Agenda item
Capital Programme Overruns
The report seeks to inform the committee’s understanding on overruns occurred in the Capital Programme, the impact of these and the ongoing work to reduce them
Minutes:
At the invitation of the Chair, Hakeem Osinaike (Operational Director Housing) introduced the report and gave a general overview of the Capital Programme, focusing in particular on the issue of overruns, their impact on leaseholders and the mitigation plans put in place.
In the discussion which followed members sought further clarification on covering the cost of works, contract management and overruns. Particular onus was paid on the issue of overspends and recouping the cost of works when the total bill had exceeded the original estimates by 25% or more of the original contract value. Members further questioned how works evaluations were carried out, the reasons for the occurrence of discrepancies between them and actual cost and the processes which were in place to ensure the accuracy of estimates and prevent overspends which fell below the 25% threshold from happening. The Committee felt strongly on the issue of cost management and the adverse financial impact experienced by leaseholders in Brent. In noting some of the measures set out in the report, the Committee also flagged up the importance of developing specific cost indicators and maintaining historical data to allow for estimates to be continuously benchmarked and compared against in the long term.
In acknowledging members’ concerns, officers explained that under the Landlord and
Tenants Act 1987, a Section 20 notice had to be served before any works could be carried out, allowing residents to comment and make any observations prior to commencement of work. With the exception of emergency repairs, the totality of any incurred spend was funded by the Housing Revenue Account, with service fees subsequently subsidising the charges. It was noted that this in turn had a knock on effect on available funds and restricted Council’s capacity to carry out any future repairs, thus stressing the importance of accurate estimates. It was also stated that at the core of the overspend laid contractual management flaws, which were inherited from Brent Housing Partnership, with delays impacting on the total cost and penalty clauses no longer deemed adequate. Members were assured that the Council was determined to follow the processes stipulated within the law in order for estimates to be done accurately and fairly before a Section 20 was served
as well as seek to reduce the overall number of reissued notices going forward. The
Council was committed to seeking best value for money when contracting a repair but noted that quotes were currently based on the difference between estimates and actuals. It was stated that that the Council had a long-term agreements with Wates to carry out contractual works but assured that independent surveyors would do all preliminary measurements before a Section 20 was served to the residents.
Discussion continued with officers referencing section 6 from the report and briefing
members about some of the mitigation measures which had been introduced by Housing Management as part of the Capital Programme. The committee was assured that a 3 year rolling programme was already under way alongside a stock condition survey to ensure the viability of all council owned properties and to ascertain that leaseholders were not charged more than necessary for the cost of repairs. Further measures which were spotlighted on included the development of an asset management strategy, improving pre-works processes, use of technology and employment of professional surveyors as part of the contracts management team. It was expected that the above systems would provide the Council with a clear benchmark on progress made, measure levels of satisfaction amongst residents and result in provision of more accurate total bill estimates.
With regards to resident engagement, Mr Osinaike explained that a key factor in improving the Capital Programme processes was the Council’s increased focus on transparency working and strengthening resident involvement. He stressed the importance of having an open and holistic approach, such as carrying out consultations with both tenants and leaseholders on equal terms and allowing them to challenge any decisions. Some of the actions put in place which officers raised also included the introduction of handover meetings to all residents in a given block upon completion of works and use of electronic media to accommodate those residents who may not be able to attend an inspection in person.
RESOLVED:-
i. That contents of the report and progress made to date be noted
ii. That a system to measure cost overruns be set up by Housing Management
iii. That Housing Management Team provides further details on overruns procedures, improvements and Key Performance Indicators (KPI) by next committee meeting
iv. That Housing Management Team explores the possibility of setting up a measure to cover estimated and final cost of capital works, benchmarking this against previous years.
Supporting documents:
- 07. Capital Programme Overruns Report, item 7. PDF 108 KB
- 07a. Appendix A - Capital Programme Overruns, item 7. PDF 54 KB