Report of the Strategic Director (Growth and Development)

The purpose of this report is to update Members on the construction progress for The Factory project, its significance in terms of cultural impact within the neighbourhood; the evaluation of Manchester International Festival 2019; and the projected social value outcomes identified to be delivered collaboratively through the design team, contractors and the operator.

The Committee considered a report of the Strategic Director (Growth and Development), which provided an update on the construction progress for The

Factory project, its significance in terms of cultural impact within the city, the projected social and economic benefits, legacy impacts and opportunities for Manchester residents generated by the project.

The main points and themes within the report included:-

·                To date progress had been good, with 11 of the 32 work packages having been let, the most visible of which were the steelworks;

·                A number of key successes were highlighted including the substantial completion of the towers steelwork, the installation of the concrete stairs and the lift shaft erection. The truck lift enclosure and orchestra pit had also been 'topped out' and structurally completed;

·                The project team were working to achieve the earliest, most cost effective completion date, with the Factory due to play a significant role in MIF 2021, however the most significant challenge remained the complexity of the project;

·                Additional issues had been discovered on site including drainage issues due to incomplete data which had put some pressure on the project;

·                The project was currently going through the next quarterly review with Arts Council England. A cost and design review had also been commissioned to underpin the next phase of delivery with the Mechanical, Electrical and Plumbing (MEP) being the next major work package to be let;

·                Details of social value commitments to date, including the number of apprenticeship starts, pre-employment schemes or placements focusing on long term unemployed groups and employability skills support activities;

·                A broader piece of work was also being undertaken into the construction market and inflationary pressures within Manchester as this was a concern across the capital programme;  and

·                Whilst as this stage the project was reported as delivering to budget, the situation was being kept under careful review.

Some of the key points that arose from the Committees discussions were:-

·                Concern was raised in relation to the engagement by the Management Contractor in permitting access to the site for Unite and Trade Unions, in light of the Council’s signing of the Unite Construction Charter;

·                Members sought further detail in relation to the additional drainage issue identified in the report;

·                What financial contingency existed within the total cost of the project to take account of these additional issues and inflationary pressures surrounding the construction market;

·                In terms of apprentices, could the Committee be provided with information on how many had actually started working on the project and how many of these were Manchester residents; and

·                Could Officers give an assurance that there would be no need for any further capital investment into the project

The Director of Capital Programmes advised that he met regularly with Unite, officers within Procurement and the Management Contractor’s Project Director, to discuss protocols around site access for Trade Unions.  It was reported that it had been agreed that the protocols for Trade Union access to the site would replicate those protocols applied to the construction of Liverpool Hospital (which was another development overseen by the same Management Contractor), however, he had been advised that negotiations around this between Unite and the Management Contractor had broken down and as a result he had contacted Unite to understand their issues and had committed to meeting with the Management Contractor and Unite to try and identify and agree a resolution.

In relation to the additional drainage issue, it was explained that following intrusive surveys of the site it was identified that drainage of an adjacent site (owned by Allied London) was actually coming on to the Factory site which had not be identified in any groundwork drawings.  Consequently adjustments were needed and the Council had formally written to Allied London to suggest that the cost of these adjustments were borne by them rather than the Council.  It was also reported that following ground excavation, contamination had been found, which was not unusual for a brownfield site, but required additional unplanned work to remedy. 

The Director of Capital Programmes advised that the original contingency for the project was circa £4.1m and it was acknowledged that this was currently under some pressure. Reassurance was given that the agreed budget was being monitored regularly and all efforts were being made to deliver the project on budget.  In terms of inflationary pressures, it was explained that at present, the demand in the Manchester construction market outstripped supply and as a result complex project such as the Factory were not as appealing to the supply chain as more simpler projects.  As such some of the supply chain were less active in some of the key components of the factory.

The Chair suggested as well as information on apprenticeship starts being sent to Members of the Committee, a report should be submitted to the Ethical Procurement Sub Group on apprentices, including the gender breakdown and BAME background and the issues that had occurred between the Management Contractor and the Trade Unions.

Furthermore, the Director of Capital Programmes advised that it was not possible to give an absolute assurance there would be no need for any further capital investment due to the nature and complexity of the project.  Only 11 of the 32 works packages had been let so far and the Council was still in design and negotiation with the supply chain on some of the remaining packages of work.  He did advise that this was being monitored closely and steps had been taken to reduce some of the cost and inflationary pressures.

Decision

The Committee notes the report.