Issue - meetings

Appendix 4 to the report is exempt from publication as it contains legal privileged information (exempt under paragraph 5, Part 1, Schedule 12A of the Local Government Act 1972 (as amended)).

Further to Minute 106 (20 April 2021), the Cabinet Member for Regeneration and Economic Development introduced a report on the proposed Gascoigne Estate (East) Phase 3B redevelopment project.

The Cabinet Member advised that the Phase 3B project represented a major element of the Gascoigne Estate regeneration programme and was intended to deliver 334 new homes, 50% of which would be at affordable rents.  However, the rising cost of construction projects in the current economic climate had severely impacted the financial viability of Phase 3B in the context of the financial metrics within the Council’s Investment and Acquisition Strategy, which was overseen by the Investment Panel. 

Following a procurement exercise via Lot 2 of the Be First Development Framework, Wates Construction Ltd had been selected as the preferred bidder for Phase 3B.  In light of the financial viability issues, Be First proposed the use of a Gross Maximum Price (GMP) contract which meant working with the contractor using an open-book approach during the supply chain tender process, in order to maximise value for money and mitigate the Council’s financial exposure prior to committing to the main works.

Phase 3B had been awarded £16.1m grant from the Greater London Authority (GLA) on the basis of a construction start date of March 2023 and the Cabinet Member highlighted other key reasons for progressing the project on time and the options analysis within the report.  It was noted that entering into a build contract to deliver the consented scheme (Option E) was considered to be the preferred option as it would enable the project to continue to be delivered within the planned timescales, provide the greatest degree of control over the delivery of the project and optimise the benefits to the local community and the financial performance of the project.  The Cabinet Member added, however, that in view of the viability challenges of that option, a number of additional activities would be undertaken aimed at further improving the financial performance of the project, which included:

·  Exploring opportunities for additional grant funding towards the affordable homes and community infrastructure through, for example, the use of Section 106, Community Infrastructure Levy and/or additional GLA grant funding;

·  Exploring opportunities for reducing operating costs (and increasing net income) by developing a holistic management strategy for the entire Gascoigne Estate that delivered a good quality service for residents, whilst achieving operational efficiencies through economies of scale; and

·  Reviewing market rent values.

The Cabinet Member confirmed that once those issues had been resolved and the final contract price confirmed by the contractor, the project would be re-presented to Investment Panel prior to the main works commencing and, if appropriate, a further report would be presented to the Cabinet for final sign-off of the project.

Cabinet resolved to:

(i)   Agree to award the Constructing Excellence Contract to Wates Construction Ltd (company no. 01977948) for the Gascoigne Estate (East) Phase 3B redevelopment project on the basis of a Gross Maximum Price of £142,061,994;

(ii)  Approve the total development cost of  ...  view the full minutes text for item 43