Agenda item

Prior to the commencement of this item Councillor Munro asked that his appreciation and thanks be recorded for the visit arranged by officers from Bolsover District Council and Shirebrook Town Council.  Councillor Munro hoped that there would be more opportunities for Members who had been unable to attend from both authorities to visit the site in the future.

 

Consideration was given to a report presented by Councillor Munro, Portfolio Holder for Growth and the Head of Business Growth, Dragonfly Management (Bolsover) Limited (DML), relating to the Roseland Park and Crematorium proposals which sought approval for borrowing additional funds to fund the continuation of the scheme through to practical completion and an advance amount for working capital required to cover the operational costs prior to and during, initial operation.  Councillor Munro drew members attention to paragraph 2.6 and the breakdown of the additional expenditure likely to be incurred.

 

The Head of Business Growth, Dragonfly Management (Bolsover) Limited presented the report and summarised the key points as follows:

 

·       The initial investment for the development of the crematorium at Shirebrook was £9.2m funded through borrowing as approved by Council in August 2022 also delegated authority for a contingency of 5% (£460,000).

 

·       CDS were appointed in the early phases of the project to continue post planning permission to produce the detailed Stage 4 and 5 architectural drawings.  A RIBA Professional Services Contract was signed on 7^th March 2023 between the Council (the “Client”) and CDS.  Dragonfly Development Limited (DDL) was appointed as (the “Contractor”) under an ‘open book agreement’ and started on site on 18^th September 2023.

 

·       An instruction was passed by the Client to the Contractor to stop work on site in April 2024.  This was due to several significant issues which were identified and had the potential to compromise the build quality of the contractor’s delivery teams.

 

·       The architect’s RIBA Stage 5 pack and their performance on the project fell below the standard expected by the Council and it was decided to terminate the contract.  The contract was a RIBA Professional Services Contract 2020 for Architectural Services.  This meant that the works onsite slowed significantly with some groundworks and planting continuing but at a much slower pace.

 

·       Benchmark Architects and Whiteley Eaves have been appointed the contract.  After which works on site remobilised following a lengthy delay in late 2024 following the revised drawing packs being issued by  Benchmark to the Contractor.

 

·       Section 2 of the report detailed the different parts of the build project with the build contract just being one of those elements.  The contract with DDL was ‘open book’ which ensured the Contractor undertook a “Plan and Specification, Non-Remeasurable” procurement exercise.  However, due to the errors and omissions from the outgoing architect’s RIBA drawing pack, some construction information was not detailed and some completely omitted.  The new architects had to undertake a comprehensive review of the RIBA Stage 5 drawing pack to align works already completed on site and to produce new co-ordinated  construction drawings for the outstanding packages of work yet to be delivered. 

 

·       The causes of the increased costs were detailed in paragraphs 2.6.1 to 2.6.8. 

 

·       The Client Team have been working to establish positive relationships with funeral directors, learning from other crematoria to better understand the arrangements for the operating model for the wake building, colleagues in Environmental Health to obtain the necessary permits and drafting of job descriptions for the employees.

 

·       Consultation and engagement events have been held on the site with Members and funeral directors to show the progress of the build but also to receive feedback.  The recent consultation event had been really positive, and feedback included how to maximise opportunities such as developing an access road link from the site through to the cemetery.

 

·       The value of the works in the contract forecast (paragraph 2.14) was £10.2m (as of 26^th June 2025) which was an increase of £2.75m.  There were also other increases outside of the build contract of £3.5m to get the building fully operational detailed in paragraphs 2.6 to 2.11 of the report.  Estimates for the borrowing costs of £3.5m were £306,950 per annum based on an interest rate of 6.27%.  The projected surplus and income based on the potential number of services delivered each year were detailed in paragraph 2.17 table 1 and table 2.

 

·       It was anticipated that the building works would be completed by March 2026 which would be followed by a period of testing and commissioning of services prior to opening to the public. 

 

·       The structure of the joint venture entity would be in the form of a Limited Liability Partnership (LLP) between Bolsover District Council and Shirebrook Town Council.  It was called the Shirebrook Crematorium LLP and would have a Board comprising District Councillors and officers as well as Town Council Members.  The next meeting of the Board was scheduled for 13^th August 2025.

 

·       It was anticipated that the £204,600 working capital loan from BDC would be repayable in the first year of operation as an expenditure liability.

 

The following additional information was provided in response to Members’ questions:

 

·       It was confirmed that advice had been sought from a legal expert in relation to the litigation but as this was an ongoing matter it could not be discussed in an ‘open council meeting’. 

 

·       Councillor Kirkham was welcome to view by appointment the business plan and associated documents relating to the Crematorium, but copies could not be provided due to commercial and legal sensitivities. 

 

·       The issues that arose with the contract were not due to any failure in the  procurement process as due diligence had been undertaken and the contractor was appointed under a formal RIBA Contract.  It was issues within the contractor post contract award which had resulted in a sub-contracting arrangement being terminated on their part which the Council knew nothing about. 

 

·       Moving forward, controls had been implemented including the appointment of an external Client Cost Manager and for management of costs and building works.

 

·       The Shirebrook Crematorium LLP Board comprised 7 members from Bolsover District Council including the Leader and/or Deputy Leader, Portfolio Holder, Chief Executive and two officers (currently the Head of Business Growth DML and the Deputy Chief Executive Officer of DML) and from Shirebrook Town Council the Clerk and Chair. 

 

·       Legal advice had been received in February 2025 and included a number of recommendations for next steps in terms of the legal process.  Additional information had to be provided including costs and updated packages of work that were affected as set out in the report in 2.16.  In relation to the impact of Local Government Reorganisation (LGR), the Chief Executive confirmed that the guidance so far indicated that all contractual arrangements, partnerships etc would be moved forward into the new Council.

 

·       The Head of Business Growth DML confirmed that she would check the details of the penalty clauses for both architects and build contractors which had been included in the new contract for failure to meet KPI’s and share these.

 

·       The Section 151 Officer confirmed that there were insufficient reserves to pay the additional £3.5m costs.

 

·       Building Regulations had changed since the commencement of the project and as a result the additional requirements meant that the revised drawings and plans had to be submitted and go through the building regulations process.

 

·       The works and costs outside of the build contract included the  purchase of the cremator, furniture and audio-visual packages.

 

·       The Section 151 Officer confirmed the borrowing costs in the report were based on the figures on 8^th July 2025 at an interest rate of 6.27%.  This  may change slightly if the interest rates change at the point when the loan was agreed but thereafter be fixed for the duration of the loan period.

 

Councillor Munro moved the recommendations which was seconded by Councillor Smith.

 

Councillor Moesby then moved an amendment to include the following additional recommendations which was seconded by Councillor Ritchie:

 

(1)  that regular quarterly progress and expenditure reports were provided to the Bolsover District Council Executive by Dragonfly Development Limited;

 

(2)  that independent external assurance on value for money and quality of build be sought by Bolsover District Council as part of these reports; and

 

(3)  that a review of risk management measures in relation to the site be provided to the Bolsover District Council Executive.

 

On being put to the vote the amendment was carried.

 

The amended substantive recommendations were moved by Councillor Munro and seconded by Councillor Smith and following a vote were carried.

 

 RESOLVED that (1) approval be given for additional borrowing of £3.5m to

          fund the building works through to completion;

 

(2) approval be given for the advance of £204,600 from the Council’s Transformation Reserve to Shirebrook Crematorium LLP, as a loan of sufficient working capital necessary to cover the expenditure liabilities prior to and during the first 6 months of operation;

 

(3) regular quarterly progress and expenditure reports be provided to the Bolsover District Council Executive by Dragonfly Development Ltd;

 

(4) independent external assurance on the value for money and quality of build be sought by Bolsover District Council as part of these reports; and

 

(5) a review of the risk management measures in relation to the site be provided to the Bolsover District Council Executive.

 

Councillors Fritchley and Wilson returned to the meeting.