Risk

Impact if risk materialises

Mitigation/management of the risk

IT infrastructure specification would become out of date because of developments in technology

Updating a contractually agreed specification may result in an extra cost to the Home Office

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The Home Office deferred finalising the specification until the latest possible date, 12 months after financial close. That date has now been met although negotiations over the price of enhancements are ongoing.

The PFI contractor is responsible for installing the IT infrastructure, but not for its maintenance.  There is therefore a risk that it will not be incentivised to ensure that the infrastructure meets quality standards

Potential maintenance problems and associated costs outside the PFI deal

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The Home Office intends to examine options for maintaining the infrastructure this year and undertake any procurement in 2004.

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The Home Office plans to have a robust testing procedure to ensure that the infrastructure is only accepted by the Home Office, IT suppliers and the IT infrastructure maintenance provider if it meets set standards.

Business risk associated with a double decant - original proposals to redevelop the existing estate would have necessitated the Home Office moving out into temporary accommodation in the existing building at 2 Marsham Street and then moving back again

Disruption, risk to business continuity

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One of the reasons why the Home Office considered the 2 Marsham Street new build option attractive, and eventually proceeded with it, was that it avoided this double decant. Nevertheless it is not clear what the Home Office would have done to mitigate the business risk associated with a double decant if the new build option had not arisen.

Risk that it will not be possible to house all staff in one building

Requirement to identify accommodation to house the excess and associated cost

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It first became clear that the Home Office was forecasting increases in staff numbers beyond the 2920 expected when BAFOs were invited in 2000. The preferred bidder was invited to provide for an additional 530 staff in the new building, bringing the total that can be accommodated to 3450.

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Actual numbers are now 4900 and although the projection for 2005 is currently under review, it is likely that there will be a significant excess to be accommodated. Options are being considered but at present there are no firm proposals.

A related risk is that until the projected staff numbers for 2005 is clear, the Home Office may need to amend its announced plans for which directorates are allocated floors in the new building. This could result in a delay to any plans the Home Office has to prepare the staff for its new accommodation and associated changes in working practices. It may also slow down migration to the new building if final numbers become clear too close to completion

Could be difficult for the Home Office to secure business benefits

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The projection for 2005 is currently under review and expects to report in July 2003.


It is not clear what the Home Office are currently doing to manage staff expectations in this respect. Up to 1400 staff may not be accommodated in the new building - at the moment it is not clear who they will be or where they will be accommodated.

These issues are being considered by Home Office top management.

Risk that the contractor will not deliver quality services

Home Office would not be getting what they wanted from the deal

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The contractor will only begin receiving payment when the building is available for occupation and the Home Office has declared it fit for purpose. The Home Office designed a payment mechanism to incentivise the contractor to achieve availability and service levels and this was the subject of considerable negotiation at preferred bidder stage. The payment mechanism includes a number of additional measures that come into play if there is any continuing shortfall in performance.

Risk that full occupation of the office building in 2 Marsham Street cannot take place due to residential/commercial development not being complete.

Under the planning permission, the Home Office could not fill the final 25 per cent of floorspace. The Home Office would have to seek alternative accommodation.

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The Home Office consider that this likelihood is remote since Bouygues is responsible for the construction on both the office and the residential/commercial development. Failure to complete on time and allow full occupation of the office building would result in the AGP consortium (of which Bouygues is a member) foregoing receipt of the Combined Payment. The monoline insurer, Ambac, is entitled to step-in rights and complete the residential/retail development if AGP do not meet a 'longstop' date for completion of this development.

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The Home Office have received a non-binding letter from Westminster City Council stating that planning conditions may be varied to allow full occupation even if the residential/commercial development is not complete to the required extent.