 

2.3        Members will recall that they noted last month that Chief Officers have now been formally nominated onto the SIF Steering Delivery Groups as below

 

            North – G.Millar   South – A.Hassard    West – S.Wylie   

            East - J.McGrillen

 

            Update on current position

2.4        Members will know that it was proposed that the Council would be the delivery agent for a number of the capital projects. A management fee of between 15%/20% has been built into project costs.  However there has been no confirmation on the number of these and no agreement had been reached with OFMDFM over how the management fee for these would be allocated to the Council. Members are also asked to note that CPD are involved and OFMDFM are using part of the management fee to pay for their services.

 

2.5        A planning day for all Steering Group members and lead partners for SIF projects was held on Monday 10 March.  This was attended by the Director of Property & Projects.  This session was focused on was the delivery of projects and one of key issues emerging from the day was how much support and guidance some delivery agents were going to require in terms of project delivery (both on the capital and revenue sides).

 

2.6        The role of the Council as a civic leader and successful delivery agent of physical projects was recognised and highlighted at the session. The Council is playing a key and increasing role in the city in terms of regeneration and the emerging community planning and area planning roles through the AWGs. The Council is also already working closely with OFMDFM on a number of other key strategic city initiatives including TBUC and the Interface Strategy. In recognition of this role it is now proposed that the Council become the delivery agent for the capital projects outlined below. 

 

            BELFAST ZONES – CAPTIAL PROJECTS – COUNCIL PROPOSED DELIVERY AGENT

     

	Project Name	Cost	Status	Lead organisation
North	Cluster – Increasing community services (new builds)	£2,684,087	Not approved - Economists signed off on 13/2. Case currently with the Consultants to address some o/s Finance issues	Various
	Cluster – Increasing community services (refurbishments) (10 projects across both)	£433,815	Not approved - Currently with the Consultants following the first review.	Various
South	Market Tunnels at Lanyon	£1,431,813	Not approved -Council currently undertaking a site contamination survey.	Markets Development Agency
	Capital cluster – Increasing community services (10 projects)	£1,749,886	Not approved - Appraisal being written by SIB Consultant.	Various
	Taughmonagh Healthy Business Centre	£933,500	APPROVED **	Taughmonagh Community  Forum
	Sandy Row Resource Centre	£797,292	APPROVED**	Belfast South Community Resource
East	Capital cluster – Increasing community services (17  projects)	£1,588,490	Not approved -Appraisal being undertaken by SIB. SIB addressing the Economist and Finance comments from first review.	Various
West	St. Comgall’s	£3,544,090	Not approved -EA issued for review to Finance and Economists on 14/2	Falls Community Council
TOTAL		£13,162,973	** the Council was previously not proposed to be the delivery agent for these but the Groups at the SIF day on 10 March expressed their willingness for the Council to be the delivery agent
Number of projects (including cluster projects)		41

 

            Issues to consider

 

2.7        The Council is therefore currently proposed to be the delivery agent for over 40 projects worth over £13 million (this is including the two capital projects in the South at Taughmonagh and Sandy Row).  It should be noted that many of these projects are also subject to and/or receiving funding from other sources including LIF/BIF from the Council, DSD funding so the real value of the projects is significantly higher than this.

 

2.8        A breakdown of the capital cluster projects for North, South and East has been circulated.  It should be noted that these range in value from around £10,000 to nearly £1,000,000 so are vastly different in scope and scale (figures for individual projects are being checked with OFMDFM). It should also be noted that some of the projects in the East/South zones are currently outside the Council boundary

 

2.9        Members are asked to note that a number of these projects have already been approved and/or are nearing final approval and therefore there is pressure to now begin to move forward with delivery. 

 

2.10      There are obviously associated resource implications and resources costs in delivering projects and the impact of delivering these also needs to be taken in the context of the Council’s other project delivery commitments under the Capital Programme, Leisure Transformation, LIF and projects which may emerge through BIF. The Property & Projects Department currently do not have the resource capacity to deliver the SIF projects on top of its existing workload and therefore it will be necessary to recruit additional resources to deliver these.  There is a lead-in time for recruitment and so this will have to start to be progressed now.  The exact resource requirements will need to be quantified but it is envisaged it will require at least 1 project manager, 1 or 2 assistant project managers and a couple of project sponsors (given the range and scale of projects under the clusters).  Members are asked to note that there are also a range of support and indirect resources that will be required internally to help support project delivery including finance, legal, estates and procurement.  This will also have to be factored in against existing workload commitments including the LGR. 

 

2.11      As outlined above a 15/20% management fee has been built into each project which includes project delivery costs.  However as noted OFMDFM also has to pay for CPD costs out of this management fee so not all of this will be available to the Council.  Further discussions need to be held with OFMDFM regarding how this money will be allocated to the Council and what proportion the Council can expect.  At one stage OFMDFM were proposing a MOU to cover all the projects however this approach was then changed to a letter of offer on a project by project basis and the final model of allocation will need to be agreed. 

 

2.12      Members are asked to note that there are also a number of inherent risks associated with the Council taking on a project delivery role for external projects, particularly in the case where a third party has put together costs/plans for a project, including –

 

-         potential lack of robustness in project costs which the Council have been unable to verify/ quality assure,

-         lack of contingency built into budgets  

-         unrealistic project plans resulting in construction overruns etc.

-         unforeseen issues including contamination, land issues etc

-         the  lack of capacity of the groups involved

 

            Discussions also need to be progressed with OFMDFM in relation to the above and what happens if project construction/costs overrun etc. These discussions will be progressed with Legal Services.

 

            Other Capital Projects – SIF

 

2.13      Members are asked to note that there are a number of other capital projects have been approved and/or have been identified as priority projects in the Belfast area which at this stage are due to be delivered by other bodies including

     

AREA	PROJECT	COST	STATUS	PROPOSED LEAD ORGANISATION
West	Argyle Extension	£1,100,000	Not approved	Argyle Business Centre
	Impact Training – New build	£1,200,000	Not approved	Impact Training
	Iontaobhas na Gaelscolaiochta – new build	£1,000,000	Not approved	InaG
East	Ballymac Friendship Centre	£1,265,000	Not approved	Ballymac Friendship Trust
	Bryson Street Surgery	£1,000,000	APPROVED	Landmark East
North	Childcare & Family Support cluster (Ashton Centre and Wishing Well)	£1,920,000	APPROVED	Ashton Centre

 

2.14      There are a number of issues where organisations are currently listed as the delivery agent however there are concerns over whether they have the capacity to deliver/also number of occasions where the delivery agent was also going to be the operator. OFMDFM are currently looking at this and Chief Officers are asked to note that there is a possibility that the Council may end up being the delivery agent for some of the projects above.

 

3.0        Next steps

 

3.1        The Director of Property & Projects and the Director of Finance & Resources have meet with OFMDFM officials to begin to agree the delivery process, the arrangements for management fee etc. These discussions will continue to be progressed over the coming weeks.  

 

4.0        Recommendations

 

            In terms of SIF capital projects, Members are asked note the contents of this report and

 

·         note that a key issue emerging from the SIF planning day was the level of support and guidance that some organisations are going to require in terms of project delivery (both in terms of capital projects and revenue programmes).  However the Council’s key civic leadership role and successful role in delivering capital projects was recognised at this session – resulting in additional groups expressing their willingness for the Council to become the delivery agents for their projects.  This is a sign of confidence in the Council and recognition of the Council’s increasing role in terms of regeneration and emerging community planning role

 

·         agree if the Council should act as the delivery agent for the proposed projects as outlined in 2.6 above  and notes that the implications of SIF are still somewhat emerging and that the Council may end up becoming the delivery agent and/or involved in the delivery of some of the other capital projects

 

·         note the associated resource implications in the context of other the Council’s physical delivery requirements including the capital programme, leisure transformation programme, LIF and emerging BIF 

 

·         note that the Property & Projects Department currently does not have the resource capacity to deliver the proposed SIF projects as it is already over-stretched by existing workload

 

·         note the inherent risks associated with the Council becoming the delivery agent for the proposed capital projects and the need to minimise the risk to the Council

 

·         agree that the Director of Property & Projects, in conjunction with Legal Services,  continues to progress discussions with OFMDFM to clarify governance, delivery and management fee arrangements

 

·         agree that the Director of Property & Projects quantifies the resources required to deliver the above projects and progresses the recruitment of the necessary resources in conjunction with HR.  These posts will be funded via the management fee associated with the projects and will be of no cost to the council.”

 

            The Committee adopted the recommendations.

 

(The Chairman, Alderman Robinson, in the Chair.)