Flood Risk Management Strategy

BOROUGH OF POOLE

Financial Services - Internal Audit

boroughofpoole.com

HEAD OF FINANCIAL SERVICES REQUESTED APPROVAL UNDER FINANCIAL REGULATIONS - INTERNAL AUDIT REVIEW

Value for Money demonstrated

Type of approval sought:

Service Unit Contract details:

Contract value / period:

Contract bud et confirmed Key Supporting Reason(s)

I Audit Opinion

Internal Audit Summa

Award contract to not the lowest tender

CS041)

Planning Regeneration

Poole flood risk management strategy £32,967 - completion Sept 09

I Appears reasonable

Chief Internal Auditor / Management Auditor:

Date:

30/06/07

Head of Financial Services comments

Acceptance of Other than Lowest Tender

Under Standing Order 41.

1.A tender for Poole Flood Risk Management Strategy was advertised in the local press, New Civil Engineer and the Supply2.gov website.

2.The estimated value of the contract is £90,000 - £120,000 for the

favoured option, to be completed by 30th September 2009.

6.10 firms returned a completed tender.

7.Tenders were opened on 29th May 2009.

8.The Tenders were evaluated on a Cost/Quality split of 60/40 by an assessment panel comprising officers from Planning and Regeneration Services, Leisure Services and the Environment Agency against the quality criteria listed below.

Prerequisites:

Full information supplied, including method statement and supplier questionnaire
Method statement demonstrates how key stages will be addressed
Submission demonstrates the necessary technical and professional skills
Satisfactory references.

Qualitative criteria:

Proven track record in flood management work
Skills needed to identify measures and cost these up
Clear understanding of legislative requirements and policy framework, including PPS 25 (Government policy on flood risk)
Demonstrates ability to deliver project on time and to budget

In the light of the above authority is requested under Standing Order 41 to award the contract to Royal Haskoning (with a quoted cost of £32,956.57 for the favoured option) as the firm achieving the highest combined cost/quality score.

Head of Planning and Regeneration Services - Stephen Thorne

Date ... 29th June 2009

~ Head of Finance - Liz Wilkinson.

Date 1/7/09

Portfolio Holder. ..Ron Parker ......

BOROUGH OF POOLE

MATTER FOR APPROVAL BY ECONOMY PORTFOLIO HOLDER AND HEAD OF FINANCIAL SERVICES

REPORT OF THE HEAD OF PLANNING AND REGENERATION SERVICES ON TENDER SELECTION FOR POOLE FLOOD RISK MANAGEMENT STRATEGY:

ACCEPTANCE OF OTHER THAN LOWEST TENDER UNDER STANDING ORDER 41

24TH JUNE 2009

1. Purpose of the Report

1.1 Under the provisions of Standing Order 41, the Head of Planning and

Regeneration Services seeks approval from the Portfolio Holder, on behalf of the Executive, and Head of Financial Services, to accept a tender which was not the lowest in terms of price. This follows a financial and qualitative assessment of the merits of the tenders submitted.

1.2 A separate form is presented to the executive parties which seeks a signature.

This report sets out the case as to why the tender in question is preferred despite the fact that it is not the lowest.

2. Recommendation

2.1 That the Head of Planning and Regeneration Services be authorised to accept

a bid other than the lowest for the Option 2 study (as set out in the project specification). The tenderer in question is Royal Haskoning, for the sum of £32,956.57 (for option 2) as set out in the tender submission.

3. Background

3.1 Tenders were invited, using the Council's competitive tendering process, to

carry out research needed to inform the Council's flood risk management strategy (FRMS). In summary, the FRMS represents the next stage of the Strategic Flood Risk Assessment in that its purposes will be:

to identify defences and means of escape needed to protect Poole from a 1 in 200 year flood event for development planned in the Core Strategy;
to cost up the delivery of such a scheme; and
to enable the Council to quantify the likely charge upon new development needed to deliver the flood management measures, the mechanism for which will be the emerging Infrastructure Development Plan Document.

3.2 Tenderers were invited to quote for two options:

Option 1: FRMS limited to the Town Centre area (Le. the only area in Poole at risk from coastal flooding where significant change is planned in the Core Strategy);
Option 2: Comprehensive assessment of flood management for all parts of Poole at risk of coastal flooding.

3.3 Ideally, Option 2 is the preferred option as it allows for creative solutions to be

considered which might be more effective than an option which is geographically limited to the Town Centre. It also assists the Council in looking for solutions for those parts of the Borough at risk from future sea level rises but which do not have significant development opportunities that otherwise could help to deliver such measures (as is the case in the regeneration area).

3.4 However, the option selected would come down to cost, as a significant

difference in quotes between the options might lead to the conclusion that the priority has to be to demonstrate that the Town Centre development can be achieved to ensure that the Core Strategy is deliverable.

3. Submissions

3.1 There was an encouraging response from consultants and 10 tenders were

received. Overall these were generally of good quality and, although the prices quoted varied significantly, they were competitively set and a good number were comfortably below our initial estimate of what the cost might be. Initial informal soundings with the Environment Agency suggested costs could be as high as £250,000, although this was assuming that there was not already a significant amount of evidence in place. In fact, Poole has already completed its Strategic Flood Risk Assessment (Levels 1 and 2), which has modelled the areas of flood risk - a significant piece of work in its own right. In addition, the Council, along with neighbouring authorities and the Environment Agency, has been preparing a Shoreline Management Plan for the wider Poole Bay area. Both of these pieces of work mean that a substantial amount of background evidence is already in place, and for this reason, there was a justified expectation that costs would be significantly below the initial Environment Agency estimate.

3.2 Following some informal soundings from consultants (without prejudice), there

seemed a possibility that costs might be around £40,000 for Option 1, rising to £90,000 for option 2. It should be noted, however, that these were based upon a telephone conversation and the consultants did not have sight of a project brief and also would not have been aware of the extent of the evidence already in place. The principal purpose of seeking an informal view from consultants was to gauge whether or not the project would exceed the OJEU limit (approximately £139,000), the triggering of which would require a different tendering route. Once the informal soundings were done, and bearing in mind that we are not starting from a baseline position in terms of evidence, it was possible to proceed with confidence that the project would be unlikely to exceed the EU trigger point.

3.3 For the purposes of tender opening, an estimated cost was provided for both

options 1 and 2, and a range was shown. This estimated the range for Option 1 to be £40,000 - £70,000, rising to £90,000 - £120,000 for Option 2. As can be seen from paragraph 3.2, the ranges start with a figure based upon the advice received in the informal soundings. This was used as the lower end of the range because, despite there being a degree of confidence that the

presence of existing evidence would help to keep costs relatively low, the project is not a standard piece of work for which costs can be easily anticipated until consultants have had a chance to fully consider what the brief is asking, and what information is already available. It was considered safer, therefore, to allow for a possibility that costs might exceed the estimates given in the informal soundings. As it happened, the bids received included quotes below the range in 8 of the 10 submissions for option 1 (although 3 of the 8 were very close to the £40,000 mark), and 9 out of 10 of the bids for Option 2.

3.4 It is important to note that the project brief set out details of the existing

available evidence to ensure tenderers were in a position to take this into account when estimating the cost of delivering the project. The fact that most quotes were below the estimate would indicate that this has had a bearing upon the quotes. It also provides some assurance that the brief provides a robust basis for tenderers to estimate the project costs.

3.5 This does not explain why the upper end quotes were significantly greater

than the cheapest ones. It seems apparent, however, that those companies quoting the lower prices tend to specialise in flood management and assessment work and so perhaps have a greater understanding, from their portfolio of experience, in this type of project. The most expensive quotes were generally from companies with a broader range of engineering and construction-related disciplines. Indeed, it is informative to note that one of the most expensive quotes for Option 2 provided the least amount of detail about how it intended to address the brief. In contrast, the cheaper quotes provided good method sta tements which made clear exactly how they intended to deliver the project. This would support the finding that the three top-ranked submissions, which were also the three cheapest quotes, actually had a better understanding of the brief than the more expensive ones.

3.6 Four of the ten submissions (for option 2) were under £40,000, three of which

were the top ranked overall. Bearing in mind that the qualitative criteria included a requirement to demonstrate the availability of the necessary staff resources and an understanding of the brief, this leads me to conclude that the tenderers quoting the lowest prices are in a very good position to understand the requirements of the project, and to efficiently manage its delivery to ensure their prices are competitive.

3.7 In the event, quotes ranged from £20,000-£58,645 for Option 1, rising to

£26,234-£94,218 for Option 2. The preferred choice identified through the quantitative/qualitative assessment is within the top 3 most competitively priced quotes (which also happen to be top 3 in the overall assessment of bids).

3.8 The top three bids ranged in price from £26,234 up to £32, 956.57 for Option 2

and, given that they were lower than the Option 1 quotes for 6 of the 7 remaining bids, these would appear to be highly competitively priced. This, combined with the distinct advantages of following a comprehensive route in terms of assessing the wider flood management of Poole, has led to my conclusion that the project be commissioned on the basis of Option 2. This is

also strongly favoured by the Environment Agency, who should be considered as a key stakeholder in development the FRMS if it is going to be sufficiently robust to survive examination by an independent inspector (as part of the Infrastructure DPD)

4. Assessment of Tenders

4.1 The FRMS Tender Appraisal Matrix sets out the considerations, scores and

weightings attached to the scores. This applies a 60/40 split between quality and price. In this way, the price is a significant consideration but is not the sole consideration as the quality of the submission and our confidence in the ability of the consultant to do the best job can be taken into account.

4.2 The relevant considerations are set out below:

Prerequisites

4.3 Prerequisites are factors which all tenders are expected to comply with. These

are not counted in terms of the scoring and ranking but, clearly, failure to meet them would count against submissions and could rule them out regardless of performance on the other elements.

4.4 It should be noted, however, that one of the prerequisites - the quality of

references - has only been scored for the top three submissions as these were the only ones for which references were sought. With the exception of the references, only one of the submissions failed to meet all of the prerequisites.

4.5 The prerequisites are as follows:

Full information supplied, including method statement and supplier

questionnaire

Method statement demonstrates how key stages will be addressed
Submission demonstrates the necessary technical and professional skills
Satisfactory references.

Qualitative scores

4.6 There are four qualitative criteria, scored between 1 and 5, where 5

demonstrates the criterion is met in full or exceeded, and 1 where the criterion is not met. Added together these make up a maximum of 20 points (ie 4 criteria x 5 points) and so the weighting multiplied to scores by 3 to make up 60 (i.e. 20 x 3 =60), leaving 40 for the cost scores (discussed below).

4.7 The four qualitative criteria are:

Proven track record in flood management work: this would take account of any evidence submitted of previous projects and their relevance

to Poole's work. .

Skills needed to identify measures and cost these up: the submissions would be expected to show a sufficient range of skills that would be applied to the project, including technical, policy and financial/costing skills.
Clear understanding of legislative requirements and policy framework, including PPS 25 (Government policy on flood risk): the method statement is expected to show a good understanding of the context for this work, together with the outcomes being sought. Detailed understanding of local issues and an ability to set this project within the wider Shoreline Management Plan are relevant considerations.
Demonstrates ability to deliver project on time and to budget: submissions would need to give some confidence that staff resources and project management capabilities are sufficient for the task.

Cost Scores

4.8 Cost bands were devised (10 in total) which covered the range of quotes

submitted, with the cheapest band attaining a maximum of 10 points, and the most expensive band getting only 1 point. These scores were then multiplied by 4 to achieve a maximum of 40, in accordance with the 60/40 quality/score split.

4.9 The scores derived from this approach have since been checked with Internal

Audit (Financial Services) to ensure that their assessment of the cost component of the tenders did not reveal a different outcome to that used, or indeed which might reasonably have been expected by tenderers. This has not altered the cost ranking of the preferred bidder.

Assessment procedure

4.10 A panel of professional assessors was assembled to consider the tender submissions against the appraisal matrix. The panel comprised:

Mike Garrity - Senior Planning Officer and FRMS project co-ordinator, Planning and Regeneration Services
James Gilfillan (BoP)- Senior Planning Officer (Development

Management), Planning and Regeneration Services

Dave Robson - Senior Engineer, Leisure Services
Malcolm Brushett - Environment Agency
Neil Watson - Environment Agency

4.11 In order to focus the assessment on the most competitive bids, the four most expensive were put to one side in the first instance. This enabled more detailed discussion and scoring to take place on the remaining six bids. Once these were scored and ranked, the four most expensive bids were then assessed to ensure that they were considered objectively and also to satisfy the panel that their qualitative merits would not bridge the cost disadvantage.

4.12 The top three bids also happened to be the cheapest of the 10 submissions.

This was not considered surprising as they were generally competitive on qualitative grounds too.

5. The Preferred Tender

5.1 The top three quotes were very competitive in terms of price and so this

served to reduce the relative significance of the cost of bids in favour of qualitative criteria. At the other end of the spectrum, the four most expensive quotes were between two and four times greater than the cheapest (based upon option 2) and so, for these, cost was the single most significant factor in ruling them out.

5.2 Turning to the preferred bidder, Royal Haskoning came in at £32,956.57

which, although behind two others in terms of cost, was able to demonstrate other advantages which have been considered to outweigh this. Moreover, given the complexity of the project, the quote is considered to be extremely good value.

5.3 If a quote is not the cheapest, it must demonstrate that it brings certain

qualitative values and benefits to the Council which overcome the cost advantages of competing bids. The selection panel's assessment, based upon the selection criteria, has shown this to be the case with the preferred tender. Each of the qualitative criteria will be considered in turn:

Proven track Record in Flood Management Work

5.4 Royal Haskoning has a well-established reputation nationally for undertaking

flood management work. The same is also true of a number of other bids (including Wallingford's Arup, Mott Macdonald, Scott Wilson and Gifford). However, like Wallingford (Poole SFRA consultants), Haskoning are in a stronger position to demonstrate a proven track record in the context of Poole in that they worked on the Shoreline Management Plan for Poole Bay and are currently reviewing the SMP. Not only does this give the Council assurances about the quality and reliability of Haskoning's work, it also means that there are compatibility advantages between the FRMS project and the wider Shoreline Management Plan. These factors were considered to weigh in favour of Haskoning's tender.

Skills needed to identify measures and cost these up

5.5 Haskoning's submission demonstrated a comprehensive array of skills. This

ranged from the technical, through the contextual/planning to costing up of works. This range was comparable with some other submissions, notably Weetwood, Arup and Scott Wilson, and Haskoning were considered to outperform the two closest contenders, whose undoubted technical skills were focused primarily upon technical expertise.

Clear understanding of legislative requirements and policy framework, including PPS25