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(Paper 1) Innovation Centre Highlight Report (Neil Batt)
Neil provided an overview of his report:
• Speller-Metcalfe have been appointed as the design and build contractor up to
stage 4 design, with an option to extend into delivering the development in full.
Stage 4 design work is now complete and the work packages are being used to
competitively source quotations from a range of sub-contractors and identify final
costings for the construction phase. Costs to date have been based on agreed
Stage 3 estimates between Speller-Metcalfe and appointed cost consultants
(Gleeds). Note that previous value engineering savings have been achieved
without the need to reduce the building in size, or compromise on overall quality of
offer.
• Additional public realm works have been paused so that remaining Town Deal
funding (just under £900,000 in total) can be utilised as contingency for the
Innovation Centre. Public realm works to Church Green East have been costed at
£350,000 and would only proceed in the event that sufficient contingency remains
unutilised.
• MHCLG have confirmed the deadline to spend Town Deal funding has been
extended until end of March 2028, providing additional time if needed. The
extended timescales allow public realm works to be delayed until we can be
certain that remaining Town Deal (contingency) funds are not required for the
Innovation Centre.
• Planning permission was granted on December 11th 2025. Signage for the
Innovation Centre site has also been installed to keep the public informed.
• Value engineering works previously led to slight programme slippage with an
additional 8 weeks required to bring the project back in line with agreed budget. The extension of time from MHCLG has allowed additional market testing to be undertaken with construction sub-contractors (as above). This approach will maximise cost certainty with quotes based on final specifications, as opposed to sub-contractor appointments based on earlier stage estimates. This process is well underway with mobilisation and construction set to commence July 2026.
• The final business case for GBS LEP funding has been approved by the EZ
Partnership Board and ratified by BCC Cabinet on 20th January 2026. We have
been working with BCC to develop the funding agreement which is now ready for final sign off.
Next steps:
• Finalise costs with Speller Metcalfe. Finalise grant funding agreement with
Birmingham City Council.
Discussion followed:
• Neil advised there had been quite a few developments following the last meeting in
February.
• At the last meeting it was reported that cost estimates had been agreed with
Speller based on Stage 3 designs. Shortly afterwards the problems in the Middle
East began, leading to immediate and significant cost escalation.
• In working with Speller to obtain quotes for the construction phase, over the last
week the quotes coming in have now caused some concern as looking like £14m
rather than the previously agreed £13m. Neil advised he was going to the Exec
Briefing Meeting, this evening with the new information and had prepared a
presentation. He took the Board through the key points.
• Neil also went through the current costing position and reported that the total
project budget (including all development costs) was originally £15.8m but is now
projected to be circa £16.9m (including required contingency), representing a cost
increase of over £1.1m.
• Brian noted we do not want suppliers making provision for the uncertainty around
supply of goods / prices etc. We need to be mindful of that, and he wanted to
ensure that no agreement is made until the Board is happy. Neil agreed and said
once costings are finalised, he will most likely schedule a separate meeting with
the Board, outside of the normal schedule, to review. The board will consider the
possibility of seeking additional quotes or retendering the works should the
required cost position not be agreed with Speller-Metcalfe.
• Neil felt that the only real remaining value engineering option would be to reduce
the building size, but this would reduce the operating surplus and create re-design
costs, time delays and then leave the project open to significant further inflationary
risks.
• Town Deal funding needs to be used by March’28. LEP funds now are available
until March 2029.
• James has identified a risk and resilience reserve which may be able to act as
contingency funding. However, this would be subject to additional executive and full council sign off. There may also be some additional regeneration reserves,
although identified amounts would be dependent on reversing existing council
decisions to free up funding.
• Neil advised that we were working actively with Speller Metcalfe and felt we are
achieving value for money, but risks remain and some packages have not yet been
scrutinised by Gleeds (appointed cost consultants). There is ongoing liaison
between Speller-Metcalfe, Gleeds and the Council on daily basis in striving to
reach an agreement on the final costs position. The board very much reserve the
right to competitively tender the works if required.
• Brian reiterated, up to the point we commit to Spellers, with rising prices, we have
to, via Gleeds, work that money as much as possible, despite costs rising due to
global changes. He felt the worry is, at the 11th hour, Spellers might come back
with higher prices which leaves no alternative than to look elsewhere. Brian said
we only want to be requesting additional contingency monies. Everyone agreed.
• David asked if Speller Metcalf was our preferred contractor. Neil confirmed and
explained the initial procurement process.
• Brian confirmed to David, this was not a one-horse race.
• Steve asked if a JCT contract was in place. Neil confirmed we are working
towards a JCT 2024 Design and Build contract which is under negotiation and links
closely with agreeing a final overall cost.
• David asked if Neil could circulate his presentation when appropriate. Neil advised
he would. Neil also advised the Exec Committee would be 9th June, with full
Council on 29th June and that if we missed the opportunity of putting the project
forward on the agendas this time, then we would have to wait until September for
the next – and that would inevitably lead to further price increases etc.
• There was discussion surrounding the operating of the building. Neil advised
discussions had taken place with key partners such as the Growth Hub, Birmingham University etc, who were keen to bring in support services to help us
make things work, if we ran the building.
• Neil advised the initial thinking was to use an organisation such as Oxford
Innovation to run building for us - might be the easiest way. But a lot has changed
since then. Neil has met with Malvern Hills, Warwick Uni, Shell Store, Hereford
etc, and now feels this approach may not be flexible enough and that we would
end up losing a lot of control.
• Brian was of the view that we will lose the creative element if we get someone else
to run the building. Ultimately, they would be there just to make money etc. We
needed to keep a good level of control.
• Neil advised that Bruton Knowles may end up being involved and that Bex had
good knowledge of how this might work so we can manage the way we would
want.
• David advised he was still unaware of what the building might be used for. Brian
explained it was going to provide an environment for seedling business trying to
grow into something more substantial and would enable skills transfer and access
to decent facilities. Neil agreed and said that most businesses would probably move through the centre on short-term leases and with the help of a supportive
environment, this would enable small businesses to progress. There was a strong
demand for clean, modern office space and currently much of the available space
around Redditch was not up to standard and outdated with landlords not really
bothered with what they are providing, which would all work in our favour.
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