Purpose

The integrated wetlands programme makes a
valuable contribution to the environmental and economic priorities
set out within the County Plan 2020-2024, unlocking housing
development and associated economic activity while safeguarding and
improving the water quality of the River Lugg. The Luston wetland
as a pilot scheme represents a successful collaboration between the
council and a range of stakeholders, and establishes a model for
future phosphate mitigation schemes both in Herefordshire and
beyond.

Following an open procurement process a contract was placed for the
initial construction phase of the Luston wetland in 2022. Due to
the need to meet ambitious expenditure milestones as part of Local
Enterprise Partnership (LEP) grant funding conditions, it was
necessary to move to the construction phase while elements of the
design were still in development, and while regulatory approvals
with no direct precedent were still being worked through. In order
to secure the grant, contractor procurement went ahead based on the
design as far as it had progressed at that stage.

Subsequent stages of design addressed the absolute certainty of
phosphate reduction levels required to underpin the principle of
the offsetting scheme, and a cautionary approach was essential at
every level in order to satisfy the statutory requirements for such
a scheme. The design development was also required to respond to
the evolving requirements of the regulatory bodies with regard to
performance projections, flood risk and drainage. Of most
significance was a resulting increase in the water holding capacity
of the wetland lagoons, which leads to a greater volume of bulk
excavation in the construction phase. In tandem with this,
Environment Agency requirements regarding flood risk have impacted
previous proposals to retain surplus soil on site, meaning the bulk
of the excavated material being loaded and removed off-site to a
licensed location.

Options for the further phases of construction work dictated by the
developed design included separating off elements of the work (in
particular the bulk excavation and disposal) and procuring these
works separately, or utilising the established provisions of the
NEC4 form of contract to employ the existing contractor, JN
Bentley, with support from the appointed quantity surveying
consultant to assess value for money. The following conclusions
emerged from robust consideration:
1. It would not be practical or economic to have two separate
contractors working in tandem on the same site, and so a subsequent
phase would have to be deferred until completion of the original
phase.
2. Deferring those works as in (1) would extend the project outside
of the grant expenditure deadlines, so that a grant allocation of
£1m is likely to be lost.
3. Unit rates for the bulk earthworks and disposal had been
obtained from the contractor in the competitive tender and included
in the original contract. These rates can be applied to the
subsequent phase on a re-measurement basis, ensuring value for
money in those works relevant to those rates. Reference to rates
for the same work in similar more recent procurements has
demonstrated that the contract rates in place remain competitive
against the market.
4. Separating the work into distinct phases would be expected to be
more costly overall since there would be a need to pay contractor
site establishment, plant and equipment costs twice, whereas
combining the phases carries economies of scale in using and
overlapping the site establishment, plant and equipment provisions
already in place.

The original phase contract value was £363,382, plus enabling
works of £67,462 agreed during the procurement process,
making a value at commencement of £430,844. This reflects the
extent of design information in place at the time of the initial
contract, due to the stage of design and approval reached at that
point. The largest proportion of the cost forming the subsequent
phase comes from additional bulk excavation, handling and disposal,
along with the contractor establishment costs associated with a
longer period on site.

The final cost of delivering the wetland scheme falls within the
established budget. With the wetland-based phosphate offset scheme
being the first of its kind, project development costs were
anticipated and the £1m LEP grant funding was allocated to
cover the additional project development costs not recoverable
through the sale price of the phosphate offset credits resulting
from the scheme.