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The purpose of this paper is to provide a literature review of the Holyrood Inquiry, which initiated in response to the problems with the Scottish Parliament building from its inception to its completion. The paper will take an in-depth look at the procurement management process and will also raise some of the questions that should have been asked prior to and during the project. We will take a look at the parameters of the project that were identified as being a priority at times decision were made. Finally, the paper will outline the alternative methods of procurement that could have been considered.
In the 1997 referendum the Scottish people chose to form their own, independent parliament - almost 300 years after the last one was incorporated into the Westminster Parliament - and a building to house it. Very soon, the project was criticized for the mounting costs and delays, which eventually caused First Minister Jack McConnell to initiate a major inquiry into the handling of the project, which was begun on the 28th of October, led by Lord Fraser of Carmyllie. The inquiry took evidence from the architects, politicians, and the construction companies over the course of 49 hearings, involving more than 60 witnesses and the revision of thousands of reports, to produce a final report.
The inquiry started by examining Donald Dewar's interest in finding a site for the Parliament. Of particular concern was his choice to not consider the old Royal High School building on Calton Hill because of its past use by the eponymous academic institution - a “nationalistic” anachronism according to Dewar.
In July 1997 a new draft of the white paper was produced which included the requirements for the buildings such as quality, durability and civic importance so it would reflect the parliament statues and operational needs it also needs to be secured and accessible to everyone including people with special needs.
Donald Dewar wanted an important symbol to Scotland that pay tribute to Scotland's past achievements and it also must be flexible to future changes. A consideration which should've been focused on is a value for money and quality which was the original idea but it wasn't followed.
An early estimate was produced which has been used as evidence to the inquiry which was prior to the identification of the location or a design is between £10m and £40m, and According to the BBC these figures were excluding the Fees, Inflation and VAT.
The first draft of the white paper was produced to the inquiry which had the estimated figures was dated April 1997 stated that the capital cost for parliament which includes purchasing and refitting the new parliament and the other buildings are estimated around £24.5m and £34m, And detailed estimates are set out in Annex D. However, no copy of the Annex D to the draft of the white paper was available to the inquiry so the figures between £24.5m and £34m were same that was provided to the incoming ministers. These figures were confirmed but without any information to their sources. A further Discussion took place between Ms Low and the Secretary of State's Private Secretary, this discussion enclosed a briefing paper for Donald Dewar's stating that they are working there best to give there estimate but that will be in range.
In a further draft from Ms low in July 4th 1997 stated: it is impossible to say how much the Scottish parliament building will cost until a final decision is made on the location and how it will be refurbished but according to the range of sites and the funding method the capital cost would be in the range of £10m and £40m.
There was clear evidence to the inquiry on who is responsible for the £24.5m to the £34m range quoted in the annexes to the sequences of draft prepared between April and June. In the inquiry when Mr. Wyllie was asked if he takes responsibility in relation to annex E of the draft dated June 1997, Mr Wyllie confirmed that he had no involvement in that set of figures and that they did not come from the building Directorate. Mr Wyllie also didn't know what the £10m intended to cover as there was no conclusive evidence showing the use of that amount, Mr Wyllie also suggested that number might have come from the Edinburgh council and their consultants and when he was asked about the £40m figure, Mr Wyllie expressed in his evidence that the number of £35-£40 million were based on the Victoria quay costs for the basic accommodation 47% loading for the higher quality Chamber and Committee space, Mr Wyllie thought that the figures didn't come from building division and he was surprised that the figures found their way to the white paper.
In Mr. Brown evidence he suggested that the £10 million might have presented to be a one off cost associated with building the parliament in a building that is already provided, lease or rented. In Mr. Brown written statement prior his evidence in November 2003 referred to the wide range of outcomes still under discussion including minimal work on ORHS/St Andrew's House and/or private funding at the lower end of the range.
Lord Fraser discovered on the evidence available that £10 million was intended to cover no more than refurbishment of the Old Royal High School As it would have been sufficient to provide temporary home for the Scottish parliament and not a permanent home. Or it could have been meant to cover the costs associated with a leased building or a building acquired by PFI/PPP or by some means other than conventional funding.
Mr Mark Batho Head of one of the Scottish Office Finance Divisions, said in his evidence to the Inquiry: “While the £40 million figure reflected an initial new build at Leith. ...the figures had been rebased to a 1998 figure from a 1995 figure that had underpinned the White Paper £40 million figure.”
Wendy Alexander told the inquiry that Donald Dewar asked on a number of occasions the type of funding this project will need and on both PFI and on the involvement of a private sector, Mr. Gordon clarified to the misters that if the conventional procurement was the preferred route officials would advertise the competitions immediately, and if ministers wanted PFI to be explored further then a formal public comparator must be done including risk assessment in conventional procurement and to explore informally the likely interest among potential bidders which estimated that the process could take 2 month before a final decision is made.
The decision to adopt conventional procurement was the subject of consideration by the Auditor General, He said that the procurement that adopted needed more studying of other procurement options and the risk associated with it. Lord Fraser couldn't conclude that the funding adopted was wrong and it was the cause of the delay and the decision to follow a construction management route a decision to put into Ministers. Selection of the Holyrood Site:
A visit made by Donald Dewar to the old royal high school confirmed his doubts about the suitability of the site as there were many historic building that are worth keeping and there are limited spaces and a chamber has t be build in the middle of the old royal high school. A range of sites were produced by Mr. Brown to the ministers in respond with Donald Dewar request, the estimated cost for the sites were in the range of £27m to £43m.
On 15 December 1997 Ministers received presentations on the design feasibility and estimated construction costs of the four site options but all these costs were higher than the figures that were presented in the white paper five month earlier.
At a meeting Donald Dewar narrowed down in to the choice between regent road and Holyrood and he asked that further information on the Holyrood site to be presented, in early January he got the last pieces to make his decision which included the cost report by DLE on each of the earlier feasibility studies. And In 6 January 1998 The cost of the two sites were shown to ministers in an annex submitted by Mr. Brown which showed that Holyrood was the cheaper site so it was chosen after it found favour from MSP's. However, some MSP's didn't agree with the site claiming that the parliament is going to be built on false information and the MSP's asked for the project to be delayed for further studying as the budget was unrealistic but Donald Dewar denied their request stating that delaying the project would cost a penalty £3m. And according to the Observer New paper that the civil servants didn't tell Dewar about the problems of the site and he wasn't given the right information about the costs and the risk costs (Peterkin, 2003).
Appointment of an Architect
On 16 July 1997 Donald Dewar announced that competition is going to be held for the best design of the Scottish parliament the best design must be of architectural quality, accessibility, value for money, cost-saving and a design as he stated “worthy of the hopes and aspirations of the Scottish people.” And this competition to be held within the constraints of a realistic building cost budget, It might be argued that this assertion was fulfilled, but it is another question as to whether or not a realistic budget was set. The competition was a mean of procuring the new parliament building and it was good way to attract very talented architects and it will also explore a lot of design philosophy but with a risk that the job will take longer and the cost will be more than estimated.
Dr Gibbons explained the characteristic of the competition to choose a design and a designer, he outlined that a competition to choose a designer is quicker and offers control this was agreed by the ministers, which shows that there was a clear emphasis that time is a huge factor in the project.
When the competition was launched in January 1998 the decision of the selection was going to be chaired by Henry McLeish. However, Donald Dewar made a decision on 6th of February that he would chair the panel him self along with other ministers and university professors from around Scotland.
The OJEC resulted in submission of 70 Pre Qualification Questionnaires including a separate submission by the firms of Eric Miralles Y Moya of Barcelona and RMJM ltd.In Mr. Armstrong's analysis, Snr Miralles practice was assessed as 44th out of 70 on the basis of adequacy of the practice and it was not recommended to be included in the initial long list of 20.
From 3rd of May to the 5th of May an interview of the 12 of the long listed candidates, all members of the panel participated in the interview, and the final five teams were named on 7th of May 1998.Before the final interviews the five short listed candidates were asked to submit concept designs where it went on public exhibitions around Scotland. There was an importance in making these designs visible to the public as possible across Scotland.
On June 5 1998 it was released the RMJM limited emerged with Enric Miralles Y Moya, and in the inquiry it was shown that no formal or legal agreement had been put with regard to the constitution of the proposed joint venture, this was a surprise to Lord Fraser that so little inquiry was made of the joint venture and how it was to operate.
It is very important to mention that none of the finalists adhered either to the budget or to the user brief when they submitted their estimated cost, yet the panel felt confident it could proceed to the selection of a winner without these discrepancies being highlighted.
On the final interview of the 5 short listed candidates, evidence showed that presentation given by Enric Miralles and his EMBT/RMJM was superior to that of the other candidates. Miss O'Conner suggested in her written evidence that the panel were aware of the risks of the selection of EMBT/RMJM but their assessment that the risks were worth it.
The inquiry was assisted with the objective of understanding the selection of construction management with evidence from Mr. Collin Carter of Gardiner & TheoBald. In Mr Carter Evidence he showed the inquiry risk profiles of various procurements and contract strategies which might have been used for the holyrood project, the risk profile showed that using construction management carries almost all the risk with the client and he also suggested that it would've been Ideal to use other methods of procurement such as PPP (PFI), Design and Build and prime contracting as any delays would be compensated by the contractor but as it is mentioned in the inquiry report that it was the ministers who rejected the idea because such route might cause delay to the completion.
Mr. Carter also added in the inquiry that using construction management is very risky since the client is using a fixed budget so the final cost wouldn't be known until the project is finished. Mr. Carter concluded in his analysis that virtually none of the key questions were asked and none of the disadvantages have been identified or evaluated.
When the decision was made of choosing construction management as the method of procurement, it appeared to the inquiry that no consideration have been given to the involvement of ministers which brings to question why were ministers fully involved and informed in the decision process when there was a possibility of using PFI/PPP but not when choosing construction management and why didn't anyone put forward any suggestion that any other form of construction procurement would have better suited the situation, this only proves the lack of communication this project faced.
In the selection of construction management Bovis one of 4 tenderers was invited to the final interview after being excluded on cost rounds and PCG. The final round of the interview took place on the 4th of January 1999 before the panel which included Snr Miralles and in the final interview Mr. John Anderson the managing director of Bovis said that his company would provide a PCG without additional charges and on this basis the contract was awarded to bovis, this had effect by reducing the bovis tender by £500,000 which improved its competitiveness with the other tenderers.
According to Lord Fraser that it wasn't fair for competing tenderers, because if one tenderer was permitted to change their financial basis on which it's tender was submitted it's an opportunity should have been given to the others.
On the 7th of January 1999 Bovis was informed of the intention of the Scottish office to enter in a contract and a formal letter was sent a few days later.
Evidence from Mr. David Boyle, Director of Sir Robert McAlpine that his company requested a debrief after the selection process but no satisfactory response was received for three letters sent, in Ms Laura Dunlop closing submission she acknowledged that there had been a failure in this respect for which she expressed her regret (Hector L MacQueen, 2003).
Evidence showed in the inquiry that the project team didn't succeed in securing a design from the design team within the budget, in Mr. Gordon's written evidence to the inquiry he thought at the time that if it became impossible to meet the parliament space with the budget it might be necessary either to revisit the budget or the brief but it wasn't in his view to concede a possibility of increasing the budget before developed design proposals.
Mr Armstrong stated in his report to Mrs Doig that quantity surveyors has produced a cost estimate on draft stage C, and indication showed that the budget of £50m will be slightly exceeded.
Mrs Doig said in her evidence that she felt it was in appropriate to seek a budget increase from ministers until there was certainty of cost estimate.
In December 1998 Mr. Armstrong resigned from his position as project manager he stated in his letter to Dr. Gibbons that his main reason is that he wasn't given the support necessary to enable him to carry his job and his advice was not being listed.
The meeting officials to draw information on cost, a submission was put forward to minister to inform them of the last cost estimate a figure of £107m was identified as a total financial provision. However, according to the BBC that figure didn't £29m for risks.
It was said that civil servants didn't tell Donald Dewar about the problems in the curse f the project and he wasn't given the right information abut the costs.
Snr Miralles and Donald Dewar's Death
On 3 July 2000 Snr Miralles Died, his death gave rise to disharmony within the architectural joint venture and the only conclusion that it caused further delay. The difficulty rose afterwards on finding a replacement to Snr Miralles to direct and control the project.
In October 11th 2000 Donald Dewar died. As Mr Stewart put it in evidence his death and that of Snr Miralles earlier in the year left the Holyrood Project bereft of its begetters and prime advocates. Although responsibility for the Project had passed to the SPCB in June 1999 his continuing influence on the Project should not be ignored.
The health of the Project
after Mr Ezzi took his place a project director, Mr mustard prepared a paper setting his observations on the project dynamics and culture his main observations were that the challenge in the bovis programme was tight, the design team performance was poor in terms on construction information flow was impacting on budget and the budget was under pressure due to continuous design development.
In Mr Ezzi's evidence he felt that Mr. Mustard analysis and observations to be mainly sound and he continued that he agreed with that view, he continued to conclude that by the end of 2000 the project is was serious trouble. Mr Ezzi resigned later from his job as project director his reasons were according to the BBC news channel that despite being in charge he was excluded in meetings and the relationship between the architects were difficult, and the architects in particular were in direct communication with the HPG members and tended to bypass him. and according the telegraph Newspaper that his resignation has nothing to do with Scottish Parliament's corporate body which forecast that the cost of the new building was likely to be at least £208 million and could be as high as £234 million. Sarah Davidson, who has been involved with the project at a senior level for more than a year, has been appointed as Mr. Ezzi's replacement but at that time there were criticism against Ms. Davidson appointment as she didn't have the construction background as Mr.Ezzi, and it was feared that it would lead the project into more delay and cost (Holyrood project director quits job, 2001).
In November 2000 the HPG recommended that Kenny granite to be procured as part of the cladding package for the complex. Mr. Ezzi's suggested the procurement of Portuguese granite would e better as choosing Kenny granite would cost an extra £520,000 and there was also an uncertainty that Kenny granite can supply the quantity and quality of granite to the required timetable and it would threaten the ability to adhere to the construction programme. it is clear to me that Mr. Ezzi in his role as Project Director properly informed the HPG that to proceed with the procurement of Kennay granite would not represent best value for money and would significantly increase the risk of failing to meet the December 2002 completion date.
Mr. Stewart made the point that the changes made by the client were reasonable, but it was the timing of those changes which caused difficulties with the programme, Lord Fraser continued that most change requests forms submitted since 1999 have been approved which caused the cost esalation and these changes were values using the CRF. This shows that the changes were made with taking no account of any consequential effect on the programme, or trade package interface.
My personal view that such project as big as the parliament should have been understood by the client that a project that high quality design work takes time, and that programme itself was unrealistic given the complexity of the design especially after Mr. Briggs' report in February 2002.
After September 11th 2001 a greater attention is paid to the security of the parliament, It has been suggested that the full extent of the additional costs attributable to security may have amounted to as much as £100 million. It has also been understood that extra security requirement were a scapegoat t the extra cost rises. In the course of this investigation Lord Fraser have gained a lot of information on the true cost of security measures used for the parliament this information gained after the evidence given Mr Fisher. The evidence has persuaded Lord Fraser that suggestions that the cost of security measures for the About Holyrood could amount to £100 million were wholly inaccurate. While this suggestion appears to have risen initially in the press, it was given some credibility in comments made by Robert Brown to the Finance Committee on 23 September 2003, Mr Brown at that time was speculating in the absence of accurate cost information, lord fraser rejects Mr. Brown subsequent assertion that “resolution of the bomb blast issue was the biggest single factor affecting both programme and cost over the last 5 years.”
At the end of June 2004, Ms Davidson vacated her post as Project Director after completing her secondment to the Scottish parliament, the move came before the completion of the project and it was explained by Mr Grice that Ms Davidson completed her role as a project director at that stage, as the remaining project-related tasks focused on migration and, thereafter, post-contract management. Ms Davidson was replaced by Mr Curran.
In July 2004 the construction work has almost completed and members of the parliamentary staff began to take up occupation of the premises from the beginning of August.
Methods of Procurement
There were many alternative methods of procurement that should have been used in the process of building the parliament building such as PPP/PFI, Design and Build and prime contracting but these methods takes longer time than the method used. However, using construction management considers being risky but it's a fast track strategy that will get the project completed in the shortest time.
This method was carefully considered by Mr Gordon as it a public sector body with a private sector organisation to deliver public services. This method of procurement is very good as any late delivery would be a risk on the private sector, but the profit rewards can be significant but this route didn't please the ministers for the reason of a PFI solution should not be pursued and a ‘conventional' one should and it would cause a delay to the completion of the parliament building and Donald Dewar and ministerial colleagues were very keen into finishing the building of the parliament as soon as possible.
In my opinion this was the most suitable procurement method route for this project and my decision was arrived at principally because it was the only procurement method which could accommodate the programme requirements of the political leadership, and it was used earlier to develop a Major hospital in the UK and it proved to be successful in the PFI scheme and all major bodies that are involved and affected by the PFI project were consulted in on the drafting of the contract, the PPP/PFI is prove to be more successful as its scheme typically (design, build, Finance and operate) meaning that the private sector partner is responsible for designing the facility based on requirements specified by the client and in this case the Scottish government, the private sector will also be responsible of building the project on the time and at a fixed cost that was estimated at the beginning f the project and any extra cost wouldn't be paid by the Scottish government. The private sector will also be responsible of financing the capital cost and operating the facilities, this method of procurement will reduce the risk of the client to a minimum and the PFI partner capital is at risk they will have strong incentives to keep continue strong throughout the life of the contract (Akintola Akintoye, 2003). Furthermore, a study showed that 89% out of the 61 PFI projects were delivered on time or early and all of the PFI projects were delivered within the public sector budgets and three quarter of public sector managers stated that their project was meeting their expectation, this truly shows the methods that PPP/PFI use could have met Donald Dewar's and the ministers expectations in building the parliament (Darrin Grimsey, 2004).
This has the advantage for the Scottish government of taking their scheme to an advance stage with their team before appointing a contractor, and after the designer is employed he can advice the Scottish government in designs and ensure the work is delivered on the agreed budget and complies with the standard required (Brook, 2004). And although it has a firm contractual date for completion, the project sometimes is not finished on time (Brian Cooke, 2004).
In my opinion this would have also suited the Scottish parliament because it ensures the work is going to be done in time and it also gives the Scottish government to hire a quantity surveyor that can give guidance on design cost and budgets, prepare bills, check tenders and advise on the value of variations although I think that the Scottish government ruled traditional contracting for the reason of separating responsibility for design and construction along with extending the completion date to the end of 2002, and at that time it was foreseen that the project would be completed by June 2001.
Prime contracting was largely dictated along with construction management when Mr Armstrong minuted Mr Brown. However, in Mr Armstrong view that prime contracting was problematic when it was adopted for the procurement of the Scottish Office building at Victoria Quay (Fraser, 2004). In my opinion this wouldn't have been the best route to go with regardless that it has similarity to the PFI method and it's improved value for the Scottish government and profitability for the supply chain through two pilot project (Bower, 2003). This method has a single responsibility for the total process from conception to completion, hence there is no financing required by the prime contractor and there is a limit to the maintenance and operating period (Smith, 2002).
It appears to me that almost all of the methods of procurement that have been considered ensured the work is kept within the cost limit and ensured that It would be delivered n or before dead line. The programme was propelled by the clientfas obsession with early completion. Throughout the Project was that if the quality and unique complexity of the building was of overriding importance, the programme and the timing of completion would be affected significantly and extra cost would inevitably occur were lack coordination between Edinburgh and Barcelona