For the Chairman or nominated Member of the Overview and Scrutiny Committees to report back on recent activities including any requests to undertake reviews.
Minutes:
The Chairman stated that this item had been moved up the Agenda in order to facilitate a discussion about events following the news that one of the Council’s contractors, Dawnus Construction, had gone into administration. Dawnus Construction was responsible for delivering the Peach Place regeneration project and the planned primary schools/community facilities at Arborfield Green and Matthewsgreen.
As the Town Centre Regeneration Programme had been scrutinised by the Community and Corporate Overview and Scrutiny Committee, Guy Grandison provided an update to the Committee as follows.
Dawnus had been appointed to deliver the Peach Place Regeneration scheme in 2016 after a rigorous tendering and due diligence process. In January 2019 the Council became aware that Dawnus was in financial difficulties. Consequently, the Council developed contingency plans to ensure that, in the worst case scenario, works could carry on to complete the Peach Place project. This meant that, on 14 March 2019, the Council was able to act swiftly by securing the site and instructing another contractor (CTS) to continue the construction work in the short term.
In the ensuing discussion Members raised the following points:
What were the governance arrangements for overseeing the Town Centre Regeneration works?
Graham Ebers confirmed that Member oversight of the Regeneration programme was delivered through the Town Centre Management Board made up of Members and Officers from the Borough and Town Councils.
What were the next steps to ensure completion of the Peach Place project?
Graham Ebers confirmed that discussions were ongoing re the requirement for retendering and completing the works. It was inevitable that there would be negative impacts relating to cost and completion dates. However, it was anticipated that the project would be completed within the agreed budget.
Were there any warning signs about Dawnus, for example following the collapse of Carillion in 2018?
Graham Ebers stated that the collapse of Carillion had raised a number of issues. However, there had been ongoing dialogue between WBC and Dawnus. The Council developed a contingency plan as soon as information about the Dawnus financial situation was received.
Were there any financial implications for the Council’s Medium Term Financial Plan (MTFP)?
Graham Ebers stated that the recent events did not have a direct impact on the MTFP. Funding of the Regeneration project was structured so that income received was initially to be used for debt repayment. This meant that there may be a delay in the debt payback period but there were no immediate additional financial risks.
Could the financial risks have been reduced through additional insurance?
Graham Ebers stated that credit checks indicated that Dawnus was a sound company. It was not possible to de-risk every business decision. It would have been possible to pay higher insurance premiums but the Council’s arrangements in this case were felt to have been be sound and prudent.
RESOLVED That:
1) the update on the collapse of Dawnus Construction be noted;
2) Members receive further updates on the implementation of the contingency plan aimed at completing the Peach Place project.