< CAR PARK REPORT

Car Park Working Group
Final Account Settlement
Review and Recommendation to Melbourn Parish Council

1    Background

1.1.   Phase 1 of the Terms of Reference for the Car Park Working Group (CWG) included a review of the final account of Interserve Construction (the car park contractor). The principle recommendation Phase 1 of the review was to:

1.1.1.  fully understand all associated costs and to satisfy themselves that they were a fair charge to public funds

1.1.2.  make recommendations to the Parish Council for Payment

2    Actions Taken

2.1.   In February 2016 Interserve submitted a final account in the sum of £504,175.79. Subsequent discussions between Interserve and Sweett resulted in Interserve submitting a revised account in July 2016 of £393,364.09.

2.2.   An early action for the newly formed CWG was to meet with Sweett (now Currie and Brown and will be referred to as such from now on) who were responsible for preparing and agreeing the final account. The meeting which was held on 3rd November sought to review in detail the draft final account prepared by Currie and Brown. At this stage the estimated final account figures were as follows:

2.2.1.   Currie and Brown £295,653,13

2.2.2.   Interserve £ 393,364.09

2.3.   At this stage Currie and Brown were of the view that Interserve had yet to provide evidence of any additional work that would justify their figure. The additional work within the figure estimated by Currie and Brown was reviewed in detail and explanations sought as to the reasons and outcomes arising from the additional work. As a result the CWG were able to populate an excel spreadsheet identifying the costs and reasons. Where a satisfactory answer was not forthcoming Currie and Brown were formally tasked with providing the information. It was agreed that an early meeting between Interserve and Currie and Brown was to take place in attempt to resolve the outstanding differences in an effort to prevent the issue proceeding to adjudication.

2.4.   The CWG was also of the view that legal advice should be sought in the likely event of adjudication and the need for the Parish Council to explore a potential claim against one of the design consultants.

2.5.   Following a further threat of adjudication by Interserve if the final account was not settled by November 18th an urgent meeting was held on 25th November between Currie Brown and Interserve with the aim of reaching a final settlement. A final settlement reached in the value of £344,980.45. At this meeting it became apparent that Interserve had been required to carry out much more work than had been recorded on the drawings. This was as a result of the one of the design team consultants refusing to update their drawings to capture many of the later changes to the contract work as he had expended his fee. This work had not previously been included in the assessments of Currie and Brown as their previous recommendations were based on drawings which were shown to be out of date and inaccurate. Currie Brown believe that the figure of £344,980.45 to be fair and equitable settlement of the account and represents a reduction of £48,400 from Interserve revised final account issued in July and a £159,200 reduction from their original final account submission. It is also understood that the actual costs of Interserve are around £420,000 and Interserve have agreed to accept this reduction on the basis of an early acceptance of this agreed figure. Should this early acceptance not be agreed the threat of adjudication still remains. Details of this settlement were forwarded to the Parish Clerk on 28th November.

2.6.   In the interim approval was given by the Parish Council for the CWG to seek legal advice and engage the services of Birketts an interim basis to explore the situation. Their initial advice suggested that should this issue proceed to adjudication:

2.6.1.   The Parish Council would need to engage lawyers to defend their position and this could be in the order of £5k to £15k.

2.6.2.   There was no guarantee that the adjudication result would reduce the final account and the starting point for the adjudicator would be the initial claim of Interserve (£504,175.79). In addition, the costs of the adjudication an additional £5k to £15k would also need to be budgeted for should the Parish Council lose the case as these costs are normally borne by the losing party.

2.7.   The CWG sought an early meeting with Currie and Brown to review and understand the additional costs involved in arriving at a figure of £344,980k from the £295,653.13 previously agreed.

2.8.   A meeting with Currie Brown took place in the Hub on 2nd December where all of the additional costs were reviewed and the summary of the additional work involved was developed and agreed. This is attached at Appendix 1.

2.9.   Members of the CWG and Clerk discussed the results arising from the meeting with Birketts on 5th December during a conference call. Birketts remained of the view that the comments in their letter to the Parish Clerk dated 29th November still stand:

2.9.1.   Should the Parish Council wish to seek further reductions in cost either themselves (or via a third party) or via Currie and Brown the likelihood is that Interserve would proceed to adjudication and any reductions gained would be more than offset by likely increases in cost of the adjudicators final assessment of cost and the legal fees involved.

2.9.2.   The Parish Council could themselves proceed to adjudication in an attempt to reduce the final settlement however this would involve the same risks.

2.9.3.   The low risk option would be to accept the recommendations of Currie and Brown and settle the account as quickly as possible

2.9.4.   In doing so the Parish Council should also consider whether to take action against the unsatisfactory performance of consultant responsible for many of the changes and increases in cost.

3    Recommendations

3.1.   Based on discussions and a detailed review of the facts and issues involved the CWG strongly recommend that the Parish Council accept the final account of Interserve negotiated by Currie and Brown in the sum of £344,980.

3.2.   In order to follow due process and the need for an early settlement to prevent Interserve proceeding to adjudication it is further recommended that Interserve submit a further invoice in the sum of £25k whilst due process takes its course.

3.3.   The CWG will need to review the costs, benefits and risks of taking legal action against the unsatisfactory performance of the consultant responsible for many of the changes and increases and costs.

3.4.   The CWG were concerned about the apparent lack of financial and change control procedures during the construction of the project and this will be the subject of a major scrutiny during phase 2 of the report.

< CAR PARK REPORT