Agenda item

Report to follow.

6.1      The Chairman introduced the item and welcomed the Committee’s   input into providing ideas how to deliver the Capital Programme and to gain a greater degree of certainty into the process and prevent ‘optimism bias’. 

6.2       Stephen Muldoon (Assistant City Treasurer – Commercial and Financial Management) then presented the report and stated that the Capital Programme continued to grow, which brought along with it challenges. A number of development schemes were now coming forward which placed pressure on the programme and impacted upon treasury management. Large cash reserves were available to use in the short term, however borrowing would need to be considered in the mid to long term in order to deliver schemes within the programme. There was now a greater focus on how to manage the budget process and directorates were required to provide greater details of their schemes. Stephen Muldoon also advised that the Capital Programme was reviewed by the Capital Review Group.

6.3       James Green (Director of Development) advised that a new Development Team had been created to provide a single service for schemes funded through either the General Fund or the Housing Revenue Account (HRA) and there was a rigorous reporting structure. A Project Management Office had been set up and the overall structure for development was now much more organised and aligned. Project management procedures were also in place to address project slippages and delays.

6.4       Councillor Robathan stated that the Capital Programme was an ambitious one and she acknowledged that there was a need to deliver more projects. Every effort also needed to be undertaken to ensure that both the budget and the targets were realistic. There was a number of actions being undertaken to ensure there were sufficient resources in place, including staff.

6.5       During Members’ discussions, the Chairman recognised the significant improvement in spending from the General Fund which was now at 80%, however he noted that the HRA spend still lagged behind on 66%. He asked what resources were currently in place and what assessments would take place to ensure that there were sufficient resources to deliver the programme. In noting the diverse range of projects, the Chairman commented whether consideration should be given to appointing a project manager with the appropriate skills and experience for a specific project. In respect of ‘optimism bias’, he enquired what steps were in place to recognise when a project could not be delivered within the proposed timeframe. In noting the top 15 spending projects, the Chairman asked if there were sufficient resources to deliver all of them. He also noted that a number of projects were due to start in 2020 and asked if there were sufficient financial resources in place to undertake this.

6.6       Members asked whether delivery of the WOC would be managed by the Development Team and what efforts were being made to increase delivery from projects that would be funded through the HRA Capital Programme. It was remarked that residents had expressed concerns about the viability of the Huguenot House scheme. A Member asked what steps were in place to vet the performance delivery of contractors. Another Member acknowledged the ambitious nature of the Capital Programme and its history of under delivering. She expressed concern that capital may be being raised too early before projects could go forward. Members sought more information on staff training to ensure officers could work on a variety of projects with the sufficient skills and knowledge.

6.7       In reply to the issues raised by Members, James Green advised that the Project Management Office within the Development Team would assess each project and look at issues like capacity. Should additional resources be required for a specific skill set, then external sources would be sought to help deliver a project. James Green advised that staff underwent a talent assessment process and where there were gaps in skills, appropriate training would be provided.  It was recognised that there had been optimism bias in some cases and a consistent programme approach to all projects would address this. James Green confirmed that the Development Team would support the delivery of the WOC and advised that contractors were subject to a rigorous vetting procedure.

6.8       Natalie Roberts (Strategic Finance Manager – Commercial Lead) advised that there were contingencies in place in respect of funding of projects due to start in 2020.

6.9       Councillor Robathan advised that there was a lot of work being undertaken to increase delivery within the HRA Capital Programme, although there was not as much financial headroom compared to the General Fund Capital Programme. She emphasised that there was a huge focus in ensuring that raising of any capital was undertaken as prudently as possible. In respect of the top 15 spending projects, the need for sufficient physical capacity was acknowledged and Councillor Robathan advised that the detail of the schemes were in the process of being worked up. Members noted that there were two experts on the Property Investment Panel. Councillor Robathan advised that there would also be a degree of borrowing to ensure that there were sufficient financial resources to deliver schemes. Borrowing would be staggered and every effort would be made to obtain lower interest rates.

6.10    Stephen Muldoon advised that slippage was usually due to issues in respect of planning and the design stages and re-negotiations did not entail projects having to start again from scratch.

6.11    The Chairman welcomed the new processes in place that provided more rigour. He asked that future reports provide more details on borrowing. The Chairman expressed concern on relying solely on the Project Management Office to ensure the right people were recruited on specific projects. Further consideration needed to be given as to what happens when a project in unable to commence within the specified timeframe and it was important to have a process in place to prioritise projects, as well as ensuring there were sufficient resources in place. The Chairman commented that it also needed to be recognised that there will be some situations where contractors may not wish to go ahead with a project at a particular time. He requested an update on Capital Programme Delivery in 6 to 12 months’ time.

            ACTION:

            Analysis of the effects of underspend on the Capital Programme and borrowing decisions to be provided. (Action for: Stephen Muldoon, Assistant City Treasurer – Commercial and Financial Management.)