Archived decisions

Contact: Helen Ackerman, tel 01962 857806

email: [email protected]

1. Summary

1.1 This report presents an overview of the Environment Department Capital Programme, with particular emphasis on the 2008/09 integrated transport programme and recently identified funding pressures.

1.2 A potential shortfall in funding of up to £1 million has arisen owing to various cost increases on existing projects and other new pressures. While it is anticipated that these can be mitigated, there remains a high degree of uncertainty over the likely additional funding coming from Government for the A3 major scheme.

1.3 This uncertainty is unlikely to be clarified until the summer. In the meantime, this report recommends holding a contingency against areas of the programme, namely Waste Management (HWRCs) £300,000, ROUA approvals £362,000 and Quality of Place of £338,000, which will not be delayed if programme funds are released in the summer.

1.4 This report is presented in three parts; this being Part A. Part B sets out in more detail the Transport, Maintenance and Bridges sub programmes, including a partial Quality of Place programme pending clarification on the shortfall, while Part C sets out the Environmental Improvements and Waste Management sub programmes and makes reference to the held-back HWRC approvals.

1.5 Decisions made in relation to the Environment Department Capital Programme will support the Council's priorities of developing safe communities, ensuring access to services and protecting local distinctiveness and diversity.

2. Recommendations

2.1 That the recommended actions detailed in Sections 4 and 5 and summarised in Appendix 1 be approved in order to mitigate the identified shortfalls and funding pressures in the Capital Programme.

2.2 That the amended 2008/09 Integrated Transport Capital Programme, discussed in Section 7 and set out in Appendix 2, be approved.

3. Overview

3.1 In February 2008 the Cabinet agreed the 2008/09 Environment Department Capital Programme. Since then a number of cost pressures have arisen against current schemes, particularly within the Integrated Transport programme, which need to be funded. The shortfall against ongoing schemes in the integrated transport programme is estimated at £2.5 million in 2008/09 with ongoing commitments of £0.242 million into 2009/10.

3.2 Funding to cover these increased costs has been provisionally identified. However a large element, related to the A3, is reliant on Government agreement to additional funding. As a worst case, there remains a £1 million risk in 2008/09 against this project.

3.3 In addition to the above, new funding pressures have been identified. Early estimates indicate additional costs could be £0.8 million in 2008/09, £1.140 million in 2009/10 and £0.430 million in 2010/11. Approximately £2.370 million over three years, plus longer term aspirations continuing into Local Transport Plan 3 (LTP).

3.4 Funding has been identified to address these pressures over the next three years. However funding for the A3 will remain uncertain and is discussed in more detail in section 4.

3.5 A summary of the various pressures and the sources of funding or recommended action is attached for approval in Appendix 1.

3.6 In addition to the above pressures, estimate changes and new additions (with funding already identified) to the 2008/09 programme are discussed in section 7 and set out for approval in Appendix 2.

4. Existing Programmed Schemes - Cost Pressures

A3 Major Scheme 2003/04 - £31.5 million funding available, £33.5 million estimate

4.1 The A3 Major Scheme has been under construction for six years on a rolling programme of sections. The final section in Cowplain is being constructed now and is due for completion in June.

4.2 Additional funding streams were sought, prior to the final phase being commissioned in June 2007. As a result, a further £0.2 million was identified which, at the time, was considered adequate.

4.3 Since commissioning the final phase, financial commitments have been revised and a number of significant changes have been identified. Essentially the scheme is likely to cost £1.65 million more than the currently identified funding.

4.4 Every effort is being made to reduce this figure and the following investigations are ongoing:

(i) clarification of contractor claims;

(ii) funding of preparatory costs from the Government Office for the South East following change in the way major schemes are funded;

(iii) additional funding from Government to cover unprecedented inflationary increases over the life of the project;

(iv) additional Integrated Transport programme support in 2007/08;

(v) additional maintenance support in 2008/09; and

(vi) use of Part 1 Claim contingency.

4.5 It is expected that funding from these sources will cover the current financial pressure of £1.65 million. However, the estimated funding that may be released through extra Government funding and clarification of claims remains uncertain. At best, more funding than is currently required could be received. In this case the Integrated Transport and Maintenance programmes will be refunded. At worst there could be a £1 million shortfall.

4.6 As a contingency measure against the potential shortfall, it is recommended that commitments against three areas of the capital programme are held back pending the A3 outcome:

(i) Environmental Improvements 2007/08 (ROUA programme) £362,000;

(ii) Waste Management (HWRC programme) £300,000; and

(iii) Maintenance (Quality of Place programme) £338,000.

4.7 These programme funds will be reviewed later in the year; when funding pressures into 2009/10 and beyond can also be considered. A decision is unlikely to be required until after the summer.

Witherbed Lane/Segensworth Roundabout, 2007/08 programme - £2.650 million funding available, £3.140 million estimate

4.8 This scheme started on site in September 2007. It is expected to be completed by June 2008.

4.9 A number of problems have occurred throughout the construction period that have resulted in cost increases and delayed completion, including:

(i) a delayed start, which meant the original completion prior to Christmas was unachievable;

(ii) discovering concrete beneath the roundabout that was not detected by the trial holes and the associated delays this caused to the contractor and Utility Companies; and

(iii) a number of other small changes identified during construction.

4.10 The latest estimates indicate that the final cost is likely to be in the region of £3.140 million, £0.490 million over budget. The size of the cost increase has been mitigated because this contract has been operated as a target contract, which means that the County Council and contractor share any financial `pain' or `gain'.

4.11 In order to fund these costs, it is proposed that £0.490 million of the £0.626 million of 2008/09 Term Highway Contract (THC) efficiency savings are utilised.

Andover Town Centre, 2007/08 programme - £0.585 million funding available, £0.864 million estimate

4.12 This scheme was approved in the 2007/08 Capital Programme report in January 2008.

4.13 The original budget was found to be inadequate following completion of the tender process. In response, the scheme has been revised and additional funding has been identified, mainly from developer contributions. It did not start in 2007/08 owing to the funding issues and therefore it is recommended that the scheme be deferred to 2008/09, with a revised starts value of £0.864 million.

4.14 The scheme is now ready to go out to tender again. Estimates have been checked and are considered robust.

A3013 Reading Road South Pedestrian Crossings - £112,000

4.15 Originally part of the 2007/08 programme, these crossings were deferred in the 2007/08 Capital Programme report to the Executive Member for Environment in January 2008. Unfortunately, both crossings were mistakenly omitted from the 2008/09 programme report also approved in January by the Executive Member and by Cabinet in February.

4.16 It is expected that these crossings, a zebra and a puffin, will be funded with developer contributions. The sum of £45,000 is already available through a specific developer contribution paid to the County Council; the remainder is still to be paid over.

4.17 The `Tesco Express' zebra is expected to start on-site within the next month. It is therefore recommended that these crossings are added to the 2008/09 starts programme at £45,000 Externally Funded (EF) and £67,000 LTP, subject to the LTP being replaced by EF when it is received.

5. New Cost Pressures Identified

5.1 A number of other priority projects have recently been identified for development or implementation in 2008/09. Funding for these is likely to be found from a number of sources and while they may not all affect the 2008/09 starts programme, spending will occur in year and beyond.

Safe and Secure Communities Programme Phases 2 and 3 (Village 30s)

5.2 Phase One of this initiative has been funded from the 2007/08 Integrated Transport programme. An initial budget of £0.5 million was approved towards new speed limits in 40 villages around Hampshire.

5.3 The following table sets out the latest estimates and spending profile across all phases, with a breakdown of the proposed funding sources.

5.4 The total costs are likely to be £2.020 (based on 40 villages per phase). Of the original £0.5 million 2007/08 starts value, there is £0.230 million remaining for use on Phase One in 2008/09.

5.5 In order to continue the delivery of this priority programme of village speed limits, it is recommended that the remaining phases are added to the 2008/09 integrated transport programme with a starts value of £0.420 million LTP (redeployed Term Highways Contract (THC) savings) and £1.1 million `other'.

5.6 Redeploying the capital THC efficiency savings across the programme will enable a reduction in starts values against the Minor Works, Minor Traffic Management and Casualty Reduction Sub Programmes. It should be noted that these reductions do not represent a reduced programme size, only reduced delivery costs due to lower tender prices. Section 6 explains the THC savings in more detail.

Hedge End Transport Initiatives

5.7 This project was originally funded through the New Growth Point (NGP) bid mechanism and was awarded £0.850 million in June 2007/08. It was a substitute for the Botley Road Bus Link which was withdrawn during the year.

5.8 The total claim in 2007/08 against the NGP funding was £0.786 million. Unfortunately some elements of work relating to the real-time information at bus stops will not be completed until June and as the NGP funding does not carry forward there will be a need to fund approximately £80,000 of costs incurred in 2008/09.

5.9 Opportunities to fund these costs from external sources are being pursued and the proposed solution will be discussed in a later report. In the meantime, it is proposed that a deficit is carried in the developer contributions account, to be credited as soon as other sources have been identified.

Lyndhurst Traffic Management

5.10 Work on a package of measures as alternatives to the Lyndhurst Bypass is now starting.

5.11 Funding for the first elements can be accommodated within the overall 2008/09 programme allocation. A £300,000 starts value already exists for Lyndhurst Signals and Traffic Management in 2008/09. It is proposed that the signals element be withdrawn and replaced with Goose Green/Shrubbs Hill Bus Lane; a bus priority measure to reduce journey times for the proposed rail bus link from Brockenhurst.

5.12 Additional longer term measures are also being developed. These will need to be considered for inclusion within LTP3.

Colbury Pedestrian Crossing

5.13 The New Forest Hampshire Action Team (HAT) identified this crossing as a priority project for the area. Concerns over the location of the crossing and the associated costs are currently being investigated.

5.14 In order to progress this project within existing approvals it is recommended that this scheme be added to the 2009/10 programme, under the `Emerging Priorities' headline, with a budget of £250,000.

5.15 Approval of this addition to the published 2009/10 programme is required in order for design and associated statutory consultations to continue through 2008/09 to enable construction to start early in April 2009.

6. Identifying Sources of Funding

6.1 A detailed assessment of the capital programme has been undertaken and various possibilities have been identified. Though each carries a certain element of risk, the majority of funding pressures in 2008/09 can be accommodated.

THC Efficiency Savings Assessment

6.2 Re-tendering of the Term Highways Contract has resulted in a 2% efficiency saving across prices for the maintenance and capital programmes.

6.3 By comparing old and new prices for common items in the maintenance programme, efficiency savings of up to £0.834 million can be assessed as available for redeployment across the programme each year.

6.4 The sum of £0.168 million has already been agreed to fund prudential borrowing costs required to maintain the maintenance spending at desired levels, leaving a net figure of £0.766 million available in 2008/09, £0.469 million in 2009/10 and £0.341 million in 2010/11 and beyond, part of which could be held to meet cost pressures under the Street Lighting Private Finance Initiative.

6.5 It is proposed, in section 4.11, that £0.490 of the assessed maintenance savings are set aside for Segensworth Roundabout overspend, leaving £0.465 spare in 2008/09 and 2009/10.

6.6 It is proposed, in section 5.5, that all the assessed capital savings are set aside as part funding towards the ongoing Safe and Secure Communities (30 mph village speed limit) Programme.

Use of Developer Contributions

6.7 Whenever possible, developer contributions are allocated to capital transport projects. This funding is often more flexible in terms of timing, although it must be spent in accordance with current policies relating to Districts and the terms under which the contributions were taken.

6.8 In recent years it has become necessary to look for suitable contributions for schemes that would otherwise be LTP funded. Sub programmes such as Safer Routes to School, Minor Works and Casualty Reduction are examples of where LTP has been `swapped' for contributions.

6.9 Individually these swaps are relatively small, often less than £20,000, but totalled they can create space in the LTP programme to accommodate cost increases, slippage and new funding pressures.

6.10 In previous years the EF swap total has been around £600,000, however the LTP starts programme was much larger than it is today. A conservative estimate of approximately £200,000 worth of swaps may be possible in 2008/09. Work to identify likely swaps will begin shortly and a revision of this estimate may result.

6.11 An initiative to accelerate the use of developer contributions is also underway. It is important however that the projects coming out of this initiative are not put at financial risk because of the swaps.

7. Amendments to the 2008/09 Integrated Transport Programme

7.1 The following list of schemes did not start in 2007/08 and are recommended for inclusion in the 2008/09 programme.

7.2 This is a significant improvement on in-year delivery compared to last year where over 20 projects slipped from 2006/07. Reasons for this improvement are primarily owing to the reduced programme, both in 2007/08 and in 2008/09. Additionally, more sophisticated monitoring techniques and improved management have also ensured that more schemes were started in time.

7.3 One new scheme has been assessed through the Gateway process (Full Business Case) and has been recommended for inclusion in the 2008/09 programme.

Subway Lighting in Area North - £175,000 developer contributions

7.4 Replacement of lamps, frames and covers in various subways across the north of Hampshire. This scheme will reduce energy consumption and vandalism of subway lighting units in the Basingstoke, Hart and Rushmoor areas. This should result in improved lighting levels leading to benefits for pedestrians, especially the elderly and visually impaired. A Project Appraisal has been approved, and it is hoped to start the improvements in early June.

2008/09 Sub Programmes

7.5 The sub programmes are detailed in Part B and Part C of this report. Part B includes the proposal to reduce the starts value of Minor Works and Minor Traffic Management and Casualty Reduction sub programmes as discussed in section 5.6 of this report.

8. Impact Assessments

8.1 The proposals in this report are derived from the departmental service plans and LTP objectives, and are in accordance with the budget strategy and the County Council's financial management policy. An impact assessment of the departmental service plans and the financial management policy has been carried out and the proposals in this report are not considered to be discriminatory.

9. Conclusion

9.1 The need to amend the 2008/09 Capital Programme has arisen from the identification of a number of cost pressures and slippage from the previous year.

9.2 Expenditure and programme delivery will be carefully monitored throughout the year and progress will be reported regularly.

1672Rpt/HA

APPENDIX 2

REVISED 2008/09 TRANSPORT CAPITAL PROGRAMME