8.1.1 A fundamental aspect of the intention behind the Private Finance Initiative was to transfer responsibility for the risks associated with the design, construction and some aspects of the operation of public sector facilities from the public sector to private sector providers. Other than in respect of the form, content and overall quality of the design and construction of buildings, there has been a precautionary tendency on the part of many public sector bodies causing them to be hesitant about examining to any depth the technical design of projects in case any resulting interventions served to reduce this intended transfer of risk. Equally to do so, for example in terms of structural calculations etc., would require a replication of a significant element of the input of the private sector and the related professional consultancy costs.
8.1.2 During the design development stage after the appointment of the preferred bidder, in order to ensure that the facilities meet all the requirements of the public sector client, there is a process for the client to review specifically prescribed elements of design data, referred to as Reviewable Design Data ("RDD"), as normally listed in a schedule to PPP contracts. These provisions were incorporated into the PPP1 Contract. Under these provisions, no construction work relating to these aspects of the work is supposed to commence until the requirements of RDD have been satisfied in accordance with the process laid down.
8.1.3 This schedule, included as Appendix A to Part 7 of the Contract, did not require the submission of detailed design and construction information for the cavity walls of the schools for approval by the client.
8.1.4 However, in addition to the requirement to submit the specific RDD for review by the client, there was a provision within Schedule 11 of the Contract that required ESP to provide additional information to the City of Edinburgh Council that is not included with that to be dealt with under the reviewable data process. The following extracts from the clauses in this schedule provided the client with the opportunity to undertake a more detailed scrutiny of the detailed design of a number of aspects of the design including the construction and structural integrity of the walls.
"SCHEDULE PART 11 (Information Specification)
(a) Architectural
The Service Company (ESP) will prepare the following information for the Council's professional advisors to check compliance with defined standards.
Scheme design drawings, plans (including full room layout information, sections) (scale) and elevations at a scale appropriate for design review and construction.
Detailed design drawings covering the following:
• Wall sections of typical locations at a scale appropriate for design review and construction indicating sectional details and constructional arrangements.
(b) Structural Engineering
Structural drawings for all floor levels and roofs at a scale appropriate for design review and construction to show the proposed structural form and the principal features including:
• Stability
• Provisions for structural movement
• Column positions
• Plantrooms and basements
• Foundation layouts
• Retaining wall layouts
• Roof layouts
Sections and layouts at a scale appropriate for design review and construction showing floor slab construction, type, retaining walls, typical edge beam arrangements and junctions with existing buildings……….
• Structural key plans marked up to show design loading throughout the building
• Summary sheets of assumptions used in the design
• Reinforcement drawings as and when required.
• Design specifications for structural elements"
8.1.5 It is notable that sub-clause '(a) Architectural' above specifically requires that:
"The Service Company will prepare the following information for the Council's professional advisors to check compliance with defined standards."
8.1.6 Sub-clause (c) (Structural Engineering) above, while requiring detailed information on aspects of the structure, either intentionally or through oversight, failed to include a similar mention as to the purpose of the structural engineering information, although there would be little point in a requirement to provide the information unless there was an intention to examine it.
8.1.7 Examination of the required submission of 'sectional details and constructional arrangements' of walls under 'Architectural' and issues associated with 'stability' under 'Structural engineering' would have facilitated a focus on the areas of the building that subsequently failed to comply with requirements.
8.1.8 The Inquiry are of the view that while the 'defined standards' referred to are not specified in the Contract, it would be reasonable to assume that these standards would include those set down in British Standard Codes of Practice, such as those referring to wind-loading and/or referred to in the Building Regulations, which are a mandatory requirement of the Building Warrant approval process.
8.1.9 No evidence was provided to the Inquiry to demonstrate that the specific 'Architectural' or 'Structural Engineering' information referred to was either submitted to the Council by ESP or checked by the Council's professional advisors. For public sector clients to undertake the scrutiny of technical design documentation to a high degree of detail would, in the experience of the Inquiry, be unusual in PPP projects. Despite the provision for doing so in the Contract, should the Council not have undertaken or arranged for such checks of compliance, this would in no way have reduced the responsibility of ESP for any subsequent failures in design or construction. Clause 4.4 states:
"The submission of documentation to the Council Representative, its examination by or on behalf of the Council and the making of any comments thereon (including any approvals) shall in no way relieve the Service Company of any of its obligations under this Agreement or of its duty to ensure the accuracy, correctness or suitability of the matter or thing which is the subject of the submission, review or comment."
8.1.10 The general view offered by witnesses to the Inquiry was that the Council took a very much 'hands-off' approach once the Project Agreement was signed and would have been unlikely to have taken up the provision to examine the structural engineering proposals in relation to the 'stability' of the external walls although 'stability' of the structure was specifically identified in the clause.
8.1.11 The Project Manager at the time said in evidence,
"With regard to build quality assurance issues, the team we had was quite small. There were 3 Council architects, a couple of quantity surveyors as well as some education staff."
"The team put forward by the Council to deal with the Special Purpose Vehicle (ESP) included a construction manager, two head teacher liaison staff but no real structural technicians. The approval of room layouts would have been done by the single construction manager. I would accept that this was a very small team for what was a very large batch school project."
8.1.12 It is the view of the Inquiry that there was facility built into the contract for the Council and its professional consultants to undertake more in-depth examination specifically of the structural design than they appear to have undertaken. However, failure to apply this requirement by the Council would not have been inconsistent with general practice of PPP at the time, and in this case, would have been unlikely to have prevented the occurrence of the defects subsequently identified.