Thursday, 26 August 2021 - Infocouncil

Finance and Performance Committee

MINUTES ATTACHMENTS

Date: Thursday 26 August 2021

Time: 9.30am

Venue: Council Chambers, Civic Offices,

53 Hereford Street, Christchurch

TABLE OF CONTENTS PAGE

12. Capital Project Performance Report - July 2021

A. Covid -19 Related Cost Variations .................................................................................................... 3

B. Supply Chain Risks and Issues .......................................................................................................... 4

Finance and Performance Committee

26 August 2021

Finance and Performance Committee 26 August 2021

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2 Projects in Construction before Covid-19 Alert Level 4

Current view of projects at risk of Covid-19 related cost variations

# projects

Current FY Forecast

($M's)

# projects

Current FY Forecast

($M's)

# projects

Current FY Forecast

($M's)

3 Waters and Waste 40 $70 4 $2 42 $18

Transport 16 $35 5 $4 38 $53

Community, Facilities, Parks, Rec & Sport*

18 $19 85 $11

Parakiore Recreation and Sport Centre 1 $60

TOTALS 75 $183 9 $5 165 $82

*Includes Naval Point and Ōtākaro-Avon River Corridor (OARC) which have construction commitments

Projects at High Risk are where the projects are under contract, contractors have mobilised on site, and bulk of construction works werebeing undertaken when the country entered Alert Level 4.

High Risk Medium Risk Low Risk


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Supply Chain Risks and Issues

The following risk has been added to the ELT risk register.

Construction Price Escalation and Supply Chain Delays

Over the last year global steel prices have continued to rise due to a significant escalation in raw material costs. In addition, transport and logistics costs have also been under pressure leading to higher container, shipping and other freight charges.

The ongoing impact of COVID-19 outbreaks and the resulting emergency measures on international trade are unknown.

Mitigation

Mitigations for this risk have been identified including:

Early procurement and subcontract package tendering in order that price and quantities can be locked in; and

Leverage of existing supply chains,

Selection of materials that avoid fluctuations, including local material selection.

Capital Project - Current Reported Risks and Issues

This document provides the current reported risks and issues on Capital projects relating to construction price escalation and supply chain delays.

Risks, Issues and mitigations at a procurement level, and the wider industry level will be reported through the Procurement report.

At a summary level, other mitigations (in addition to those identified in the ELT risk above) used by projects are as follows;

- Early purchase of materials, - Procuring steel early and passing it to the main contractor, - Early visibility of the Council forward works provided to the contractor market, - Encourage Contractors to fully consider their supply chain when preparing a tender response - identifying how

they will manage the supply chain as well as lead in times for supplies.

Note

This is an initial view of risks and issues only.

This is under development and not yet exhaustive.

Further work is underway with Planning and Delivery Leads in conjunction with Project Managers to identify the full risk and issue profile across Capital Projects.

Future Capital Project Performance Reports will provide updates to this paper.


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Transport

CPMS ID Project PM Risk/Issue Detail Mitigation/Action

61843 Coastal Pathway Dave King Risk Stainless Steel Balustrades Streetlights

Contractor to place order at tender award. For streetlights, can substitute older lights in interim if there are delays.

12692 Belfast Park Cycle & Pedestrian Rail Crossing

Georgina Sandilands Risk Unknown value for the supply of raw materials for works on the rail corridor. Manufacturing cost escalation and delays Shipping cost escalation and delays.

Review at scheme design completion and estimation stage. CCC will continue to work with Kiwirail around supply issues to understand any impacts on prices and supply chain timelines.

18378 Lichfield Street (Manchester – Madras)

Neil Gillon Risk Steel for manufacture of light or tram poles Complete design early to enable early order supply of the materials. This may not mitigate the risk of a high price but will mitigate the risk of time delay. There is no indication of delay in these materials at present.

18342 High Street (Cashel to Tuam)

Lindsay White Issue Material Shipping Ordering supplies from Europe early, and then having the installation of those components moved to the end of the contract works.

57717 Oxford Terrace Bollards

Lindsay White Issue Material Shipping - ship got stuck in the Suez Canal, and the flow on effect of this was a delay to ensure the works were done at a time that suited the Tram company. The original plan was to install in January, this got moved to May, and then July.

Ongoing communication and monitoring.


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3 Waters

Additional projects are likely to be added to the below table, information is being collated relating to Stormwater, Wastewater and Water Supply.


Multiple Multiple Multiple Risk/Issue Purchase of Electrical, Instrumentation and Control equipment (EIC) where these are sourced from overseas.

Purchase equipment in advance of the projects scheduled for delivery. This may need to continue to FY23 if supply market constraints continue.

Multiple Multiple Multiple Risk/Issue Pipes and associated fittings Pipe suppliers are made aware of Councils forward work programme so that they can reserve stock appropriately.

Multiple Multiple Multiple Risk

Shipping delays - bespoke fabricated mechanical equipment including gearboxes, fluid couplings, diesel engines, new bearings, shafts and flight extensions.

No current impacts. Programme is being planned with consideration of the prevailing logistic environment in mind.

62350 WS Smart Water Monitoring System

Irmana Garcia Sampedro Risk

Lead time to manufacture and deliver sensors is on average three months - This time is lately being extended due to global pandemic. It can take about six months from time of placing order a sensor until delivery. Sensors include: smart residential water meter, flowmeters, acoustic and transient sensors.

Plan and order devices well in advance.

63671

Stormwater - Cashmere Stream Control Structure Gate

Jo Golden Issue

Stainless steel increased cost Minor impact to project ($2k)

Actuator and Gate Lead Times Will be installed during defects liability period.

32243 Stormwater – Eastman Wetlands Mark Penrice Risk Actuator and Gate Lead Times Ordering early to reduce the risk of delay

40237 Stormwater – Wigram Mark Penrice Risk Actuator and Gate Lead Times Ordering early to reduce the risk of delay


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Community


42147 Delivery Package - Planned Monuments & Artworks Renewals

Jo Grigg Issue Shipping of glass has delayed Peveral Street Fountain mural. Being monitored.

52317 Cowles Stadium Building Renewals Albert Smit Issue

Delay in shipping of the coils (roof sheeting material) to New Zealand. Australian Roof Sheet supplier and is required on site - requires MIQ spot or travel bubble to be reopened.

Work to be completed after the winter due to risk in working on roofs in the rain season. Travel bubble monitored, MIQ if required and possible.

16130 Citizens War Memorial Jo Grigg Risk Portland (UK) Stone - 16 week lead time

Early condition assessment of the stone during deconstruction completed to ensure the order is placed urgently. Additional stone has also been ordered for contingency.

58672 Ōtākaro Avon River Corridor Kent Summerfield

Issue Steel Structure Items – prices and shipping – half of the steel has arrived.

Resolved – amended the design to utilise alternative steel available in Australia.

Risk Low risk due to the nature of the work. Material supply from overseas

Early planning Early ordering of material Alternate model substituted where available Local sourcing of product

54276 Diamond Harbour Wharf Renewal Olivia Heaslip Risk

Floating pontoon suppliers are very busy and fully booked for approx. six months.

Complete existing wharf works prior to pontoon installation. Main contractor to provide programme with tender submission.

Composite decking material - 14 week lead time.

Procure material prior to contract being awarded and novate to contract.


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Hardwood timber beams availability - we do not know quantity required until we remove the deck and can observe the condition of each beam.

Investigate purchasing hardwood prior to engaging contractor and novate to contract (purchase maximum required and request a refund on those not used). Currently discussing options with suppliers. Consider removing small section of deck to gauge condition of beams.

To come Parks Nursery Building Renewal

Steel availability (12-13 weeks) Locally sourced timber (3-5 weeks longer) Irrigation Valves (4-5 weeks, usually 2-3 days)

To come

Playgrounds - Multiple

Stainless Steel Slides (steel supply and powder coating) – no firm delivery date provided Play equipment components

Ongoing communications. Manufacturing in NZ however some components are still imported.

Major Facilities


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Hornby Library, Customer Services & South West Leisure Centre

Peter MacGibbon Issue

Steel supply has a 5 to 6 month lead time.

Sub-contractors seem to have shortened their price validity periods due to supply uncertainty and price volatility.

All overseas supplied materials have significant programme uncertainty around supply and shipping.

Council have ordered steel for the piles however shipping is now an issue and could delay the start on site.

The tender evaluation team has been flexible with sub-contractor pricing and escalation.

The contract is flexible in allowing off-site materials payments.


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Bonds cannot be obtained on some off-shore materials where large payments are required to secure supply.

Quantitative Risk Analyses have been used to ensure contingencies are appropriate considering the current unusual programme and cost risks.

64048 Performing Arts Precinct

Peter MacGibbon Risk All overseas material supply has higher than usual programme risk.

Pricing volatility.

Currently undertaking detailed design. Greater detail than usual is being included in the programme to allow analysis of lead times and consideration of Council ordering materials.

Higher than usual escalation allowances are included in the cost estimates.

1026 Canterbury Multi Use Arena

Mark Noonan Risk

Risk Workshop is planned for Thursday 19th August.

Items which have been mentioned by BESIX Watpac to date follow:

Concrete supply (market capability for large pours)

Crane availability (700 tonne) Possible issues only - monitoring

Structural steel

ETFE roofing/cladding

Indenting larger structural steel members and early contractor engagement

Early subcontractor engagement for roofing/cladding

1017 Parakiore Recreation and Sports Centre (Metro Sport Facility)

Ōtākaro Nil

Mark Noonan (CCC Project Director) notes that Ōtākaro has not raised any specific supply chain risks or issues on the project.

It is anticipated there will be supply chain risks in relation to materials as experienced at Te Pou Linwood Pool.


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IT


2203

IT Equipment Infrastructure & Device Replacements & Renewals

Jason Boyte Issue Delay in specialised hardware

e.g. 2 in 1 devices were a 5-6 week wait now 3-4 months

To come

Thursday, 26 August 2021 - Infocouncil

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