THE DECISION to award a major contract to build a new student hall of residence in Lerwick to a Chester-based company runs “counter to the purpose” of the University of the Highlands and Islands (UHI), according to Shetland MSP Tavish Scott.
Local construction firms are unhappy that Cityheart Ltd has been awarded the contract after they were not afforded the opportunity to tender for the work.
It means the local industry can, at best, pick up subcontracting jobs – mirroring a pattern seen with other major public building projects operated through the contentious “hub” model.
The model was introduced in 2013 and is seen by many to favour large construction outfits on the mainland at the expense of isles-based firms.
A site is still to be acquired for the 80-bed new halls of residence, which is to be built for students at Shetland College and the NAFC Marine Centre.
It is estimated the project will cost around £5 million, though there is scepticism about UHI’s scheduled completion date of September 2017 given a site has yet to be finalised and planning permission still has to be obtained.
The Lerwick halls of residence project forms part of the £34 million second phase of UHI’s agreement with Cityheart Ltd, awarded in September. It prompted local firms to approach the Federation of Master Builders to intervene on their behalf.
Scott was also approached by the construction companies concerned by the “centralisation of building contracts which stops them bidding for work”.
“Shetland needs new student accommodation,” he said. “But local construction firms should be allowed to win this work in an open tendering competition. They were not allowed to tender for this building and have missed out on a crucial local project. That is not a fair or open process.
“I am asking the Scottish Government whether they approved the £34 million contract between UHI and Cityheart Ltd, and why local contractors did not have the opportunity to tender to build the new student hall of residence in Lerwick.
“Local builders need a fair crack at buildings being funded by government or any of their agencies. The decision to award the contract to a company in Chester appears to run counter to the purpose of UHI to support communities and businesses across the Highlands and Islands.
“I want the Scottish Government to review its approach to the awarding of contracts to allow local firms a fair fight for the work. That does not happen at the moment.”
Shetland Building and Allied Trade Association chairman Robert Anderson said that association members had discovered the halls of residence contract had been advertised and awarded on the mainland.
“When they enquired they said it had been put into a package similar to the hub, as a design and build, and awarded to some other body,” he said.
“Shetland contractors are losing out on the work. Any big jobs that the council has is put through hub, and local contractors – they can’t get onto Tier 1 because it is multimillion contractors down south, and they get the job and then they subcontract it all.“
Anderson said he was hearing of similar concerns from counterparts in Orkney who are “not very happy with the hub either”.
Peter Tait of DITT said that around six weeks ago, local firms asked the Federation of Master Builders to raise the issue with UHI.
He said they were unhappy that UHI was “simply looking to pass on the whole package of responsibility to this company, Cityheart”.
Bigger local firms – such as DITT, Hunter & Morrison and Garriock Bros – prefer to work as the main contractor on projects rather than as a subcontractor, and this way sees profits “going out of the south mouth and loss of local control, Tait said.
In response, a UHI spokeswoman said the university had signed a £44 million agreement with Cityheart, which it described as a “specialist student residences developer”, to design, fund, construct and operate student residences throughout the region.
She said the “privately-funded project solution will be owned by a third party private investor, with the university becoming tenants of the completed residences”.
At the end of the lease period, the university will become owners of the buildings.
The spokeswoman said Cityheart had begun work on a 40-bed residence in Fort William and a 150-bed facility near Inverness – projects worth £10 million in total and due to be complete next September.
Elgin-based construction firm Robertson Group is the main building contractor on both of those sites and the second phase will see Cityheart “seeking additional suitable development sites throughout the university’s area with a view to providing a further 470 student beds” by September 2017.
The spokeswoman stated: “It is hoped to provide a student residence in Lerwick to serve both Shetland College UHI and NAFC Marine Centre UHI as part of the second phase.
“Cityheart is currently looking at potential sites in the town and will then seek to enter into arrangements with a suitably capable contractor once designs are completed and planning consent has been secured.”
In a letter responding to the Federation of Master Builders, UHI chief operating officer Fiona Larg said that a “key policy objective of the entire process for the university was equivalence of outcome regardless of location”.
Packaging various locations into a single project ensured that “the variable development costs and risks are balanced across all locations” meaning “high cost loss-making locations such as Lerwick can benefit from the surplus arising from more profitable locations such as Inverness”.
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