Dear Mr Kinnaird,

Further to your email dated 2nd January, 2017, based on the information I have received from officers, I would comment on each of your main points as follows:-

Question: Refurbishment costs of the Visitor Centre

The £750,000 quoted was the estimated backlog maintenance on the Centre, ie the elements of the building that would require to be renewed to improve the condition of the building without changing the core functions being delivered from the facility. This figure would not include the movement of walls, improvements to cafe, external works, etc required to improve delivery of service. Our Quantity Surveyor based costings on works just completed at Auchmuty Learning Centre and has costed a full refurbishment at £1.8m. The budget for this project is £1 m.

Question: Budget for the new Visitor Centre

Property Services were asked to take over the project by FCCT. Property Services were asked to sTiow the current Chief Executive what a budget of £1.2m could achieve. They visited the newly completed Lynburn Nursery School Extension which had a gross internal floor area of 500m2. It was made very clear that the cost of this building was £1.4m. However this visit did give the FCCT a very good indication of what size of building their budget could deliver.

Question: Building warrant figures

The budget for the Visitor Centre is £1m, which includes professional fees, surveys etc. The £900,000 is an estimated construction value that Property Services use to submit our warrant application. This figure is submitted before the tender exercise commences.

Question: Why were both buildings procured together?

The procurement strategy for this project was to combine the two buildings into one contract. The budget for the two projects was extremely tight to deliver the requirements of the Client. The decision to combine the buildings was done to provide economies of scale ie:-

• One contractors compound
• One site manager
• A bigger value of contract would be more attractive to tenderers
• The use of similar construction/materials in both buildings would create extra buying power

Our preferred contractor has confirmed that this approach has saved significant amounts of cost, which ensured we could construct both buildings within the available budget.

Question: Costs for a site engineer

Property Services commissioned a structural engineering consultant to design the structural and civil elements of these two buildings, eg foundations, this is not a site engineer. The cost of this consultant is deducted from the professional fee that Property Services receive for the project. The value of the structural consultant requires the tender to be advertised on a tendering portal. This is standard practice. Again the building warrant figures quoted above are pre tender construction estimates and not actual tender return figures.

Question: Tender return prices

That is correct, seven tenders were received that ranged in value from £1.74m to £2.37m, all over budget. As was explained to you the tender acceptance has not yet been issued for this contract and therefore the tender figures are commercially sensitive.

Question: Comparative costs for Highland Council.

It is difficult for Property Services to comment on this without further detail of the buildings and the functions delivered from these buildings, we would need to ensure we are comparing like with like and in doing so would ask ourselves questions such as:-

• What did the rate include?
• What is the building?
• When was this building built?
• What were the ground conditions?
• What were the finishes?
• What external works are included?

Property services have confirmed from work that we do on our schools programme that our cost/m2 is significantly lower than Highland Council. The location factor of the Highlands alone adds significant cost to their projects.

I also understand that you have continually attempted to compare our building with others. One Visitor Centre in England was shown and marked as £2.3m. The FCCT actually checked these costs and were told the buildings construction costs were £2.5m and excluded professional fees and other costs. The other misleading fact was that this building was in fact constructed in 2009; to bring this cost up to today’s prices would add at least another 20%.

Question: Other price guides

The West Lothian Council website is in fact a guide for building control warrant submissions; this is for a completely different purpose to pricing large standalone buildings.

Again as explained to you previously, we have achieved best value for Fife Council by following a traditional procurement approach. A full bill of quantities for the project was produced and the project was openly advertised in public contract Scotland, the tendering portal used by all local authorities in Scotland. This provides the opportunity for any construction company in the UK to submit a price for the works, thus guaranteeing the best possible price for the works. The tenders were also advertised on a price only basis with a list of pass/fail quality questions included within the tender documents. This approach proves the costs are as per the current market place tender returns and fully follow our procurement guidelines. The tender process couldn’t be more open and our preferred contractor was £100k cheaper than the second contractor. This preferred contractor is also a local contractor.
I also understand that the traditional tendering approach that we have followed was actually supported by another member of the forum at the meeting, who was a local builder. This methodology ensures we give the maximum number of potential tenderers the opportunity to price the work.

Additionally as part of the value engineering exercise to reduce the lowest returned price to match our available budget our preferred contractor was asked to identify alternative products that could be used on the buildings which would allow us to maintain quality but reduce cost. The contractor confirmed through this process that apart from some proposed changes to ceilings and external blocks that there was nothing specified in these buildings that could be substituted to achieve savings.

Question: Modular buildings are 40% cheaper

These are figures that I cannot accept. The actual costs of manufacturing off site are in fact more expensive but are balanced against the buildings being erected much quicker on site, therefore reducing on site costs. The advantages to us of off-site fabrication is a much higher quality of building, reduced on site health and safety risks, quicker building times and a more sustainable approach to construction. There is in fact no cost benefits to this approach.

As explained the tender process and subsequent value engineering followed has guaranteed the lowest market price possible for these buildings.

Question: The buildings are far too expensive

As explained to you at the forum meeting, the Council’s tendering procedures require us to ensure that we achieve best value through our chosen procurement strategy on every contract we procure. In this case we achieved this by defining the quality of the building in our tender documents and therefore inviting tenders on a 100% price basis. The suitability of the contractor eg financial performance, criminal convictions is also fully checked during the tender appraisals.

To clarify, our preferred successful contractor was £100k lower than the second contractor and £140k lower than the third contractor.

Fife Council new build schools are currently built at £2600m2, this figure is in line with the Scottish Future Trusts cost metric allowances. By using the procurement strategies outlined above we ensure building costs within Fife Council for all build types are competitive with regard to the marketplace conditions thus will stand up against all other local authorities in Scotland. Fife Council Property Services are held up by government agencies like Sports Scotland and the Scottish Futures Trust on our delivery record of construction projects.

I hope the above answers your queries

Yours sincerely

Councillor David Ross

Council Leader

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