MAJOR capital projects and programmes are to be reviewed and reprofiled with a risk of being potentially delayed due to external factors in the construction trade’s supply chain, a committee unanimously agreed today.
A report is to be brought back to Aberdeen City Council’s Full Council meeting in August with recommendations from senior officers about what could be done to mitigate the current financial circumstances.
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The members of the City Growth and Resources committee today agreed capital projects should be reviewed to have potential built-in delays along with other financially prudent options. The committee also agreed there should be a report taken to the Urgent Business Committee on any proposed reprofile of capital projects where supply chain volatility may lead to additional cost or revised timelines outwith the current project budget and budgeted contingency provisions.
Aberdeen City Council City Growth and Resources convener Councillor Alex McLellan said: “During these unprecedented times, it is only right that we look at how to protect our council from huge rises in costs and other external risks. This should help to ensure we are in a strong position to deliver the services people will rely on in the coming months.”
“It is welcome that there has been agreement on this, and I hope councillors can work together to steer us through these uncertain times.”
Aberdeen City Council Co-Leader Councillor Ian Yuill said: “Potentially delaying projects is not something we would undertake lightly so we welcome the report which will investigate options for what we can do to mitigate the current circumstances.”
The report to committee said global external factors are having a negative impact on capital and revenue costs, including the delivery of capital programmes and projects in terms of their budget and delivery timelines.
The factors including ongoing market impacts from Covid, Brexit, current inflation rates which are at a 30-year high inflation across many parts of the world, and the invasion of of Ukraine. The war is affecting access to supply markets in Russia, Ukraine and surrounding area, and has led to a cycle of market and price volatility and shortages across many commodities. This in turn is having a negative impact on the delivery of capital projects, budgets (General Fund and HRA), and on revenue expenditure in the delivery of services and procurement processes carried out for affected commodities.
In light of these external factors and their associated cost and time implications, senior staff will review the approved general fund and housing capital programmes/projects in terms of timeline delivery and financial viability and to consider the impact on service delivery as a result of revised delivery timelines.
The report to committee said the council will request an opinion from external auditors on the impact of the considerations from a value for money perspective.
The report to committee focused exclusively on the direct impact to the council and reports will be submitted to a report to Full Council later this month and in August on how ACC can help to mitigate the global external factors on citizens and businesses.
The full report on the supply chain volatility to CG&R committee is item 9.2 at Agenda for City Growth and Resources Committee on Tuesday, 21st June, 2022, 10.00 am (aberdeencity.gov.uk)
