Agenda item

The report was noted.

Jonathan Burns presented the report to inform the Committee of the Swansea Bay City Deal Quarterly Monitoring report for both the Swansea Bay City Deal Portfolio and its constituent programmes/ projects.

 

Jonathan Burns also explained that the quarter 4 financial report is not present as it needs to go through program board and joint committee and considered for Joint Scrutiny Committee at a future date.

 

Members feel there are substantial risks on the RAG status as stated on page 2 of the report and wanted to know what the mitigations were.

 

Officers agreed that there are seven red risks and advised that the risk register has a mitigation in place for each risk. Some of the risks aren’t controllable by the Swansea Bay City deal and a watching brief is kept on those. Officers explained that for the ones under control of Swansea Bay City deal there are mitigations in place, at least for monitoring of the risks. There are also mitigations such as course corrective action in some cases.

 

Members were concerned about private sector funding contribution not being in line with business case projection and the slippage in delivery programme against key milestones. Officers explained that at a portfolio level, private sector funding is a red risk as £600,000,000 of funding is private sector funding. This is why at a portfolio level it is at a red risk, however, no project within the portfolio is identified as a red risk.

 

Officers explained that in relation to the slippage, all infrastructure project’s nationally have been affected by delays caused by issues such as contract negotiations taking longer and increased costs. A construction impact assessment is ongoing to try monitor and mitigate against rising construction costs and slippage which tend to coincide.

 

Members referred to the amount of value engineering, especially the waterfront refurbishment where it is refurbishment rather than re-build. Officers advised that a change management process would need to take place, this would mean change approval.

 

Members also asked about whether some projects would start suffering because of these cost increases.

 

Officers explained that they can only when things go out to tender do projects know if there is a problem. The construction impact assessment highlights a gap of £31,000,000 that needs to be plugged. Officers advised that the mitigations against that are value engineering and gaps are also plugged by the host authority. Officers advised that they are looking at what mitigations can help with contractors.

 

Members were informed that on each of the project statuses included in the report. Officers explained that there are 9 headline projects and programmes and within those are 35 projects. Of these 3 are complete and in operation, 17 are in delivery and build started. This equates to approximately £400,000,000 of investment. Officers also highlighted that 15 of the 35 are in pre-commencement activity.

 

Members asked about the homes for power stations and asked if the risk should go to amber from red as there is only one member of staff left to employ. Officers explained that it was just a lag due to the timing of the report and they are now fully staffed. The next report will be updated with a green for this measure.

 

Members asked for more clarity on the project status or Generalized Activity Normalization Time Table (GANT). Members sought clarity if it was the status of the business cases or the status of projects.

 

Officers clarified that it was the delivery of projects such as procurement activity, these could be pre-commencement stage, going into build.

 

Members pointed out an issue with the diagram on the report. Officers clarified that the diagram in the report was not complete, and they would course correct the report for the next meeting.

Members requested clarity on the project status reports and indications of what the risk mitigations are so that the committee can appreciate the status of aspects of the City Deal better.

 

Members also asked for an update on the number of total jobs created as mentioned in the appendix. Officers said that they believe the number is currently 550, an increase on what the report states of 536. Officers advised that jobs need to have run for at least a year to confirm they are longer lasting jobs before they can be included. The number of jobs created is much higher in all likelihood. Officers stated that only after an independent economic assessment on the impact on City Deal will they be able to ascertain the true impact on job creation.

 

Members were advised that the economic and job impact is yet to be scoped out until certain milestone evaluations have been done. This hasn’t been instigated by Joint Committee yet. governance and process must be gone through first before this can be instigated.

 

Officers advised from an investment perspective they are up to 22% of the overall investment target which is £271,000,000 and the updated reports that will come through will hopefully progress that as they go through the year.

 

Members asked to clarify if this report was a snapshot in time and wondered whether the £31,000,000 figure was an arbitrary figure due to the number of estimates included. Officers confirmed this was a snapshot in time and said there were quite a few procurements not in a stage where they could estimate the gap.

Officers also stated that the figure is a minimum as the price of things will be unlikely return to a level of two or three years ago and it’s difficult to ascertain how much things have gone up until procurement.

 

Members also wanted clarification on whether this included the materials as well as employment costs as well. Officers confirmed it included everything.

 

Members enquired how much was allocated to the builds alone, having commissioned quite a few companies to start the build process on several projects. Officers didn’t have the figures to hand but can find that detail out.

 

Members asked how many tier 1 contractors are based in Wales (had a head office based in Wales). Officers were uncertain but didn’t believe many would have a head office in Wales although they are based here during the builds and are talking about a longer-term presence in the area in the future. Officers said they can look at asking these tier 1 contactors about this.

 

Members said that one of the early Committee discussions was the hope that contractors would be grouped together so that they can burden the liability of the costs associated with the build and put in a tender that would be a viable to be a tier 1 contractor among 3 or 4 of them. Members advised that, that hasn’t come through.

 

Members wanted to know if was down to the market in Wales or if that was a failure on the City Deal to ensure that the projects were packaged as a whole site tender rather than packages of tenders.

Officers advised that they are a collection of tenders and gave the example of the waterfront in Swansea. These will be the hotel, Arena and Kingsway and the Matrix and Precinct, they are all separate packages within the same business case. Officers explained that these would be broken down into subprojects within a project or program but even with some of the projects they would go over the scale thresholds that some local suppliers would be able to tender for.

 

Members were concerned that for benefits realisation, especially for jobs that especially men in the construction sector are used to working away and stay somewhere during a week and go home at the weekend. The members expressed the concern that when that project is finished what are the jobs going to be locally.

 

Members stated that so far most of the spend and benefits has been around construction and if that is not benefitting Welsh companies and Welsh workers then it must be questioned what the benefit realisation is of the locals as part of this stage of this scheme.

 

Officers advised that there have been over 200 local supply chain contracts, this would be the tiers 2 and 3. These are all with local companies who will all contribute to City Deal and grow their own companies.

 

Members noted this but were concerned that the tier 1 contractors would take an element of profits and had there been more Welsh tier 1 contractors then potentially there would be more of the Welsh pound staying in Wales.

 

Officers explained that tier 1 and tier 2 contractors are reluctant to bid for contracts at the moment and there is a need to get subcontractors involved and growing them and making sure they are able to prosper going forward. Officers also explained that even with the sub-contractors, their books are full and there is a lack of supply of manpower that is driving the lack of companies able to bid for contracts.

 

Members explained that the hope was that many companies would have popped up in response to this massive investment and/or for the bigger companies locally to grow. Members stated that the question is how do they grow to the size to take on the large projects?

 

Members said that it might be that a conversation is needed where it can be drilled down on the benefits realisation in constructions and a paper on subcontractors and Welsh Jobs etc.

 

Members explained that the problem with construction would always be there because construction moves around the country and therefore so do the workers. The long-term employment needs to be looked at because the short-term employment is an issue as there aren’t any Welsh construction tier 1 businesses based here. The transient nature of construction means that the construction jobs will always only be short term.

 

Members also wanted to know about the value added on the wider benefits of the project and would be interested to read the report that officers stated would come later in the year.

 

Members also stated that the projects will have a shelf life longer than the period of the City Deal and those jobs should hopefully stay for many years to come, but currently most of the jobs are in construction and the idea is to try squeeze as many benefits as possible out of that element to ensure value for money.

 

Officers advised that one of the areas of skills and talent is the construction industry sector, particularly around innovative ways of construction. Officers explained that they will develop a highly qualified workforce because of the pilots and the apprenticeships and ideally those people will be kept here in the Welsh construction industry.

Members highlighted that the UK Government had provided more investment via skills through other pots created and wanted to know if the local authorities and the officers have had discussions to ensure that the skills programs are being married up in a way that avoids duplications.

 

Officers said that they believe that is happening via the regional learning skills partnership and with the partners around levelling up as well. Officers also advised that there are other opportunities for skills development there.

 

The report was noted.