Mechanical and Electrical Services Modernisation Presentation to - - PDF document

Mechanical and Electrical Services Modernisation Presentation to Commons and Lords Management Boards 26 November 2008 Those present: David Beamish (Clerk Assistant, House of Lords) John Borley (Director General, Department of Facilities, House of Commons) Simon Burton (Director of Human Resources, House of Lords) Malcolm Jack (Clerk of the House and Chief Executive of the House of Commons) Douglas Millar (Clerk Assistant and Director General, Department of Chamber and Committee Services, House of Commons) Michael Pownall (Clerk of the Parliaments and Chairman of the House of Lords Management Board) John Pullinger (Director General, Department of Information Services, House of Commons) Philippa Tudor (Finance Director, House of Lords) Andrew Walker (Director General, Department of Resources, House of Commons) In attendance: Mel Barlex (Parliamentary Director of Estates) [s.40] (Secretary to the Management Board, House of Lords) [s.40] (Acting Head of Projects, Department of Facilities) Philippa Helme (Head of the Office of the Chief Executive, House of Commons) [s.40] (Private Secretary to the Clerk of the House, House of Commons) [s.40] (Secretary to the M&E Programme Board)

• 1. Introduction

John Borley thanked Board members of both Houses for attending. He said that the modernisation of the mechanical and electrical services (the M&E programme) was a massive and complex undertaking. It was particularly important that the governance

• f the programme was clear and that the two Boards worked together effectively.
• 2. Presentation

Context Mel Barlex said that work on M&E had been underway since 2003. An initial study by F.C. Foreman and Partners identifying a likely cost of £40 million had been followed by work on a wider brief undertaken by property consultants BDP, which had put the likely cost at £250 million. The latest study had been a due diligence review undertaken by E.C. Harris which had reported to the Programme Board in June 2008. Capita Symonds property consultants were currently undertaking a contract management review. The work on M&E was considerable in size, cost, risk and impact. Why the M&E programme is required The service capacity of the Palace of Westminster was insufficient for its needs. Many original services could not be replaced or upgraded as they were no longer

• accessible. At 60 to 110 years old, all of the services were now working beyond their

expected life and had become increasingly unreliable, presenting a high risk to the business of the palace.

Coverage of the M&E programme The M&E programme only affected the basement of the Palace of Westminster (one floor or 20% of the building), which itself constituted 64% of the Parliamentary estate. This 20% provided 100% of service capacity to the Palace of Westminster. The planned programme would not address the modernisation of the remaining 80% of the Palace, where much of the service infrastructure was as old as that in the

• basement. An analogy would be taking an old car and renovating only the engine –

the fabric of the car and all the systems powered by the engine would still be old and liable to break down. Asbestos had been identified in service ducts as well as lagging for pipes and as general building material. This would require containment and management. Consequently the presumption would be made that Asbestos was present unless proven otherwise. A full Asset Liability and Condition Survey would report in 2009, quantifying the requirements for modernisation in the remaining 80% of the palace and the remaining Parliamentary Estate. The 25 year estates programme and 10 year Estates Strategy would also be developed in 2009. The M&E programme would involve work on numerous services and on a considerable length of pipes and cabling as well as specialist IT supplies. In some cases a degree of rationalisation would be possible, for example in the number of plant rooms. The M&E Project Brief The project brief was to deliver modern services installations which would be resilient, manageable, energy efficient, accessible and maintainable, asbestos free and safe. The services would be future-proofed only in the sense of allowing for expansion in capacity requirements. It was envisaged that the project would take 10 years to complete, at which point the Palace would have the same service provision as today but supplied by more modern and resilient systems. If the requirements for service provision in the Palace were likely to change over the next 10 years, then flexibility would need to be built into the contract to enable these to be accommodated. The Project would cover over 30 mechanical and electrical services. Many of these services were co-located, so each stage of the project was likely to affect all or many

• f the services.

The Programme overview The M&E programme would follow the usual work stages of a project (A to L, following the Royal Institute of British Architects’ model), using a “gated” approach (meaning that approvals would be required to move between certain stages). A detailed examination of the governance requirements for the programme was being

• undertaken. The programme had been divided into 8 distinct work packages each

affecting different portions of the palace. The processes of developing briefs, producing designs, tendering for contractors and undertaking the works for each of these work packages would take place over periods of years. Contracts would need to allow for inflation and allow contractors to take account of the financial risks they would face. There was a question over how much responsibility for these risks should be taken by the House and how much passed on to contractors. Due to the scale of the project and the numerous and diverse services which needed to be replaced, a decision had been taken to appoint an Executive Project Team (EPT) of consultants. The EPT would write the briefs for the

individual project design teams for each service. The EPT consultants would be appointed in April subject to the approval of the Business Case. The EPT would also include nominated representatives of both houses to cover services within Parliament .i.e procurement, maintenance etc. This group would also tender for a Principle

• Contractor. Different contractors would have to be used for different work packages

as there was no single contractor with sufficient capacity and specialist knowledge to cover all the areas required. The programme was currently in stage C (the first stage of the Design phase). The PEB was examining what funds would be required and at what stage. The programme board was looking at how the views of stakeholders should be accommodated. Costs The current budget estimate of £332 million reflected the cost if the programme were delivered instantly in November 2008 and paid for in cash. The final figure would inevitably be much higher (perhaps 50 to 100%), particularly because inflation in the construction industry averaged 10% per annum. The budget estimate was based on the work being carried out in parliamentary recesses. Next steps

• The work package for specialist IT systems was still at the appraisal stage. PICT

were being asked to envisage their system requirements in 10 years time.

• The Executive Team brief was being developed by Capita Symonds.
• Recommendations on governance arrangements would be produced in

December.

• Procurement options would be developed by the new Commercial Director,

although the EPT would need to be in place before these were taken forward.

• Programme options were being developed, for example the first draft of the

Decant Feasibility Study would be available in June 2009 (14 expressions of interest had been received – these were being short-listed and invitations to tender would be issued in January). Management Boards’ involvement

• The Business Case would be politically sensitive and the Boards would need to

give advice on how political buy-in could be achieved. An approval strategy for both Houses would be required.

• There would be a need for the Management Boards to provide advice on
• communications. This was not a PED specialist area, and it was recommended

that someone be identified to lead communication work.

• The Boards would be involved as much as possible and their advice would be

taken as to any occasions when the approval of the Commission and House Committee was required. Questions Q: How long did the last significant refurbishment begun in 1947 take? A: Five years, at a time when systems were much less complex. The Grade 1 Listed Building status of the Palace provided a further complication. Some of the mechanical systems themselves were listed, including a steam engine. This could be moth balled in situ but not removed. Q: What was the rationale for including such large “optimism bias” in the budget figures?

A: All Government projects have to follow the Treasury guidance, which is currently to include 52% optimism bias. Together the calculated risks and optimism bias in the figures presented amounted to 52% of the budget. The aim was that optimism bias would reduce over the lifetime of the project, reaching 0% at its completion. It was designed to take account of factors such as developments in technology which would cost more to employ. Q: Should the project be seen as finite or rather in terms of an ongoing requirement for expenditure in the order of £30 million per annum to maintain these systems? A: In some ways the latter was the reality of the situation, as even once the M&E programme was complete, the remaining 80% of the Palace would still need to be

• upgraded. Procurement packages could be used to transfer some of the risk to

industry. Q: Were there other institutions which had undertaken similar programmes from whom lessons could be learnt? A: The US Congress had undertaken a similar programme to upgrade the systems in their basement. Their building was a similar age and scale to the palace and fulfilled a similar function. It would be useful to see if they had learnt any lessons from this

• work. The Canadian Parliament also had a plan to redevelop its heritage buildings.

Q: Would the feasibility study on decant look at what else might be achieved in terms

• f works in the palace if a decant took place?

A: The feasibility study would look at three options for decant.

• 1. enabling only the M&E programme to be delivered.
• 2. enabling the M&E programme and other planned works to take place.
• 3. enabling the M&E programme, other planned works and further works

which could not be contemplated unless decant occurred to take place. The Asset Liability Survey would give a clearer idea of what other works were required in the remaining 80% of the Palace. It was likely that these would be

• significant. It was crucial that the 20/80% point was communicated effectively to

Members at the start of the M&E programme as it affected the arguments on decant. The additional costs entailed in decanting the building would also need to be

• considered. It was possible that the feasibility study might conclude that complete

decant was the only realistic option. In terms of business continuity the really critical areas were the basement and the two Chambers. Members of both Boards would need to identify potential interdependencies and overlapping areas of work which should be undertaken simultaneously. Sequencing would be vital. The options presented by the Feasibility Study would be considered by the Boards in summer 2009. A decision would not be required until late 2009. If a decant did take place then “blue skies” thinking about the most sensible distribution of accommodation within the Palace could be undertaken. Full refurbishment of the Palace would be extremely expensive. The length of the decant would determine the specification of the building into which Parliament moved – for a longer decant Members and Peers would expect a better standard of accommodation. A decant would take years to plan and involve significant cost which would need to be set against the costs of undertaking the work on a piecemeal basis. Mel Barlex asked for any feedback or further questions to be directed to him. [s.40] 5 December 2008