Archived decisions

Hampshire County Council

Buildings, Land and Procurement Panel Item 15

19 October 2004

Revenue and Capital Repairs 2004/05

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

There will be an impact on all of the Corporate Aims, in particular:

Aim 1 - maximising life opportunities: proposals associated with improvement of school premises and better learning and safe environments

Aim 5 - improving services: users of all the affected services benefit from the work undertaken

1

Summary

1.1

This report updates Members on the current budgetary position for capital and revenue repairs and the New Deal for Schools (NDS) condition funding. In particular it:

    · confirms that the NDS condition funding programme for 2003/04 has been delivered in line with central government targets

    · highlights two implications on the capital repairs budget, namely:

      o a change in the County Council's control mechanism for capital repairs; and

      o future potential demands for capital repair resources

    · recommends additions to the NDS and capital repairs programme.

2

Revenue Repairs

2.1

Appendix 1 shows the level of commitment to date against the approved budget for revenue repairs and maintenance, which is 78% of the total £12.565m available. This commitment initially appears high given that only 41% of the financial year has elapsed. However, this includes some £3m of budgets which are delegated with no buy-back arrangement. The remaining £9.5m, which is within the control of the Executive Member for Policy and Resources, shows a commitment of 71%.

2.2

This is still a relatively high proportion of the budget and reflects whole-year value of the engineering term contracts (£5.3m). Other expenditure is in line with expectation.

2.3

The revenue budget includes a contingency of £300,000, which is generally held in case of an extreme winter and its impact on repairs. There is an established principle that the unused element of this contingency is carried forward to the following financial year. As a consequence, £104,000 has been brought forward to 2004/05, and this is in addition to the annual allocation of £12.565m. £50,000 of this is being used to enhance general maintenance in the Community Services group, who deal with all non-education buildings, with a further allocation to asbestos removal in school boiler houses.

3

Capital and Major Repairs

3.1

New Deal for Schools

The County Council's New Deal for Schools allocations for 2003/04 and 2004/05 are:

      2003/04

      2004/05

      £'000

      £'000

      Works

      13,102

      14,948

      Fees

      1,965

      2,242

      Total

      15,067

      17,190

3.2

The conditions of the government grant for 2003/4, in effect create a 17 month financial year, as the 2003/04 programme needed to be completed by 31 August 2004. This was achieved, so that over £15m of projects were delivered by the end of August - a significant achievement. The 2004/05 allocation is 14% higher, and it is therefore necessary to ensure that progress is tightly managed. The programme of work for the 2004/05 allocation has previously been approved, and progress has already been made on its implementation, with some £6.3m (inc fees) already committed. The Panel will be kept informed of progress on the delivery of this programme up to August 2005.

   

3.3

Another report on this agenda discusses the outcome of the Corporate Risk Assessment. The contingency from which it is proposed to fund CRA priorities is in the capital repairs budget. Assuming the proposals for allocating resources to priority areas are approved, it is necessary to vire £500,000 to revenue to fund the proposed expenditure for staff and consultants (mainly relating to asbestos disturbance). The impact of the virement is reflected in appendix 1.

3.4

In the current year some £3.2m has been allocated to the highest risk of fire. This allocation comprises contributions from a number of budgets, as indicated in the table below:

 

Budget £'000

NDS 2,165

Major repairs (including £600, 000 carry forward) 970

Balance of OPH reinvestment strategy 80
3,215

 

Due to the extent of support to other projects, particularly the nursing care refurbishment and NDS programmes, it will not be until the next financial year that decisions relating to the landlord's spending are made. At this stage it is also not possible to quantify exactly the extent to which the sprinkler policy will impact on spending plans. For these reasons it is planned to run the capital spending, of some £970,000, over two financial years.

3.5

Financial management

Previous reports have updated the Panel on the level of commitment on capital and major repairs. This is because the capital programme has been controlled on a `starts' basis, whereby a scheme is considered committed against the capital programme cash-limit once the scheme has started. However, the Executive Member for Policy and Resources has approved a change in this approach for lump sum provisions in the capital programme, including capital and major repairs. In future, they will be managed on an `expenditure' basis. As a result, the charge against the capital cash limit will be the total expenditure incurred in the financial year. This is more practical for lump sum provisions which are spent on a number of relatively small schemes.

   

3.6

This change is to have immediate effect, so it is necessary to identify suitable control totals for the current financial year and 2005-06, using a starting point of the total resources available in respect of capital programme allocations up to and including 2005/06. This will be the total of:

    · the capital programme allocations for the years 2004/06

    · approved carry forwards from 2003/04

    · the value of those payments not yet made on those schemes which

    had started by 31 March 2004.

   

3.7

For capital and major repairs, those resources are:

     

    Capital

    Major

     

    Repairs

    Repairs

     

    £000

    £000

         

    2004/05 Allocation

    6,354

    8,310

    2005/06 Allocation

    5,618

    8,310

    Carry forward from 2003/04

    2,424

    1,300

    Payments outstanding

    		  

    on committed schemes

    5,474

    19,870

    4,063

    21,983

3.8

There are a range of factors, most of which have previously been reported to Panel, which make it practical and desirable to earmark some of this spending power of almost £42m for use in future years, rather than to commit it immediately. The key considerations are:

    · in recent years, high priority has been given to achieving NDS programmes. However, the longer-term future of NDS funding is uncertain, and it would be prudent to carry resources forward beyond 2005/06 to help avoid a major reduction in overall spending power

    · for other than relatively small schemes, there is often a three year planning and implementation cycle meaning that better value and greater impact can be achieved by carrying the money forward from year to year

    · some major leases expire in the years 2006/07 and beyond. To support a potential strategy of relinquishing some of those leases, it will be necessary to reserve resources to:

      o meet possibly significant dilapidations liabilities

      o invest in other freehold, or core leasehold, properties, in order to provide the necessary levels and quality of accommodation

    · the need to set money aside either to part-fund the redevelopment of Ashburton Court, or alternatively to carry out significant capital repairs

    · the need to fund the urgent replacement of key property and related financial management systems which are currently being progressed; further details are contained in Appendix 2 for information

    · it has so far been possible to support the high priority areas identified by the Corporate Risk Assessment by allocating resources from the contingency but a longer-term more sustainable approach may need to be identified

    · in order to maximise future capital receipts, it may be necessary to identify resources to enable pump-priming investment in infrastructure

    · Contribution to schools projects

    o East Hants Special Schools Reorganisation - as noted in the project appraisal at item 9, it is proposed to allocate funding from P&R Capital Repairs once the level of the capital receipt from the Whitedown School site is known. This contribution is unlikely to be required until 2005/6. A contribution to the enabling works has been identified in paragraph 3.11

    o South Baddesley Primary School - a design project appraisal to provide a new classroom, staff room and hall is due to be considered by the Panel at its meeting on 30 November 2004. The project, which will be completed in two phases, is due to cost around £800,000. funding for Phase I, which is due to start on site in March 2005, is in place as detailed below:

 

                  £'000

          Education 55

          School 57

          NDS (boiler replacement) 20

          Policy and Resources 200

                  332

      It is proposed to fund Phase II (due to start April 2006) from the Education Capital Programme and Policy and Resources support.

3.9

Having regard to the issues discussed above, and to existing commitments and programmes of work, it is estimated that the following resources for major and capital repairs expenditure will be required:

       

      £'000

         

      2004/05

      13,000

      2005/06

      13,000

      Carry forward to 2006/07 and beyond

      15,853

       

      41,853

          Any over or under expenditure should be carried forward to the following financial year.

3.10

The position on NDS Condition funding is different in that the government's financial criteria have always focused on payments rather than commitments. The management of the programme has therefore been more concerned with payments. These are estimated to be:

         

        £000

           

        2004/05

        17,000

        2005/06

        14,000

3.11

It is proposed to add the following to the programme to be funded from NDS, Capital and Major Repairs:

    Up to £100,000

    		  

    Alton Infant - rewiring and new gas and water mains

    Connaught Secondary - re-roofing sports hall

    		  

    Hawley Primary - renew heating main and asbestos removal

    		  

    Hurst College - ceiling and lighting replacement

    		  

    Whitewater Primary - improvements to heating system

    		  

    East Hants CLD School - sprinkler installation (NDS)

    Eggars School - contribution towards infrastructure costs associated with new development

    DDA Access Improvements

    Elizabeth II Court - improvements to rear entrance

    Wildern Secondary School - replacement of Warwick Windows (NDS)

    Trafalgar House/Law Courts - access and security improvements (part funded by the Court services)

    Rookwood Centre - replacement of high level windows, guttering and perimeter improvements

    		  

    £100,000-£200,000

    Crescent Primary - boiler replacement, fire precautions, re-roofing and replacement hall floor

    Kings School - health and safety work relating to access

    Purbrook Park School - infrastructure work

    Weyford Infant - ceiling and lighting renewal (NDS)

    Lakeside Special School - sprinkler installation (NDS)

    East Hants Special School - enabling works

    Aldershot Registration Office - refurbishment

    Merdon Junior School - recladding (addition to NDS)

    Swanmore School - replacement of Warwick windows (NDS)

    Hayling School - replacement of Warwick windows (NDS)

    Over £200,000

    Three Minsters House - replacement of wet cooling towers*

    Hampshire Scientific Services - replacement of wet cooling towers*

    Winchester Law Courts - replacement of wet cooling towers* (to be funded by the Court Services)

    Perins School - infrastructure costs

    * to be the subject of further technical reviews

4

Conclusion

   

4.1

The Revenue maintenance budget is on target, subject to the extent of use of the winter contingency. The NDS Condition Funding targets for 2003/04 were met thus maximising government grant. The change in the process for managing capital and major repairs offers the opportunity to take a longer term view of those programmes.

   
 

Recommendations

   
 

That the Panel advises the Executive Member for Policy and Resources that approval be given to:

1

the budgetary position;

   

2

the capital repairs cash flows in paragraph 3.9;

   

3

any over- or under-expenditure for capital and major repairs be carried forward to the following financial year;

   

4

the proposed additions to the programme as identified in paragraph 3.11.

    Section 100 D - Local Government Act 1972 - background papers

    The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

    NB the list excludes:

    1 Published works

    2 Documents which disclose exempt or confidential information as defined in the Act

    ........................

    ........................

    BLPP1004A

                      Appendix 1

    P&R Revenue Maintenance - 2004/05

    Commitment as at 31 August 2004

 

Budget

Commitment

  
 

£'000

£'000

Percentage

       

a) Non-Education Services

      
       

Redecorations

510

81

15.9%

Engineering servicing and repairs

1,585

1,743

110.0%

Minor structural repairs

540

510

94.4%

Asbestos testing

40

9

22.5%

Vandalism reinstatement

100

54

54.0%

Sub Total

2,775

2,397

86.4%

       

Contingency

300

5

1.7%

       

b) Delegated to schools

      
       

Delegation under LMS scheme

2,240

2,240

100.0%

Delegation under fair funding:

      

Community Schools

5,773

4,157

72.0%

Foundation Schools

767

767

100.0%

Sub Total

8,780

7,164

81.6%

       

c) Other Allocations

      
       

Strategic consultants

370

192

51.9%

Non functional buildings

100

7

7.0%

       

Devolved to other services

240

79

32.9%

Sub Total

710

278

39.2%

       

Total

12,565

9,844

78.3%

                      Appendix 2

    Replacement of Legacy Systems - County Buildings Records (CBR) and Estates Property Information System (EPIS)

    1. Purpose of Report

    This report explains the background and the anticipated benefits of replacing the Department's two property legacy systems (CBR and EPIS) with the SAP Flexible Real Estate module.

    2. Background

    2.1 PB&R's two core property systems (CBR and EPIS) are mainframe Oracle databases that were developed separately in 1990. They were brought within PB&R in 1997 when the former Architects and Estates departments merged and are still maintained as separate databases with significant duplication and overlap.

    2.2 With the shut down of the County Council's mainframe computer on 31st March 2005, these two systems must be replaced and considerable work has been undertaken to identify the best replacement solution.

    2.3 As property is managed as a corporate resource by PB&R, the systems replacement was included in the County Council's original scope for the Enterprise Project. As a result a review was started in 2001 involving the County's implementation partner (formerly known as Price Waterhouse Cooper) and PB&R representatives to ascertain whether SAP would meet the current and future needs of the Council and department for property systems. However, due to problems with the overall SAP project the review was not completed. There were some doubts within the department at this time as to whether SAP was a viable replacement for the property systems.

    2.4 A second review was carried out by PB&R in 2003 to establish whether the Real Estate and Plant Maintenance modules of SAP would meet the department's needs. This review was again inconclusive and recommended a wider investigation of other relevant suppliers of property management systems against which to assess SAP. As a result, IT Services were commissioned in November 2003 to undertake a project jointly with the department to evaluate a number of potential replacement systems as well as a further more detailed review of SAP.

    2.5 Any replacement option will incur significant cost to the department. Rather than just replace CBR and EPIS the aim has been to move to a system that, over time, will provide full integration of both land and buildings information and which provides the potential for a one stop shop for accessing all textual data (currently within CBR/EPIS and a number of other databases) and also graphical information (mapping, CAD drawings, photographs).

2.6 Following production of a requirements specification, an OJEC advertisement was placed in December 2003 which resulted in 36 suppliers expressing an interest. 12 of these, including SAP, stated that they could meet the requirements set out in the specification.

2.7 A further evaluation of the material provided by the suppliers (which is detailed in a separate report by IT Services) focused on those with an established record of helping Local Authorities to manage a large portfolio of land and property information. This reduced the suppliers down to SAP and 2 other contenders:

      · CAPS-Uniform (CAPS)

      · Tribal AssetManagement Ltd (Tribal)

2.8 Each of these three suppliers have carried out two demonstrations of their products, the first to the core project group and the second involving representatives from Property Services and Estates Practice. The second demonstration also involved the suppliers showing how their systems could hold data provided by the department for Brune Park Community School and Compton County Farm Estate.

2.9 In addition, a sample of client reference sites of CAPS and Tribal have been contacted by telephone to obtain feedback on their satisfaction with both the products and the suppliers. In addition a visit was carried out on 8 June 2004 to Surrey County Council who are currently working on a project with IBM to implement SAP's new Flexible Real Estate module.

3. Evaluation Criteria

3.1 Given that each of the three products of SAP, CAPS and Tribal purport to meet the basic requirements specified, a number of additional criteria have been used to further evaluate and distinguish between them. These are:

      · Costs - for the first 5 years.

      · Functionality - ability to meet the basic requirements specification for replacing CBR/EPIS plus their potential for future development and expansion including Geographical Information System (GIS) functionality.

      · Usability - ease of use and system navigation. In particular, feedback from staff representatives at the product demonstrations has been useful for this purpose.

      · Reporting - ease of data retrieval and report generation.

      · Integration with other existing and planned PB&R and corporate systems (e.g. SAP's Asset Register, project systems, customer relationship management software).

4. Preferred Option

4.1 The preferred option of the core project team is SAP's Flexible Real Estate (RE) Module with the use of the Plant Maintenance module if this is considered beneficial.

4.2 Flexible RE has only been available in the UK since March 2004 and, as its name implies, offers more flexibility in how data can be referenced and structured. This is why SAP is now viewed as a serious option when previous reviews were inconclusive about its ability to meet the department's needs.

4.3 The perceived benefits to the department in adopting SAP over the two other products are seen to be:

      · The immediate integration of property data with the Asset Register and the potential for linking to other SAP functionality including procurement (CAC replacement), project systems, plant maintenance and GIS.

      · The potential to use the document management module within SAP to create a complete electronic records management system for each property to pull together all property data, correspondence, drawings, photographs and mapping in a single place.

      · The product's flexibility means that it can be tailored to the department's needs but once it is implemented it will provide a robust platform for consistent data management than the previous systems (CBR/EPIS).

      · The County Council, and the department, is continually developing its own SAP expertise to enable continued support and development of the system into the future.

      · The ability to offer a solution to meet the department's annual rent review process that could not be supported by the other two products.

4.4 The SAP solution (in the form seen) is not the best however when compared to the other two products in regard to:

      · The style of the system and its general user-friendliness;

      · Its complexity and terminology used.

4.5 The project team and Property/Estates representatives are concerned that staff will find it difficult and will not want to use the system. However, with the department's experience of the current CAC to SAP project, it is believed that efforts to improve SAP usability (by improving screen appearance, removing unwanted fields and renaming other fields) can also be applied to the property systems replacement project and thereby remove this concern.

5. Contingency Plan

5.1 Major IT projects like this generally require a period of at least 12 to 18 months for implementation and there are only 9 months remaining before closure of the County Council's mainframe computer.

5.2 IT Services are therefore currently investigating a contingency plan which addresses:

      1. the need to capture from the mainframe computer and safeguard the data currently held within CBR and EPIS and allow continued access for staff to view it via PBR Datasource,

    and, depending upon how long a replacement solution takes to implement

      2. the need to enable the data held within the interim contingency solution to be maintained up-to-date.

6. Costs

6.1 The County Council's experience of SAP to-date suggests that it will not be the cheapest of the three replacement options evaluated. However, it is believed that the shorter term costs will provide benefits to the department in the longer term in regard to system integration, expansion, continued security and corporate support.

6.2 The Enterprise Team are being asked to provide an estimate of costs and also advise on when they would be in a position to commence a project with the department if SAP is the finally agreed choice.

6.3 Costs for the other two products are also being reviewed. If SAP is seen to be unacceptably expensive compared to the other options, then it is likely that the product offered by Tribal Asset Management would be the second choice.