Notice of the Ordinary meeting of

Nelson City Council

Te Kaunihera o Whakatū

 

Date:                      Thursday 22 September 2022

Time:                      9.00a.m.

Location:                 Council Chamber
Civic House
110 Trafalgar Street, Nelson

Note:       This meeting will reconvene on 27 September from @10.30a.m. to 12.30p.m., and on 29 September at 9.00a.m.

Supplementary Agenda

Rārangi take

Chairperson                           Her Worship the Mayor Rachel Reese

Deputy Mayor                        Cr Judene Edgar

Members                                Cr Yvonne Bowater

          Cr Trudie Brand

          Cr Mel Courtney

          Cr Kate Fulton

          Cr Matt Lawrey

          Cr Rohan O'Neill-Stevens

          Cr Brian McGurk

          Cr Gaile Noonan

          Cr Pete Rainey

          Cr Rachel Sanson

          Cr Tim Skinner

Quorum    7                                                                                 Pat Dougherty

Chief Executive

Nelson City Council Disclaimer

Please note that the contents of these Council and Committee agendas have yet to be considered by Council and officer recommendations may be altered or changed by the Council in the process of making the formal Council decision. For enquiries call (03) 5460436.


Nelson City Council

22 September 2022

 

 

Page No.

 

Karakia and Mihi Timatanga

28.     Pūtangitangi Greenmeadows Centre Project External Review 03 - 54

Document number M19850

Recommendation

That the Council

1.    Receives the report Pūtangitangi Greenmeadows Centre Project External Review (R27038) and its attachments (1016753008-157, 1016753008-225 and 1590798627-38); and

2.    Notes that the recommendations for improvements in the delivery of large vertical building projects will be considered by the Chief Executive, alongside improvements already implemented to date, to ensure that they are appropriately incorporated into standard Council practice for future projects of this nature.

 

 

 

 

 

 

                                                     

                                                     


 

Item 28: Pūtangitangi Greenmeadows Centre Project External Review

 

Council

22 September 2022

 

 

REPORT R27038

Pūtangitangi Greenmeadows Centre Project External Review

 

1.       Purpose of Report

1.1      To receive the Pūtangitangi Greenmeadows Centre Project Review findings report prepared by Klu’dup.

2.       Recommendation

 

That the Council

1.    Receives the report Pūtangitangi Greenmeadows Centre Project External Review (R27038) and its attachments (1016753008-157, 1016753008-225 and 1590798627-38); and

2.    Notes that the recommendations for improvements in the delivery of large vertical building projects will be considered by the Chief Executive, alongside improvements already implemented to date, to ensure that they are appropriately incorporated into standard Council practice for future projects of this nature.

 

 

3.       Background

3.1      The Pūtangitangi Greenmeadows Centre is a Council-owned community hub, located on the Greenmeadows Reserve in Stoke.  It is an attractive and well-built facility that is well utilised and enjoyed by the Stoke and wider Nelson community.

3.2      The construction project encountered significant challenges including delay, quality issues and some unbudgeted cost overruns.  Construction commenced in November 2016 and was not completed until May 2019.  Council approved an initial budget of $5.72 million for the project in the 2015-25 Long Term Plan.  Prior to commencement of construction Council agreed to scope changes, increasing the budget to $6.14 million.  During the construction project, Council agreed to further scope changes, increasing the budget to $7.349 million.  The final cost of the project was $8.041 million. The difference between the total approved budget and the final cost was $0.692 million, a cost overrun of 9.4%. 

3.3      The final cost of the project was as shown in the table below:

 

$

%

Initial Approved Budget (2015-2025 Long Term Plan, approved June 2015)

5,720,000.00

 

Scope changes

1,629,000.00

 

Final approved budget

7,349,000.00

 

Final cost (including unapproved)

8,041,437.82

 

Cost overrun

692,437.82

9.4%

 

3.4      On 9 August 2018, following significant public, elected member and media interest in the problems with the project, the Council passed the following resolutions:

That the Council

Confirms its trust and confidence in the Chief Executive, Pat Dougherty, to oversee all matters relating to the Greenmeadows project; and

Notes the Chief Executive’s support for an external review of the process by which it manages large capital projects, in particular the Greenmeadows Centre Project, to be commissioned at the appropriate time.

3.5      The external review could not be commenced until the conclusion of the project and any settlement process. 

3.6      On 14 November 2019, the Council appointed a Greenmeadows Working Party, comprising the Mayor, Cr Noonan, Cr Courtney and Mr Peters to liaise with the Chief Executive in relation to settlement matters.   Following a confidential mediation process Council entered into a settlement agreement with the principal parties to the project, subject to confidentiality obligations and an agreed media statement. The following agreed media statement was issued on 19 March 2021:

Nelson City Council has been in discussions with the principal parties to the Greenmeadows Centre construction project, following which Council’s concerns in relation to the project have been resolved to the Council’s satisfaction.

As a result, the sum of $340,000 will be paid to Council on behalf of the parties (without admission of liability).  The remaining details of the matter are confidential to the parties. 

3.7      Following conclusion of the mediation process, the Chief Executive, initiated the external review.  With the agreement of the Working Party, the Chief Executive appointed Ben Coman, of Coman Construction Limited, as an independent representative of the local construction industry to advise the Working Party on the external review process.

3.8      The Terms of Reference for the external review were finalised in March 2022, with the assistance of the Working Party and Mr Coman.  These Terms of Reference are attached as Attachment 1.  Information in paragraph 4.1.10 of the Terms of Reference has been redacted as it is subject to legal professional privilege.

3.9      The key objectives of the Terms of Reference are to seek independent reporting on:

3.9.1   What went wrong specifically with the Greenmeadows Centre Project;

3.9.2   Where Council processes could be improved to avoid (where possible) the same issues being encountered on future large building projects;

3.9.3   Whether Council’s internal reporting as principal during the project was appropriate from a project risk management perspective; and

3.9.4   Council building inspection reports and response to those reports.

3.10    Klu’dup, the Capital Intelligence division of RDT Pacific, was appointed to carry out the external review.  RDT Pacific’s expertise includes project management, quantity surveying, business case development, technical due diligence and project delivery system improvement for large scale construction projects for public and private sector clients.  

3.11    The external review commenced in March 2022 and the findings report was completed on 25 August 2022.  The review process included analysing a large volume of information that was provided on the project and conducting interviews with the Working Party and other Council officers or consultants with knowledge of the project.  The findings report is attached as Attachment 2.  Information on pages 18 and 22 of the findings report has been redacted, as it is subject to an obligation of confidence (being the terms of the settlement agreement). 

4.       Findings and Recommendations

4.1      The findings report makes numerous findings about the project and recommendations on improvements that could be made to Council processes for managing large vertical building projects, such as the Greenmeadows Centre.  These are summarised in section 5 of the findings report. 

4.2      The findings report notes that the recommendations are specific to vertical building projects and the report has not contemplated the more numerous horizontal infrastructure (such as civil and utilities) projects that Council undertakes most often.  The reviewers note that while some of their comments may be applicable to the latter projects, the industries, complexities and risks are quite different. 

4.3      The findings report also notes that the recommendations are based on “best practice” models that are designed to cover all situations.  It may be useful for Council to modify best practice to accommodate particular project characteristics and objectives, but this should be done in a considered manner and not because it is easier or more convenient.

4.4      The findings report also notes that following the challenges encountered on the Greenmeadows project, and prior to completion of this external review, Council has already implemented a number of changes in its approach to vertical building projects. 

4.5      The changes that Council has already implemented in its approach to vertical building projects include:

4.5.1   Delivery changes to the Infrastructure and Capital Projects teams to improve in-house resourcing of project delivery (vertical and horizontal);

4.5.2   Assigning appropriate contingencies at the relevant stage of the project cycle and reviewing the risk profile as the project progresses;

4.5.3   Understanding project risks up front better (for example asbestos) and undertaking more detailed up front assessments;

4.5.4   Non-price attribute advantages (up to 10%) for local contracting firms;

4.5.5   Increased due diligence on preferred tenderers, including for example google search of companies to check for any public record of litigation and credits checks;

4.5.6   Establishing the Tenders Subcommittee to provide increased governance oversight of procurement;

4.5.7   Improved processes for iwi engagement at all project stages.

4.6      An example of implementation of these changes in Council’s approach to vertical building projects is the Central Library Development Project.  This has included consideration of best practice delivery approaches, development of a detailed risk register, assigning appropriate contingencies and development of a project management and governance structure (including iwi representation on the Governance Reference Group and Project Control Group) as set out in Attachment 3. 

5.       Conclusion

5.1      The findings report provides a comprehensive and detailed external review of delivery of the Greenmeadows Centre project, including what went wrong and improvements that can be made to avoid (where possible) the same issues being encountered on future large vertical building projects. 

5.2      The Chief Executive will consider the Klu’dup recommendations, alongside improvements already implemented to date, to ensure that they are appropriately incorporated into standard Council practice for delivery of large vertical building projects. 

5.3      Authors of the Klu’dup findings report will attend the meeting to answer questions on their report.  

 

 

Author:          Pat Dougherty, Chief Executive

Attachments

Attachment 1:   1016753008-157 Final Terms of Reference Greenmeadows Project Independent Review redacted version

Attachment 2:   1016753008-225 Greenmeadows Centre Project Review Findings Report redacted version

Attachment 3:   1590798627-38 Central Library Development - Organisational Chart   


Item 28: Pūtangitangi Greenmeadows Centre Project External Review: Attachment 1

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Item 28: Pūtangitangi Greenmeadows Centre Project External Review: Attachment 2

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Item 28: Pūtangitangi Greenmeadows Centre Project External Review: Attachment 3

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