REPORT BY: SPECIAL AD HOC POLICY & REVIEW PANEL

REPORT TO: THE CITY COUNCIL – 15 May 2006

SPINNAKER TOWER - MANAGEMENT OF THE TOWER PROJECT AND RELATED MATTERS

Purpose

1 To report the outcome of the Panel’s inquiry into the management of the tower project.

Introduction

2 The City Council, at its meeting on 11 October 2005, considered notices of motion that had been submitted expressing concern about the series of delays that prevented completion of the Spinnaker Tower and its opening for the Trafalgar celebrations. The notices of motion also proposed the appointment of a special panel to review various aspects of the project.

The Panel’s Terms of Reference

3 The Council, on 11 October 2005, agreed to appoint a special ad hoc policy and review panel with the following terms of reference ­

(a) To take evidence, consider and report (with conclusions and recommendations as may be necessary) upon the management of the Tower project from the end of the period covered by the previous Policy and Review Panel report focusing upon ­

• the delays in completion and opening of the Tower,

• the roles played by members, officers, advisers and contractors in seeking to avoid delays and in maintaining adherence to the construction programme,

• the selection and appointment of Maspero, including the external lift specification and employer’s requirements, the firms available to be appointed, the qualifications of the chosen firm and the roles played by Council members, officers, advisers and contractors in the appointment,

• the issue of the quality of the concrete,

• how lead members were kept informed,

• what further lessons may be learned from this period,

• what lessons can be learned from the contract,

1

• what lessons can be learned from the use of sub-contractors (including those that went into administration)

• the excellent safety record of workers on the Tower

• compensation events

• what changes have been made to Project management arrangements and are they satisfactory

• whether the City Council should ever again promote or fund high risk prestige projects

(b) To have the power, if it considered necessary, to ask for advice from independent people from outside of the Council to assist the panel.

(c) To meet as frequently as needed, whenever possible meeting in open session, and to report back to the Council by February 2006.

(d) The quorum for meetings will be 4 members present.

Membership of the Panel

4 The Panel’s membership (in political proportionality) is Councillors Hugh Mason (Chair), Michael Andrewes, Steve Wylie, Alan Langford, Lee Mason, and Tom Blair. The Council agreed that Councillor Hugh Mason should chair the Panel. The Council also agreed there should be no casting vote.

5 The officers serving the Panel have been Stephen Kerr (Deputy Monitoring Officer), Bradley Wright (Head of Project Management, Risk Management and Emergency Planning), Trevor Wallis (Corporate Finance Officer) and John Haskell (Democratic Services Manager).

6 In agreeing to make the appointments to the Panel the Council decided that to encourage an independent view no member should serve on the Panel who had been involved in decision making on the tower (except at full Council) or had been in receipt of the regular confidential briefing reports on the tower. The Council also directed that the Panel’s work should not interfere with the completion of the various contracts that were ongoing.

The way in which the Panel has undertaken the Inquiry

7 The Panel decided that it would proceed by way of receiving evidence in respect of a number of discrete elements of the tower project. A programme of meetings was arranged to enable those principally concerned to give evidence and answer questions from Panel members. In all 8 meetings were held, of which one was in closed session because of the nature of the evidence and the impact in respect of current negotiations continuing in respect of the external lift contract.

8 This report has been prepared by presenting within it the key evidence received and the Panel’s comments/conclusions as appropriate in respect of

2

each element. In paragraphs 109 to 117 the Panel has set out its general conclusions on the evidence received. In paragraph 118 are recommendations for consideration by the Council.

9 The Panel was provided with a copy of each of the Project Manager’s regular reports to both the client officer (the Strategic Director for Corporate Resources and Services) and leading members. These weekly (and latterly fortnightly) reports were issued on a “confidential” basis because much of the information contained within each report was considered to have a bearing upon contractual issues and might therefore be considered to raise issues of commercial confidentiality.

The Spinnaker Tower Project - A General Overview

10 At its meeting on 20 April 2004 the City Council adopted (with a couple of small changes) the recommendations of the Special Panel that had been chaired by former Councillor George Semmens. This Panel ‘signed off’ its report on the 26 March 2004. In all there had been some 30 recommendations, which had evolved from consideration of the tower project from its inception in 1995 up to the late autumn of 2002 following the appointment of John Mowlem and Company plc as the main contractor. At that meeting in April 2004 the Council also considered a report from the District Auditor which was critical of certain aspects of the way in which the Tower project had been managed.

11 The City Council, when setting the terms of reference of this latest inquiry, agreed that it should focus upon the project from the end of the period covered by the previous Policy & Review Panel report. The Panel has, therefore, of necessity received some evidence relating to this earlier period in order to understand more precisely issues that have arisen during the later part of the tower project.

12 The Panel is in no doubt that the project to build such an “iconic” structure as the Spinnaker Tower has been unique and placed considerable demands upon all those involved in designing, managing, building and delivering the Tower as the centrepiece of the Renaissance of Portsmouth Harbour Millennium Project. At the outset the Panel noted that the Spinnaker Tower occupies a very constrained and small site that has been reclaimed from the sea for this purpose. It has needed to draw on the best design and engineering principles and has presented a tough challenge for all those involved with the project.

13 A project of this nature has necessarily brought together many different sub­contractors working for the main contractor, John Mowlem and Company plc. In turn, these sub-contractors have been responsible to Mowlem for all elements of the construction project, including construction of the tower, provision of steelwork, provision of lifts, and rendering the external surface.

14 The physical constraints of the site and the requirements of the surrounding landowner, Berkeley meant, for example, that parts and materials could not be stored on site because of a lack of space. Neither could work that was deemed noisy be undertaken outside certain time periods each day. The

3

Panel was advised in evidence that although these requirements caused concern and needed careful attention throughout the construction, Gunwharf Quays had been co-operative, which had helped the construction process.

15 As at April 2004, the management arrangements for the project had a project team with David Greenhalgh as Project Manager, Mike Broomfield, (Deputy Project Manager), and Mike Homer (Site Supervisor). Mr Greenhalgh reported on a weekly basis to Roger Ching, the Strategic Director for Corporate Resources and Services (as the client officer), and other City Council officers on the tower team. This team considered weekly progress reports from the Project Manager and then forwarded these to the three group leaders and Executive Members.

Appointment of the Main Contractor and Form of Contract

16 The construction contract appointing John Mowlem and Company plc (Mowlem) was signed in November 2002. The form of “risk sharing” contract between the Council and Mowlem is called the Engineering and Construction Contract 2nd Edition Option C Target Contract with Activity Schedule, May 1998 Edition. The aim of this form of contract was for the employer and supplier/contractor to work in a spirit of mutual trust and co-operation.

17 The terms of the contract provides for early warning notices to be issued in the event of any deviation from the project plan – put simply “anything going wrong”. Some of these notices might lead to compensation events occurring. The contract also provided for variations to be made as and when needed to facilitate changing requirements, including changing requirements of the employer.

18 The contract on behalf of Portsmouth City Council gave authority to the Project Manager to resolve any conflicts arising, although if that was not possible in a particular case then the matter would be referred to a dispute resolution process, the first step of which was adjudication. This was standard for this type of contract.

19 The Panel is conscious that a comprehensive report prepared by the Strategic Director for Corporate Resources and Services explaining the financial implications of the Mowlem contract; contractors’ risks; employer’s risks; shared risks; the pain-gain mechanism including target price and maximum contract price, risk management of the final account settlement process, and compensation events, was submitted to the City Council on 20 December 2005.

20 In evidence to the Panel Mr Greenhalgh (who had been appointed as Project Manager in October 2002) made clear that it had been important for the Council to get into contract, otherwise work would have continued to proceed on the quantum merit principle, where the contractor is paid in full for the work it claims to have done. Mowlem had initially been appointed to proceed with work over an extensive period under a Letter of Intent and this, in Mr Greenhalgh’s view had placed the Council in a weak position when seeking to finalise the eventual terms of the contract.

4

21 Before deciding to proceed with the contract in October 2002, the Council had considered a report from Blake Lapthorn (solicitors) setting out their legal view of the terms proposed, including a commentary on each of the likely compensation events. Blake Lapthorn had been asked to review the draft contract. In the conclusion to its report Blake Lapthorn said that ‘in summary, the contract in its present draft form contains a number of areas, in both the amendments to standard clauses and the addition of bespoke clauses, that give rise to a potential exposure for the Council. This exposure arises in the sense that there are no “absolute guarantees” that the Council can (a) limit its cost to a Maximum Contract Price of £25M, (b) enforce compliance by Mowlem with the timetable for a completion date in July 2004 and (c) maintain a “seamless” total design liability which rests entirely with Mowlem.’

Blake Lapthorn also said –

‘To summarise the conclusions of our review of the Contract, therefore, we have found that it contains certain areas of potential exposure for the Council where there are open ended provisions regarding cost (the possibility of incurring costs beyond the so-called Maximum Contract Price, time (the possibility of extending the time for completion of the contract without financial recourse to the contractor) and design liability (the possibility of the contractor’s “total design liability” being reduced or compromised).’

22 A feature of the contract is that Mowlem and City Council agreed a schedule of activities that defined the works to be completed, which in turn produced the initial ‘Target Price’ of £21M for the contract. It was also agreed at that time that the City Council would only be required to share any loss of up to £4M over the target price. This upper level was referred to as the ‘maximum Contract Price’ in the sum of £25M. The Target Price and the Maximum Contract price are both subject to adjustment through a so called ‘pain-gain’ mechanism. Each and every time the Project Manager awards a ‘compensation event’ to the contractor, both the Target and Maximum Price values are adjusted. In turn, the difference between the ‘Actual cost’ and the final adjusted Target Price represents the ‘pain’ to be shared between the City Council and Mowlem. The first £4M of this is shared between the City Council and Mowlem in agreed percentages, and the remainder funded entirely by Mowlem.

Project Completion Timescale

23 At the time Mowlem signed the contract in November 2002 it was expected that the project would be completed in July 2004. However, the Panel has received evidence that by April 2004 both Mowlem and the City Council’s own project team were predicting completion by November 2004. The major cause of this 4 months delay was approximately 1 month’s delay in the completion of the slipform works (caused by high winds and Bierrum going into receivership) followed by a further 3 months delay in the early detailed design for the Structural Steelwork.

5

24 The delays in completing the tower since April 2004 have been due mainly to ­

• Delays in design, procurement, fabrication, assembly and completion of structural steelwork (which eventually was a full eight months behind the original programme)

• Delays in fitting out the base buildings and view decks

• Delays in installing and bringing into use the external lift.

The Panel has been advised that the concrete quality issues discussed in greater detail later in this report were not material causes of delay.

Appointment of Sub-Contractors

25 The form of contract between the City Council and Mowlem entitles Mowlem to appoint sub-contractors for any element of the work. As and when Mowlem decided to sub-contract the company was required to give the Project Manager the name of each proposed sub-contractor. In evidence to the Panel David Greenhalgh, the Council's Project Manager has made clear ­

• Sub-contracting was a common feature of most contracts. It did not in itself, however, permit a lowering of quality or control over the work to be undertaken.

• Although the Project Manager could advise the main contractor (Mowlem) of other sub-contractors who might be capable of undertaking the work, the Project Manager could only reject the proposed appointment by Mowlem of a sub-contractor if he considered that the sub-contractor was not capable of undertaking the works.

• Sub-contractors were appointed by the main contractor (Mowlem) with whom there was the contractual relationship.

26 The Panel noted that attention has focussed on three main sub-contractors ­

• Butterley Engineering Ltd, (Butterley) who were responsible for steelwork fabrication and assembly;

• Bierrum & Partners Ltd (Bierrum), who were responsible for the concrete works and slip form construction of the tower legs; and

• Maspero Elevatori SRL (Maspero), who were responsible for provision of the external glass lift.

27 Aspects of each of the three sub-contractors’ work and their appointments are dealt with later in this report. However, Mr Greenhalgh has made clear that, even with hindsight, he would have had no reason not to endorse the then proposed appointments by Mowlem of Butterley, Maspero and Bierrum. Mr Greenhalgh emphasised to the Panel that the availability of competent specialist contractors at the time of their appointment was limited but he was

6

confident that these three sub-contractors were the best available to deliver the works for which they were being engaged.

28 Mr Greenhalgh submitted to the Panel a detailed paper explaining the role of sub-contractors, and this is included as appendix 1 to the report.

29 Mowlem, as the main contractor, could engage sub-contractors and pay them in a variety of ways. In evidence to the Panel, Mr Greenhalgh said he believed that the following three types of contract had been used ­

(a) Lump sum payment to the contractor;

(b) Priced bills of quantity (in other words each item of work and the materials used is individually priced);

(c) Time and labour only.

The contractual arrangements provided that Mowlem could claim against sub­contractors in those cases where sub-contract conditions were not fulfilled.

Legal and Financial Matters and Compensation Events

30 The budget for the project as at 1 April 2004 (approved by the Council in February 2004) showed a total cost of £29.641m. At the 1 April the expected completion date was the 30 November 2004.

31 Various agreements were still in course of preparation and these included a Gunwharf Quays operational interface agreement, Heritage lease, Heritage agreement to lease, agreement with Towers Too Limited. To complete these documents and also provide continuing legal advice in respect of various aspects of the Mowlem contract, the Council in April/May 2004 appointed Wragge & Co, a leading firm of external lawyers. They have since worked to complete all the necessary documentation.

32 Under the terms of the contract with Mowlem the employer (the City Council) accepts risks associated with actions and decisions required/made by the employer and project manager. These include for example instructions to change works, late approvals and unforeseen obstructions.

33 Due to the unique design and the susceptibility of high-rise construction to adverse weather, the City Council accepted further risks on design development and weather delays during the final negotiations of the contract in July 2002. These were explained to the Council in the report in October 2002 from Blake Lapthorn.

34 A detailed report setting out the formal process to be adopted in approving compensation events was approved by the Executive on 13 December 2004.

35 As at December 2005 some 703 such compensation events had been submitted. A detailed explanation on the status of compensation events as at December 2005 was included in a report considered by the Executive on 13 December 2005 and subsequently the City Council on 20 December 2005.

7

36 Compensation event claims are assessed by the Council’s Project Manager, under the terms of the contract. They are then notified to the three group leaders in accordance with the process agreed in December 2004. The role of members was not to approve or reject claims, but to be kept informed and be aware of the issues that had arisen and the costs involved. In this process the Project Manager decides whether to pay or challenge a claim.

37 The Panel has been given evidence as to the number of claims that are still outstanding and the wish of the client team to bring the matter to a satisfactory close that will be financially acceptable to the City Council.

38 The Panel is also aware, from evidence that has been given, that at the conclusion of the construction period there is inevitably a period before final accounts are concluded. Sometimes it can take many years to settle the final account between the employer and the main contractor. Separately, the main contractor would be dealing with settling claims involving the sub-contractors.

39 Of the 703 compensation events that had been issued (as at December 2005), some related to shared risks. In some cases they also related to changes of specification that had been requested by the employer. Each of the claims would be assessed against the contract.

40 A key feature of the form of contract used was to “shared risk”. The Panel was told the general view was that if a risk could not be varied/reduced or controlled then it should not be held by that party to the contract. In other words, a risk should only be held by a party who can do something about that Risk. Under the contract, in simple terms ­

• The contractor was liable for anything he did wrong;

• If the contract document said the contractor should undertake work in a certain way and something went wrong that would be termed a “shared risk”;

• Those risks that were the responsibility of the City Council, as employer where those related to issues outside the control of the Contractor. A list containing some 24 reasons was included within clause 60.1 of the contract. An explanation of these risks and the likely scope of PCC’s liability was given to the City Council within Blake Lapthorn’s October 2002 report.

Project Management including Risk Management

41 A timeline setting out construction activity and key events, prepared by David Greenhalgh, the Project Manager, is attached as appendix 2.

42 The Panel has received detailed evidence from Roger Ching and David Greenhalgh on the arrangements for managing the project. Briefly, David Greenhalgh, as the Project Manager, reported on a weekly basis to Roger Ching as the client officer and other City Council officers who formed the “tower team”. This is an arrangement that had been followed from the commencement of the project.

8

43 Soon after his appointment in October 2002 Mr Greenhalgh initiated a risk management review of the project with all key stakeholders, as a result of which he had prepared a risk register. This register contained information on likely construction risks, project risks, and interface risks. The risk register is a technical document which had limited circulation amongst key stakeholders in the project. These stakeholders met on a monthly basis to monitor risks and to identify whether any had changed. Each risk identified a percentage possibility of occurrence and ways of mitigating the risk. The risk register also included details of the possible financial consequences if a risk became a reality.

44 The City Council project management team was strengthened in September 2004 by the appointment of a Deputy Project Manager responsible for dealing with claims. At the same time a part-time Programme Manager was added to the team because it had become clear that Mowlem needed help to deliver its programme. There had also been a need to predict end dates and ensure that Mowlem were managing effectively on site. Linked to this, Mowlem gave a commitment to allocate a dedicated programme manager to work with the city in the spirit of mutual help and co-operation.

45 To further assist the Council, an external lift consultant was appointed to assist Halcrow in July 2005, and this aspect is dealt with later in the report.

46 Both Roger Ching and David Greenhalgh have told the Panel they consider that the project management arrangements have proved satisfactory.

The use of Concrete

47 A “concrete issues timeline”, prepared by David Greenhalgh, the Project Manager, which sets out key dates and activities, is attached as appendix 3.

48 Bierrum were appointed as a sub-contractor by Mowlem to undertake construction of the slip form and the mechanism for providing the reinforced concrete of the tower and its two shafts. In turn, Bierrum sub-contracted others to carry out specific parts of the work, including, for example, those responsible for the design, fabrication and installation of the Slipform Rig.

49 In June 2003 construction commenced on the two tower shafts after which they were treated with a two millimetre thick Sika render which provided a smooth surface and a moisture seal to the concrete, to ensure that there was a proper surface finish. In December 2003 heavy frost caused some sections of the Sika render to become de-bonded. The render had been applied too late during concrete setting process and a weak bond between the substrate concrete and the render was created. Subsequently moisture permeated into the space between the concrete and render; it subsequently froze and pushed the render off. The Panel has been told that elements of render that were considered suspect were subsequently identified by survey, removed and replaced. This is a cosmetic issue and does not affect the functionality, durability or structural strength of the Tower.

9

50 In March 2004, whilst fixing brackets to the internal stairwell, certain discontinuities (voids) were found. David Greenhalgh gave detailed evidence to the Panel of the work that was carried out to ensure there were no short or long term structural concerns affecting the integrity of the building. Mowlem commissioned a report and several stakeholders in the tower project were involved in undertaking inspections. Additionally the Concrete Society also carried out “on-site” inspections.

51 An interim report was issued in August 2004, which was fully endorsed by the entire concrete expert team. It concluded that what had been identified was a superficial problem that did not affect the structural strength or the short or long term durability of the tower. Remedial work (which was now Mowlem’s liability) was undertaken by breaking out the discontinuities (voids) and carrying out repairs using proprietary concrete repair products. The Panel visited the tower and inspected the sites of these repairs, which were few in number.

52 Although the interim report on defective concrete was issued in August 2004, the final report was not issued until June 2005. The report itself had been commissioned by Mowlem, who were responsible for its eventual publication. The delay in final publication appears to have been caused by the need to ensure that all parties were ‘signed up’ to the final conclusions in the report, coupled with the fact that Mowlem did not attach much priority to this issue. Both the interim and final reports were circulated to all councillors and made publicly available.

53 David Greenhalgh has given a full explanation of the issues regarding concrete strength and how this is calculated. The tower is of a unique design being constructed with a slip form. The investigations undertaken showed that the discontinuities (voids) had been discovered inside the legs of the tower. None had been found on the external surfaces. The Panel was also told that the problem of voids was not unique - similar problems had occurred in the construction undertaken with a continuous slip form of a motorway concrete crash barrier in Canada.

54 The Panel was told that all the concrete for the shafts of the tower was batched on site to ensure that the control of all batches of concrete were of the correct quality. In advance of the shafts being constructed trial runs had been carried out on the slip form and rig before finally work commenced. It had taken some two months to get the concrete mix correct. The mix needed to be expertly varied according to the slip forming stage

55 The Panel wished to know whether the problems that had arisen had caused any delay with other elements of the project. David Greenhalgh told the Panel that there had been delays in the structural steelworks and that the investigation and rectification of problems with the concrete works were being carried out in parallel and therefore had not caused any extra delay.

56 Bierrums went into receivership in September 2003, and as a consequence responsibility for work undertaken by the company as a sub-contractor then passed to Mowlems the main contractor.

10

57 David Greenhalgh advised the Panel that Bierrum’s going into receivership in September 2003 (just after they had finished the slip form of the tower) probably added about 3-4 weeks to the works programme.

Steelwork Fabrication

58 In May 2003 Butterley were appointed by Mowlem as a sub-contractor to undertake the steelwork fabrication and manufacture. The company was not the original preferred steelwork supplier. Butterley had come second in the Mowlem competitive tender, but the preferred company (Cimolai) were not available subsequently to undertake the work because of a slippage in the programme. Butterley were approached because they had just finished work on the Falkirk Wheel (another millennium project), which they had produced on time. A further company – Cleveland Bridge, had also been approached, but had been unable to take on the work. In evidence to the Panel, David Greenhalgh made clear that there were not many companies a main contractor could rely upon to manufacture and prefabricate 1200 tonnes of steel in what was originally intended to be a three months period.

59 At the commencement of this part of the sub-contract delays had occured as a result of the need to resolve some 200 technical queries that had arisen between the principal designer (Scott Wilson) and Butterley who were undertaking the manufacture and fabrication. The Panel understands that this is not an exceptional number for a project of this size.

60 Some 5-6 weeks into the contract, it became clear that Butterley were falling behind with fabrication. Prompt action was taken to try and bring the programme back on course. Weekly visits were made by the Project Manager to Butterely’s manufacturing plant to ensure the company was working properly and the project proceeding; Mowlem who were responsible for the sub contract similarly were making regular visits.

61 The Panel was told that at the time Butterley submitted its cost quotation and timescale for undertaking the work, it was envisaged the promises made by the company could be honoured. However, subsequently it became clear that the Butterley production team was not able to meet the promises that had been made, although it might have been possible to do so if the company had worked a three shift system over a 24 hour day.

62 The Spinnaker sail metalwork construction comprised 52 sections. Its construction was more complex than originally envisaged. Each of the parts were individually brought to the site by road on a ‘just in time’ schedule. The first piece was the massive cruciform steelwork section, weighing in excess of 100 tonnes. This had taken longer to fabricate than had been estimated by Butterley. The delay in completing the stage 1 steelwork led to a delay with the start of the stage 2 steelwork and a consequential slippage in the overall programme into the winter period. Subsequent inclement weather (high winds and rain) led to further delays. In all, this led to something like an eight month delay on completing the structural steelwork. In the Project Risk Register 12 the following construction risks were identified –

11

• Item C33 – Erection of steelwork is found not to work or is problematic during construction – 15% probability. The mitigating action indicated the need to discuss with the sub contractors to draw on experience from previous structures;

• Item C53 – Steelwork delays cannot be recovered in the programme – 75% probability. The mitigating action indicated that Mowlem was to continue to press Butterley to complete their part of the work.

63 Roger Ching, as the client officer made clear to the Panel that if at the outset it had been known that Butterley could not have delivered to time then members would have been advised. Members were told in the Project Manager’s report dated 31 March 2004 (Section 1.3) that a 13.5 week delay had occurred and that work was slipping behind programme. David Greenhalgh commented to the Panel that perhaps too much faith may have been placed in Butterley at the outset of their involvement.

64 The employer’s requirements had been very detailed to ensure that the shape of the Spinnaker Tower was retained in subsequent design and construction work. Both Scott Wilson (the designer) and Butterley were clearly committed to ensuring a professional approach to the work and that all work should be completed in a satisfactory manner. All steelwork alignments and bolt connections fitted perfectly as the various pieces were brought to site and erected.

65 The sub-contract with Butterley was a “lump sum contract”, in which Butterley was paid to complete specific works within a given programme. The Panel understands that since the contract was completed there have been a number of claims between Mowlem and Butterley. There were, however, ‘knock on’ costs from the delay. One of the more significant elements of this was due to the ongoing site establishment costs for the Mowlem Team and attendant works to the Sub-Contractor.

66 Although Butterley produced the trunnion just six weeks late, they were not able to manage production of the “steel boxes” comprising the rest of the superstructure to time, only producing about 1½ boxes per week.

External Lift Contract

67 The Panel has received evidence, which was taken in closed session because of the commercial and contractual issues involved and other ongoing related matters.

68 In evidence to the Panel from David Greenhalgh, it was explained that in 2000 Halcrow and HGP had developed the employer’s requirements for an external lift based on a track and pinion arrangement. At that time it was believed that Alimak (a track and pinion lift supplier) was likely to be the most appropriate lift company.

69 In November 2000 tenders for the external lift were received and Mowlem, (under advice from their lead consultant at that time Ove Arup), expressed

12

concerns that the Alimak type lift might not fulfil the employer’s requirements. This view was based on problems that had arisen with a similar lift at the Glasgow Science Park.

70 After the appointment of Mowlem in January 2001, discussions took place with consultants regarding the efficiency of the lift and three possible companies were identified - Alimak (track and pinion); Elephante (rack and pinion) and Maspero (traction lift). There were very few manufacturers for the production of the type of lift required.

71 Following an in depth procurement study undertaken by Arup (consulting engineers) and Mowlem, they concluded that Maspero would be their preferred supplier for the external glass lift. Maspero are an Italian company who have provided lifts operating on mountains and cliffs which were of a similar nature to that envisaged for the Spinnaker Tower. Maspero were, and continue to be, a member of a drafting panel responsible for the highly specialised Inclined Lift part of the internationally recognised European Standard EN81 for inclined lifts.

72 On 19 February 2003 Mowlem Civil Engineering issued a formal order to Maspero for the work. At that time there was a need to appoint the external lift contractor at an early date so that construction information could be obtained. Mowlem could then know what embedments were required to be included within the concrete shaft, which was under construction at that time.

73 In June 2003 drawings of the proposed lift and embedments (for future fixings) were received from Maspero and incorporated into the tower.

74 The lift industry is “self-certifying”, but every manufacturer has to ensure that every safety feature of their lift after self-certification complies with EN81 and this has to be independently certified by a notified body. In December 2003 Maspero forwarded to Mowlem and the City Council fully detailed schedules including certificates from the notified body for each of the safety systems included in their design. At that stage there had been no doubt about the technical ability of Maspero – for example, all the information for the slip forming embedments had been provided on time and in a professional manner.

75 In 2004 periodic visits were made to the Italian plant to check on the quality of work.

76 In July 2004 Libero Maspero (the founder of the company) died and his son took control of the company. Subsequently further visits to the Italian plant were made to carry out technical reviews and inspection of the lift car and control systems whilst in production. By December 2004 the City Council’s Project Manager and Mowlem’s Project Manager had significant concerns about Maspero. Both considered Maspero required additional technical support in quality control. As a result Bureau Veritas (an internationally recognised quality management company) was appointed by Mowlem to test and check initially the welding on behalf of Mowlem and the City Council. A technical review of the lift car in its state of construction was also undertaken by Bureau Veritas (BV). As a result, in January 2005, Maspero agreed to address every technical issue identified at the time in an extensive written list

13

provided to them by the BV/ Mowlem/ City Council inspection team. At the time it was also expected the lift car would be delivered to Portsmouth in February 2005, although it eventually arrived on 2 March 2005.

77 David Greenhalgh told the Panel that, although there were delays between December 2004 and January 2005, completion of the lift car was not on the critical path and at that stage the late delivery of the lift was not delaying other parts of the project.

78 By the end of June 2005 Maspero had said it had completed to its own satisfaction the lift installation. Subsequent checking found that extensive issues needed to be addressed. As a result the City Council appointed a new external adviser (Dunbar and Boardman who were appointed through Halcrow). By July 2005 the City Council and Mowlem had a substantial team of technical experts in lift technology from Maspero, Halcrow, Bureau Veritas, Dunbar and Boardman and the prospective lift maintenance company Cotswold Lifts. In July 2005 a list of issues containing some 56 items affecting the external lift was developed. These were categorised A, B or C, with category A being “showstoppers” of which 27 had been identified. Those issues within categories B and C were related largely to durability and robustness.

79 During September 2005 continuous testing and commissioning of the lift was undertaken. On 5 October 2005 the first entrapment occurred at 80m due to the failure of the Bode brake compressor. Further tests were undertaken and there were further minor breakdowns including a breakdown on 18 October, the day the Tower opened. The Project Manager has advised that the failure of the lift on 18 October 2005 was caused by an unusual wind event. The north east wind had been at gale force, and pulled the overspeed governor rope out of its protection channel. This in turn caused the rope to become trapped as the car moved upwards, which dislodged the rope from its pulley and applied the emergency braking system. David Greenhalgh told the Panel that the issue of the north east wind had not been identified at a much earlier date due to it being very difficult to predict local wind effects around the Tower. Also during the period of testing and commissioning for the lift the wind at this strength had not been experienced from this direction.

80 With regard to the performance of Maspero against the original target dates written into their original subcontract in Feb 2003, David Greenhalgh told the Panel that he considered the dates were always unachievable due to Mowlem’s delays elsewhere on the project. The steelwork delay was the principal problem. During the early stages of Maspero’s involvement it was Mowlem who were unable to give Maspero an access date onto site and this was in effect delaying Maspero. Because the construction of the lift car was not on the critical path it did not delay the overall project - it only delayed Maspero’s part of the project. There was a large time period included within the contract for constructing and completing the external lift. Problems with completion of the lift car were encountered in July 2005 and became critical in the last eight weeks of the project during August and September 2005. David Greenhalgh has told the Panel that the key concern of PCC was whether the lift complied with EN81. Unfortunately Maspero’s view of what constituted compliance was often at variance from that of the combined technical team of Mowlem/PCC. Due to the problems of compliance, commissioning took two

14

months (rather than two weeks as originally envisaged). The Project Risk Register (Item C56) indicates a 15% probability that ‘the external lift testing does not comply with the employer’s requirements’

81 Maspero’s delay to the overall project of some 4-6 weeks has added financially to the project cost and might well have to be accommodated within Mowlem’s element of the pain-share mechanism.

82 There are ongoing discussions between Mowlem and the City Council’s project team regarding various aspects of the lift construction. Mowlem have however, agreed that the 12 months defects liability period will commence from the date the external lift is finally handed over to the City Council (currently thought to be in May 2006).

83 Mr Greenhalgh has told the Panel that in his experience it was not possible to carry out lift testing of the completed product until it was erected on site. The lift car did not come pre-assembled. A lift did not become a working lift until it was installed. David Greenhalgh explained that no trials had been carried out on the Kone internal lift before it was installed, and after installation it worked perfectly well. He has reiterated to the Panel that a lift was never an entity that can be tested until all the components had come together as one item.

84 The possible failure of the lift car to work properly had not been included within the Construction Risk Register. David Greenhalgh told the Panel that it was expected the lift would work when the lift car was installed. The Risk Register had focussed upon the effect on the construction project rather than operational issues. The failure of the safety critical systems including lifts was noted in the Operational Risk Register (Ops6) which was first produced in December 2003 and was jointly managed by PCC and Heritage. Future maintenance of the lift car is to be split between landlord maintenance and the tower operator. The Panel has been told that a future maintenance contract with performance indicators should enable costs to be identified and apportioned between each of the parties.

85 At some stages during the design of the lift there had been a lack of technical response from Maspero - for example when seeking information about emergency escape procedures. David Greenhalgh told the Panel that he had not experienced similar problems with the internal lift constructed by Kone.

86 The external lift forms an integral part of the entire tower as a tourist attraction and provides a secondary means of escape and a fire fighting lift. The finished product comprising lift car, control mechanism and associated equipment was not available for testing until brought together on site. The City Council has entered into an agreement with Heritage to operate and manage the facility, as agreed by the full Council on the 6 July 2004. At that time the anticipated opening date of the Tower was March 2005, an ideal time for an attraction of this nature. In April 2005 the Council approved the terms reflected within the proposed agreement to lease and subsequent lease. A number of potential handover dates had been mooted by Mowlem, none of which were achieved. By September 2005 Mowlem was suggesting that all works to the external lift should be completed by late September 2005 followed by handover in early October.

15

87 Heritage, in the lead up to the eventual handover and opening of the tower, whilst being committed to the project, was obviously concerned about the financial ramifications of delay and put forward various options, their preference being to be open in April 2006. In this respect, the full City Council on the 13 September 2005, considered and approved a report and agreed a financial arrangement. This involved the opening of the tower as soon as it was handed over whilst at the same time requiring the Council to meet the expected loss (estimated in the region of £200k-£250k) in the period October 2005-March 2006. Whilst the Council has been advised of the large number of visitors to the tower (far exceeding the predictions), the continuing unavailability of the external glass lift is considered by Heritage to have affected visitor numbers. Delays could add to construction costs and impact upon ongoing revenue costs of the operation. The life-time maintenance costs of the structure and the financial predications possible over the life of the operating lease were important in securing an operator. The life-time costs of the building are thus very important.

Mowlem’s Offer to complete the Tower Project by May 2005

88 In January 2005 Mowlem offered to complete tower construction by 31 May 2005 for a fixed price. This offer was rejected by the full City Council at a meeting on 22 February 2005 because Roger Ching and his team had no confidence that physical completion could be achieved by May 2005, nor did they believe the offer represented value for money. Their view was based on a number of factors including privileged advice from Currie and Brown (cost consultants), David Greenhalgh’s opinion as Project Manager and the effect that such an offer would have on the contract that was already in place between the City and Mowlem. The offer would have also meant that the City Council would have had to have effectively been “hands off” in terms of project management and control meaning a loss of control over the quality of the workmanship.

Safety Record

89 At the outset the Panel was advised that the safety record at the site has been excellent with no serious incidents reported. In the circumstances the Panel considered that it was not necessary to carry out any further enquiries, but simply to compliment all those involved in maintaining a high degree of safety given the difficulties of working within such an exposed and constrained site.

How Members were kept informed

90 The Panel has received evidence from Councillors Gerald Vernon-Jackson, Leader of the City Council, Steve Wemyss (Leader of the Conservative Group), Alistair Thompson (Deputy Leader of the Conservative Group), Simon Bosher (Conservative Group Secretary), Jim Patey (Labour Group Leader), and Roger Ching.

16

91 The Panel was told that weekly progress reports prepared by the Project Team were sent to group leaders and Executive Members, commencing in May 2003. The circulation list was extended to include Deputy Group Leaders from August 2004.

92 Previously, under the “rainbow alliance” that had existed from May 2002 until May 2003 there had been regular written reports but only to the relevant Executive Member (the member holding the Resources Portfolio).

93 From May 2003 informal meetings of the Executive took place on a weekly basis at which the progress reports were discussed with members. In addition open written reports to each formal Executive meeting were requested from July 2004 and indeed this request was largely fulfilled.

94 The present Leader of the Council continued from 2004 to have informal briefing meetings with the other two group leaders on a regular basis. The Tower featured very often on the list of topics discussed. These informal meetings stopped in the autumn of 2005.

95 Meetings between Mowlem directors and the three group leaders commenced in June 2004, which gave group leaders the opportunity to ask any questions they wished of the Mowlem team and on occasions when they were present the Heritage team as well.

96 Since October 2004 reports and presentations have been submitted to several Council meetings on various issues relating to the Spinnaker Tower project. At these meetings there has been the opportunity for members to ask questions of officers, external consultants and external lawyers. In this respect presentations were made to the Council in July 2004, November 2004 and September 2005.

97 Informal briefing sessions to all members of the Council have been arranged including one specific meeting held at the Tower to apprise members on the reasons for the lift failure and the action which was being taken to remedy the issue.

98 The weekly progress reports that were circulated were prepared on a “confidential” basis and were distributed accordingly to relevant members and officers, printed on orange paper. In evidence given to the Panel, Councillors Simon Bosher and Alistair Thompson both expressed the view that much of the information contained within the reports was not “confidential”. They expressed the view that everything surrounding the tower appeared to have been treated as confidential. They felt a view should have been taken as to what was truly financially or commercially sensitive and that which could have been released into the public domain without detriment. They also applied this view to separate group leader briefings which they had attended in the period between June 2005 and September 2005.

99 Whilst both Councillors Bosher and Thompson were kept informed, they have criticised the different ways in which information was provided to backbenchers and that provided to a group leader. They have expressed the view that greater use could have been made to disseminate information through the Members’ Information Service (MIS). Roger Ching reminded the

17

Panel that the open reports submitted on a regular basis to the Executive gave members of all political groups the opportunity to ask questions.

100 Councillor Jim Patey, the Leader of the Labour Group, told the Panel that at briefing meetings of group leaders he had been given information “on trust” and he had to accept the advice given. Although he received information, because of the trust in which it had been imparted, he was not able to pass that on to anyone else. He also said he had felt uncomfortable about not being able to pass on such information received in those circumstances. In respect of “orange paper reports”, Councillor Patey expressed the view that he felt the balance of information contained in those reports was about right.

101 Councillor Gerald Vernon-Jackson (Leader of the Council) gave evidence to the Panel in which he made clear that there had been considerable progress in the way information was disseminated since publication in March 2004 of the report of the Panel chaired by Councillor George Semmens. Briefings were now held and all key decisions were being taken by the Council. Compensation events were being reported to leading members, although it might have perhaps been better to have had wider circulation of the compensation event reports. So far as possible he had tried to ensure that group leaders were kept informed on issues and that there had been written reports, albeit on a confidential basis, on various matters. The Leader of the Council (and other Executive members) together with opposition leaders and their deputies had been given fortnightly written reports briefings, but these were discontinued, because, according to the Leader of the Council he felt they had served their usefulness and there had also been issues arising as a result of the leakage of confidential information.

102 In respect of the content of the reports, Roger Ching has made clear to the Panel that as Section 151 Officer1, he has statutory duty to protect the financial interests of taxpayers at large and information of a commercially confidential nature to the Council had been included on orange paper (to indicate its status as ‘confidential’). The commercial negotiations had been criticised. Leaking of information had made the negotiations more difficult and Mr Ching regarded the weekly progress reports as properly confidential so that trust could be maintained between the negotiating parties as they strove to secure agreement and progress. The District Auditor recently published a report on confidentiality in which he had been critical of the leaking of information and that it was a culture within Portsmouth City Council that should be stopped. If councillors were not able to keep information confidential then the District Auditor supported the withholding of such information until the last minute. Roger Ching has made clear to the Panel that the issue of confidentiality had affected how group leaders were kept informed, but that they were kept fully informed.

103 In respect of the delay in completing the Maspero external lift, the Leader of the Council told the Panel that the frustration with Maspero had been a “gradual turning of the dial”. He recalled that both the Project Manager and Mowlem had been clear about their frustration with Maspero from at least the

1 Section 151 of the Local Government Act 1972 requires a local authority to name one of its officers as having responsibility for the proper administration of the Council’s financial affairs.

18

spring of 2005. Councillor Patey has also told the Panel that he thought he had been told in the spring of 2005 that there were problems with the lift.

104 Councillor Bosher has told the Panel that on 20 July 2005 he and others met the Mowlem directors and reference had been made at that meeting to Maspero missing “every single completion date”.

105 Roger Ching told the Panel that it was only by August 2005 that “alarm bells rang” in respect of the lift not being ready to operate. This did not mean that the lift was not delayed, rather that such delays were not always on the critical path analysis.

106 In addition to the weekly (subsequently fortnightly) progress reports there were several meetings with group leaders and Mowlem. The point has been made to the Panel that there is a distinction between matters discussed at the Leader’s portfolio meeting, and informal meetings between group leaders. The informal meetings between group leaders continued until October 2005, and had now been temporarily suspended.

107 In respect of the offer (in January 2005) from Mowlem to complete the project in a given timescale (by May 2005), Councillor Patey has told the Panel that so far as he could recall he had been advised of Mowlem’s offer verbally. He did not recall the detail of figures that had been quoted and he could not recall the reasoning for the officers recommending against the offer. In further evidence to the Panel Roger Ching explained that the three group leaders had been given a written statement at an informal meeting, after which the statement had been collected in. The reasons for rejecting the offer included the fact that officers had no confidence in Mowlem’s ability to complete the Tower by the 31 May 2005, the offer did not represent value for money and it did not remove on-going financial risks.

108 Neither Councillor Jim Patey nor the late Councillor Andrew Storey (Conservative Group Leader from June 2004 until June 2005) had asked for a change in the arrangements or frequency in the briefing meetings that had been convened by the Leader of the Council. Councillor Patey told the Panel that so far as he was concerned both he and Councillor Storey had been happy to be called in and briefed as and when necessary.

Conclusions

109 Delays

a) The delay in part resulted from the late start to the project and other matters considered in the earlier (Semmens) report.

b) The main delay in the period under consideration resulted from the inability of Butterley to fabricate the steel sections to the timetable which they had originally agreed with Mowlem. The Panel considered this delay to be one which could not have been foreseen at the time since it related to internal arrangements within the Butterley company. In retrospect it could also be argued that too much reliance was placed upon Butterley’s statement that the company could deliver to time.

19

c) The delay produced by the failure of the external lift did not become critical until the Summer of 2005 and, although there had by that time been concerns raised as to the technical reliability of the company, the delay could not have been reasonably foreseen until the whole lift was assembled on site since that delay was the result of weakness in the total system rather than in any of its component parts.

110 Sub contracts

a) The pattern of contracting and sub-contracting was effectively set when the contract was signed and this removed selection and appointment from the responsibility of the Council yet maintained a formula whereby the “pain” of delay or non delivery would be shared between the main contractor and the Council. Mowlem, the main contractor, was responsible for the work of the sub-contractors.

b) The Council, its officers and advisers, while being aware of the process and able to comment (and reject), were not instrumental in the choice or appointment of sub-contractors.

111 Adherence to programme

a) The officers and advisers to the Council used the limited opportunities allowed within the contract to maintain the programme. In particular the panel noted that the project manager made strenuous efforts to streamline the relationship between Scott Wilson (designer) and Butterley (fabricator) in the production of structural steelwork. The project manager also visited Maspero, having perceived weaknesses in Maspero following the founder’s death.

b) The eight months delay in completing the structural steelwork clearly impacted on the project which in turn will have contributed to the delay in opening the tower with the consequent financial effect.

112 Concrete

a) The problems with the concrete were not of a serious nature and posed no threat to the integrity of the tower. The cause could not be firmly established.

b) The problems with the concrete caused no delay to the project.

113 The External Lift

a) The lift was a bespoke item. The finished product comprising lift car, winding gear, control mechanism and associated equipment was not available for testing until brought together on site. This placed the prestigious project at a significant disadvantage, given that the external lift is an integral part of the tower as a tourist attraction and provides a means of escape. Although the ‘technology’ being used has been

20

well tried and tested elsewhere the designers, manufacturers and those advising on the project should have been more alert to the potential for delay occasioned by any one or combination of circumstances, including the site specific localised wind effects given the exposed nature of the site.

b) The matters that caused problems to the external lift were not originally predicted in the Construction Risk Register.

114 The Role of Members

a) Members sought information, and efforts were made to apprise members of the progress and difficulties with the project. Officers were conscious of the commercial confidentiality of information and this led to concerns by some councillors that information was not being provided in a timely manner.

b) There is no evidence that the activities of members either did or could have caused or exacerbated delays to the project.

c) With regard to the offer by Mowlem to complete the tower construction by a given date, the Panel’s view is that declining the offer was the correct course of action, given that there were already delays in the progress with the project and a need to ensure the long term durability, appearance and functionality of the tower.

115 Project Management

a) The principles of Prince 2 Methodology were being applied to this project as recommended in the Semmens Report.

b) Both Roger Ching and David Greenhalgh told the Panel they consider that the City Council’s project management arrangements proved satisfactory. This is a view with which the Panel agree, albeit that the tower was completed later than originally anticipated.

116 Public Relations

a) It is unfortunate that the City Council could not have been more open at various stages of the project, but there was felt to be a need for leading members and officers to be conscious throughout of the various contractual positions and third party interests including those of Heritage, the then prospective tower operator.

b) The delay (of 10 months) between the issuing of the interim and the final concrete reports commissioned by Mowlem placed the Council in a weak public relations position.

c) The timing of public relations announcements regarding progress with the tower project was affected by the unauthorised disclosure of information and its release into the public domain.

21

117 Quality

The quality of the finished tower was not adversely compromised by the delays that occurred. The quality of the tower is exceedingly high and is a superb piece of engineering of which the City should be proud. The main contractor and the sub contractors worked hard to create an iconic structure. Some of the delays in the construction have enabled improvements to be made to the original design.

118 Lessons and Recommendations

1. When considering a high cost project a full appraisal should bemade of the “full life” cost of the project and not of the initial buildcost alone.

2. Contracts should contain provisions for greater incentives fortimely completion in addition to penalties for delay.

3. When using contracts such as the Engineering and ConstructionContract 2nd Edition Option C Target Contract with ActivitySchedule, the City Council should continue to ensure that specialemphasis should be given to:

a) the establishment of and the management of ongoing risk,b) the sharing of additional costs under partnering

arrangements,c) the management of compensation events,d) ensuring that every element of the product has ‘fitness for

purpose’ in addition to having been produced with‘reasonable skill and care’.

4. All projects should produce an ongoing risk register which shouldbe seen and monitored at regular intervals by members involvedin the oversight of the project.

5. Reports to members and client officers should be written in amanner which highlights and emphasises exceptions and delays.

6. In order to minimise the risk of leakage of commercially sensitiveinformation the procedures agreed by the Council on 17 January2006 in respect of the handling of such information must beadhered to.

7. The Council should always seek to provide the fullest possibleinformation on the progress (including any programme slippage)of a project.

8. In all contract negotiations the interest of Council tax payers mustbe paramount.

22

9. The Council should ensure that a risk register in respect of itsown interests is prepared and maintained for the on goingoperation of the Tower.

10. In order to ensure the minimum amount of "downtime" for the lift during opening hours, the Council should seek to ensure thatthose responsible have a suitable maintenance contract,including performance indicators.

11. The Council should continue to consider promoting and/orfunding high risk prestige projects in the future but onlyundertake them if the recommendations agreed by the CityCouncil in April 2004 in respect of project management,procurement and related issues are followed.

Signed……………………………… Councillor Hugh Mason, Chairman

Members of the Panel

……………………………………… ……………………………………

……………………………………… ……………………………………

………………………………………

JH/DMF 4 May 2006 M:\JH\MILLENNI\coun20060300rv9.doc

23

Spinnaker Tower Portsmouth

APPENDIX 1

SPINNAKER TOWER POLICY AND REVIEW PANEL

MEETING No. 4 -12th Jan 06

BRIEFING NOTE

BY

DAVID GREENHALGH – PROJECT MANAGER

ON

“THE USE OF SUBCONTRACTORS”

Author David Greenhalgh Doc Ref :- djg/5733/110106

Spinnaker Tower Portsmouth

1.0 Why use Sub-contractors?

All Main Contractors in the Construction Industry who undertake works of a General Nature only provide in house resources for skills that are common to most contracts on which they work. It is uneconomic for a large Contractor to maintain a skilled workforce that may not be 100% committed to projects. On this Contract Mowlem provided directly employed people for the following elements of the project.

• Project Management Staff • Cost Management Staff • Site, Safety and Environmental Management Staff • All Piling Works. • Some Pre-cast Concreting Works • Some Insitu Concreting Works • All Mechanical and Electrical Works • All Commissioning and Testing Works

Sub-Contractors undertake all other more specific tasks (which are not common to each project).

2.0 What is a Sub-contractor?

A Sub-Contractor is any body that undertakes work on behalf of the Main Contractor which the Main Contractor is Contracted to provide to the Employer.

There is a cascade of sub-contractors on any major contract with the sub-contractors in turn sub-contracting elements of their work for which they are unable to provide the relevant skills or materials in house. This continues down the line to the suppliers of the constituent items that form the work i.e Nuts and Bolts; steel plate; welding consumables etc.

The Generic Name for this Cascade is “The Supply Chain”.

“Supply Chain” Management is one of the key skills expected of a modern main Contractor.

3.0 What is the Contract Position on Sub-Contractors?

The Contractor is responsible for performing all subcontracted works as though the Main Contractor was undertaking it. The Contract applies as though the Subcontractors employees and equipment were the Main Contractors. There is no

Author David Greenhalgh Doc Ref :- djg/5733/110106

Spinnaker Tower Portsmouth

reduction of quality control or commitment to comply with the Employer’s Requirements if works are Subcontracted.

4.0 What is the Role of the Employer in Appointing a Sub-Contractor?

The Project Manager has a limited Role in approving sub-contractors with the only reason for not approving a particular contractor being: -

• The subcontractor will not allow the Main Contractor to Provide the Works (as described in the Employer’s Requirements).

• The terms of the Sub-Contract do not include a statement that the parties will act in a “spirit of mutual trust and cooperation”.

There are two approval stages in the procurement process required under the Contract. Please see and extract from the Project Execution Plan showing the latest flow chart for Procurement Management attached.

¾ Sub-Contract Short List (Tenderers) ¾ Final Sub-Contract terms and Conditions (Contract Data)

5.0 The Design Element of any Subcontract Works

The main Contractor will control the management of the Design process for elements of Design produced by a Subcontractor.

On this project we have introduced a number of job specific processes and procedures to enable this to be adequately managed.

Please see and extract from the Project Execution Plan showing the latest flow chart for Design Management attached.

Author David Greenhalgh Doc Ref :- djg/5733/110106

Portsmouth City Council Project Execution Plan

Printed 10/02/05 46 of 60

Portsmouth City Council Project Execution Plan

7 Design Management

7.1 Introduction The management of design is the responsibility of the Contractors Project Manager (MCE), who has appointed Scott Wilson (SWK) as lead design consultant.

The detailed design of the substructure had been substantially undertaken by Ove Arup but had not been completed due to a commercial dispute. SWK was then appointed to undertake the detailed design of the tower substructure and superstructure, accepting design responsibility for the existing Ove Arup designs. The interface between the Ove Arup and SWK design responsibilities is as defined in the close out agreement between Ove Arup, SWK and MCE.

SWK has also been retained to provide the role of “independent checker” for the project. This is included as an element of the subcontract duties of SWK acting as the main designer. The checking team is a fully independent team of engineers located remotely from the design team; their offices as are located in Basingstoke and London respectively.

7.2 Design Acceptance Process The Design Acceptance process can be found in appendix C. There are two sub processes which sit beneath this process and they are described in detail below.

It is important to stress that all parties involved in the project must endeavour to be as proactive as possible in positively resolving design issues. For everyone’s benefit, repetition must be avoided at all costs by addressing differences as soon as they occur.

For this reason, it has been agreed that design acceptance meetings are held weekly to address all current issues.

7.2.1 DAF System The process of design acceptance within the contract has been formalised through a Design Acceptance Form (DAF) system. This system allocates a unique number (DAF number) to each design submittal, be it a drawing, specification or schedule. Each DAF is responded to by the PM (PCC) and the Contractor within the Contract timescale for communications (14 calendar days).

Each DAF when submitted to the PM (PCC) for acceptance is commented on by the PM (PCC) were there are issues that affect;

• Aesthetics • Functionality • Maintainability • Durability • Deviations from the works information (not covered by DER)

The Contractor issues revisions of each design document using the same DAF reference number to allow the PM to close out his comments from the previous submission, these are categorised as follows:

• A-Z = this is used for preliminary revision drawings • C1-Cn = this is used for drawings issued for construction (IFC)

Printed 10/02/05 15 of 60

Portsmouth City Council Project Execution Plan

A DAF register is maintained by both the Employer and the Contractor and a review meeting is held fortnightly which is attended by the PM (PCC), the CDPM and the appropriate administrative support staff.

7.2.2 MAF System The Material Acceptance Form (MAF) system is a sub process which aims to clearly control the acceptance materials for inclusion in the works. This requires the Contractor to submit full technical details and samples were appropriate, of all principle materials (particularly finishes) that will be included in the works.

7.2.3 Acceptance of Design Categories Acceptance is graded by the PM (PCC) in order of its level of acceptability as follows:

• A = Accepted for construction with no comments • B = Accepted for construction subject to inclusion of comments • C = Resubmission required, construction should not proceed.

7.3 Method Statements The Contractor will identify all areas of construction where there are significant risks to either Health & Safety or the permanent works. Wherever these methods have an influence on GQML, Network Rail or Wightlink, the contractor will ensure copies of these method statements are submitted in adequate time to these bodies for review.

7.4 Deviation from Employers Requirements (DER) Process In principle the DER process is the method of managing change control within the works information. It is the Contractors formal responsibility to inform the Project Manager whenever there are inconsistencies, errors or omissions within the works information. Further to this, whenever the Contractors design deviates from the explicit requirements of the works information, the contractor needs to inform the Project Manager.

The Deviation from Employers Requirements process can be found in appendix C.

7.5 Defect Identification and Rectification Process The Defect Management Process can be found in appendix C.

7.6 Change Control

The Operator Change Control Process can be found in appendix C.

Printed 10/02/05 16 of 60

Portsmouth City Council 08/05/2006 Project Execution Plan

REVISED DESIGN ACCEPTANCE PROCESS 5.11.04

Yes

No No

No

Yes

No

Yes

Yes

No

Sub Consultants

Contractor Project Manager Building Control / Planning

Lead Designers

START

Complete Coordinated Design

Provide Detail Design Input

Accept Design

Revise Design

Accept Design

Log & Review DAF Submission

Produce DAF & Submit to PM

Receive Comments from PCC

Respond to PCC Comments

Provide MCE Response to PCC

Comments

Log & Review Response

Categorise Acceptbility of

Response on DAF Form (A,B,C only)

Receive Response from PCC

Sign DAF Cat A & update

Register

Notify Designer Design is Accepted

Prepare Construction & Building Control Submission Documents

Issue Construction Document with Signatures (Designer + Checker + MCE)

Are Changes Minor

Accept for Construction

Sign Document (with Caveats if any

PCC Comments remain relevant)

ISSUE FOR CONSTRUCTION

END

Recieve Design and Log

Accept Design

Revise Design

Consult with Planners

Develop the Building Control Package and Submit for Approval

Consult with Building Control where necessary

Building Regulation Approval Process

Site Use

Identify Site Modifications

Required to Design

Site Liason to Agree design Modifications

PM Agreement to all Changes Agreed with

Designer

Submit Details of all as-built information to

Designers

Produce AS-BUILT Documents

Include AS-BUILT documents in the Health and safety

File.

Building Regulation Approval

Portsmouth Spinnaker Tower Scrutiny Panel Dec 2005

Date Construction Activity Event Description and Timescale Jan-01 Mowlem Appointed on a 'Letter of Intent' Feb-01

Undertake Piling for the Raft to the Tower

Mowlem Set up their Site establishment and

wait for PCC to provide access to Site

Construct Slipform Concrete Shafts to the

Tower

Construct Structural Steelwork Bows, Ribs

and Spacers to the Tower

Construct Concrete Raft to the Tower

Mowlem/Arup Recommend Maspero after Elephante withdrew due to Liquidation. 24/06/02 Letter Ref: C5089/PCC/ap/0532 Arup Letter Re: External Lift 26/07/2002 Letter Ref: C5089/PCC/jn/0570

David Greenhalgh Appointed as PM and the Blake Lapthorne Report Issued Mowlem Contract Signed

PCC Accept Maspero and MCE Appoint Maspero for the External Lift 19/02/03 Letter Ref: C5089/PCC/ap/0783

The Steelwork Sub-Contractor Cimolai withdraws and MCE renegotiate with Butterley

Delayed Access to Site due to difficulties in Agreeing the Construction Interface Agreement with GQML

Alimak write to MCE/Arup stating they can not provide an external Lift to PCC'S Employer's Requirement's

Arup / MCE issue a Report to PCC on external Lifts giving three alternatives Maspero, Alimak and Elephante

Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02

Jun-02

Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03

Feb-03

Mar-03

Apr-03

May-03 Jun-03 Jul-03 Aug-03

Sep-03 The slipform Sub-Contractor Bierrums went into recievership 24.9.03. MCE had to finish their works

SEMMENS SCRUTINY REPORT ISSUED - START OF NEW SCRUTINY PERIOD

Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 Hollow Sounding Concrete Defects Identified by PCC in Stair Shaft

Libero Maspero (Founder of Maspero) dies and his son Andrea takes control Initial Concrete Report Issued

Concrete Defect letter leaked to press - Full Investigation by Independent experts -Press release issued stating No Problem further Invesigations being undertaken.

May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05

Final Concrete Report Issued

External Lift - MCE Appoint Bureau Veritas to assist on QA/QC - QA/QC Mtg Italy 27.1.05Feb-05

Complete the Installation of the

M&E, Lifts and Fit Out

Mar-05 Apr-05 May-05 Jun-05 Jul-05 Technical problems become apparent with the External Lift. PCC Appoint new

External Advisor. All advisors develop a list of issues including 27Aug-05 Sep-05 Oct-05 Tower Complete - Major failure of the external Lift on Opening Day 11th October Nov-05

Defects Rectification Period

Dec-05 External Lift to go back into Service

End of Defects Period

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06

Author:- David Greenhalgh - Project Manager 08/05/2006

Portsmouth Spinnaker Tower Scrutiny Panel Jan 2005 CONCRETE ISSUES TIMELINE

Date Construction Activity Doc Event Description and Timescale

Jan-01 Mowlem Appointed on a 'Letter of Intent' Feb-01

Undertake Piling for the Raft to the Tower

Mowlem Set up their Site establishment and wait for PCC to provide

access to Site

Construct Concrete Raft to the Tower

Construct Slipform Concrete Shafts to the

Tower

David Greenhalgh Appointed as PM and the Blake Lapthorne Report Issued Mowlem Contract Signed

Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Heavy frosts cause sections of the 2mm thk Sika Render to become debonded Jan-04 Feb-04 Mar-04 SEMMENS SCRUTINY REPORT ISSUED - START OF NEW SCRUTINY PERIOD Mar-04 On site QA/QC inspections by PCC identify Discontinuities in the Stairshaft Concrete

Apr-04 Scott Wilson (Designer) attends site and rights a letter to MCE on the concrete issue dated 5.4.04. MCE copy this letter to PCC. MCE / PCC commence investigations into this Concrete Quality issue.

May-04

Construct Structural

Unknown Person leaks the SW letter to "The News" and DJG issued a statement stating "Concrete quality problems are very common and occur on most projects and are being investigated via the normal QA/QC processes under the Contract". PCC/MCE agreed to mitigate press critism we must bring together an expert group to provide an independant view.

Jun-04

Steelwork Bows, Ribs and Spacers to the

Tower

25.6.04 - Joint Inspection of the Tower Discontinuities in the stair shaft by Concrete Experts from MCE,PCC, Scott Wilson, Mott MacDonald and the Concrete Society followed by a press release stating "The groups current view is that the issue appears to be superficial and does not give rise to any short or long term structural concern". A further tests, sampling and laboratory work was then undertaken as agreed by the above group..

Jul-04 16.7.04 - PCC recieve Interim Concrete Report from Mowlem. This report concluded " the issue is a superficial problem that does not effect the structural strength or the short or long term durability of the Tower". This conclusion was endorssed by the full Concrete Expert Team.

Aug-04 MCE Undertake External Render Repairs and assess extent of "Internal Discontinuity" by tap survey. 20.8.04 - The Interim Concrete Report was issued to all Members and the Press. Areas of Concrete Discontinuities in stairshaft broken out and repaired by propretary concrete repair product.

24.6.05 - Final Concrete Report issued to PCC by MCE stating "… there will be no adverse affet on either the structural integrity or the long term durability of the concrete."

A series of tests and trials were undertaken to try and identify the cause of the discontinuity and the most appropriate method of long term remediation particularly for the Lift shaft in which the lift was already installed. It was identified at an early stage that breaking out the effected area and repairing (as in the starshaft) was inpractical due to the potential damage to the installed lift equipment.

Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05

Complete the

Mar-05 Apr-05 May-05

Jun-05 Installation of the M&E, Lifts and Fit Out 30.6.05 - Final Concrete Report with letters of support from Scott Wilson; Mowlem Laboratory; Mott MacDonald

and the Concrete Society was issued to Members and the press. Jul-05

Defects Rectification Period

reenhalgh - Project Mana

Mechanical Anchors reccomended by the Fianl report were installed in the Lift shaft.

Tower Completed and Opened to the Public

Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06

Author:- David GOct-06 ger End of Defects Period 08/05/2006