Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 160-179)



  160. It says here that the Project Advisory Board met monthly which was "far more frequently than the Project Steering Group". What I am interested in is how far more infrequently did the Project Steering Group meet?
  (Sir William McKay) Eleven times over four years.

  161. Who was responsible for the Project Steering Group?
  (Sir William McKay) It was chaired by the Serjeant at Arms, and I think there was a Treasury observer and other members were, I think, the Deputy Serjeant, and the Director of Finance, Andrew Walker's predecessor.

  162. Do you not find it very surprising that it did not meet much more frequently, with a multi-million-pound building project? A monthly meeting would have seemed sensible.
  (Sir William McKay) I think, Chairman, at that point the management function was not rolling ahead as quickly as it was from 1998 when what might otherwise be described as brick was put upon brick, when we had real management decisions to take, real risks to assess.

  163. Paragraph 4.12 talks about the problems of the air conditioning last summer. This is on page 39. It says that in June 2001 very hot weather "required the use of portable air-conditioning units in some parts of the building." It goes on to say that the problems were resolved within five days. Does that mean that the portable air-conditioning units were withdrawn after five days?
  (Sir William McKay) I think it does, yes. A very close eye is being kept, and work is being done, on the bore hole which was at the bottom of this.

  164. You have a little man down there drilling it out?
  (Sir William McKay) Not constantly, but I am told Mr Makepeace has been down there.

  165. There was a photograph in the papers recently of rats, and if you put a control device on them you can make them go in any direction you want, so since you have so many rats, you could do that. A bit further down, in paragraph 4.13, it talks about the 7,500 defects which were logged. It says the survey is still under way, "The survey of defects in the exterior and the mechanical and electrical equipment is still under way." Where do we stand now on that?
  (Sir William McKay) There are 250 defects.

  166. Out of the 7,500?
  (Sir William McKay) Yes, which is one for every 1 million of investment. Considering that a lot of them are scratches or loose screws, and considering also the contractors have to come and do them and put things right or we stop their retention money—

  167. So you had a huge snag list basically and you have nearly got rid of them?
  (Sir William McKay) Yes.

  168. I had another question about value for money and it is to do with claiming money from contractors, or not paying them basically. At the top of page 31, paragraph 3.35, it is talking about the Northcroft Review and it says, "The review also concluded that the building would provide value for the House if: the building delivers a life span in excess of 120 years . . .", I do not suppose we will be around to find out, ". . . the promised lower costs of running and maintaining the building are achieved; and moneys due from London Underground and any defaulting contractors are recovered." Can you comment on the second and third there? "The promised lower costs of running and maintaining ... are achieved"?
  (Sir William McKay) As I have already said earlier this afternoon, Chairman, yes, this is a thing to which we are attaching a great deal of importance but it is complicated.

  169. Forgive me, I have been in and out of the meeting.
  (Sir William McKay) It is complicated by the fact that the figures are at the present moment unstable and, secondly, the users of the building can help a great deal in getting the costs down by the way they, for example, use the blinds.

  170. I see. That brings me neatly on to the air conditioning question. In the specification for air conditioning, was more emphasis put on innovative energy efficiency than functionality?
  (Sir William McKay) I think we shall see if we get the figures down to the two-thirds of standard expected figure, which we are promised by the design and designers.

  171. What about the moneys due from London Underground and any defaulting contractors?
  (Sir William McKay) As I said earlier, we took legal advice on the liquidated damages and it seems likely we will get from London Underground 750,000. On defaulting contractors?
  (Mr Makepeace) There are four contractors who have not completed their snags, and work is being done by somebody else and the money will be deducted from their retention money, so there are no defaulting contractors in the sense of this paragraph.

  172. I cannot resist asking about the trees. I do not know why, perhaps you are fated to have to answer lots of questions about this, but when I first picked up this Report and read it some weeks ago the very first sentence I read was in paragraph 3.43, "The supplier offered a second set of trees but, again, these were not suitable", which I took as an augury of what was to come, I must admit. When I read the rest of it, what struck me as odd was obviously they offered the second set because the first set were unsuitable, they were in poor condition, then we terminated the contract at the cost of 5,000 and we were contacted by another company who were offering to sell you fig trees. You talked to seven companies. You wanted Holm oak but apparently only one could supply Holm oak, except they had two goes at it and found they could not supply Holm oak. Why were you dealing with this company in the first place which seemed so unable to meet your requirements and then to whom you had to pay money when you terminated the contract? Why were you dealing with them in the first place? Was it not possible to establish their inability to supply quality Holm oak trees beforehand?
  (Mr Makepeace) Yes, it was possible. They showed us photographs of the things but they were not available when it came to our contract.

  173. You mean they said they were available and then they were not?
  (Mr Makepeace) Yes.

  174. So why did you have to pay them 5,000?
  (Mr Makepeace) For some of the work they had done. They had done some preparatory work for the design of the layout and the design of the containers in which the trees would go and we used their design work in the subsequent contracts.

  175. And these fig trees we have got there now—Those are fig trees, are they not?
  (Sir William McKay) Yes. Ficus nitida.

  Mr Bacon: Oh, I thought that was the name of the firm which supplied them! I did actually look at the footnote and thought that was an interesting name for a company.

  Mr Gardiner: The loss of the classics, I don't know!

Mr Bacon

  176. Mr Gardiner is quite right, but actually I did do Latin. I will move on swiftly. I wanted to ask you about the increase in conference rooms which is referred to in page 35, which resulted in extra costs of 1 million. I have a particular interest here because I understand that the main change was the increase in the number of conference rooms from rooms which were intended to be used by the Clerks Department. It is a shame, from my personal point of view, they were not intended to be used for Members, because although I think this is a tremendous building there are not enough rooms for all of us. Mr Osborne has now moved to the luxury of a large Gothic tower but, until recently, shared with me the Kafka-esque white tube known as the Upper Committee Corridor South, which has little rabbit hutches off it with no windows. I would have quite liked to have an air conditioned office, even if it is poor quality air conditioning. I do not see any immediate prospect of having one, and the prospect, it seems to me, from reading paragraph 4.3, has been reduced still further by the fact there was all this extra space which was turned into meeting rooms which was not originally planned as meeting rooms. Can you explain why and, in particular, why did it cost an extra 1 million? I would have thought large meeting rooms like this intrinsically ought to cost less than a whole series of small ones.
  (Mr Makepeace) The original design did not meet the brief. The brief required more meeting rooms than we were able to provide. Sir Michael came up with this proposal which put the meeting rooms in here and moved the Clerks Department to 7 Millbank. The additional costs came from such things as the extra catering facilities put on this first floor to serve these rooms, there was for the first time audio-visual facilities and the translation facilities; they were all added into the scheme at that stage.

  177. Just one more question about fees. Can I first direct this to the National Audit Office. On page 28, the column in blue at the top, where it says "Outturn", and then the figures are 141 million, and professional fees 32 million. It says that figure is the outturn figure, yet, if you look at the opposite page, paragraph 3.23, it says, "The estimated final outturn for professional fees is 40 million, or 32 million in 1992 prices." My question is, is that 32 in the blue column an outturn figure or is it a 1992 prices figure?
  (Mr Cavanagh) It is an outturn figure in 1992 prices. I beg your pardon, it is a 1992 actual.

  178. It says "outturn". I was speaking at an NAO seminar recently—I still have the little tag here actually. Earlier, it says, "Costs expressed in outturn cash prices, that is actual cash expenditure incurred." So if I see the word "outturn" am I not entitled to think that means actual cash expenditure incurred?
  (Mr Cavanagh) In this table it is being used in the sense of actual as opposed to estimate.

  179. The phrase I like to use is "cash out of the door". The 32 million in that column where it says "Outturn", that is not the same as page 23, "Actual cash expenditure incurred"? That is not strictly accurate, is it?
  (Mr Cavanagh) No, that is not cash out of the door, it is cash in 1992 prices.


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