£10.5M Centenary Square scheme under microscope amid cost overrun fears
Two cabinet members have been asked to provide a detailed breakdown of the business case and risk assessment for a £10.5 million refurbishment of Centenary Square following concerns that Birmingham city council would have to bail out the scheme if construction costs overrun.
Stewart Stacey, the cabinet member for contracting, and Tahir Ali, the cabinet member for redevelopment, agreed to return to the main scrutiny committee with further details after councillors said they were worried about “the severe risk” of the project costing more than estimated.
The two also agreed to deliver regular financial reports once work begins on the prestigious city centre scheme.
Jon Hunt, leader of the Liberal Democrat group, said public sector construction projects routinely ended above the estimated budget and he wanted to know how the council could be protected from any overspend at Centenary Square.
He pointed out that bids from two private sector firms for the project were based solely on the quality of design with no account being taken of cost or value for money – an approach described as “novel” by Cllr Hunt.
Two of the four firms originally shortlisted by the council pulled out and failed to enter a tender for the scheme, leaving a shortlist of two.
Cllr Hunt and opposition Conservative councillors want the Labour cabinet to reconsider the Centenary Square contract to make sure “a robust process” is in place for managing costs.
Cllr Stacey said Cllr Hunt had misunderstood the way the contract operated.
The project was based on a design and build basis which involved setting the cost in advance and then designing a scheme to fit the budget. The approach was favoured by the Government as a means of keeping costs down, he added.
Cllr Stacey said: “Rather than the council working out the cost and getting it wrong, they (the contractor) will work to an agreed target cost.
Under the standard contract if the contractor found some savings, they kept them and pocketed them. Under this system if there are any savings to be made then we share them.
However, Cllr Stacey conceded that the council was “clearly responsible” for any cost overrun.
He was happy that a “thorough process” had been followed with a competitive process to select the contractor.
The £10.5 million cost is not being met directly by the council – the project will be funded by the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP) through finance from the city centre Enterprise Zone.
The council announced almost a year ago that Edinburgh-based Graham Massie Architects had been selected in an open competition from more than 200 contenders to redesign Centenary Square and turn the area into a “world class public space” where people would be able to “pass through, linger and enjoy”.
A judging panel explained why they were impressed with the winning scheme, known as the Hall of Columns:
- The lighting columns will provide a unique and iconic image for Birmingham.
- The scheme is multi-dimensional, incorporating trees, seating and water with a ceiling of lights which can be appreciated not just from the square but from the terrace of the library and the higher floors of surrounding buildings too.
- The ‘timeless simplicity’ of the design offers the flexibility for the location to be used for a wide range of events in the long-term.
- The design fits in well with the existing and planned developments in the area and complements the history of the square as well as providing an iconic design for the future.
The scheme is yet to receive planning permission but the council expects work to begin on site early in 2017.
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