Capital programme monitoring –quarterly monitoring report – quarter 2

Report: 5
Date: 6 December 2010
By: Director of Resources on behalf of the Commissioner

Summary

This report provides members with a detailed review of the MPS capital programme as at quarter 2 (September 2010).

A. Recommendations

That members

1. Note the quarter 2 (September) monitoring position for the Capital Expenditure Programme 2010/11; and
2. approve the content of this report for submission to the MPA Resources & Productivity Sub-Committee on 6 December 2010.

B. Supporting information

Background

1. MPA Members have requested a detailed quarterly capital monitoring report which provides more comprehensive monitoring information than that provided in Appendix 4 of the combined monthly Revenue and Capital Monitoring Report. This report provides details of the financial and non-financial impact of significant project slippages and any actions being taken to resolve any identified underlying issues. This report reviews the capital monitoring position as at quarter 2 (September 2010) for financial year 2010/11. Appendices 1, 2 and 3 provide the information which enables a comprehensive monitoring analysis of the Capital Programme 2010/11 to be undertaken by Members. Please see paragraphs 4 to 6 for information explaining the content of Appendices 1, 2 and 3.

2. Information is provided in this report at programme and sub-programme level adding a tier of detail beyond that provided in the monthly Revenue and Capital Budget Monitoring Report presented to the Finance & Resources Committee.

3. Appendix 3 shows details of the top 10 spending projects in the 2010/11 programme.

4. MPS is implementing additional functionality in MetFin (SAP) for project budgeting and control which will be fully live in December 2010. This will enable more efficient and detailed financial reporting of budget and expenditure profile progress at project level for the quarter 3 report.

Appendix 1 - Summary Capital Programme Monitoring Report.

5. Appendix 1 is the same appendix that is included in the monthly Revenue and Capital Monitoring Reports submitted to the MPA for monitoring purposes. It shows the overall position in terms of year to date capital expenditure, annual approved and revised budgets, annual forecast expenditure and forecast variances for each element of the Capital Programme. It also provides a breakdown of how the Capital Programme is funded.

6. Year to date expenditure is £72.0m, representing 26.1% of the revised annual approved budget of £276.3m. Current forecasts predict spend for the year as £253.3m. This is £23.0m below the target expenditure figure of £276.3m. This represents a significant reduction in the over-programming sum - £33.2m down to £nil. Over programming has now been removed. Discussions with Business Groups continue to ensure that the changes are reflected into the 2011/12 capital programme which is under construction.

7. The forecast level of capital receipts to support capital expenditure remains at £20m. However, the MPA Finance & Resources Committee on 21 October approved the disposal of additional properties and noted that the level of capital receipts in 2010/11 will now reach £22.3m. It is proposed that this additional £2.3m should be utilised as part of the 2011 - 14 budget process.

Appendix 2 - Detailed Capital Programme Monitoring Report.

8. Appendix 2 provides a summary of individual projects or schemes within each Capital Programme. It has been extended to capture the detailed information requested by the MPA: specifically, reasons for reported variations, a statement regarding how underlying issues are expected to be resolved, the financial and non-financial impact (including associated risks) and information on projects being held in reserve to bring forward should any slippages occur.

Appendix 3 - Top 10 Projects Monitoring Analysis

9. Appendix 3 provides similar information to Appendix 2 but specifically for the top 10 individual projects by actual expenditure in 2010/11. The revised 2010/11 budget for these schemes total £83.5m (30%) of the total budget of £276m.

Capital Programme Funding.

10. The financing situation is closely monitored to ensure all funding sources remain available and the Capital Programme continues to be affordable and sustainable in accordance with requirements of the Prudential Code. As shown in Appendix 1, the funding take up for the year will match the forecast expenditure and will be below the original planned level.

11. The largest single funding reduction of £17.6m relates to specific grant for the Olympics. This is an inevitable consequence of the re-pricing of the necessary works which are grant funded.

12. If sustained the lower than expected drawdown of capital reserves - £3.7m - will be reallocated into the funding plan for the 2011/12 programme.

C. Other organisational and community implications

Equality and Diversity Impact

1.  Equality Impact Assessments are completed on business group activities undertaken where there is deemed to be an impact. The equality and diversity implications are identified in business cases and reports on individual proposals through our normal decision making channels.

Financial Implications

2. The financial implications are those set out in the report.

Legal Implications

3. The MPS are aware of their statutory duties in respect of capital finance and accounting and will comply with those duties in implementing the capital programme .This report is submitted as part of the governance process and no legal implications arise.

Environmental Implications

4. There are none specific to this report.

Risk Implications

5. Risk management is integrated into the Service’s budget, business planning and performance management processes. Business Groups and Management Board monitor risks on a regular basis. This report is part of this framework commenting on the risk to delivery of the capital plan for 2010/11.

D. Background papers

None

E. Contact details

Report authors: Anne McMeel, Director of Resources, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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