Item: 3 Harbour Authority Sub-committee: 19 March 2019.

Miscellaneous Piers and Harbours and Oil Port Maintenance Programmes.

Report by Executive Director of Development and Infrastructure. 1. Purpose of Report To confirm the programme of revenue maintenance works for Miscellaneous Piers and Harbours for 2018 to 2019 and consider the programmes for Miscellaneous Piers and Harbours and Scapa Flow Oil Port for 2019 to 2020. 2. Recommendations The Sub-Committee is invited to note:

2.1. The budget allocation for 2018 to 2019, in respect of the Miscellaneous Piers and Harbours Maintenance Programme, of £1,948,100, together with a tug refit programme allocation of £687,500 in respect of the Scapa Flow Oil Port.

2.2. That, to date and due to exceptional circumstances, detailed Maintenance Programmes for Miscellaneous Piers and Harbours and Scapa Flow Oil Port have not been submitted to the Sub-committee for consideration.

2.3. The commitments incurred against the respective Maintenance Programmes, referred to at paragraph 2.1 above, at 31 January 2019, together with the anticipated final outturn, attached as Appendix 1 to this report, with an underspend currently being forecast for the Miscellaneous Piers and Harbours.

2.4. That the tug refit programme is currently provided for directly from within the Scapa Flow Oil Port revenue budget and is currently forecast to overspend for financial year 2018 to 2019.

2.5. That the budget for 2019 to 2020 in respect of Miscellaneous Piers and Harbours Maintenance Programme has been set at £842,000, together with £410,000 in respect of a tug refit programme for the Scapa Flow Oil Port.

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2.6. The detailed programme of maintenance works for 2019 to 2020 in respect of both the Miscellaneous Piers and Harbours Maintenance and Scapa Flow Oil Port Accounts, attached as Appendix 2 to this report.

2.7. That, subject to surveys, any emergent urgent maintenance requirements, indicated as unbudgeted risk in Appendix 2, will be submitted to the Sub-committee for separate approval if and when required.

It is recommended:

2.8. That the Miscellaneous Piers and Harbours Maintenance Programme for 2018 to 2019, attached as Appendix 1 to this report, be endorsed. 2.9. That the Miscellaneous Piers and Harbours and Scapa Flow Oil Port Maintenance Programmes for financial year 2019 to 2020, attached as Appendix 2 to this report, be approved. 3. Maintenance Programme 2018 to 2019 3.1. Appendix 1 shows the maintenance programme for 2018 to 2019 with the initial allocated budget assumptions summarised as follows:

• Major maintenance items 2018 to 2019 - £1,050,000. • Harbour Authority Building, Scapa, roof repairs - £270,000. • General repairs and painting of linkspans - £220,000. • Repairs and Maintenance to piers and harbours - £100,000. • Accelerated Low Water Corrosion, 2018 to 2019 (year 4 of the programme) - £308,100. 3.2. Appendix 1 also shows, as a separate line item, the budget allocation of £687,500 for 2018 to 2019 for the major refits of tugs Einar and Erlend. The tug refit programme is currently provided for directly from within the Scapa Flow Oil Port revenue budget.

3.3. The Accelerated Low Water Corrosion programme is now in the fourth and final year, with an anticipated in year cost of £308,100. However, significant defects have been found in a number of piers, most notably the final pier in the programme, at

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Longhope. It is anticipated that this will increase the cost for 2018 to 2019 to £618,936, being a forecast overspend of £310,836, with the potential for programme completion to slip further into 2019. On the basis that a balance of £546,539 remains set aside within the Repairs and Renewals Fund for completion of this programme of works, a net overspend of £72,397 is currently forecast.

3.4. The nature of repairs and maintenance on an elderly asset is such that the unexpected happens and the availability of contractors to undertake the work is problematic. The planned programme has therefore undergone a number of changes during the year with major elements of work on Pier and at Scapa headquarters being replaced by other works including works associated with the Kirkwall Harbour Flood Defence programme. Whilst this has resulted in an underspend of £888,465 being forecast for general repairs and maintenance, this is offset in part by potential cost growth in the Accelerated Low Water Corrosion programme.

3.5. Based on an original planned spend of £687,500 for financial year 2018 to 2019, significant growth in the tug refit packages, where substantial age-related emergent works were required, and unexpected engine overhauls introduced as a requirement by the Maritime and Coastguard Agency, means that a spend of £1,449,428 is now forecast, being an overspend of £761,928. As the tug refit programme is currently provided for directly from within the Scapa Flow Oil Port revenue budget, this forecast overspend position will be offset by additional income generated in the form of harbour dues.

3.6. Notwithstanding the divergence from the initial planned programme, a significant amount of progress has been made on pier surfaces, linkspan overhauls and ram replacement and on lesser items such as fendering and ladder replacement. There is, however, a great deal of work is still to do and a five year programme, of approximately £6 million, is under development by officers, with a view to submitting a longer term programme for consideration at a future meeting of the Sub- committee. 4. Proposed Maintenance Programme 2019 to 2020 4.1. Appendix 2 shows the proposed planned maintenance for 2019 to 2020 summarised as follows:

• Major maintenance items - £552,000. • Harbour Authority Building, Scapa, repairs - £20,000. • Linkspan painting and repairs - £190,000. • Repairs and maintenance to piers - £80,000. Page 3.

4.2. Appendix 2 also shows, as a separate line item, the initial budget estimate for the refit of tug Harald. This figure carries some risk as indications are emerging that her azimuth thrusters may require overhaul of the seals. The tug refit programme is currently provided for directly from within the Scapa Flow Oil Port revenue budget.

4.3. The programme of works for 2019 to 2020 carries considerable risk of emergent work for the Piers and Harbours Account, including further slippage on the Accelerated Low Water Corrosion programme. The risk of further unplanned cost growth in respect of tug refits is also highlighted again for the Scapa Flow Oil Port. These pressures have been recognised in the figures at Appendix 2 as unbudgeted risk, accepting that any additional spending pressures will require further consideration by the Sub-committee if and when required. It is considered that the balance of earmarked funds set aside in financial year 2018 to 2019 will go some way towards addressing these pressures for the Piers and Harbours Account. 5. Corporate Governance This report relates to the Council complying with its governance and financial processes and procedures and therefore does not directly support and contribute to improved outcomes for communities as outlined in the Council Plan and the Local Outcomes Improvement Plan. 6. Financial Implications 6.1. The approved budget for financial year 2018 to 2019 set aside £1,640,100 within the Repairs and Renewal Fund for Revenue Repairs and Maintenance

6.2. After allowing for an opening balance of £546,539 set aside within the Repairs and Renewal Fund for accelerated low water corrosion works, the projected spend on the Miscellaneous Piers and Harbours Account programme of works at £1,370,471 is likely to result in a balance of £816,068 being carried forward. 6.3. The budget for financial year 2019 to 2020 set aside a further £842,000 within the Repairs and Renewals Fund for Revenue Repairs and Maintenance within the Piers and Harbours Account. This should be sufficient to deliver both an original planned programme of works at £842,000 and meet additional unbudgeted risks provisionally identified at a cost of £560,000.

6.4. A budget of £687,500 was approved for tug refits within the Scapa Flow Oil Port for 2018 to 2019. Based on a projected spend of £1,449,428 an overspend of £761,928 Page 4.

is now being forecast for 2018 to 2019. This forecast overspend position will be offset by additional income generated in the form of harbour dues, but it is perhaps a timely reminder that consideration should be given to improving the governance surrounding this recurring programme of works.

6.5. A budget for £410,000 was further approved for tug refits within the Scapa Flow Oil Port for 2019 to 2020. As a result of experience from the 2018 to 2019 refit programme, additional unbudgeted risks of £300,000 are now being forecast for 2019 to 2020 in respect of tug refits.

6.6. Notwithstanding that two new tugs are currently under construction, it is considered prudent to establish an annual maintenance programme for the Scapa Flow Oil Port going forward and to side aside funds within a Repairs and Renewals Fund for this purpose, as a mechanism to smooth out the impact on the revenue budget going forward. This will be formally considered as part of the budget setting process in due course. 7. Legal Aspects There are no legal implications arising directly from the recommendations of this report. 8. Contact Officers Gavin Barr, Executive Director of Development and Infrastructure, extension 2301, Email gavin.barr@.gov.uk

Brian Archibald, Head of Marine Services, Engineering and Transport, extension 3600, Email [email protected] 9. Appendices Appendix 1: Miscellaneous Piers and Harbours and Scapa Flow Oil Port Maintenance Programmes 2018 to 2019

Appendix 2: Miscellaneous Piers and Harbours and Scapa Flow Oil Port Maintenance Programmes 2019 to 2020

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APPENDIX 1 - Revenue Repairs and Maintenance Budget (excluding minor works allocated to each pier) 2018/19

Pier/Location/Works Expenditure Budget Commitments at Anticipated Notes 2018/19 31 January 2019 Expenditure to 31 March 2019 Miscellaneous Piers and Harbours 60,000 0 0 Helliar Light – nothing required Kirkwall Harbour 250,000 0 0 Waiting Room – design works not commenced 15,222 15,222 West pier resurfacing 49,000 49,000 car park Shapinsay Pier 20,000 15,000 15,450 Lining and pier repairs Carry forward R&M 175,000 Incorporated elsewhere Carry forward R&M 250,000 131,750 142,782 Funds earmarked for slab replacement and waiting room works re-allocated to work in wake of Flood protection works. Pier Lighting upgrades 45,000 0 0 Nothing spent over and above Moaness or as minor repairs New R&M Works per sub report 250,000 62,592 58,401 Moaness Pier lighting and railings and repairs 32,995 Scapa pier fencing SUB TOTAL 1,050,000 273,564 313,850 Harbour Building Repairs 270,000 47,547 70,000 Store Roof £80k (complete). 34,381 34,381 HQ refurbishment final elements. Linkspan general repairs 100,000 88,500 88,500 Linkspan repairs including cylinders Linkspan painting 120,000 134,627 134,627 Pier R&M Piers and Harbours 100,000 5,800 5,800 Kirkwall fendering 19,000 19,004 Loth lighting 25,550 36,937 Ladder replacement 26,560 26,560 Holm fendering 15,800 15,800 Scapa fenders 3,910 3,910 Kirkwall Pier road markings 2,166 2,166 Pier road markings SUB TOTAL 590,000 403,841 437,685 ALWC 308,100 394,918 618,936 Significant additional repair works at Longhope. Programme completion in 2018/19 will be challenging. PIERS & HARBOURS TOTAL 1,948,100 1,072,323 1,370,471 Probable Underspend £577,629 Tugs refits 687,500 761,928 1,449,428 Significant cost growth ((£761,928) from emergent works and certification changes during refit of two tugs SCAPA FLOW OIL PORT TOTAL * 687,500 761,928 1,449,428 Probable Overspend £761,928 • or information only.

APPENDIX 2 - Revenue Repairs and Maintenance Budget (excluding minor works allocated to each pier) 2019/20

Pier/Location/Works Proposed Currently Notes Expenditure Budget unbudgeted 2019/20 potential costs (RISK)

Kirkwall Harbour 250,000 0 Concrete slab replacement Electrical supplies and pier 155,000 0 Loth and , Kettletoft lighting upgrades Lining 12,000 0 Houton and Kirkwall Water Supply reroute - Eday 50,000 0 Design details to be approved by Scottish Water Ladder replacement programme 35,000 0 Various piers Carry forward R&M 50,000 0 Engineering works Helliar Holm light Unbudgeted for 60,000 Potentially £60,000 2019/20 Major Pier Repairs Unbudgeted for 250,000 estimate Subject to survey for Papa 2019/20 Major Pier Repairs Unbudgeted for 150,000 – serious collapse now evident – detailed survey required. Project 2019/20 could become capital. Costings for remedial works. SUB TOTAL 552,000 460,000 Harbour Building Repairs 20,000 (20,000) Underspend on year as Store Roof £70k completed in 2018 Harbour Building rainwater Unbudgeted for 120,000 Potentially £120,000 for roofing works. repairs 2019/20 Linkspan general repairs 50,000 0 Linkspan painting 140,000 0 R&M Piers and Harbours 80,000 0 SUB TOTAL 290,000 100,000 ALWC Nil but risk of 0 Works should be complete – but risk of slippage of emergent repairs works slippage. estimated at £300,000. PIERS & HARBOURS TOTAL 842,000 560,000 RISK Scope to fund unbudgeted pressures from Repairs and Renewals Fund.

Tugs refits 412,000 300,000 Separate budget line. To include charter costs. Risk that Azimuth Thrusters will have to be lowered following experience from Erlend/Einar refits. SCAPA FLOW OIL PORT TOTAL 412,000 300,000 RISK Not all risk will materialise in 2019/20.