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BEIS Government Major Project Portfolio data, September 2016

Updated 19 July 2017
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Project Name Local Land Charges (LLC) Programme New Polar Research Vessel Project Eagle (formerly Urenco Future Options) The Francis Crick Institute (formerly UKCMRI) FID Enabling for Hinkley Point C Geological Disposal Facility Programme (GDF) Heat Networks Investment Project Magnox & RSRL PBO Competition Sellafield Model Change (SMC) Smart Meters Implementation Programme
Department BEIS BEIS BEIS BEIS BEIS BEIS BEIS BEIS BEIS BEIS
IPA Delivery Confidence Assessment (A Delivery Confidence Assessment of the project at a fixed point in time, using a five-point scale, Red ? Amber/Red ? Amber ? Amber/Green ? Green; definitions in the MPA Annual Report) Amber Amber/Green Red Amber Green Amber Exempt under Section 43 of the Freedom of Information Act 2000 (Commercial Interests) Amber Amber Amber
Description / Aims A Local Land Charge (LLC) is a restriction or prohibition on land which binds successive owners and occupiers. The LLC Programme will deliver a single LLC Register Service for England (the inclusion of the LLC Registers in Wales will be subject to a further business case), implementing the powers granted to Land Registry under the Infrastructure Act 2015. The scope of the Programme is to take the 326 English Local Authorities registers and replace them with a single digital register, resulting in Land Registry becoming the sole registering authority and official search provider for LLC. NERC/British Antarctic Survey has a business need to replace its two aging science/logistics support vessels with a new dual role purpose vessel. The FBC calculated that the NPV of the option selected as best overall Value For Money, (design, build operate a new dual role science/logistics support vessel) resulting in a saving of œ102m over a period of 25 years representing the anticipated lifetime of the new asset. The reduction in vessel capacity and attendant running costs is predicted to deliver significant savings with only a minor impact of delivery of science days at sea. The Specification/Statement Of Requirements for the new vessel was developed in consultation with the key stakeholders including, but not limited to, the scientific user community; logistics support staff within the British Antarctic Survey and the Supply Side. Working with the selected shipyard, Cammell Laird we are optimising the design and on track to deliver the vessel in Autumn 2018. Following intensive commissioning and sea trials, the vessel will enter into service in Autumn 2019.NERC is not purchasing any steel. Steel purchased by the main contractor has due regard for the guidance and commercial best practice. Urenco is a company which provides enriched uranium to the civil nuclear industry.HMG's objective is to sell HMG's one- third shareholding in Urenco.UKGI is currently looking at 1. the benefits of transforming the governance to a corporate board structure and 2. the commercial value of creating the optionality to sell. The Francis Crick Institute is a joint venture between the UK's largest biomedical research and academic institutions: The Medical Research Council (MRC), Cancer Research UK (CRUK), the Wellcome Trust, University College London, Kings College, London and Imperial College, London. A new research Institution will be established involving the construction of a new facility located close to St Pancras station, London. This facility will accommodate 1,268 scientists when fully operational. The National Institute for Medical Research (NIMR) will be closed. The funds from the sale of the former NIMR site at Mill Hill and the former National Temperance Hospital site will be used as part of this project. Primary objective is to agree a contract to enable the construction and operation of a new nuclear power plant that achieves a fair deal, represents good value for money, is affordable and is compatible with State aid rules. Secondary objective is to fully explore and understand the issues around a CfD for HPC and make a recommendation to ministers based on this.Procurement Policy on steel in major projects It doesn?t apply as DECC is not procuring HPC. The primary objective of the programme is to site and construct a permanent geological disposal facility (GDF) as the safe, secure and environmentally responsible solution to the long-term management of higher-activity radioactive waste in the UK, excluding Scotland. The programme also supports the delivery of the UK's nuclear new build programme because before development consents for new nuclear power stations are granted, the Government needs to be satisfied that effective arrangements exist or will exist to manage and dispose of the wastes they will produce. The programme complies with all public procurement policy obligations including the guidance in Procurement Policy Note 16/15. The developer will be able to provide data once we are in the implementation phase of the programme ie we have a designated site and a site specific rather than a generic design. The Heat Network Investment Project (HNIP) consists of project pipeline development and time-limited œ320 million capital support to build heat networks in England and Wales. The objective of the procurement (the Magnox Competition) is the delivery of a series of outputs largely based on the extant baselines of Magnox and RSRL, currently defined as outcomes of the Magnox Optimised Decommissioning Plan (MODP) and Optimised RSRL Baseline (HOP and WOP) at 10% lower cost. The performance obligations associated with delivery of this objective are embodied within a Client Specification which forms the basis of the Site Licence Company Agreement (SLCA) and Parent Body Agreement (PBA). Following the application of competitive tension via the competition process and share transfer to a new PBO, a target cost incentivised contract arrangement is in place for delivery of the performance obligations in the contract. A contract period of 14 years is envisaged in two phases each of circa 7 years. The target cost as bid is œ2.4bn for phase 1 and œ1.4bn for phase 2. Currently the project is focussed on "Consolidation" of the successful bidders commitments into the SLC Lifetime Performance Plan (LTPP).The SLCA anticipates some change to the Target Cost during the Consolidation phase but the full extent of the change will only be known at the end of May 2016. A key enabler to achieving a lower cost for delivering the programme is the NDA's ability to put in place funding to match the programme established by the contractor in the updated LTPP. Should the updated LTPP prove to be unaffordable a further iteration may be required. Changing the model for engaging the private sector at the Sellafield Site from the current Parent Body Organisation model to a new Market Enhanced Site Licenced Company characterised by public sector retention of the uncertainties intrinsically associated with Sellafield. The Government's vision is for every home in Great Britain to have smart electricity and gas meters by 2020. Smart Meters will give consumers up-to-date information about how much gas and/or electricity they have used in pounds and pence, as well as units of energy. Smart meters will have benefits for consumers, suppliers and energy networks. Consumers will have near real-time information about their energy use, enabling them to monitor and manage their energy consumption, save money and reduce carbon emissions. Switching between suppliers will also be made simpler and faster. Energy suppliers will have access to accurate data for billing and will be able to offer a wider range of services and tariffs. Energy networks will have better information to manage and plan current activities and support the move towards the development of a smart grid.
Departmental commentary on actions planned or taken on the IPA RAG rating. The programme has in place an action plan to address all recommendations from the review. The Programme team has actions underway or complete against all recommendations identified. The proposed corporate restructuring of Urenco that would have enabled a possible future sale of HMG?s stake in the company is now not going ahead as all the parties involved were unable to agree and we will continue to assess all our options. The Department will continue to monitor and seek to mitigate risks to operation accordingly which include the British Library development and the route of Crossrail 2 The Green DC RAG in September 2016 was reflective of the significant decisions taken in autumn 2016, since when the project to gain an investment decision has completed its final delivery, through to project closure in June 2017. The rating continues to reflect the inherent uncertainty of being at the early stages of a long term project that involves working in partnership with local communities. HNIP has made full use of both internal and external (IPA) reviews to ensure that the project was on track prior to the launch of pilot. HNIP is also undertaking lessons learned reviews as well as comissioning an evaluation of the project so that HNIP can learn from the pilot phase and refine the project ahead of Main Scheme launch. Since the the October GMPP return the project has made considerable progress and has successfully launched and delivered the pilot phase, on schedule. Although the DCA was rated amber in the Quarter 2 and Quarter 3 GMPP returns, there has since been a change in circumstances. The Parent Body (CFP) started work on the Magnox estate on 1st September 2014. There then started a process to ensure that the scope of the contract assumed in the 2012 tender matched the actual status of the decommissioning to be done on each site ? a process known as Consolidation. It has become clear to the NDA through this Consolidation process that there is a significant difference between the work when the contract was tendered in 2012 and awarded in 2014, and the work that actually needs to be done. The scale of the additional work is such that the NDA Board considers that it could amount to a material change to the specification on which bidders were invited in 2012 to tender. In the light of this the NDA Board has exercised its right to terminate the contract on 2 years? notice. The contract will be terminated in September 2019, after 5 years rather than its full term of 14 years. This termination is made with the agreement of CFP. During the period to September 2019, the NDA will establish arrangements for a replacement contracting structure to be put in place when the current contract ends. This complex programme of work is pregressing well through the consolidation phase and the decision in Q3 to undertake an IPA Project Initiation Routemapping exercise, concluding in Q1 17/18, will ensure we have created the delivery environment best suited to a transformation of this nature. Sellafield, supported by NDA, continue to work on the transformation proposition and vision, and to work with senior government officials, to secure the guiding coalition and the delivery controls and reporting required for successful delivery. This will be concluded by September 2017, within the original 12-18 month estimate set out in SMC. An IPA Gate 0 Review in March 2016 assessed the Programme as Amber. This reflected the good progress made since the last Gate Review in 2015, but acknowledged that there remained a number of areas requiring close management attention by the BEIS programme team. Action is underway or complete against all recommendations.
Project - Start Date (Latest approved start date) 01/03/2014 01/05/2014 01/02/2010 01/10/2006 01/09/2011 30/06/2008 25/11/2015 03/04/2012 13/01/2015 02/12/2009
Project - End Date (Latest approved end date) 17/11/2023 01/07/2020 30/04/2013 31/12/2016 30/09/2016 31/12/2040 31/03/2021 31/08/2015 24/05/2017 31/12/2020
Departmental narrative on schedule, including any deviation from planned schedule (if necessary) In March, our LLC Programme Plan was re-baselined to take into account delays with the approval of the Programme Business Case. Despite key milestones being revised to the right we are absorbing the delay and currently holding to the scheduled end date of the Programme. Programme remains on schedule The proposed corporate restructuring of Urenco that would have enabled a possible future sale of HMG?s stake in the company is now not going ahead as all the parties involved were unable to agree on a proposed new governance structure. As no agreement was reached we continue to assess all our options Migration of all MRC researchers to the new Crick building is complete as scheduled. Crick removed from GMPP following the Q3 report. Start date represents start of project following the EMR White Paper of July 2011. End date represents the conclusion of the project following award of contract and transition of contract management to the Counterparty body. Planning schedules are in line with the ambition to identify a site and construct a GDF by the 2040s and are kept under review by the developer, Radioactive Waste Management Ltd. The HNIP is being developed in 2 stages, Pilot Phase and Main Scheme The Pilot Phase consists of an initial funding round, delivered through Salix/BEIS and utilising funding allocated to 2016/17 as well as some from 2017/18, to test process and project design. This will conclude on 31st March 2017 The Main Scheme will incorporate learning from the Pilot Phase and will cover the remaining period of the project which runs to 2021. A delivery body for the Main Scheme will be procured through open competition. The aim of the project is to launch the Main Scheme in 2017, but final timings regarding this will be confirmed later in the year. With the announcement on the 27th March 2017 that the Magnox Contract has been terminated by mutual consent, the NDA will now embark on a process to establish replacement arrangements. At the same time a timetable and schedule of activities for delivering this alternative will be prepared and the required assurance framework will be established to run alongside In 2014, the original Sellafield Model Change programme set out four tranches (decision, transition, consolidation and transformation); we are now ten months into the 18 month schedule for Tranche 3 ? Consolidation, during which SL and NDA are implementing and refining the subsidiary arrangements and planning for the very substantial challenges of long term transformation. The overall approach to Transformation is making good progress towards delivering real impact in FY 17/18, and leading further work in defining the critical activities and capabilities required in the longer term. Driven by the need to implement a better way to deliver three specific time critical projects, a proposed approach for improving project delivery at Sellafield was brought forwards for an approval in advance of the wider transformation proposition. Sellafield, supported by NDA, continue to work on the transformation proposition and vision, and to work with senior government officials, to secure the guiding coalition and the delivery controls and reporting required for successful delivery. This will be concluded by September 2017, within the original 12-18 month estimate set out in SMC. On schedule for 2020 subject to energy suppliers accelerating their rollouts in line with their plans provided to Ofgem.
2016/17 TOTAL Baseline œm (including Non-Government costs) œ12.20 œ63.00 œ1.70 œ27.70 œ1.80 œ28.47 œ36.60 œ692.00 œ2,302.50 œ524.26
2016/17 TOTAL Forecast œm (including Non-Government costs) œ9.90 œ71.50 œ1.70 œ24.00 œ1.70 œ28.53 œ36.60 œ434.00 œ2,204.50 œ523.96
2016/2017 Variance %age -19% 13% 0% -13% -6% 0% 0% -37% -4% 0%
Whole Life Cost TOTAL Baseline œm (including Non-Government costs) œ193.30 œ1,403.00 œ32.60 œ752.70 œ49,891.20 œ11,751.97 œ352.70 œ3,860.00 œ29,992.92 œ17,215.78
Departmental narrative on budget/forecast variance for 2016/17 (if variance is more than 5%) Budget/forecast variance (underspend) in 2016/17 is due to delays in two key suppliers joining the Programme. These suppliers were successfully onboarded in September and November 2016. A futher decision was taken to complete data quality work in-house as opposed to procuring a quality supplier, contributing to underspend. 2016-17 budget variance resulted from financial re-profiling to match revised project milestones, including bringing forward œ5M capital funding from 17/18 to 16/17. It does not increase the whole life cost of the project. Budget variance less than 5%. Costs re-scheduled to 2017/18 budget. No cost overrun to WLC Internal project resource required for 2017-18 has been marginally less than forcast at the start of the year. Budget variance less than 5%. Budget variance less than 5%. The 2016/17 variance between the baseline and the forecast reflects a pre-consolidation position for the Target Cost. At the time of the termination announcement, the Consolidation process remains incomplete, and as a result a variance commentary is not meaningful. On completion of Consolidation an updated variance commentary will be provided. Budget variance less than 5%. Budget variance less than 5%.
Departmental Narrative on Budgeted Whole Life Costs Baseline costs have been derived from the financial model in the Outline Business Case approved in September 2015. The Programme has now submitted Version 1 of the updated Programme Business Case for approval. Once thishas been approved, the costs will need to be updated in line with the PBC. The whole life costs represents costs until 2043/44. These cost include the project costs until closure and recurring Antarctic Partition and Logistics infrastructure budget costs. The whole life cost respresented an estimate at April '16 of the advisory fees payable in order to realise a sale. These were mainly a success fee to an investment bank upon successful completion of a sale and legal fees on the corporate restructuring, shareholder agreement, taxation structuring, legislation and other elements necessary prior to a sales process being possible. However, the project has since closed whilst structuring and governance issues are re-examined. The Whole Life Costs represent the total construction costs including contributions from all participants. The Whole Life Costs (WLC) for this project are determined by the difference between the Strike Price for Hinkley Point C and the long-term Wholesale Electricity Price forecasts, which are influenced by market prices for fossil fuels. Therefore, we would expect the WLC to vary year on year to reflect changes in the market. Wholesale prices are volatile and sensitive to a number of uncertain factors including, for example, future global gas price trends, carbon prices, coal prices, the level of intermittent generators in the system and demand trends. Whereas the strike price agreed for Hinkley Point C is fixed and has been set following extensive negotiations with EDF and with advice from independent expert advisors. Hinkley Point C alone will generate 7% of reliable low carbon electricity for the UK; enough to power 6 million homes for 65 years. The WLC has been calculated in nominal terms and has not been discounted. Whole Life Cost figure represents the estimated cost of designing, constructing and operating the GDF out to 2130s. Note that the figures reported here only covers costs related to a GDF for legacy waste and waste arising from the existing fleet of nuclear reactors, they do not include any provisions for waste disposal from a new nuclear build programme, as this will be funded by new nuclear operators. Figures are provided in real rather than nominal values due to the long timescales associated with the programme. As part of the 2015 Spending Review agreement, œ320m of capital funding was allocated to BEIS to support investment in heat network projects. The funding comprises œ170m of fiscal spend and œ150m non-fiscal that does not negatively affect Public Sector Net Borrowing. Of this money œ27m has been allotted to the financial year 2016/2017 with the rest profiled each year to 2020/2021. The cost-benefit analysis undertaken for the HNIP Pilot Outline Business Case (in line with Q2) assesses the social NPV for the scheme as a whole at œ365m, with 6.5Mt of total carbon savings over the appraisal period. This will be finalised as part of the work on the OBC for the Main Scheme in 2017. The comment above relating to the 2016/17 variance is also applicable to the Whole Life Cost. The budgeted whole life costs relate to the whole of Sellafield Site costs to the end of financial year 2028/29 and our forecast RDEL and CDEL numbers reflect the allocation of funding to Sellafield from the NDA's Spending Review (SR) settlement agreement. The total budget whole life cost figures in this return are presented in undiscounted nominal terms, for comparability with other programmes. The figure differs from the total cost figure forecast in the Smart Meter Programme's 2016 Cost-Benefit Analysis (CBA), which expresses net costs and benefits over 2013-30 in 2011 real prices and discounted to 2016 present values (in line with HM Treasury appraisal guidance) giving net present value benefits of œ5,746m.