ITEM NO: 5

Report To: STRATEGIC CAPITAL AND MONITORING PANEL

Date: 13 July 2015

Reporting Officer: Elaine Todd, Assistant Executive Director, Asset and Investment Partnership Management

Subject: VISION PHASE 2 PROGRESS UPDATE

Report Summary: A Key Decision was made on 4 February 2015, to progress the Vision Tameside Phase 2 programme. This report is intended to update members of the Panel with progress in respect of the programme and any financial implications. Recommendations: That members of the Panel review the content of the report and recommend to Council the approval of the virement of budgets

Links to Community Strategy: Prosperous Tameside

Policy Implications: In line with approved policy

Financial Implications: The overall costs of the Vision Tameside programme must be contained within the overall net budget of £48,673,794, which (Authorised by the Section 151 was approved in February 2015. Contingency provisions were Officer) made for construction and overall programme related cost pressures as part of this budget allocation. As the programme progresses and firm costs are determined, there will be variations which will require approval. Key elements of the programme, including decant, demolition and lease terminations now have firm costs and the scanning and IT costs have been rescoped. It is important to note that the projected costs are still contained within the overall programme budget however; contingency budgets have been reduced by £946,854. This will leave a construction contingency of £941,316 and an overall contingency of £1,581,548. There are still significant risks to construction costs related to further design development, the exposed façade and the cost of the college element of the new building, particularly related to the level of fitted furniture required. Any additional costs will need to be delivered from the remaining contingency to ensure that the project remains within the overall approved budget. Expenditure Budget Projected Variation Approved Expenditure February May 2015 2015 £ £ £ Construction 36,320,849 36,849,251 528,402 TMBC 1,469,718 941,316 -528,402 contingency 5% Contingency for 2,642,327 2,642,327 0 inflation at 7.73% Gross 40,432,894 40,432,894 0 construction costs Less SFA grant -4,000,000 -4,000,000 0 Net construction 36,432,894 36,432,894 0 costs Additional costs Re fit / Fit out 1,709,900 1,709,900 0 costs re early lease termination – Wilkos Decant / condition 2,200,000 2,824,452 624,452 works Public Realm 2,631,000 2,631,000 0 Document 1,000,000 500,000 -500,000 scanning Co-op bank 100,000 100,000 0 termination of lease Potential loss of 550,000 550,000 0 profits Wilkos Legal costs of 50,000 50,000 0 construction works IT enablement 2,000,000 2,194,000 194,000 Programme 0 100,000 100,000 management Programme 2,000,000 1,581,548 -418,452 contingency Total 48,673,794 48,673,794 0 It is important that regular monitoring of all expenditure budgets, value for money and inflation projections are maintained throughout the programme. It is also important that the agreement for lease and lease with the college, CCG and JCP are completed as soon as possible so that the capital and revenue implications of the programme can be confirmed.

Legal Implications: The project is progressing well and there remain some areas that needs resolution, including the contract for the programme (Authorised by the Borough management so we can ensure that we are receiving vfm. Solicitor) There are still a number of significant issues that need to be resolved to ensure that the programme remains on budget.

Risk Management: The key risks, impact and mitigation proposed are included in the report at Section 5. The highest risks are reviewed by the internal working group on a fortnightly basis.

Access to Information: The background papers relating to this report can be inspected by contacting the report writer Elaine Todd, Assistant Executive Director, Asset and Investment Partnership Management by:

Telephone: 0161 342 3238

E-mail: [email protected] 1. INTRODUCTION

1.1 On 4 February 2015, the Executive Cabinet approved a Key Decision to:

a) surrender the current lease with Wilkinsons, and enter into an agreement for lease for the retail unit within the redeveloped Vision Tameside Phase 2 building’ on the terms detailed within the report; b) enter into an agreement to surrender the current lease with the Co-operative Bank plc; c) accept the Stage 1 submission in respect of the Vision Tameside Phase 2 building; d) procure the required extended design and planning work to develop the Stage 2 submission, through the TIP at a projected cost of £ £1,078,949; e) procure the demolition of the current TAC building and enabling works at an estimated cost of £3,361,863, through the TIP; f) the negotiation of an agreement for lease with the College, Clinical Commissioning Group, Job Centre Plus and other partners; and g) the allocation of additional capital and revenue budget to ensure that the project is fully resourced which was approved at Council on 24 February 2015, as follows.

1.2 The Vision Tameside Phase 2 programme, also included details of the investment and decant programme required to the retained corporate and civic buildings to address condition of the buildings and accommodate staff and services, throughout the decant period and in permanent locations, into the future.

1.3 Since the Stage 1 report was issued and approved, the design of the Vision Tameside Phase 2 building has been progressed, with a number of options put forward for building finishes and the northern elevation as well as developing the internal areas of the entire building.

1.4 This report is intended to update members of the Panel with progress with the Vision Tameside Phase 2 Programme and the potential financial impact of any proposed changes.

2 PROGRESS SINCE STAGE 1

2.1 Significant progress has been made since 4 February 2015, when the last Key Decision was made.

2.2 Wilkinsons moved out to their temporary store in the Arcades on 6 May 2015, with the surrender of their lease being imminent, once the strip out of their old store has been completed. An agreement for lease for the retail unit within the redeveloped Vision Tameside Phase 2 building has been signed;

2.3 The surrender of the current lease with the Co-operative Bank plc has progressed, with the bank leasing an alternative retail unit, the former Car Phone Warehouse building on the Market Place in Ashton. They are in the process of refitting the unit and expect to vacate their existing building at the end of July 2015;

2.4 The plans for the demolition of the current TAC building have progressed and a planning application was approved at Speakers Panel in April 2015, for the demolition of the TAC building and the Listed Building Consent for the works to Ashton Town Hall and the former Water Board building. The National Planning Casework Unit for consideration. This is a standard process, which is a result of the Council being unable to grant consent to its own planning listed building applications;

2.5 Discussions have progressed with plans for the College, Job Centre Plus (JCP) and the Clinical Commissioning Group (CCG) about their proposed space, CCG will take up approximately 650m2 and JCP approximately 400m2. The rent achievable for this space would be in the region of £113,000 to £170,000 per annum. This additional revenue income will reduce the overall cost of operation the new building, however, it will reduce the number of work spaces for Tameside staff in the new building. There are still sufficient work places across the retained corporate and civic buildings for projected numbers of staff in 2018.

2.6 Leases have been signed at Birchcroft for the Drugs Intervention Service, Clarence Arcade Ashton, Patterson and Rothwell, Ashton, Shirley House, Hyde and the PCC building in Ashton for Public Health service;

2.7 The decant programme has been significantly progressed. The works to the all the corporate and civic buildings, to enable the decanting of services, have been completed. Decant to the following buildings has been completed:  ;  Birchcroft;  The Archive Centre, Ashton;  Stalybridge Civic Hall;  ;  Denton Town Hall;  Denton Festival Hall;  Ryecroft Hall;  Shirley House;  Tame Street;  Patterson and Rothwell;  Ashton Market Hall;  Two Trees; and  The Primary Care Centre for Public Health.

2.8 The only decant locations left to complete are Clarence Arcade, where we are waiting for the developer to complete his works and a lease to be signed for the IRIS team at the Primary Care Centre. All service decants are planned to be completed by 10 July 2015.

2.9 Progress has also been made with the design development of the northern elevation of the new building, the general design of the building and finishes. There are funding implications to the project which are detailed in paragraph 4.7.

2.10 The Vodaphone mast will be relocated to James Howe Mill, Turner Lane, Ashton which the Council is intending to purchase, in order to ensure a permanent relocation site is available. The mill will be resold at auction, when the lease has been signed.

2.11 The scope of the building hasn’t changed and remains overall as follows, although the Tameside accommodation analysis may change once internal layouts are finalised:

Occupancy Current Design at May 2015 Tameside and Partners Gross Area M2 Reception 96 Customer Service 1,300 Meeting / Interview 372 Library 600 Offices 3,788 Total 6,156 College 7,000 Retail Unit 2,136 Total 15,291

3 PROGRAMME

Total construction 31,666,541 528,402 32,194,943

3.1 The programme for Vision Tameside Phase 2 has been updated as follows:

Phase Milestone Target Date at June 2015 Design Stage Stage 1 Design Achieved Design Stage Stage 2 Design Submission for Achieved Planning Stage 2 Approval November 2015 Contract Negotiation Financial Close December 2015 Decant phase TAC vacated 17 July 2015 Decant Phase Retail decant July 2015 Demolition and Enabling Separation works from Ashton Commenced Phase Town Hall start Demolition Phase Demolition Starts 6 July 2015 Construction Phase Construction Phase May 2016 Construction Phase Completion December 2017 Recant phase Recant commences January - April 2018

3.2 The pre planning consultation process has been undertaken and presentations of the proposed new building design have been made to both the College and Tameside Council Executive Boards, all elected members, staff members of the public at Ashton Market Hall, the Arcades and staff and students at Tameside College.

3.3 The planning application for the construction of the new building was submitted on 12 June 2015 and has been validated.

3.4 Feedback in respect of the proposals and design has overall been very positive.

4. FINANCIAL IMPLICATIONS

4.1 The projected costs of the Vision Tameside Phase 2 building, decant work, public realm and potential costs of the early termination of the Wilkinsons lease have been reported throughout the project.

4.2 A summary of the projected cost of the building at 4 February 2015 and in May 2015, is shown below:

Demolition 1,807,807 1,807,807 430,920 430,920 Treatment of Town Hall Facade

2,849,146 2,849,146 On-site public realm / external works

Outstanding contingency items at Stage 1,583,327 -528,402 1,054,925 1 @ 5% LEP Fees 295,153 295,153 Total 38,632,894 0 38,632,894 Other Capital Budgets TMBC furniture and equipment 1,500,000 1,500,000 College fixed furniture fit out costs 300,000 300,000 estimate based on SFA allowance Total 40,432,894 0 40,432,894 This included:  Inflation of 4.1% to reflect the actual rates between Quarter 1 2014 and Quarter 4 2014, added to the main build costs;

 The £2,644,710 price for external works as follows: a) Hard landscaping including paths, paving, steps, handrails in respect of the raised deck, Warrington Street and the new public realm between the Town Hall and the new building- £1,511,410; b) Road markings & signage- £12,500; c) Soft landscaping planters & trees - £50,000; d) Street furniture including seats, litter bins etc within the current curtilage of the TAC site and on the raised deck- £50,000; e) New loading bay area - £100,000; f) General site drainage - £325,000; g) Drainage attenuation - £100,800; h) External services including builders work, draw pits, ducts - £120,000; i) Diversion of existing utility services - £50,000; and j) New utility services gas, water, electric and telecoms - £325,000.

The assumptions above are based on the premise that the same material is used for the additional public realm work, created by separating the town hall from TAC, the raised deck and Warrington Street, as for the market place works.

 The net fixed demolition price is £1,807,807, which includes £150,000 for making good the areas where the TAC building is disconnected from back of the Town Hall;

 The main build costs also include a contingency of £250,000, to manage any required changes as a result of the review of the Stage 1 design proposal. Once the Stage 1 proposal is approved, the same formal change control process, as used for the BSF projects, will be put in place, to manage the impact and cost of changes due to the number of stakeholders involved in the scheme. The intention is that if changes are required that increase costs, savings equal to the increase in costs must be found.

4.3 A revised Council contingency of 5% was projected at to take account of remaining risks that are excluded from the contract price, including:

 Potential poor ground conditions under TAC;  Additional costs of addressing the Ashton Town Hall façade over £400,000;  Highways works at the junction of Wellington Road / Warrington Street; and  Tameside College fixed furniture fittings and equipment. At this stage in the project a detailed analysis of the fixed furniture and equipment required by the College needs to be provided. The TIP has agreed to survey projected requirements in the new building and prepare a priced schedule for consideration by the Council and the College. This is a significant exercise to be undertaken and it is anticipated that a completed schedule will be available very soon. If the costs exceed the budgeted £300,000, the agreed contribution from the Council will need to be funded from this contingency.

4.4 Ground investigations have been undertaken under TAC where possible and nothing has been identified that causes concern. The highways works at the junction of Wellington Road / Warrington Street, are outside the red line plan for the building and have been included within the public realm costs. However, the additional costs of addressing the Ashton Town Hall façade and the fixed furniture for the college remain a significant risk.

4.5 A programme contingency of £2 million, was also approved for the programme for any unanticipated costs.

Impact of Design Development 4.6 The designs for the new building have progressed following feedback from elected members, officers and partners. There were concerns in respect of the Stage 1 building design, about the building’s general appearance, external access to the first floor deck, the proposed metal tile cladding and the northern elevation. The designs have been developed to satisfactorily address these issues. However, this has resulted in a projected increased cost, that can be contained with the £1.469 million construction contingency, plus inflation of £0.113m. However, this will mean that less contingency is available to address any other additional costs. The financial impact of the various changes are as follows:

Summary Of Proposed Changes at May 2015 £ Changes to cladding materials to ceramic granite 227,632 Revised treatment of northern elevation 234,356 External deck lift access 148,765 Reconfiguration of customer services 27,649 Net savings on other design changes -110,000 Total 528,402

4.7 Options for value engineering are being explored to reduce costs in other areas of the construction programme, however it is unlikely that more than £300,000 will be identified. Therefore, if the above changes are approved, at least some of the additional costs will need to be funded from contingency.

Scanning and Archiving 4.8 There has been a significant review of the amount of scanning and archiving required within the Council Offices and it is now estimated that the cost of the programme will be reduced to £500,000.

Decant 4.9 The approved budget for converting and improving the condition of existing space or remodelling rented space in February 2015, was £2.2 million:

Projected Staff / Budgeted Target Date Building Cost at Variation Explanation Spaces Cost Completion May 2015 £ £ Archive Centre 22 42,500 38,201 -4,299 Underspend against budget Completed Ashton Market Hall 12 18,000 17,330 -670 Underspend against budget Completed Clarence Arcade 20,000 320,000 300,000 Fit out of customer services Completed 120 Clarence Arcade 0 0 0 Landlord Fit Out 10.7.2015 Copley Youth Base 10 0 0 0 Completed Denton Centre 35 0 0 0 Completed Denton Town Hall Condition 20 114,742 122,878 8,136 Additional surveys Completed Ryecroft 3 0 0 0 Completed Housing Options 7 0 0 0 Completed Cost of permanent demountable unit Completed Tame Street Decant 80 231,059 378,790 147,731 on Civils Site Hyde Town Hall 140 691,118 691,118 0 Completed Dukinfield Town Hall 41 213,180 213,180 0 Completed Paterson and Rothwell 128 50,000 82,000 32,000 Additional remodelling work Completed Shirley House 63 20,000 14,998 -5,002 Underspend against budget Completed Two Trees 300 440,000 467,000 27,000 Additional surveys required Completed

Denton Library / Festival Hall 70 180,000 185,755 5,755 Completed

Ashton PCC – Health 28 15,000 15,000 0 Completed

Additional work to accommodate IRIS Ashton PCC – IRIS 80 60,000 60,000 Completed team

Stalybridge Civic Hall 58 80,000 80,000 0 Completed

Fee costs of new leases and Removals/ fees and surveys 84,401 138,202 53,801 Completed termination of existing tenants Total 1,217 2,200,000 2,824,452 624,452 4.10 It is proposed that the £500,000 budget was vired from the scanning and archiving allocation and the residual £124,452 is vired from the overall programme contingency of £2m.

Public Realm Costs 4.11 To fully complete the vision for Ashton town Centre, investment in the public realm situated in the vicinity of the various driver projects will be required. These remain as previously reported as follows.

Phase Scope of Scope Detail Cost Funding Costs Scheme m2 £m Source included in summary £m 1 Market 5,919m2 The introduction 4.500 Already Square of new market identified in Kiosks and stalls and kiosks, Capital Stalls public realm and programme lighting. 2a Market 3,721m2 The introduction Already Square in of high quality identified in front of town public realm Capital hall including water programme will feature, trees, not be street furniture progressed and lighting until Phase 2 is works. complete. 2b Market 1,095m2 The introduction 0.575 TBC ( included 0.633 Square civic of high quality in summary / disabled public realm, costs plus 10% parking street furniture inflation total and lighting. £0.633m) 3 Camp Street 1,300m2 The introduction 0.475 TMBC to pay 0.475 public realm of high quality for the public in front of public realm realm above new College which will and beyond the building complement the reinstatement public realm on costs paid for AMS. Works to by the College. be co-ordinated (included in with college summary build costs) programme. 4 Wellington 3,500m2 To enhance road 0.895 To be identified 0.984 Road public for both (included in realm pedestrians and summary costs transport. plus 10%inflation, total £0.984m) 5 Warrington 2,000m2 To provide a 0.490 Included in 0.539 Street public well-connected summary costs realm setting for new (plus 10% developments. inflation total £0.539m) 6 Transport 2,300m2 The introduction 0.625 To be Interchange of high quality determined public realm (not included in which will link summary the new costs) transport interchange to Discussions the Metro and needed with train station. TfGM Total 2.631

IT Costs 4.12 The budget approved in February 2015, was £2m. An updated projection of actual costs which will be incurred in replacing ICT equipment, software, licences, phones, wifi, wiring, and connections is that actual costs will be £219,400. If the actual outturn costs are at this level the additional costs will need to be financed from the overall programme contingency.

Programme Management 4.13 A review of the programme management by EC Harris, recommended that a programme manager be appointed to provide support for the Vision Tameside programme. The estimated costs are anticipated to be £100,000.

Summary of Financial Changes 4.14 The changes in cost projections detailed in the previous sections are summarised in the table below:

Expenditure Budget Approved Projected Variation February 2015 Expenditure May 2015 £ £

36,320,849 36,849,251 528,402 Construction TMBC contingency 5% 1,469,718 941,316 -528,402 Contingency for inflation at 7.73% 2,642,327 2,642,327 Gross construction costs 40,432,894 40,432,894 0

Less SFA grant - 4,000,000 -4,000,000 Net construction costs 36,432,894 36,432,894 0 Additional Costs Re fit / Fit out costs re Early Lease termination – Wilkos 1,709,900 1,709,900 0

Decant / condition works 2,200,000 2,824,452 624,452

Public Realm 2,631,000 2,631,000 0

Document Scanning 1,000,000 500,000 -500,000 Co op bank termination of lease 100,000 100,000 0 Potential loss of profits Wilkos 550,000 550,000 0 Legal costs of construction works 50,000 50,000 0 IT Enablement 2,000,000 2,194,000 194,000 Programme Management 0 100,000 100,000 Programme Contingency 2,000,000 ,581,548 -418,452

48,673,794 48,673,794 0 Total

4.15 All costs need to be contained within the net approved budget of £48,673,794. SFA Grant Funding 4.16 A detailed application was submitted on 31 October 2014, and the outcome of the funding bid for £6 million, to be shared £4 million to the Council and £2 million to the college is awaited.

4.17 The Council is awaiting details of the grant funding conditions.

5. RISKS

5.1 The risk profile of the programme of activity at Stage 1, as all major projects are at this stage is high. There are a number of major risks that need to be mitigated as the programme develops.

Risk Potential Impact Mitigation Inflation Increase in construction The cost plan has been costs beyond funding levels reviewed in line with the approved in the capital anticipated 11.83 % programme. inflationary increase to mid- point 2017. This was reviewed in May 2015 by Sweets who confirmed that this is still appropriate. Insufficient Funding Elements of the programme The programme is subject to Available to complete all not completed or fully close monitoring to ensure that aspects of the programme. funded. overall costs are contained within the overall approved budget. Failure to move telecom This may delay the project Orange have now removed masts in required significantly if not removed their equipment. Vodafone timescales by end of September 2015. have identified a relocation site in Howe Mill off Turner Lane, Ashton which the Council is purchasing and selling on with the lease. Works required to decant Vacant possession of TAC The decant works to most locations not completed in not achieved in July 2015. buildings have been time completed. Only the Clarence Arcade developer works are reported as delayed. Vacant Possession not This will delay the Scanning, archiving and achieved in July 2015 of programme and increases disposal of surplus items is the TAC building costs well underway. Building is being cleared of furniture etc. Securing vacant This will delay the Co-op bank will move out on a possession of the Co-op programme and increases permanent basis in return for a Bank Unit by end of July costs premium payment of £100,000 2015 and have signed a lease on an alternative unit. Ground conditions Increase in cost and delay Trial bore holes have not in programme revealed any significant issues. Planning risks The existing town hall and Planning permission for the related buildings are grade TAC demolition and Listed 11 listed. Delays in approval Building Consent has been for the demolition of TAC obtained. and the construction of the new building will delay programme and increase costs. Works to the retained Increase in cost and Review of exposed façade on estate potential delay in Ashton Town Hall and programme. reduction in estate retained. Reduction of footfall during Reduction in trade for local A shop locally loyalty scheme construction shops and businesses. has been launched and shop local campaigns will be undertaken. Additional staff and students moving into Clarendon College in September 2015, plus construction staff will mitigate some of the impact. Wilkinsons moving into the arcades will also increase footfall in the arcades and potentially increase trade in market / market hall. Reputation and public Confidence in project Joint Communications plan perception reduced, negative publicity with Tameside College and Retail Tenants VAT Increase in cost through Consultation with VAT irrecoverable VAT specialist advisers in order to expenditure mitigate future risks throughout the project.

6. CONCLUSIONS

6.1 The programme to deliver the Vision Tameside Phase 2 project, is progressing well, however, there are cost implications from design development, IT, programme management and decant works that need to be managed within the programme. Approval is required to vire budget from the construction and general contingency budgets to meet the projected costs of the scheme and containing costs within the overall approved budget.

6.2 There are as yet unquantified risks relating to the treatment of the exposed Ashton Town Hall façade and also the extent of the fixed furniture in the College element of the Vision Tameside Phase 2 building. If costs exceed budget, virement from the contingency allocation or savings elsewhere will need to be identified.

6.3 Planning permission for the demolition of the TAC building and listed building consent has been approved by Speakers Panel, and confirmed by the National Casework Unit.

6.4 A detailed planning application for the new building was submitted on 12 June 2015.

6.5 The current programme will deliver the new building for January 2018, however, there can be no further delays in the vacation of the TAC building. It must be handed over for demolition in July 2015, to achieve this target completion date.

6.6 Significant risks remain in connection with aerials still located on the TAC roof. These will need to be disconnected and removed before the building can be demolished. There are a number of options that are being progressed to ensure that the aerials are removed in time.

6.7 Expenditure on all elements of the programme will be closely monitored on a fortnightly basis to ensure that the programme is delivered within the approved budget.

6.8 The outstanding agreements for lease and leases with partners and particularly Tameside College must be resolved as soon as possible to confirm the occupation by the college in the new building and also enable capital and revenue budgets to be confirmed.

7. RECOMMENDATIONS

7.1 These are included at the front of the report.