Agenda item

Executive considered a detailed report presented by the Portfolio Holder for Growth, which provided an update to Members on negotiations with the loss adjuster regarding the flood remediation works at Pleasley Vale due to significant damage caused by storm Babet in 2023.

The report informed of the final settlement figure, the value of the works to be undertaken by the Contractor and the difference to be funded through General Reserves, and also sought Members approval to award the contract to Dragonfly Development Ltd following a procurement exercise for delivering the scope of works required.

The Council’s insurer and it’s loss adjuster had inspected the site and the damage caused and appointed consultants, Monaghans Ltd, to project manage scoping out the remedial works required and undertake the procurement to appoint a contractor.  Four contractors were invited to tender for the works and responses were submitted from three suppliers with the results of the procurement exercise shared with the loss adjuster for review and approval.

Based on the findings of the evaluation, Monaghans submitted a report which recommended Dragonfly Development Limited (DDL) as their preferred supplier.

However, there was a shortfall between the settlement agreed with the loss adjuster and the Council’s Insurance Officer of £56,351.29 for works required but which the insurer was not in agreement to cover as part of the claim and would need to be covered by the Council’s General Reserves.

Moved by Councillor John Ritchie and seconded by Councillor Duncan McGregor

RESOLVED that: 1) Dragonfly Development Limited be appointed to complete flood remedial works at Pleasley Vale Business Park,

2)    General Reserves be used to cover any financial shortfall between the full and final settlement and the actual cost of the full scope of works,

3)    upon completion the £50,000 contingency unspent, be credited back to general reserves,

4)    the decision was reasonable in all the circumstances and should be treated as a matter of urgency.

Reasons for Recommendation

It was concluded, following the procurement exercise undertaken by Monaghans and subsequent discussions with the loss adjuster, that Dragonfly Development Limited be appointed as the preferred supplier.

Dragonfly Development Limited submitted the most cost-effective quote of the three submitted, which was within the initial estimate approved by the loss adjuster and they were identified as the most compliant tender with the lowest risk.

A general contingency of £50,000 had been included in these values to cover any unforeseen damage and cost increases such as discovery of asbestos whilst works were ongoing.  Additionally, the £14,329.29 proposed by the loss adjuster to complete floor repairs was considered sufficient with any shortfall being covered by the contingency.

Dragonfly Development Ltd could mobilise and start work on site immediately.

Although a shortfall had been noted between the full and final settlement agreed with the loss adjuster and the cost of the scope of works identified, it was still expected that the full scope of works be completed as not doing so would have an adverse effect on the condition of the buildings and would incur additional revenue liabilities of the General Fund at a later date.

In addition, the already fractured relationship with affected tenants would suffer if the full scope of works were not completed and it would prove difficult to negotiate lease renewals with future rent increases.  There was also a high risk of losing tenants who decided to look for premises elsewhere, plus securing new tenancies could become more challenging, both resulting in a negative impact on the overall revenue position of the Council.

Due to the urgent need to undertake the work, the Chair of Local Growth Scrutiny Committee had agreed that it should be treated as a matter of urgency and not be subject to the call-in process.

The Business Estates Manager and the Facilities Management Team within Dragonfly Development Management Limited, had worked tirelessly over the last 12-months since the flood event to ensure relationships with tenants had been maintained, services upheld, and pressure put on all parties to bring this to a conclusion.  As a result of this, tenant levels had remained constant and revenue streams maintained throughout.  The works being able to commence would be welcomed news to those tenants directly affected by storm Babet.

Alternative Options and Reasons for Rejection

Some risks were identified in the tender report, these could be seen in Appendix 3 to the report. However, despite the risks identified, Monaghans still recommended Dragonfly as their preferred supplier.  This decision had subsequently been approved by the loss Adjuster.

An alternative option is only to complete works funded by the full and final settlement and not to use General Reserves to fund a shortfall.  This option had been rejected due to the adverse effects set out in the report.