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Grenfell Tower Inquiry diary week 13: ‘Value for money is to be regarded as the key driver for the project’

Insight09.10.201.00 PM by Peter Apps

With consultants to Kensington and Chelsea Tenant Management Organisation (KCTMO) giving evidence, attention at the Grenfell Tower Inquiry turned for the first time to the actions of the TMO and the council. Pete Apps reports.

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Grenfell Tower Inquiry diary week 13: ‘Value for money is to be regarded as the key driver for the project’ #UKHousing #GrenfellInquiry

With consultants to Kensington and Chelsea Tenant Management Organisation (KCTMO) giving evidence, attention at the #GrenfellInquiry turned for the first time to the actions of the TMO and the council #UKHousing

What was Artelia’s role?

Artelia was engaged as the consultant advising KCTMO on its management of the refurbishment.

It is not unusual for social housing managers to bring in expert advisors to help them navigate a tricky construction project. That is what Artelia was paid to do – ensure KCTMO got good value from the contractors it was bringing in and help manage the work so it was completed on time and in budget.

So what did we learn from Artelia’s evidence?

Council accused TMO of ‘promising things it wasn’t structured to deliver’ during Grenfell refurbishment

Grenfell residents branded ‘antagonists’ by KCTMO employee after requesting details of refurbishment

Grenfell Tower Inquiry diary week 12: ‘Would you accept that was a serious failing on your part?’

KCTMO ‘strong-armed’ consultant into removing criticism of its management of Grenfell refurbishment

‘Value for money is to be regarded as the key driver for the project’

A crucial aspect surrounded a review of the project in spring 2013. At this point, the work was stalling.

Leadbitter – the firm that was building a school and leisure centre next to the tower – had also been engaged to conduct Grenfell’s refurbishment, but things were not going well.

Leadbitter and Artelia were negotiating the cost of the work, with Leadbitter valuing it at more than £10m – £1.2m more than Artelia’s estimate, which was itself still substantially more than KCTMO’s budget of £8.5m.

Laura Johnson, director of housing at the Royal Borough of Kensington and Chelsea (RBKC), had exchanged testy emails with Leadbitter, describing the situation as “far from satisfactory”, refusing to put up more money and threatening to find a new contractor.

Artelia was asked to advise on the way forward. It said the delay was related to multiple failures, including the development of the plans in a “piecemeal” fashion and the “absence of a controlled and managed scope”.

But the firm recommended against taking Leadbitter off the project, saying this would “incur additional time and expense” without any guarantee that a replacement could do better.

Instead, the scheme should be stopped and revised. “Unless the project, in its current guise, is stopped and a review embarked upon to redefine the scope, programme and cost, it will fail,” the firm wrote.

Simon Cash gives evidence to the inquiry (picture: Grenfell Tower Inquiry)

“In essence, is this right, Mr Cash? The real problem here was that the TMO simply couldn’t afford the project as designed within the existing budget?” counsel to the inquiry Richard Millett QC asked Simon Cash (pictured), project director at Artelia.

“Correct,” he replied.

But this advice was not acted upon. According to an email, Ms Johnson overruled Peter Maddison, who was leading the project for the TMO. Getting the project done quickly was no longer the priority – value for money would be.

“She had effectively told him that what she wanted would basically take precedence over what Peter Maddison was trying to achieve, and as, I suppose, the major funder for the project… he obviously had to take cognisance of what she was saying,” explained Mr Cash.

From now on, the project would put ‘value for money’ – or cost-saving – at its heart and Leadbitter would be replaced with another contractor appointed through a tender.

In a project meeting, it was noted that “value for money is now the primary driver for the project”.

“Was that a polite way of saying that RBKC and TMO were now interested in doing the works as cheaply as possible, even if that took longer?” Kate Grange QC, the inquiry’s other counsel, asked a later witness, project manager Philip Booth.

“There’s three primary drivers in projects: price, quality and time. Which one’s the most important to you will… help you make decisions,” he replied. “It doesn’t mean you throw the others out, but, yes, if you want to bring the price down, then it might take a bit longer, and that’s what’s being requested here.”

‘So you were basically strong-armed into making these changes?’

As a result of the refocusing on value for money, Artelia rewrote its report, removing the recommendation to stick with Leadbitter.

Mr Cash and Mr Booth explained that as it was no longer important to stick to a tight timescale, it was now worth pursuing the opportunity to drive the cost down through open tendering.

But that was not all that changed in the report – references to the TMO’s poor management were also removed.

In an email to Mr Maddison, Mr Cash wrote: “I have taken on board your comments and reworded sections to read in a better light.”

“He wanted you to produce a report that was less critical of the TMO?” asked Mr Millett.

“Peter Maddison and I had had a particularly strong conversation about the changes that had to be made. He was being very persistent and put a lot of pressure on us to make those changes,” explained Mr Cash. “I was quite resistant because I felt that it was a true reflection of what had happened on the project, but at the same time, this was a report that Peter Maddison was looking to present to his board… if we didn’t make the changes, then the report wouldn’t be presented to the board and therefore no decision would be made.”

“So you were basically strong-armed into making these changes?” asked Mr Millett.

“Yes,” replied Mr Cash.

‘The informal information that Rydon were in pole position was irregular and improper, yes?’

Leadbitter was then dropped from the project and attention turned to securing a new contractor.

A notice was published in the Official Journal of the European Union in August 2013. Five contractors returned ‘pre-qualification questionnaires’ answering questions about their suitability to do the job, which were then scored.

Rydon came flat last – scoring 51 points out of 100. Another bidder, Mullaley, was awarded 69.5.

But this was just the pre-qualification check, not the formal bid,. When Rydon submitted its bid, it quoted £9.2m, while its two competitors, Durkan and Mullaley, offered £9.94m and £9.89m respectively.

“What did they miss?” Mr Cash wrote in an email. He dismissed this as a “light-hearted quip”.

The bids were scored 60% on potential quality and 40% on price.

The tendering process continued through to April, when Rydon was formally notified it was the preferred bidder.

But low as Rydon’s bid had been, it was not low enough for the TMO, which had a budget of £8.5m. In discussion with the TMO, Mr Cash suggested “an offline discussion” with the preferred contractor to explain that the price would have to come down further.

Asked if this shocked him, Mr Cash said: “Well, yes, I wouldn’t expect that of an organisation [like] the TMO”

The problem was the opportunity to offer further cost savings should have been given to the other bidders as well. Why were they not approached?

“We felt that the difference between the tenderers in terms of what had already been evaluated was such that there was only really one player in the process now,” said Mr Cash.

He felt Rydon should have been notified that cost reductions were necessary, but detailed discussions about them should not have been entered into until the formal legal process concluded. He said that he was not “entirely comfortable” with this, but added again that he felt “put under pressure” by the TMO to agree.

However, the TMO went further still, asking Rydon to try to find £800,000 of savings before being formally awarded the contract. Asked if this shocked him, Mr Cash said: “Well, yes, I wouldn’t expect that of an organisation [like] the TMO.”

Another email showed the TMO had given Rydon a tip-off that it was “in pole position – ours to lose”. Mr Cash said this could have “voided” the tender process.

“So the informal information that Rydon were in pole position, ‘ours to lose’, was irregular and improper, yes?” asked Mr Millett.

“Yes,” replied Mr Cash.

‘They were very much about, “Do we need this role? You know, it’s 30 grand” or whatever it was’

Another revelation this week was that the TMO declined the services of a client design advisor (CDA) to reduce its expenditure on the project.

This advisor would have been Richmal Hardinge, an architect with 15 years’ experience, who could have overseen the design process and reviewed the drawings for compliance with “British and European standards”. But the TMO did not want to make this appointment. Instead, it opted to take on this responsibility in-house.

“The TMO’s budget, as you can clearly see, was a consideration on this project and they didn’t want to incur the additional fees,” he said.

“Did they expressly say that to you: ‘We don’t want to incur the additional fees?’’’ asked Ms Grange.

“Well, yes, they were very much about, ‘Do we need this role? You know, it’s 30 grand’ or whatever it was,” said Mr Booth.

He added: “I think she was reassured that there were specialist cladding designers coming in and there were warranties which related to the products. I said: ‘Yes, but you will still need to sign it off.’”

An email from Claire Williams, project manager at KCTMO, said she believed the design advisor would not “particularly apply to cladding” as this was “designed and under guarantee”.

But Mr Booth said this contradicted the advice he gave her: “I was saying that while you might know social housing and what the right thing is for a kitchen, a CDA will be able to do everything; otherwise, you will have to do it yourself.”

Asked to what extent cost-saving drove this decision, he said: “It certainly was a consideration, but it wasn’t the only part. They genuinely believed they could do the job themselves and were best placed to do it.”

Mr Booth also said that in hindsight, he may have pushed harder for KCTMO to reverse this decision as the project developed. “Maybe Richmal may have picked up some of the issues that have gone on.”

As we have seen, there were multiple, serious ways in which the deadly cladding designs did not comply with regulations or guidance.

‘This was shoddy, this was clumsy, this was frustrating’

Towards the end of the project, the relationship between Artelia and Rydon declined severely, with Artelia increasingly critical of Rydon’s performance.

This largely came to the fore when Neil Reed (pictured), head of project delivery at Artelia, joined the project to ensure it concluded smoothly. He quickly became frustrated with Rydon’s failure to stick to the agreed programme and made his thoughts known in some strongly worded emails.

He said he believed there was an “inadequate workforce on site” to install the cladding – just seven workers. In another email he called Rydon’s management “shoddy” and said the firm was “apathetic to our efforts to help”.

Asked to explain these comments, he said clerk of works inspectors were arriving for scheduled inspections to find work wasn’t ready and previous observations had not been addressed.

This frustration with Rydon continued to the point where he drafted a formal complaint in March 2016. He said this was a step he had “never had to take before”

“So this was shoddy, this was clumsy, this was frustrating,” he said.

This frustration with Rydon continued to the point where he drafted a formal complaint in March 2016. He said this was a step he had “never had to take before”.

He originally wrote in the complaint: “Our biggest issue remains what appears an extremely lacklustre approach to completing the project with no real sense of urgency, willingness nor commitment from the Rydon team.

“It just doesn’t feel like this project is important to Rydon or that you have grasped what success will look like for the client in May [when the project was due to end].”

However, Mr Reed said the latter paragraph was eventually removed from the complaint because the TMO believed it was “a little emotive”.

‘Claire considers Artelia’s efforts in this regard appalling’

Artelia was also the project’s construction, design and management (CDM) co-ordinator, which involved collating documents relevant to the health and safety features of the building into a health and safety file.

This role was governed by EU regulations and midway through the project, these regulations changed – rather than a CDM co-ordinator, the file now had to be compiled by a principal designer.

A long process of trying to appoint a principal designer ensued. This ultimately resulted in TMO deciding to take on the role itself after unsuccessfully asking Rydon to do it.

Artelia sought to hand the health and safety file over to the TMO, but the file was missing key documents and drawings. Some of these related directly to the cladding system, such as product specifications and certifications.

“With the greatest of respect, I don’t think this can be dumped on the client like this,” Mr Booth wrote in an internal email.

After a missed handover, the TMO lost its patience.

“Despite all the effort to ensure a smooth transition re CDM Claire considers Artelia’s efforts in this regard appalling,” Mr Reed wrote. “Andrew and I were quite embarrassed by the lack of professional closure.”

The Artelia witnesses said this related simply to the missed meeting and the file was only incomplete because the project had not finished.

Culture of bullying

On Monday, the inquiry heard from John Allen, head of building control at RBKC, who denied there was a “culture of bullying” in the department. You can read our report of that day’s evidence here.

Next week, the inquiry will hear the first witnesses from the TMO.

Grenfell Tower Inquiry headlines: week 13

Head of RBKC building control denies 'culture of bullying' at the council

The head of building control at the Royal Borough of Kensington and Chelsea (RBKC), John Allen, has denied accusations of a “culture of bullying” in his department at the time of the Grenfell Tower refurbishment, the inquiry has heard.

KCTMO 'strong-armed' consultant into removing criticism of its management of Grenfell refurbishment

The consultant who advised Kensington and Chelsea Tenant Management Organisation (KCTMO) on the Grenfell Tower refurbishment was “strong-armed” into removing criticism of the organisation from a report, the inquiry into the fire heard yesterday.

KCTMO rejected design advisor for Grenfell 'to save money on fees'

The company which managed Grenfell Tower decided not to appoint a design advisor who could have checked the proposals for the deadly cladding system in order to save money on its consultancy fees, the inquiry into the fire heard today.

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