Monday, 8 December 2014

Knowle relocation project .................................................... What do you get for a £15m refurbishment? ....... part one

The District Council has insisted that '£15 million' would be needed to refurbish the current buildings at Knowle.

Back in July last year, it made this perfectly clear - although the notion of 'commercially sensitive' information 18 months on is still not clear and many of the 'decisions' made back then have changed somewhat.

Stakeholder Engagement Event 26 July 2013
Which of Honiton or Cranbrook is more central to people coming to visit the offices?
We shouldn’t get too focused on the geographic location of any new office because a) it isn’t decided yet and b) many customers deal with us online or by phone and many of our staff are already available across the district such as benefits, planning and Streetscene staff. However, we do need to keep in mind that the large bulk of the population of the district are in the Western half.
What about air conditioning for a new building, it’s not been mentioned but would surely add to costs?
There are no plans to have traditional air conditioning as the office would be cooled through natural ventilation. This is part of our aim to have a BREEAM Excellent rating for the new office.
Costs appear to be the driver for this project. How confident are you that the 20% contingency you have put aside will be enough to manage any overruns?
As we have made clear, keeping costs down for the District is a priority for the Council and office relocation is a part of that. We have taken professional advice and have visited other public sector and private organisations who’ve undertaken such moves to gain from their experience and they have all said that contingency is a normal and sensible practice. If you do the proper management and preparation upfront then you manage costs better in the long run. This means for instance being clear about your design, commitment to it and don’t keep changing it. We feel confident that if properly planned and managed the contingency should be more than adequate.
Did you consider the refurbishment of the more recent office block of the Knowle offices and demolition of the Victorian element for housing?
Yes, we did fully consider that option. The space available in the office extension blocks built in the 1970s and 1980s is insufficient to house all the staff, the mixed site approach is unlikely to be attractive to a developer and even these so called modern offices would require considerable sums to bring them up to scratch. Financially it doesn’t work.
In your office accommodation cost calculations did you include rental, interest and borrowing costs?
Yes. Purchase, rental and borrowing costs are all factored in.
Are these costs publicly available?
Not yet as they include commercially sensitive information. However we would like to publish at a time when the information is no longer sensitive. Just as we have done for the sale of Elizabeth Hall: once the figures were no longer deemed commercially sensitive we published them.
You identified a figure of £4.5 million figure is that the economic impact on Sidmouth?
No, that figure is not the economic impact on Sidmouth. We are estimating that there will be a £4.8million saving on annual running costs by moving to a new purpose built office of the appropriate size over a 20 year period, as compared to staying at the Knowle.
What is the estimated Capital Cost of a new build office?
It is not possible to be exact and any figures should be treated with caution. However, as a ball park figure something in the region of £6 - 8 million is not unreasonable, depending whether it is constructed to a BREEAM Very Good or Excellent Standard.
You have used a 20 year figure in your finance model but many Council’s use 45 years for payback for Council house buildings for example. Using that model the savings you will accrue are actually far higher than you have stated. In addition have you factored in the rising price of energy which again makes your cost savings probably an under-statement?
We have worked on a prudent cost model based on the period of time of a new office from new build to first refurbishment.  
Why have you boxed yourself into the £4.8 million in terms of what a new office can add to the organisation. There are a whole range of other benefits such as improved service delivery, new employment opportunities, and greater productivity. You shouldn’t underestimate these benefits.
Yes, you are quite right, there is a mix of non-financial benefits which we are considering and aim to achieve through new office accommodation.
If you chose the Cranbrook site for instance you would be providing a huge economic boost to the new town and providing additional employment for its 3,000 residents. This would help attract a range of other businesses which would then in turn produce more business rates and make your financial model even stronger.
Again, this is correct with regard to additional benefits but we have deliberately taken a conservative view on the financing.
Has the Council decided which stakeholders and issues have more weight, for instance what is the business driver for this decision saving money for taxpayers, better working conditions for staff or the wider economic benefit such as providing real help to small businesses?
We have tried to keep all our stakeholders in mind and we see this as a district wide issue. We would support further understanding of the economic impact on the location that we choose.
Please can you clarify the financial points as I can’t see how you get to the payback model? How is it cost effective to spend £6-8 million to save £189,000 a year?
We estimate £6 -8 million for a new build. We would have to pay £1.56 million just to do essential repairs to Knowle such as stopping the roof leaking. Bringing all the existing offices up to modern day standards would be in the region of £15 million and even part of the buildings would be many million. The capital receipt we would receive for part of the site would not even start to cover this.

East Devon District Council - Moving and Improving - Stakeholder Questions
EDDC revives plans to leave Sidmouth - News - Devon 24

Back in February this year, it made several things clear - including the £15 million price tag for refurbishment:


However, the District Council has been unable to provide much detail as to how the '£15 million' figure was arrived at:

From: Robin Fuller
Sent: Thursday, August 29, 2013 3:52 PM
To: mallen@eastdevon.gov.uk ; datkins@eastdevon.gov.uk ; rbloxham@eastdevon.gov.uk ; bbuxton@eastdevon.gov.uk ;sbond@eastdevon.gov.uk ; rboote@eastdevon.gov.uk ; pbowden@eastdevon.gov.uk ; pburrows@eastdevon.gov.uk ;dbutton@eastdevon.gov.uk ; gchamberlain@eastdevon.gov.uk ; dchapman@eastdevon.gov.uk ; mchapman@eastdevon.gov.uk ;ichubb@eastdevon.gov.uk ; tcope@eastdevon.gov.uk ; dcox@eastdevon.gov.uk ; dcustancebaker@eastdevon.gov.uk ;adent@eastdevon.gov.uk ; paul@diviani.net ; cdrew@eastdevon.gov.uk ; vduval-steer@eastdevon.gov.uk ;mgammell@eastdevon.gov.uk ; Sgazzard@eastdevon.gov.uk ; rgiles@eastdevon.gov.uk ; ggodbeer@eastdevon.gov.uk ;pgraham@eastdevon.gov.uk ; shall@eastdevon.gov.uk ; phalse@eastdevon.gov.uk ; thoward@eastdevon.gov.uk ;mhowe@eastdevon.gov.uk ; shughes@eastdevon.gov.uk ; dhull@eastdevon.gov.uk ; jhumphreys@eastdevon.gov.uk ;bingham@eastdevon.gov.uk ; jjeffery@eastdevon.gov.uk ; sjones@eastdevon.gov.uk ; skerridge@eastdevon.gov.uk ;dkey@eastdevon.gov.uk ; jknight@eastdevon.gov.uk ; amoulding@eastdevon.gov.uk ; fnewth@eastdevon.gov.uk ;joleary@eastdevon.gov.uk ; hparr@eastdevon.gov.uk ; gpook@eastdevon.gov.uk ; kpotter@eastdevon.gov.uk ;pskinner@eastdevon.gov.uk ; pstott@eastdevon.gov.uk ; psullivan@eastdevon.gov.uk ; btaylor@eastdevon.gov.uk ;ithomas@eastdevon.gov.uk ; gtroman@eastdevon.gov.uk ; ptwiss@eastdevon.gov.uk ; cwale@eastdevon.gov.uk ;mwilliamson@eastdevon.gov.uk ; twood@eastdevon.gov.uk ; ewragg@eastdevon.gov.uk ; swragg@eastdevon.gov.uk ;cwright@eastdevon.gov.uk ; twright@eastdevon.gov.uk

Subject: £2million-£4.6million to refurbish modern Knowle - Davis Langdon figures

East Devon District Councillors
Sidmouth Town Councillors

Four weeks ago I sent EDDC an assessment showing that they have 2,725 sqm of floorspace in modern, 30-35 year old offices at Knowle, 40% more than they claimed. That floorspace is nearly as much as EDDC intends in a new building. I argued that sale of the redundant older parts of Knowle would pay the costs of refurbishing the newer parts instead. However, EDDC loaded the estimated costs of refurbishing Knowle – £15million they said – by pricing refurbishment of the entire Knowle which has more than double the floorspace they will actually need (see ‘Knowle HQ move can’t be justified’, Sidmouth Herald, 16 August 2013).

EDDC have not replied to defend their figures; only to say that sale of the old Knowle would not cover the costs of upgrading and refurbishing the newer buildings. Since EDDC have seemingly failed to estimate the cost of refurbishing the modern offices, I have done so using data published by Davis Langdon, EDDC’s own consultants on ‘moving and improving’. They assess typical benefits and costs of office refurbishment: (http://www.davislangdon.com/upload/30297_Cost%20Model%20-%20Office%20Refurb_v2.pdf).

They state that benefits include: a better balance of risk and return; delivery 15‑70% quicker than new build; costs 10‑75% less than a new build; an opportunity to support new ways of working; a reduction in the carbon footprint; reduction of the overall environmental impact when compared to a new build.

Davis Langdon estimated costs to ‘remodel, medium refurbishment’ as £807-£1345 per sqm or to ‘renew, major refurbishment’ as £1345-£1883 per sqm (Central London prices, 2012;  south-west prices 89% of this). These costs are for a Category A fit-out – generally what a developer provides as rentable office space.

Using Davis Langdon’s figures, the refurbishment costs for the 2,725 sqm of modern offices at Knowle would be £2.0million-£3.3million to ‘remodel’ or £3.3million-£4.6million to ‘renew’ (at SW prices).

It is obvious that refurbishment of just those parts of Knowle needed by EDDC – mostly buildings 30‑35 years old – cannot possibly cost as much as the £15million quoted for all Knowle buildings, some over 200 years old. The likely costs, in the range £2.0million-£4.6million according to Davis Langdon, need to be properly focussed by pricing a downsized Knowle, using a sensible design brief – not one contrived to match EDDC’s prejudice in favour of moving. I still expect that costs could be met by the sale of unused parts of Knowle for redevelopment as flats.

Effective refurbishment could make the energy efficiency of the modern buildings at Knowle as good as new, and bring the standard of accommodation fully up to date. However, EDDC still wants to build a brand new headquarters costing £6.9million-£7.9million (excluding the price of the land). Building costs are double, perhaps triple, the likely costs of refurbishment.

It is our money which EDDC puts at risk. We already own the Knowle. The potential loss of that amenity without a tangible gain to the people is not ‘cost-neutral’ as EDDC claim. We accept that EDDC’s offices need updating. However, we are entitled to a fair assessment of the real options and the true costs of refurbishment at Knowle, before EDDC can consider using our assets and our money to buy themselves a new building.
Robin Fuller

Futures Forum: Knowle: refurbishment vs redevelopment

EDDC Relocation..reality check?

Last year I proposed that EDDC might refurbish the modern 1970s offices at Knowle, funded by selling the older buildings for conversion to flats (letters to all Councillors and to the Sidmouth Herald, July and August 2013). 

I was told by Cllr Twiss that there was insufficient space for that. I then measured the newer buildings from plans provided by EDDC. I showed that there is 40% more modern floorspace than EDDC had claimed, and an area adequate for their needs – EDDC have never given us any factual counter-evidence. 

I later found a publication by EDDC’s own consultants indicating that, typically, full refurbishment of the modern Knowle plus the council chamber should cost £2.0million-£3.3million to ‘remodel’ or £3.3million-£4.6million to gut and ‘renew’, not the £15million claimed by EDDC (the lower figures are still unchallenged by real, publicly released, EDDC data). 

The only contribution I got to this debate from Council Leader Diviani was a two-word email (16 August 2013, copied to all Councillors): ‘Fuller’s Folly’.

EDDC Relocation..reality check? | Save Our Sidmouth

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