Transforming local government construction The power of framework agreements Contents
Report complied by Bob King Consultant for East Midlands Centre of Devon County Council/Scape, built under the Devon framework Excellence and Local Government Task Force by Costain
page
Foreword 3
ONE Introduction 5
TWO Executive summary 7
THREE Background 9
FOUR Framework 11
FIVE Ingredients of successful frameworking 13
SIX Benefits and efficiencies 23
SEVEN Advice and lessons learned 25
EIGHT Small and medium enterprises (SMEs) 27
NINE Small authorities 29
TEN The contractors’ perspective 31
ELEVEN Collaborative opportunities in highways 33
TWELVE Future directions in frameworking 35
THIRTEEN Widening the reach 37
FOURTEEN Framework profiles 39
FIFTEEN References 77
SIXTEEN Notes 79
Transforming nment local gover construction Foreword
Roger Latham
Few would doubt that local government has I am delighted to endorse this report as it 3 made significant advances in procuring and marks the first in a number of reports that will delivering construction projects in recent examine how local government can implement years. The principles set out in Sir John Egan’s the most effective construction regime. By landmark report, Rethinking Construction, have examining good practice and highlighting been successfully employed in innumerable common principles, it brings together our projects throughout the country. Equally, I am collective learning. sure that local government can do more to comprehensively adopt and embed the Egan The mission of the Local Government Task principles in its construction services. Force is to encourage and assist local authorities adopt the principles of Rethinking As this report skilfully highlights, many local Construction and I hope that this report acts authorities have adopted the framework as a further catalyst and inspires practioners to approach where not just cost but factors such rise to the challenge. as quality, performance and partnering, the very principles that Egan has sought to embed, I would like to pay my special thanks to Bob characterise their approach to construction. King for this excellent work in preparing this report and to all those who contributed to its With increasing pressure on the public purse, production. framework agreements allow local government to share resources and to collaborate across Roger Latham boundaries so that it becomes more efficient at Chair of the Local Government what it does. Importantly, they enable smaller Task Force Board authorities to access the benefits which such agreements can offer that hitherto have been out of their reach. So, good construction is also efficient construction.
Transforming nment local gover construction Tim Byles Bob King
Local government can be pleased with its track BOB KING 4 record so far on delivering its efficiency targets but with heightened public and political Bob trained as an architect. He has wide expectations, the efficiency agenda has experience in the public sector in the UK and become more relevant than ever. Local Canada where he worked in the 1980s as government must continue to explore project manager on a range of major projects innovative ways of generating efficiency gains for the Government of Alberta. right across its business. In 1986 he was appointed City Architect for The pace must quicken, the sphere of Manchester, a post which he held until 2003. influence widen and local government must Between 1989 and 1992 he was also Director think more radically, particularly in the area of of Housing. collaboration. I believe that collaboration is not optional, particularly in the areas of major As City Architect he was responsible for spend. Building Control and in that capacity coordinated the recovery operation in the With some £14 billion of capital alone spent by centre of Manchester after the IRA bomb of English local authorities on construction, I am 15th June 1996. convinced that frameworks and the adoption of the principles behind them provide a key In 1999 he became Director of Special opportunity for considerable efficiency gains Projects, the Council's in-house construction that we cannot afford to miss. project management office through which the City's major construction projects were Tim Byles procured. These included most significantly Past Chair of the Local Government the City of Manchester Stadium, the Task Force Board centrepiece of the 2002 Commonwealth Games held in Manchester.
Bob has been a board member of the Local Government Task Force since its creation in 1999, and continues to contribute to efficiency initiatives relating to construction in the public sector. ONE 1 introduction Introduction
This project was commissioned by the East They will not have started to deliver Midlands Centre of Excellence which is construction schemes on the ground before 5 managing the national lead on the this report is completed. Those involving Construction strand of the Gershon Efficiency collaboration between authorities show the review. That initiative set a short term target direction that frameworking is taking in the to secure some £6.45bn of efficiency savings future. across the local government sector by 2007/08, and an obligation to plan for longer Frameworking is progressive and incremental. term efficiencies extending further into the Each level of accomplishment provides a new future. base from which to plan new advances. Each advance enlarges the range of benefits which The object is to showcase current examples of can be reached. Those actively involved in successful local authority construction framework management and development frameworks covering housing, general building would all say that they have embarked on a and highways. In highlighting key journey, but none would claim to have reached characteristics and the efficiencies they are the end, or the limits of their capacity to delivering, it is hoped to encourage and inspire achieve and improve. others to adopt similar principles to assist in meeting their construction efficiency targets.
The examples featured have been identified through networks of contacts including the Regional Directors of the Centres of Excellence, and the Local Government Task Force (LGTF) Regional Champions. They are at different stages of development and maturity and this is often reflected in their achievements. The project profiles represent a snapshot of a changing picture at a moment in time. Some are still in the formative stages.
Transforming nment local gover construction TWO executive summary
2
Executive summary
Franklin Ellis Architects
Construction frameworks have developed by Much of the early progress in construction extending the application of the principles of frameworks has been made by larger county 7 partnering advocated by Latham and Egan and metropolitan district councils. The from individual projects to programmes of benefits are however potentially obtainable by work. Continuity allows the construction smaller councils willing to enter into partnership to grow, build on the intelligence collaborative procurement relationships with and experience developed, improve the other authorities, RSLs or central government service and product and achieve a range of agencies managing framework contracts with other efficiencies including financial similar work content in the same geographical economies. locality.
Successful frameworks require careful Frameworking is not limited to larger consideration of a number of process issues. contractors. By structuring framework They include clarity of objectives, the packages appropriately, there are formulation of detailed operating arrangements opportunities for SMEs both directly and in conjunction with the contracting partners through the supply chain. and full integration and management of the supply chain. They also require a shared Frameworking liberates contactor capacity, commitment to performance improvement enables contractors to involve more senior through progressive measurement and staff in clients' programmes and to add value benchmarking. in other areas including corporate social responsibility agendas. When a sufficient volume of work is being handled, trust and confidence exist between Future advances in frameworking will see more participants, there is a commitment to developments in inter-authority collaboration, performance improvement and cultures and reducing the demands imposed on smaller organisations adapt to the new type of authorities wishing to engage, whilst bringing working that frameworking requires, significant the benefits within their reach. gains and efficiencies are obtainable. The efficiencies obtainable through These include more productive relationships, construction frameworks can make significant higher levels of client satisfaction, savings in contributions to current efficiency targets. time and reductions in cost. Cashable savings There needs to be a wider debate about how can be worth up to 10% of the overall capital their use can be extended within the cost. local authority sector. Transforming nment local gover construction THREE background
3 Background
Rectory Lane, Fowlmere (completed July 2005) part of a wider development. Cambridge Housing Society
Thought and practice in construction project projects showed improvements in the control procurement in the last decade has been of time and cost and were characterised by 9 dominated by two seminal reports better relationships. Partnering also saw the 'Constructing the Team' by Sir Michael Latham introduction and adoption of performance (1994) and 'Rethinking Construction' by Sir measurement and systems for recording and John Egan (1998) documenting it. At the end of each project however, teams were often dispersed, and the These proposed moving away from knowledge and experience gained was largely procurement dominated by lowest price dissipated. Neither was it easy to meaningfully tendering and a culture of project performance engage supply chains in terms of innovative often blighted by delays and cost overruns, capacity or economy, so some 70% of the and relationships characterised by contributors to the building process remained defensiveness and adversity. Instead they largely untouched by the changes. advocated collaborative relationships between clients of the building process, their To exploit the fuller potential of partnering, professional consultants and the contractors harness the skills of the supply chain and they employed around shared objectives and allow teams to develop more efficient common values. relationships through learning together required associations based not on individual 'Rethinking Construction' put forward a range projects, but on a series of projects. It was of efficiency targets covering time, cost, and achieved by tendering programmes of work to defects reductions, collectively offering the contracting teams for a period of time through prospect of enormous gains in efficiency frameworks. across the construction industry. It is through the principles derived from Early practical responses took the form of Latham and Egan and the potentials created partnering and collaborative working on by frameworking that local authorities have a individual projects. They featured contractor means of meeting the challenges of the selection by a combination of quality and cost Gershon agenda in the sphere of construction. where quality considerations were dominant, This report illustrates some of the authorities and a shared commitment to values often which are leading the way and examines how expressed in partnering agreements. they are doing it.
Where the principles were adopted, relationships began to change. Demonstration Transforming nment local gover construction FOUR framework
4 Framework
Southshields
Frameworks have been described as chains. Success requires collaboration based agreements to provide goods, works or on mutuality, trust, shared values and 11 services on specified terms. They are objectives directed towards improved sometimes subdivided into Framework performance. They involve investments in the Arrangements and Framework Agreements. development of relationships by participation in a programme of projects over a period of In Arrangements there is no contractual time. commitment on either side for the provision of any particular quantity, though they may Public procurement of construction above prescribe the terms and conditions of the specified minimum value thresholds is subject eventual contract which will apply when goods to European Procurement Directives. These or services are purchased. are concerned with principles of access and transparency. Most authorities will be guided Agreements, on the other hand, incorporate in their approach by in-house legal advise commitments to purchase a volume or value where sufficiently experienced or by external of goods or services. legal specialists where appropriate. Whilst framework agreements were not excluded By reference to these terms, local Authority under 1990s directives, more recent provisions frameworks will necessarily tend to be have helped to clarify their use along with Arrangements. Whilst their capital electronic communications and auctions programmes are substantially funded by connected with their award and operation. borrowing allocations determined annually by The framework term has recently been limited central government, there are inevitable limits to four years and three contractors are now to on their ability to enter into binding be appointed unless special reasons apply. arrangements for the execution of work of These provisions were not operative when the specified volume or value over predetermined earlier schemes featured in this report were periods of time. advertised.
Practitioners' use of the terms tends to be less precise, and in describing their projects, the terms may be used interchangeably
For the purpose of this report, frameworking involves associations between local authorities as clients and contractors and their supply Transforming nment local gover construction FIVE ingredients of successful frameworking
PROCESS ISSUES The Procurement Strategy - What does Frameworking mean? 13 Establish the Objectives 13 Consult the Market 14 Single or Multiple Authority 14 Project Documentation 14 Design Services 14 Pre-qualification and Tendering 15 Numbers of Contractors 15 Tender Evaluation 15 Contracting Arrangements 16 Framework Management 16 5 Project Allocation 17 Supply Chain Considerations 18 Performance Management and KPIs 18 Project Pricing 19 Risk 19 Performance Incentives 20
CONDITIONS AND VALUES Workflow 20 Openness and Trust 20 Commitment to Performance Improvement 21 Training 21 Acceptance of cultural and organisational implications 22
FRAMEWORK MATURITY 22 Ingredients of successful frameworking
South Beach, Blackpool.
This section contains a distillation of the The Procurement Strategy - What does 13 experiences of a number of authorities which Frameworking mean? have embarked successfully on framework Most clients buying into the Latham/Egan projects. agenda do so from a belief that by changing the way they do things, and by investing in a Analysis of what they have said resolves itself collaborative approach to construction into two sets of factors: procurement, they can begin to tap into a range of benefits beyond what traditional • issues or emphases and procurement processes can deliver. • values and conditions In doing so they are not simply buying a When the participants are well versed in the different sort of commodity. They are process issues and can meet the values and embarking on a process change with conditions, their framework is on course to implications for the operation of both achieve a range of benefits and efficiencies individuals and their organisations. unattainable through traditional methods of procurement. Frameworking rewrites many of the assumptions concerning the traditional roles These points are amplified below. and responsibilities of every participant in the construction process. Imperatives of process PROCESS ISSUES management and quality in service delivery take precedence over activities based on From the initial idea to going live, setting up a traditional professional responsibilities or other framework involves working through a series distinctions. Those guiding and directing the of stages in an established process according process must anticipate and manage changes to a pattern familiar to those involved in the in the culture of operation which will affect procurement of construction projects under people and the shape and function of their EU Directives. organisations.
The following points are not so much a Establish the Objectives restatement of those steps, as a highlighting of It is important to determine at the outset what issues and emphases along the way which all the stakeholders want from a framework successful practitioners have stressed are initiative. Wide consultation is needed important to secure the maximum benefit from engaging clients, users, technical their framework arrangement. Transforming nment local gover construction contributors, elected members and all others increasing leverage on the market for with an interest in the projects concerned. component purchasing and development. The Professionally facilitated workshops are a latter will signify clearly to those with pre- vehicle frequently employed to help tease out existing supply chains deriving savings from the issues which will underpin the initiative. programme based procurement. Weaknesses and shortcomings, real and perceived, associated with normal This decision will dictate the terms under procurement arrangements must be which the OJEU notice is advertised. confronted to assist in identifying the improvements sought. Project Documentation Authorities will be generally familiar with the Typically, authorities going into frameworking procedural obligations of public sector do not do so on a narrow agenda in search of procurement under European Directives and cashable savings. They do so from a much possess procurement documentation broader value driven agenda. It invariably adaptable for use with a framework project. features a desire for improved service, a better Most of the authorities featured in this exercise product, less waste, duplication and have placed significant reliance on in-house redundancy, increased efficiency and reliable resources for the preparation of their estimates of time and cost. But cash savings documentation. Some have done so with the are obtainable as well, and as the examples benefit of external consulting support and illustrate, can rise to very significant levels. professional facilitation has proved a helpful 14 way of managing agenda-setting workshops in Consult the Market the early stages. One authority employed In a normal market with a regular flow of work, consultants to manage the whole process for contractors will find some project them. There is however general agreement opportunities more appealing than others. To that whatever means of documentation maximise the level of interest, it is important to development is used, there needs to be understand what these are, and by the way continuity of knowledge and ideally personnel the scheme is presented to the market, try to through into the operational stage of the address them. Considerations might include framework. whether the project size range suits the capacity of the contracting community in the Most pre-contract documentation is relatively area, whether there is a likelihood of a simple and modest in scale when compared to sufficient quantity of work and whether work is traditional bills of quantities. The early packaged in a way which provides processes of development, strategic decision opportunities for smaller and specialist making, stakeholder engagement and market contractors to participate. Compromises may consultation may nevertheless seem very time need to be considered, but maximising the consuming. It is widely accepted however appeal of the framework to the market at the that these early stages, in which the outset will help to harness the benefits of foundations of the project are laid, need to be competition and assist in identifying those who undertaken with thoroughness and care. are likely to bring the enthusiasm and Those frameworks developed more quickly commitment necessary for the creation of a were generally built on preceding single successful framework partnership. project partnering initiatives through which key principles and objectives had already been Single or Multiple Authority established. Early framework initiatives tended to be conceived in relation to the needs of a single Design Services authority. Subsequent projects are The frameworks are predominantly about the approaching more openly the possibilities of procurement of construction services. The inter-authority collaboration by creating technical group within the authority through frameworks accessible to groups of which they are managed will often have authorities. These offer benefits of evolved from a traditional in-house technical aggregation by bringing more assurance to the design consultancy to a more sophisticated volume of work handled by the framework and technical management unit. It may continue Saltwater to provide the design work, though in a achievement. Recent European Directives different service environment. When it is now prescribe a minimum of three contractors 15 decided for a particular project to engage unless special considerations apply. external consultants, they become an extension of the in-house capability and are Tender Evaluation managed accordingly. Evaluation of shortlisted companies will follow the process published. Client expectations Examples involving design and build show that must be clearly articulated in the tender frameworks are equally relevant to this documents to enable contractors to respond approach to project work, where designers will appropriately, particularly where financial be engaged directly by the contracting remediation may be required. Selecting the partners. right partners means thoroughly scrutinising abilities against the service quality Pre-qualification and Tendering requirements prescribed. Values and The normal preference favours the restricted experience must be closely probed, not only route with two stage process leading from through interview responses, but by visiting prequalification to shortlisting and evaluation. projects, meeting previous clients, and It will follow established practice in evaluating perhaps engaging informally with the basic quality requirements and financial and contractor's staff. It is important to establish trading information. The quality and price whether actions are consistent with words and assessment mechanism must be published in whether results bear out the experience full to meet the conditions of openness claimed. required under procurement regulations. Financial evaluation is likely to focus on profit, Numbers of Contractors overheads and perhaps preliminaries. Many Within collaborative arrangements, authorities also ask for specimen projects to comparison and competition retain a place in be priced for elemental analysis. the pursuit of progressive performance Frameworking will require the contractor to improvement. For this reason, authorities take the lead on issues of buildability and generally favour appointing a number of directing detailed project design. It is in these contractors to each band of their framework. early stages that value engineering may be Whilst the ethos of team working is needed and when life cycle costing must be paramount, performance comparisons addressed. Setting exercises around between contracting team members carrying specimen project pricing from which out similar works can be a positive stimulus to Transforming nment local gover construction assessments can be made of contractors' aspires, such considerations are less pressing. capacities to value engineer and undertake life One authority questioned whether contracts cycle cost evaluations has proved a valuable for projects executed under frameworks means of exploring capabilities in these areas. existed for anything more than the provision of a 'comfort blanket', though the prevailing view Supply chain relationships will have an was that dispensing with them altogether important bearing on the outputs that the might prove a step too far. It was also framework eventually delivers. It is imperative acknowledged that however successful a to explore contractors' abilities to harness the framework partnership might be, there is still a innovative capacities of key sub-contractors need to recognise the possibility of and suppliers and capture the benefits of supervening influences from the wider world, economy from programme based product like insolvency. procurement for the benefit of the overall programme. Many contractors will bring Partnering and frameworks are characterised established supplier relationships with them. It by much less frequent use of retentions. is however not until the contractor partners are Where these remain, it tends to be at lower appointed that their collective experience can levels than in traditional contracting and be brought to bear on creating the supply framed within a strategy leading towards their chain required by the client's programme. eventual elimination.
Contracting Arrangements In the same spirit, the move away from 16 The predominantly annual basis of capital retentions is increasingly accompanied by the allocations and project funding decisions exclusion of provisions for liquidated and means that the overarching framework ascertained damages and contractors' claims agreement cannot involve commitments to for loss and expense. These devices, which defined quantities of work. In practice it is stand as manifestations of the need for mutual more likely to be an expression of a redress embedded in the culture of traditional commitment to values and principles for a contracting, are less relevant, and increasingly relationship which will develop around projects hard to reconcile with the ethos of which the authority calls for. In strictly legal frameworking. terms, some authorities' frameworks are instantly determinable. In practice, Framework Management contractors have to base work expectations A partnership between one or more on clients' historical investment performance authorities, and a small group of contractors and future projections based on the who have emerged successfully at the end of momentum in their programmes. the selection process, will need to be managed. The tender process can lay the Specific contracts are used for the individual ground for the relationship in terms of projects commissioned. Sometimes the form principles, values and aspirations. It is not is set out in the framework tender whilst in however the vehicle for prescribing day to day others it is left open for negotiation. Although operational matters or detailing process the NEC form is frequently employed, JCT through which it will manage the design and forms and PPC 2000 also feature as do others construction of individual building projects. It for more specialised classes of work. would not perhaps accord with the principles The nature of relationships in framework of collaborative working that such issues arrangements requires a change of contractual should be unilaterally determined and imposed philosophy from that which has evolved over before contracting team engagement. decades for the delivery of single projects Agreeing these details is the first activity to be individually tendered on a lowest price basis in embarked upon by the new construction varying economic conditions. Traditional partnership. contract forms dealt necessarily and at length with the consequences of delay and cost The outcome of this stage will usually be an escalation which were frequently encountered. operating manual produced and owned by the In the less adversarial and more open and partnership. There is no set form or trusting environment to which frameworking prescription for this. It will be a statement of Derbyshire County Council/Scape, built under the CLASP framework by Skanska the requirements and agreements of a Beneath this a range of other groups will be particular group for management of its own established. They will oversee performance 17 framework. Not uncommonly it is likely to be and activity in other areas determined by the a document of some size and significance. nature of the framework and the situation in But as one authority very tellingly observed, which it is operating. Performance important though the manual might be, its real management and supply chain development worth lay in the process they had to go will regularly feature and are considered in through with their partners in order to produce more detail below. Other examples include it. It was a very important symbol of joint programming and planning, employment and operation and collaborative working. training, innovation and efficiency, marketing and communication, equality and diversity and This also explains the error sometimes others. They deal not only with operations, committed by those contemplating but illustrate the growing application of frameworking who start by wanting to borrow contractor capacity to client aspirations in the another authority's documents. The key to delivery of wider value adding dimensions of framework success lies in building the right the framework. relationships with the right partners around the right values for the particular authority's Partnerships handling predominantly housing building programme. It is a unique process work will take particular interest in tenant which creates commitments and demands that liaison and access. All frameworks will have take time and cannot be easily circumvented. groups directing individual projects including Borrowed documents alone will not do this. representation from the various stakeholders in the scheme. A hierarchy of management structures will be set up characterised by participation of Project Allocation matched seniority from all organisations The allocation of projects between the involved. At the highest levels, structures will contracting members of the team is an look at the strategic management of the important operational issue. In some cases it framework, its overall performance, direction may follow simply from the project size and and development within the originating type and the contractors' skill bases. Where parameters. They will connect through contractors' skills and experience are similar directors to company Boards, and through and attuned to the technical demands of the Chief or Executive Officers to elected bulk of the projects, other considerations members and committees. come into play. Prevailing capacity,
Transforming nment local gover construction management skills and other resources are valuable cost reductions. Material relevant. Some authorities have initially commodities with generic specifications are adopted a rotational arrangement. Over time suitable subjects for procurement by reverse this may develop into a system of project e-auction, a practice now acknowledged in allocation influenced by the performance procurement regulations and used by achieved on earlier projects awarded under contracting partnerships. the framework. This introduces an element of incentivisation. The purchase of components on a programme basis can lead to future operational Contractors' representatives will often be efficiencies. Programme based purchasing included in the allocation process, though has led several authorities towards standard client authorities usually retain control of the specifications for certain materials, elements final determination. The important point is that and components, bringing potential savings in the process is transparent and that contractors future maintenance costs associated with can see what is happening and that the them. reasons behind decisions are disclosed and can be discussed. Effective integration of the supply chain thus opens up opportunities for efficiencies, Supply Chain Considerations innovations and economies extending from the As a general principle, most main contractors initial procurement stage throughout the life of employ relatively small quantities of direct the building. 18 labour. Most labour working on building sites is employed in specialist sub-contractors and Performance Management and KPIs suppliers. As much as 70% of the value of a Two levels of performance measurement are project may come from subcontractors and encountered in successful frameworking. The suppliers outside the main contractor's direct first measures project performance, the control. Unless the framework team can second evaluates team performance. develop to include a large proportion of this, its potential contribution to the framework will Although project cost analysis has long been be out of reach. undertaken for the assembly and publication of building cost indices, comprehensive Suppliers and sub-contractors often possess project performance management is a much vastly superior technical knowledge in their more recent phenomenon. Some authorities particular specialism than technical developed early systems as part of their consultants ever can. When they become part response to Compulsory Competitive of the team and can benefit from multiple Tendering in the mid 1990s. Others, who in project opportunities, they can apply their the spirit of Latham and Egan later went into skills to achieving economy in design and individual project partnering, began to afford to invest in specialist product measure performance more systematically in development which would otherwise be accordance with the principles put forward in uneconomic. 'Rethinking Construction'.
Much of the material used in buildings is Rethinking Construction proposed targets for generic - blocks, insulation, wiring, piping improvement in construction performance carpets and items such as ironmongery and under a series of headings. These included sanitary ware. In housing projects where the client satisfaction with service and product, element of repetition is often greater, the list predictability of cost and time, defects, safety, becomes more extensive and includes time, cost, productivity and profitability. These materials for environmental works and more have gained acceptance as the construction specialised components such as security industry key performance indicators. They are windows and doors. When the procurement the basis of project performance measurement of these items is undertaken on a programme generally utilised by framework partnerships. basis with suppliers providing materials to a group of contractors for work on a number of Authorities whose frameworks developed from projects, volume discounts can generate earlier single project partnering initiatives often Cambourne, 30 houses and flats for shared ownership. Cambridge Housing Society have the benefit of earlier performance data Designer access to contractor skills and with which to compare. Others have started resources in the early stages of a project can 19 from a background of limited historical data. help to establish relative efficiency and cost of The important issue however is to agree different design options. Choice of material targets for each project, measure performance for structural framing is a significant early against them, and progressively increase them issue of importance in itself, but with over the life of the framework. The use of implications for many other components. comparators like pre-framework performance, Much waste can be driven out of the process BCIS indices, DFES rates and data from other of design and construction when design organisations can reinforce and strengthen decisions are taken in conjunction with performance benchmarking. contractors and their suppliers and subcontractors. Successful frameworks are also about relationships and team working, and these too Risk need to be assessed. Most partnerships have Too often in traditional contracting risk was not adopted schemes by which project adequately considered. It became an issue participants evaluate the contribution of the when the time or cost implications of a other team members. Low scores trigger contingent covered somewhere by the higher level reviews to explore the reasons and contractor exceeded the allowances made. the impact. Sometimes this can help to Who takes a risk becomes an insurer. Insurers highlight personality difficulties which left charge premiums and the impact of these on unchecked can compromise the process and the bottom line of a construction tender can jeopardise performance. In extreme cases exert unhelpful upward pressures. personnel reassignment has resulted. Contractors are not necessarily the best people to manage all the risks associated with Project Pricing building projects. Individual projects are generally priced on an open book basis with client quantity surveying The open and collaborative nature of staff reviewing the cost plan. Most schemes framework relationships has produced a much need a client sign off once the business case more sensible and economic approach to risk proved and the budget is set. This takes management. In general, a risk register will be place at stage D. Work input from all parties is prepared at the commencement of the project generally at risk until this point. Thereafter the and the heads of risk will be agreed. design is frozen, performance targets are agreed, and detailed design can proceed. Transforming nment local gover construction They will then be assigned either to the seen as more positive drivers. One authority 20 contractor or retained by the client according reported that when discussing potential to who is best placed to manage them. arrangements for the management of savings Project management processes will include and overruns, the contractors favoured seeing regular reviews and updates of the risk register the savings reinvested in more building work as the project progresses. than taken out as profits. Another was consulting on the implications of linking 50% Clients will usually carry a risk contingency of the profit to the achievement of fund separately within their programme performance targets in its second generation budgets from which to meet the liabilities frameworks. which will periodically arise. Surpluses are available for reinvestment in building projects. CONDITIONS AND VALUES
Performance Incentives Conditions and values operate on a separate The principle of sharing pain or gain is plane from process and emphases. They frequently encountered in the frameworks interact with the process issues and impact on examined. It generally takes the form of an their effectiveness. agreement to share savings below or additional costs above the target price for a Workflow project, excluding the effects of subsequent A framework partnership requires a workload client initiated changes. Several authorities continuum in order to function. Building however questioned the influence of such successful relationships with contractors, provisions on contractor performance. integrating supply chains, programme based procurement, developing shared knowledge Building contracting traditionally runs on small and experience and improving performance margins and low profits. Frameworks bring need a continuous flow of work around which within contractors' reach benefits of greater to develop. value to them than a small uplift in their Without a steady flow of work in line with percentage profit. Work continuity, the benefit contractors' expectations, the potentials of the of being able to move teams from one project framework are diminished. to another without the uncertainty of the outcome of the next tender, was rated much Openness and Trust more highly. The opportunity to contribute to Frameworks are examples of collaborative a project and influence the way it was working and of valuing the contribution of a specified, detailed and assembled were again wide range of stakeholders and participants in RS & Portland Cigar Factory the construction process. They involve Commitment to Performance Improvement building relationships between organisations 21 and individuals and harnessing a wider range Successful frameworking processes offer of skills to the benefit and efficiency of both benefits and efficiencies to all involved in the product and process. This requires trust along building process. Clients and users can look with openness and transparency in actions forward to better product and service. and processes. Contractors can be more productive, effective, influential and profitable. All this requires These principles find expression in framework work, an unceasing desire to drive out waste constitutions. They underpin decisions to limit and measuring and assessing performance in or exclude retentions, liquidated and pursuit of weaknesses which may compromise ascertained damages and loss and expense outcomes. claims. With contractors' profits and overheads removed from contention, open Responsibility and accountability must be book pricing links well with joint programme assigned within the process. Performance based procurement of materials and management must work from targets to commodities. Such exercises lead to strategies through which improvements will collaborative choices on the extent to which become achievable and keep the outcomes efficiencies are taken as savings or reinvested under progressive review. Problems will in product development. Shared development happen and sometimes targets will not be and investment in operating procedures and met. When these are treated as opportunities joint participation in framework management to learn, develop and grow, they can stimulate arrangements are important manifestations of improvement for individuals and for the these values. partnership.
When actions of one contributor sow the Training seeds of doubt in the minds of others or The processes need to operate a framework motives are unclear, the health of the will differ significantly from what happens in framework may suffer. When this shows up as traditional construction procurement. The a negative influence in team operation, roles of client, technical staff and contractors intervention is needed to avert adverse impact will all need to change. Removing people from on performance. the comfort of established roles and instituting new ways of working requires retraining and reorientation.
Transforming nment local gover construction Review and periodic reinforcement may be Successful frameworking will have a big needed until new habits are embedded and impact on individuals and organisations. Skills become the norm. Without this, the process previously present will be applied in very may stumble and resistance both conscious different ways and organisations will need to and unconscious develop to the detriment of be structured around a different arrangement the initiative. The frameworks examined of functions and operations. reviewed have all made serious investments in training with costs which must be Some changes will identify themselves as acknowledged and apportioned by agreement. necessary from the outset, while others will become apparent over time. Either way there This is likely to be an issue whose nature and is a need to recognise the challenges they content will be addressed under the scope of present and address them openly and operational arrangements. In the spirit of progressively with the development of the collaboration, many authorities commented on framework. the importance of joint training particularly in respect of key client, technical and contracting FRAMEWORK MATURITY staff together undertaking most day to day What is the measure of maturity and activities. confidence in a framework partnership?
New members of the team need to be trained The best indicator identified through this to the same degree where changes review lies in looking at what happens when 22 subsequently arise. Provisions will always be things go wrong. In construction, mistakes needed to ensure that school heads or the key will happen and unexpected problems will participants of new projects procured under inevitably arise. the framework are enabled to contribute in accordance with the established terms of In the early stages of a framework partnership, operation. behavioural responses conditioned by defensiveness and blame associated with Acceptance of cultural and organisational traditional procurement would not be implications uncommon. They would show that the Some of the cultural issues associated with process of cultural change was incomplete. the new process can be largely addressed through appropriate training and support. A framework may be said to have matured Architects accustomed to designing and when without prompting, the team takes detailing unilaterally might struggle with the ownership of the problem, and works together concept of sharing their historical prerogatives to find the best way of overcoming it. with contractors and suppliers. Though as one contributor observed, in reality, they shed administrative burdens and gain much greater freedom to operate as designers. Similarly, quantity surveyors will not necessarily be producing bills of quantities, though the use of their skills as cost managers and building economists offers much broader horizons. Relations with clients will need more supportive service orientated associations without obvious equivalent in traditional procurement. At contractor interfaces, management skills are of much more significance than professional or other distinctions. SIX benefits and efficiencies
6
Benefits and efficiencies
Kings Waterfront, Liverpool
General 23 Performance measurement in the frameworks Additional government funding can sometimes examined generally follows the pattern of the come unexpectedly available late in the year Construction Industry KPIs. Some of the for particular initiatives, but may only be authorities with established systems of accessible to authorities in a position to measurement compare their results with proceed quickly. The lead times associated published national averages. Their early with traditional procurement often take too results tend to show overall percentage long. North Tyneside found itself able to profit increases which are at their greatest in the where it could allow its contracting partner to area of service quality. Client satisfaction commence on site before full scheme levels in particular tend to show dramatic early documents were available in the confidence rises. In establishing new and much higher that an acceptable price could later be agreed. levels of expectation, the longer running schemes have found it challenging to sustain Economic the same level of improvement. Economic benefits may be taken in cashable form or reinvested in product quality or a In an industry often criticised for its safety mixture of both. Programme based record, improvements in efficiency of health procurement creates opportunities to develop and safety audits represent another valuable relationships with suppliers for product gain. Performance management in Hampshire developments to be applied to a series of has measured these at 37%. projects. Both Hampshire and Manchester have taken efficiencies in this way. Time Speed of project delivery is regularly improved Cashable efficiencies emerging as measurable with reduced procurement time, savings in cost savings derive from three main sources: design and construction time. i) Tendering Hampshire quotes 90 day savings in A single framework tendering exercise costs procurement time for project when a less than tendering individually the many framework call off arrangement is compared projects which may be handled under the with single project procurement subject to framework. Manchester has assessed the European directives. Design time savings can saving in its schools frameworks at between approach 40% with corresponding cost 1% and 2% of the capital cost annually. benefits.
Transforming nment local gover construction Redrow Debut Scheme, Rugby
By including the savings made by contractors iv) Overall 24 on bidding for jobs they do not win, Economies are at their greatest where the Birmingham has estimated that it is saving benefits of supply chain engagement can feed between £6.0m and £8.0m per year on a through into the framework. Hampshire has programme valued at £150.00m. assessed the overall benefit as a saving of 10%. On a programme of Nursing Care ii) Supply Chain and Programme Procurement Homes this was independently benchmarked The Birmingham Construction Partnership as a reduction of £150/m2. Norfolk Property illustrates this by an example of procuring Services puts the figure at around 12% on security doors for its housing projects saving secondary schools and 4% on primary some £750k on an order valued at £5.0m. It schools and small works. North Tyneside pre- employs reverse e-auctions to purchase partnering costs exceeded budgets by around certain materials and components for its 10%. They were afterwards assessed as programme. some 6% below.
By involving the supplier in the design of aluminium windows, North Tyneside was able to reduce the cost by 30%
In general, savings of 20% and upwards are being achieved on individual elements procured in this way.
iii) Risk Economies attributable to shared risk management represent a further significant source of efficiency. Norfolk Property Services has estimated that this is represents a major component of the overall savings it makes. SEVEN advice and lessons learned
7 Advice and lessons learned
Those who had gone through the process of ¥ Don’t let people get ’fat and happy’ - the 25 developing and setting up the frameworks process needs healthy competitive tension to examined were asked what lessons they had sustain improvement. learned and what advice they might offer to ¥ Maintain open book approach to target cost those contemplating a similar course. There development and verify cost derivation. was a lot of commonality in their responses. ¥ Measure continuously. Keep benchmarking The following summary of their comments, current. largely verbatim, needs little further ¥ The framework needs to be managed and commentary: there must be continuity with the process through which it was developed. ¥ Be sure why you are contemplating a ¥ It works better when more than one framework and what in technical terms you contractor is in the partnership. want to get out of it. ¥ Be clear about individual roles and ¥ Start by asking the hard questions - Why are accountabilities. we doing this? ¥ The importance of individual relationships ¥ Sort out the objectives before starting cannot be underestimated. through a full engagement with all ¥ One of the biggest successes was the stakeholders. preparation of the interrelationships manual ¥ It is not a quick fix. after tendering. ¥ Don’t rush - it will take time. The benefits ¥ Regularly review the risk register and update take years to realise. costs. ¥ Frameworks are not an easy option. Do not ¥ Some people can’t hack it and need other underestimate the work involved. assignments. ¥ If there are endemic problems, it will not fix ¥ A real test is what happens when things go them. wrong. At the beginning there was a ¥ Don’t be afraid to seek help. tendency to revert to type and start to ¥ Keep to pure Egan. allocate blame. Now people get together ¥ Be sure to check and validate all claims and sort it. made at tender stage. ¥ There is a need for a critical succession plan. ¥ There will be a culture change for individuals and for the organisation. ¥ Understand the commercial world of the contractor and what drives them. Work continuity, risk reduction and the chance to be a real influence are important to them. Transforming nment local gover construction EIGHT small and medium enterprises (SMEs)
8 Small and medium enterprises (SMEs)
Concern is periodically expressed that letting SME opportunities are increased where: work in larger programmes favours the 27 interests of larger contractors and suppliers to • The authority incorporates lower value work the detriment of SMEs. This is not borne out bands as in Norfolk. by the schemes illustrated in this report. • More contractors are appointed in the lower The interest of smaller companies was value work bands to spread the identified as an issue by elected members in opportunities more widely. The Hants SME Norfolk. The NPS frameworks include one framework plans to include ten contractors. covering projects up to £500k. The Leeds framework includes has twenty- seven contractors including general Hampshire is creating a new framework contractors and specialists. modelled on its successful major works framework for projects up to a value of £2.5m. • Contractors are willing to work flexibly, It is specifically badged as being aimed at sometimes undertaking projects in their own SMEs. right but also contributing to the resourcing of bigger schemes managed by larger The Leeds framework provides opportunities companies. for smaller builders and specialists. They undertake elemental work which is likely to Framework agendas are driven by shared account for a big proportion of a housing commitments to service quality, performance framework like electrical rewiring, window and improvement, technical innovation, waste door replacement, reproofing, redecorating exclusion economy, and responsibility. SMEs and work in kitchens and bathrooms. must be willing to contribute on terms which match those accepted by the other team If not included as part of the original tender as members, and not see size as placing limits on such, the approach adopted in Leeds, it can their capacity to contribute and perform. still occur afterwards in the development of the supply chain where further significant opportunities exist.
Transforming nment local gover construction NINE small authorities 9 Small authorities
The majority of the schemes presented have In cases where there may not be sufficient been developed by larger Metropolitan or technical experience to carry out the process, 29 County Councils, and the view is sometimes general support and guidance can often be expressed that frameworks are more suitable freely obtained from larger better resourced for larger authorities. Larger authorities may and more experienced authorities, and enjoy the benefits of greater technical capacity assistance can be commercially procured from and larger capital programmes. Collaboration a number of consultants. between smaller authorities can however go some way to achieving the same ends. Larger It is interesting to note that the first authority in authorities are frequently tendering their the field was also the smallest. North schemes, particularly second generation Tyneside, a Metropolitan District within Tyne frameworks, on terms which would permit use and Wear with a population of less than by neighbouring smaller authorities. 200,000 had its framework running in 2000. It Resistance is more often a product of managed the whole process in-house. concerns about sovereignty and the feeling of being overwhelmed by the scale of 'big brother' authorities than of practicalities.
Transforming nment local gover construction TEN the contractors’ perspective
10 The contractors’ perspective
The concept of developing and working with organisation the 'client' is often represented by supply chains has more novelty to those many people with divergent and 31 procuring construction than to progressive uncoordinated agendas. The results can contractors who have long cultivated range from inefficiency to critical lack of associations with their subcontractors and control. suppliers in recognition of their wider commercial significance. The developments It has been observed that embarking on fostered through frameworking derive from frameworking brings cultural and tailoring the particular supply chain to the organisational change for clients. Contractors programme and increasing market leverage too are changing to embrace the opportunities through programme as opposed to project emerging in the collaborative environments, based purchasing, and securing technical including frameworking, in which they are innovation where the assurance of work flow increasingly operating, and in the skills they sufficient to repay the investment it might need to bring. entail. Many contractors now see themselves as In terms of efficiencies, contractors feel they 'solution providers'. By introducing technical can still offer more where it is possible to plan specialists earlier and perhaps on large work flow on terms which allow the smoother programmes employing them, initial design passage of trades between the different work can be both simplified and speeded up. projects in the programme, and in moving key Institutional work programmes both local management staff between projects. This regional and national create opportunities for obviously presents challenges to local the development of generic solutions capable authorities grappling with annual funding of widespread replication, enlarging the scope regimes and mechanisms for determining for efficiency and economy. This can bring not investment priorities which are linked to them. only benefits in construction procurement, but squeezes unnecessary waste from the design Contractors also point out that many clients process. Savings of 25% and upwards are remain unrealistic in their budgeting and reported as being achieved in early aspirations. They can quickly identify benchmarking exercises. irreconcilable differences between scope and budget. Instructions to nevertheless press on Frameworking moves contractors away from with more detailed costing while the client the commercial imperatives of searching for 'seeks additional funding' are often recipes for entirely avoidable waste. In public sector Transforming nment local gover construction following project opportunities and releases Frameworks which recognise these capacities, 32 capacity which can return more valuable and create the environment in which they can benefits with both project and community be liberated, are likely to benefit greatly across focus. These are reinforced by the closer the value added agenda. Tenders for community associations resulting from framework contracts which identify these as framework management arrangements issues for consideration might reasonably be particularly where housing is the dominant expected to appeal to more potentially subject area. Contractors increasingly productive contracting partners. contribute to the corporate social responsibility agenda. Their representation on bigger programmes of work takes the form of more senior and influential managers.
There is more capacity to invest in training and many successful examples exist in mixed communities characterised by higher than average levels of deprivation. This is not limited to trade training and apprenticeships but extends to engagement with schools and other centres of education to advertise the wider opportunities available in the industry. Progressive contractors wish to be appointed for the skills they can bring and for the value they can add. They want to be seen as much more than 'the man who puts one brick on top of another'. ELEVEN collaborative opportunities in highways
11 Collaborative opportunities in highways
In one respect the situation of highways differs It identifies seven objectives for the delivery of from general building work. Whilst in terms of the strategy. These place considerable 33 user amenity, a journey commencing in a emphasis on collaborative working at all levels, county lane and moving to a minor road and sharing of knowledge and culture based on then to a trunk road or motorway might be the principles of partnering. By way of seen in terms of progression as the passage example, it envisages making Highways from roads of limited scale, capacity and Agency framework contracts accessible to speed to roads of increasing capacity, scale local and highways authorities, with and speed, the journey crosses an invisible aggregation of demand and e-procurement to line of demarcation. Local roads are the increase market leverage and efficiency in responsibility of the local highways authority, materials procurement. In the management whilst trunk roads and motorways are the areas around Birmingham and Manchester, the responsibility of central government HA framework contracts and management discharged through the Highways Agency. arrangements now in place will support collaborative working between central and The Highways Agency is the government's local government in the procurement of nominated 'change agent' charged to work highways projects. Access to these with others to deliver the efficiencies in roads opportunities will in future become more procurement identified in the Gershon widely available across the country. Efficiency Review.
In September 2005, the Highways Efficiency Liaison Group comprising senior representatives of a number of Highways, Engineering and local government bodies published an important strategy for the industry under the title of 'Achieving Efficiency Gains from Collaborative Roads Procurement'. Building on existing developments and initiatives, this has set an agenda for improving service and efficiency in the highways industry to meet government targets and improve service to road users.
Transforming nment local gover construction TWELVE future directions in frameworking
12
Future directions in frameworking
First generation frameworks, even where counties to the Isle of Wight (excluding advertised as non-exclusive, have been London) Consultation in the earlier feasibility 35 conceived for the delivery of the programmes stages has identified the prospective of a single authority. Frameworking is involvement of some nineteen county and however incremental, and as the potentials unitary authorities with a combined annual within a framework of a single authority are expenditure approaching £400m. The scheme exploited, the possibilities obtainable from will develop through demonstration projects, wider collaboration set new challenges and gateway review and governance development become more achievable. between participating authorities.
Local and sub-regional collaborations are A project of great interest nationally to both currently being planned, such as Barking and central and local government, more than any Dagenham's involvement in NELProG, a north other, it will help to establish the limits and east London Borough collaborative. Scape possibilities of construction framework System Build Ltd, a wholly owned local arrangements. authority company based in Nottinghamshire and supported by the East Midlands Centre of Excellence offers participation to a geographically unlimited constituency.
Such ventures will create new organisational demands in terms of management, add new dimensions to training requirements and require new legal entities through which to operate.
The most ambitious is the SECE project, an initiative from the South East Centre of Excellence driven by the experience of Hampshire County Council. Currently published to the point of seeking a commitment to participate from Council Leaders and Chief Executives, the synopsis proposes a regional framework accessible to authorities from Kent, through the home Transforming nment local gover construction THIRTEEN widening the reach
13 Widening the reach
The benefits obtainable from construction Some local authorities are already helping framework contracts invite consideration of others through assistance and mentoring. 37 how their use can be promoted and adopted Birmingham operates a strategic partnering more widely. The current CPA process looks initiative through which guidance is given to at capacity and VFM arrangements and the other authorities to take advantage of ODPM in its report 'Delivering Efficiency in Birmingham's experience in the development Local Services' sees …. 'Better procurement of their own schemes. Leeds is attuned to the of new construction as a key action to achieve possibilities of making its own scheme more efficiency gains'…. helping to meet the targets widely available to smaller towns in the region. put forward by Gershon. Where authorities are not involved, how might As the schemes presented here illustrate, there they be encouraged to become engaged? In is a wealth of experience in local government, areas of the country where frameworks are but also in agencies of central government less well established, should key authorities be and RSLs, showing how to successfully invited to become involved? ...... if so, by manage frameworks. whom? ...... should assistance be offered? ...... would central government participate in Where the will exists, a number of possibilities strategies to assist? …..and might it contribute may be identified. support?
Collaboration between authorities around These and other questions might engage the established centres of experience is one consideration of a broader audience. The option. This need not be limited within the contribution that construction frameworks can local government sector. Many Housing make to meeting current efficiency targets Associations are involved in similar initiatives makes them worthy of wider discussion and which may offer collaborative opportunities to debate. housing authorities particularly where the stock is in the same geographical locality and where earlier stock transfer has occurred.
The Highways Agency has frameworks established for work on trunk roads and motorways and opportunities are growing for local highway authorities to take advantage of them in the same areas. Transforming nment local gover construction FOURTEEN framework profiles
14
Framework profiles
Redrow’s Apperley Court Apartment Scheme, Apperley Bridge, Bradford, Yorkshire.
The next section comprises an outline of the ten schemes on which this report is based, 39 giving an overview of their scope, development, application and management
They feature the work of the following authorities:
London Borough of Barking and Dagenham
Birmingham City Council
Durham County Council
Hampshire County Council
Leeds City Council
Lincolnshire County Council
Manchester City Council
Norfolk County Council
North Tyneside Council
Scape System Build Ltd (East Midlands)
Transforming nment local gover construction PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 41
London Borough of Barking and Dagenham Construction Related Framework Agreements
Status The Council also wishes to advance its policies related to the local economy, environmental Currently in the final stages of contractor selection, sustainability and diversity. The frameworks are the frameworks are scheduled to come into seen as a vehicle to assist in reducing transaction operation in summer 2006. costs, overheads and waste, at the same time as increasing scope for performance related surpluses Authority and the amount of work done on site. Programme- based procurement of major subcontract packages The frameworks have been advertised as and materials with integration of supply chains and applicable to the work of Barking and Dagenham e-procurement are seen as increasing market and available to surrounding boroughs up to an leverage and efficiency. annual expenditure level of £100 million.
Aims and Objectives
To achieve higher quality buildings delivered on time, budget quality, develop less adversarial relationships with contractors, improve value for money and maximise the purchasing power of the Council's capital programme. Work Area - Project size range Project allocation
Three frameworks will be created to procure A Construction Framework Group is currently being diverse schemes where smaller schemes may be established, whose staff will be responsible for 'bundled' to effect economies of scale. Housing managing the framework agreements in order to and Health projects are projected to account for ensure that the project's objectives are met. around £40m expenditure annually, Civil Engineering and Infrastructure up to £12m with Risk Education and Regeneration accounting for a further £15m to £20m. In total, around 100 Risk will be analysed on a project basis and projects per year will be managed through the assigned by agreement for management by either frameworks. the Contractor or client according to who is best placed to do so. In accordance with current European Directives and the terms of the OJEU Notice, it is proposed to Retentions appoint four contractors to each of the three frameworks, which will not afford multiple None. appointments. Each will have a duration of four years. Measuring Performance Efficiency
Development Schedule The Construction Industry KPIs measuring client satisfaction with product and service, time and From Executive approval in June 2005, it will have cost predictability, safety, defects etc will be used. taken some eight months to work through the In addition there will be measurement of team 42 process of framework drafting, OJEU advertising, performance and continuous improvement. prequalification and evaluating final submissions to the appointment of contractors in the summer of Future 2006. An intense period of staff and contractor development training on operational arrangements Barking and Dagenham is a member of the North will continue through spring and summer with East London Procurement Group (NELProG) which transitional and go live dates planned for summer also includes the neighbouring Boroughs of 2006. Newham, Redbridge, Havering and Waltham Forest. They are jointly involved in the development of proposals to set up a collective Framework Development collaborative / procurement alliance possibly operating through a special purpose vehicle. It is The development stage of the frameworks has planned to go live in the first half of 2007 at the been overseen and directed by senior earliest. representatives of the departments whose work is involved, who work through the Steering Group engaging with representatives of the Council's technical, legal, finance, risk and audit groups. External consultants were also engaged to assist with the detailed work and manage the pre- contract processes. LBBD is currently working with Constructing Excellence in respect of benchmarking and determining the project KPIs as an integral part of the development process.
Basis of Framework Award
Quality/Cost matrix 80% - 20% in relation to the initial contractor selection process, though this will vary in relation to individual projects let under the framework agreements depending on complexity Contacts and risk. Ian Saxby Acting Head of Building Design Form of Contract London Borough of Barking and Dagenham The framework leaves project contracts negotiable E-mail: [email protected] within set limits
Impr ovement through ef ficiency PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 43
Urban Design, Birmingham City Council Birmingham Construction Partnership
Authority Project specific performance targets following the national scheme of performance measurement Birmingham City Council Urban Design created a provide a basis from which to assess continuous framework partnership with contractors appointed improvement. Decent homes standards have been to carry out capital investment projects of design, adopted on housing projects and more client construction and maintenance on council projects choice is available. (excluding housing maintenance) for a period of five years extendable by two years. The Work area - project size range Birmingham OJEU notice was not exclusive to the City Council's work. After market consultation, Birmingham opted to include schemes over £100k within the framework. Aims and Objectives Projects include schools, housing, buildings for social care and leisure along with offices and Objectives were determined by an extensive historic buildings. process of engagement and consultation with clients, users and elected members. They included producing higher quality buildings, delivering them more quickly, improving design, reducing costs and adding value though increased local employment and material sourcing, sustainability and reducing whole life costs. The Council envisaged placing £350m value of contractors' offices to further assess contractors' work over the life of the agreement, a figure now claims and capacities. Separate interviews with seen as likely to rise to between £500m. and clients were included in the process. Cost £600m. Current year expenditure will be around elements probed profit and overheads, required the £140m. cost plan pricing of specimen projects. An exercise on one project attracting high marks Numbers of Contractors required it to be value engineered and redesigned, addressing sustainability and whole life costing. Balancing the need to create a manageable and responsive partnership with the need to retain the Project Pricing benefits of competitiveness comparability in performance, up to four partners were sought. Each job starts with an outline brief and sketch. Three were eventually appointed, one national All work proceeds through briefing, feasibility and contractor, Wates Group, and two regional design development stages at risk until client contractors, Thomas Vale Construction plc and G F business case approval is secured and there is a Tomlinson Building Ltd. sign off and commitment to invest. The design is then frozen, KPIs are agreed and the project moves The intention was to work with these contractors to into the detailed design stage where value develop key supply chain relationships to support management, buildability, risk and sustainability are delivery of the City's capital programme. addressed. Pricing is open book and examined on an elemental basis by in-house staff. Development Schedule Minor differences in tendered profit and overheads It took 18 months to establish and document the originally existed between the chosen contractors. 44 project objectives with clients. Market consultation During the development stage of the framework, it and prequalification processes took place over was agreed to move to common levels. another 14 months. All project documentation was prepared in house. External assistance was Retentions engaged to facilitate some of the workshops. A smaller than usual figure originally included is Contractors were appointed in December 2003 and now being withdrawn. the Birmingham Construction Partnership (BCP) was created. It spent the first three months of Measuring Performance Efficiency 2004 developing a procedures manual to set out how the partnership was to function. Joint structures created within the partnership review project performance in accordance with the Prequalification and Tender Evaluation national scheme of KPIs covering time, cost, defects, service quality and health and safety. The pre qualification questionnaire required Measures including keeping appointments are presentation of basic company/financial included on housing projects. Working information, experience of similar projects, relationships are separately measured as strategic technical capacity structure and resources, and KPIs providing assessments of the contributions of examples of collaboration. Shortlisting and tender all participants in the team (including Urban design) evaluation was undertaken by a panel comprising to facilitate decisions on team Urban Design Technical Staff and a member of management/working. Corporate Procurement with input/overview from Birmingham Audit. Financial efficiencies - some £6.0m - £8.0m annually is saved by the Partnership over traditional Form of Contract client and contractor tender costs by not having to tender projects, on a programme of c£140.0m. This was tendered as an open matter utilising an Work offering scope for repetition, particularly in overarching framework agreement, subject to housing, is a fruitful area for savings. A security negotiation and mutual agreement. The NEC door programme of £5.0m was reduced by up Option C with partnering principles was adopted as £750k. On construction costs generally an overall the contract basis for each project awarded. saving of 5% is being achieved but on selected elements can be higher extending to 15% in Basis of Framework Award specific examples.
Quality/cost matrix 80% - 20% cost. Quality Key performance figures from the first year of assessments involved written submissions and operation show the following interviews, with follow up visits to projects and • 92% project completions with nil or minimal defects (Compared with national average 70% and Birmingham 2003/04 70%) Impr ovement through ef ficiency • 61.8% projects delivered within 5% of target cost (Compared with national average 38% and Birmingham 2003/04 29.3%) • 62.3 % projects completed within 5% of target time (Compared with national average 60% and Birmingham 2003/04 38.9%)
Performance Incentives
A project specific Pain/Gain share is operated in accordance with the NEC form of contract and in addition work allocation is driven by contractors KPI performance, which is adjusted every three months.
Risk
At the commencement of each project a joint assessment is done, project risks are identified and those to be managed by the contractor are separated from strategic risks retained by the client.
Process of management 45 Management of the processes prior to tender were managed by Urban Design.
Partnership operating structures on which Urban Design and construction partners are represented, deal at the highest level with strategic performance, which overviews project performance, partnership development and continuous improvement, client consultation, user consultation and project development.
Contacts Steve Vickers General Manager, Urban Design, Birmingham City Council E-mail: [email protected]
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 47
County Durham - Highways Framework Strategic Alliance for Civil Engineering Works
Authority Number of Contractors Appointed
The OJEU notice followed the restricted procedure The Alliance consists of the Durham County and limited the scheme to highways projects of Council, Balfour Beatty Civil Engineering, Ringway, Durham County Council. Cumbrian Industrials, and Service Direct, the in- house DSO. Capita and Jacobs Babtie provide Work area - Project size Range design services. Environment is the client, and also provides a design input. The Alliance undertakes two areas of programme work - Local Transport Plan and Non-Local The framework was tendered for an initial five year Transport Plan work along with work arising from term extendable by two. S.106 and S.278 agreements. The value of the two programmes for 2005/06 is £38 million. On average the frameworks handle £40 million of projects per year with a total value of £120 million committed to date. Individual project values range from £10k to £10m. Design services are provided through the contracting partners. Aims and Objectives Work Allocation
• Reduce Capital costs and whole-life costs. Project allocation remains the prerogative of the • Reduce design, supply and construction time. Client, and is determined by considering the • Increase predictability of time and cost. technical demands of the project and the skills, • Reduce defects and target zero defects. experience and capacity of the contractors. It is • Increase productivity. planned to move in future to a system where • Improve quality. measured project performance informs the process • Improve sustainability. of project allocation. • Skills development and training. Performance Incentives Form of Contract The benefit of performance improvement on project The overarching agreement comprises a set of target prices is shared equally between the council partnering principles. PPC2000 is used for and the contractor. The contractor bears costs in individual projects commissioned. excess of the agreed fixed price.
Development Schedule Continuity of project assignments is seen as the most important incentive from the contractors' It took some fifteen months of planning to reach perspectives. the point of publishing the OJEU notice, and six months to reach the point of going live. Most of Process of Management the preparatory work was undertaken by in-house resources with limited external consultancy A Strategic Group comprising a Board of Members, 48 support. Chief Officers and Contractor Directors meets three times per year to overview the operation of the framework, its performance and direction. Basis of Contract Award The Strategic Core Group comprising Chief Officers Assessment procedures employed a quality - cost and Contractor Directors meets monthly to review matrix weighted 70% - 30% operations.
Project Pricing The Award of Work Group meets monthly and considers programme monitoring. Overheads and profit were determined through the tender submissions. Project costs are priced on an The Alliance Project Team meets every two months open book basis. and considers systems, the business plan, and reviews performance management feedback. Risk Training Project risks are jointly reviewed at the outset and assigned by agreement between the client and the In the early days training was extensive, extending contractor according to who is best placed to from Alliance team strategic members to manage the individual items. The register is construction training on the labour side. reviewed and re-costed throughout the life of the project. Risks associated with entry into the Alliance were also assessed.
Retentions
None
Measuring Performance Efficiency Contacts The Construction Industry standard indicators are used to measure project performance to Burney Johnson benchmark against pre-framework performance, Head of Transport Strategy and Design general industry performance, and to track improvements over the life of the framework. E-mail: [email protected] Team performance is measured through mutual evaluation by participants.
Impr ovement through ef ficiency PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 49
Hampshire County Council Building Construction Framework
Introduction of its work on a conventional tender basis. Such work is procured using a variety of procurement Hampshire County Council's (HCC) construction techniques including single and two stage tenders, framework commenced in 2003 to carry out major develop and construct etc. This serves to capital construction projects and programmes of maintain a mixed basket of procurement routes work. A further framework targeted towards SMEs relevant to the individual project requirements. It will handle intermediate size projects, and is also acts as a valuable benchmark for new currently being trialed in a pilot project phase. HCC arrangements and aids succession planning. also have a number of specialist frameworks and partnerships covering a broad range of activities. HCC are also the lead authority in the Construction These include areas such as engineering services, Workstream for the South East Centre of roofing and hard landscaping. In addition HCC has Excellence (SECE). developed wide ranging consultancy service partnerships to support the delivery of a significant capital and maintenance programme. The major construction framework OJEU notice was specific to the HCC's work. Whilst 70% of the authority's programme was committed to the frameworks and collaborative working, the authority consciously opted to continue to procure 30% Aims and Objectives working arrangements. In its final form, the SME framework will likely comprise about ten HCC set out to improve the quality of service and contractors operating over two value bands. extend the range of choices available to its clients. This is done to provide value for money, remove Through the major framework, HCC are developing waste and streamline processes through the whole supply chain strategies for aggregated programmes life of projects. Objectives were determined in of work. The most notable example is their new conjunction with clients, users and elected nursing home programme which accounts for some members. These led in terms of construction £50m of construction work to build ten new homes efficiencies to goals of improved processes of and refurbish seven. On this, HCC has appointed design development, procurement and three of its framework contractors to jointly develop construction. This enabled better use of resources supply chains across the whole programme. These to ensure that competencies are properly deployed cover 60% of the work including the frame and wasteful activities are driven out; adding value solution, mechanical and electrical services, to the whole life of a project by engaging all parties roofing, windows, cladding, lifts, other specialist in joint ownership; and seeking out gains through areas and generic materials. Leverage obtained aggregation, leverage discount for economy of through programme procurement has facilitated scale, and to avoid bespoke procurement. specialist product developments of which examples include a cold rolled steel frame solution Work Area - Project Size Range and sprinkler system, which have achieved volume discounts. Future strategic developments envisage The major framework envisaged projects and total supply chain management geared to meeting programmes of work generally from £1m to £30m client objectives in the delivery of the overall HCC comprising schools, nursing care, libraries and programme. 50 other large developments for a period of four years extendable by a further two. The largest proportion On the SECE major framework contractors will be of the projects are from the education sector. In appointed to suit the emerging workload. Current total thirty-five projects valued at £170m are either commitments indicate a need for an initial in progress or completed so far, with an annual appointment of six contractors, rising to a possible expenditure in the order of £50m. ten. Following consultations with County Councils and Unitary Authorities in the region, they are using the The SECE framework will be designed to operate in experience of their own major project framework to a number of ways: establish a similar arrangement available for all • Regionally for any major building project. authorities in SECE. This framework is being • Focused on similar themes or programmes of tendered currently, and will be able to work as they emerge. accommodate a total major project workload of up • Sub-regionally around cluster groups or individual to a forecast £200M / annum. authorities who have large programmes of work.
A second tier framework is also being procured by Development Schedule HCC, which will be particularly suited to SMEs. Pilot arrangements are currently underway. This HCC undertook the shift to collaborative working framework will be used for smaller projects, but will over a three year development period involving a overlap with the major framework and carry out number of major projects and programmes of work. projects up to a value of £2.5m. The intention of During this time some 30 projects were undertaken this is to create more capacity in the above £1m through a range of procurement strategies. Most category, so that larger regional contractors can notably these included the new John Hanson also be engaged on major schemes. The Secondary School in 2001 which was an M4i framework is intended to run for a four year period demonstration project. Other projects included and will also be open for participation to other several primary schools and a programme of NOF SECE authorities within Hampshire following recent Sports Halls utilising a standardised design local interest. Discussions are also underway with approach. two neighbouring cluster groups for the development of similar arrangements. The move to frameworking represented a logical development of the individually partnered projects Numbers of Contractors and short term programmes on which HCC had obtained considerable experience. The major Six national contractors were appointed to the framework was also seen as an essential HCC major project framework. The SME pilot mechanism to deliver the new nursing care home framework has five contractors appointed and work project noted previously. Prior to tendering, market is being carefully allocated to test and develop the consultation and pre-qualification took place over a six month period. All the framework documentation was prepared in-house. Impr ovement through ef ficiency Pre-qualification for the SECE Major Project • Pricing information consisting of costed elements Framework started in October 2005 after including overheads and profit, management consultations with SECE members over a twelve costs, project specific preliminaries and specimen month period. Shortlisting for tendering was projects to create pricing templates for the priced complete in December 2005. Contractor briefing illustrative scenarios. took place in January 2006 and tender documents (also prepared in house by HCC staff) have now • Specific proposals to support and manage the been released following further consultation with framework, and implement building projects (the SECE authorities. team and the organisational arrangements)
Pre-qualification and Tender Evaluation • The approach to developing and improving the working arrangements; experience of partnering On both the HCC and SECE frameworks pre- and measuring improvements qualification was in response to a number of specific questions rather than a long questionnaire. Formal agreements were entered into after The key responses were based on suitability and consultation with the selected contractors, to experience, particular experience of collaborative provide the basis for developing and managing the frameworks with supporting case studies, Framework. The agreements include the management arrangements, presentation of following: detailed company/financial information, technical capacity and resources. Other matters covered • The key objectives included staff training and development, and their • The framework for working practice, to include environmental policy. On the SECE framework the selection processes for individual shortlisting and tender evaluation was undertaken projects/programmes by a panel comprising HCC staff in consultation • The workshops to establish the detail of the 51 with SECE authorities involved with demonstration framework in operation, and to monitor progress projects. Tenders are going to be assessed on a and for critical review number of competency and ability criteria including • Key points of contact and communication the contractors ability to bring together sustainable arrangements supply chains. • Development, innovation and measurement of improvement Form of Contract • The creation of management tools and mechanisms to control and improve the HCC has developed and written its own form of framework outputs Framework Agreement with a supporting practice • Details of integrated working and opportunities note and guidance manual. The major framework for joint training contractors have participated in the development • The creation of key supply chains of these working arrangements. Project Pricing The underlying contracts are let using the JCT suite of contracts; either the Standard Form or With On the HCC major framework the contractors are Contractor's Design as appropriate. generally appointed at RIBA stages C or D. Initial appointments are on the basis of a pre- The new JCT Framework Agreement is being construction involvement fee which may entail considered as the core document for SECE major design work commencing from the outline brief and framework. scheme design. Prelims are based on the templates generated from the original framework Risk tender and subsequent schemes. Projects are developed collaboratively during the design stages. A joint risk management plan is developed for each The work is jointly cost planned and tendered project with the appointed contractor to determine through the contractor to arrive at a fixed price for which risks associated with the project are the project. Client risk is added either as managed by the contractor, and which are retained provisional sums or a contingency. The contractor's by the client. This process commences prior to own risk is included within the fixed price. Pricing scheme design. It should be stressed that the is fully 'open book' and the final fixed price whole project team is involved with ongoing risk includes all value engineering savings achieved management, irrespective of who 'owns' particular during the pre-contract stage. The SECE Major risks. Project Framework will operate in a similar way but will incorporate key learning from the HCC Basis of Contract Award framework.
• The award of the HCC framework was based The SME pilot framework was tendered on the upon the following key areas: basis of a number of template projects. The contractors are working with the ficiency through ef ovement Impr HCC team to develop consistent approaches and • A strategic forum involving all the framework solutions to projects, using tendered rates, prelims contractors to develop and review the and subcontract tendering to build up a fixed price arrangements. It is held quarterly, chaired by project sum. HCC at senior management level, and involves each Contractor's responsible Director and Retentions Account Manager.
HCC are working towards nil retention when zero • A Principals’ meeting between HCC and each defects achieved, otherwise 1.5% is held. individual framework contractor, for an open discussion mainly focusing on current workload, Measuring Performance Efficiency performance and collaborative working
Team performance is assessed through processes • Project specific arrangements to support the which gives all project team members (including implementation of schemes, including regular framework contractors) the chance to measure the workshops within the second stage development effectiveness of each others contribution to the and a similar forum to continue during site project. operations.
In terms of financial efficiencies, HCC can The process by which the allocation of contractors benchmark savings of up to 10% on aggregated to undertake projects has been established and will work under the framework compared to receive formal approval as follows: conventional tendering. This is attributable to the development of common products and supplier • The “preferred” or “logical” framework contractor procurement across the programme which for a scheme, taking into account current 52 encourages volume discount, continuous workload, experience and performance. improvement and risk minimisation through • Discussion at the forum to check individual learning and experience. The evidence also contractor's current capacity and preferences; suggests that savings in professional time can be and availability of key staff and teams, giving significant through the approach of avoiding continuity where possible. bespoke solutions. There are however many other • A mini competition is sometimes used as a basis benefits, such as contractors have involved more for selection for the larger and more unique senior staff in the operation of the programme with projects. benefits to the client, and continuity resulting in learning being recycled into the programme. There Training have been savings in time particularly in pre construction stages, defects are reduced and levels Training of technical, client and contracting of satisfaction with the process are higher from personnel in the disciplines required by framework clients, designers, contractors and elected operation is led by HCC and the framework members. contractors across their respective organisations. Workshops based on live project examples have Performance Incentives been used as a basis for joint training. The nursing care programme has been used as a pathfinder The are no financial pain gain incentives built into project for the development of the arrangements the arrangements which HCC have developed for and working practice. A forum has recently been itself or envisaged for the wider SECE initiative. held with all the participants to the framework (both Performance of all arrangements is closely HCC and the contractors), as a joint training event monitored throughout the pre and post contract and means to shape the future direction of the stages. HCC have developed a set of bespoke arrangements. KPIs to measure performance through this process, which can be compared with national equivalents. The introduction of the major framework has also All of HCC's framework contractors have bought enabled HCC to extend its modern apprentice into the key objective of providing a continuously scheme to its construction industry partners. improving level of service, and this is the basis of Twelve young people have joined this scheme and sustaining the arrangements for the benefit of all are undertaking NVQ's whilst receiving their work parties. experience on HCC projects during their employment with the framework contractors. Process of Management
The HCC framework principally has three levels to the management/working arrangements:
Impr ovement through ef ficiency 53
Contacts David Corcoran Head of Procurement, Property, Business and Regulatory Services E-mail: [email protected]
Andrew Smith Director of Property, Business and Regulatory Services
Keith Heard Senior Project Manager, Business and Regulatory Services
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 55
Leeds Homes Construction Partnership Neighbourhoods and Housing Property Management Services Working in collaboration with Leeds ALMOs and BITMO Authority ALMOs and Registered Social Landlords (RSLs).
The Partnership has been brought about by Leeds Objectives of the Leeds Homes Construction City Council through its Department of Partnership Neighbourhoods and Housing Property Management Services in conjunction with the six The Construction Partnership's principal aim is to Arms Length Management Organisations (ALMOs) bring Leeds 62,000 homes up to the Decent and the Belle Island Tenant Management Homes Standard by 2010. This could not be Organisation (BITMO). The six ALMOs and BITMO achieved through conventional single project are wholly owned by Leeds City Council and are procurement arrangements previously used. The registered in England as companies and have principles of Latham and Egan were adopted to responsibility for the management of its housing develop more productive contracting associations, stock of 62,000 units. The Partnership is delivering build continuity and improve service and efficiency. capital works to the stock in order to achieve Associated objectives were: Decent Homes Standard by 2010.
The OJEU notice was published in February 2005 and stated that contracts awarded under this procurement exercise may also be available for use by other organisations within the region including Council organisations, • Developing partnership working across the team types such as Aireys, Caspons, 5Ms, Wimpey No including joint problem solving aimed at Fines, Livett Cartwrights, Reema and Mytons. identifying and implementing effective solutions • Developing a process of joint business action The Partnership comprises a strong mix of twelve planning in order to deliver the strategic goals of larger contractors, SMEs and two DLOs, the Partnership collectively reflecting the local industry and • Tackling a potential material resource shortage ensuring the necessary skills mix is available to through the development of a co-ordinated support the programme. It includes Baldwin & Co., Supply Chain Management Strategy BAAS Construction, Bermar Building, Bullock • Tackling the labour resource shortage through the Construction, Connaught plc, Hobson and Porter, retention of local contractors and sub-contractors Keepmoat plc (Frank Haslam Milan), Kirklees • Sharing forward programmes of work, technical Metropolitan Borough Council, Leeds City Council and business requirements and cost information Department of City Services Property Maintenance, relating to the programme Lovell Partnerships, Mears Ltd and MITIE Property • Eliminating sources of waste including duplication Services. In addition there are 27 elemental and inefficiency contractors contributing to the work programme.
Emphasis is placed on tenant involvement with Development Schedule particular regard to: The decision to embark on the framework initiative • Programme planning was taken in July 2004. The aims, objectives and • Consultation on implementation contract documents were prepared between mid • General design and customer options in kitchen 2004 and the January 2005 when the OJEU notice and bathroom design was published. An Open Day was held for 56 • Continuous on-site liaison potential bidders in February 2005 at which presentations were delivered by both ALMOs and Work area - project size range Property Management Services, setting out objectives and responding to questions. The The framework relates to capital building prequalification questionnaire process concluded construction work to deliver in the region of £450m on 8th March 2005 and the short list compiled by investment to achieve Decent Homes. The major May 2005. Tenders were evaluated between June frameworks will deliver work packages of various and September 2005 leading to the appointment of sizes; work streams include whole house successful contractors to the framework in October improvement works, kitchen and bathroom 2005. The Leeds Homes Construction Partnership replacement programmes and structural repairs to was launched and the frameworks commenced in defective system built housing. Framework November 2005. contract arrangements are also in place to deliver elemental work streams in areas such as domestic Prequalification electrical rewiring, re-roofing, UPVC window replacement, high security composite UPVC The pre qualification questionnaire required framed door fitting, painting, environmental works presentation of basic company/financial and cavity wall insulation. information, experience of similar housing projects, technical capacity structure and resources, and Property Management Services deliver a co- examples of collaboration. Shortlisting and tender ordinated approach to the provision of professional evaluation was undertaken by a panel comprising services to the ALMOs including project ALMO representation, Neighbourhood and Housing management, contract administration, clerks of Property Services, the Council's Corporate works and other specialist services such as Procurement Unit and Audit Division. mechanical and electrical engineering services, asbestos and system built housing solutions. To be shortlisted contractors had to demonstrate skills and experience in the successful delivery of Numbers of Contractors similar projects and services and the following key attributes: Leeds wanted multiple contractors in each area of work for the benefit of comparison, competition • Experience of successfully delivering high quality and provision of adequate resources to deliver the service contracts in partnership in the public work programmes. Twelve contractors have been sector appointed to the framework to deliver whole house • Expertise in undertaking social housing improvement works, kitchen and bathroom refurbishment work refurbishment and structural repair works to • Specific knowledge, experience and a proactive defective system built housing including property approach to the successful implementation of the principles of Egan and or Latham on previous contracts Impr ovement through ef ficiency • Experience of using relevant forms of contract Neighbourhoods and Housing Property Services, (NEC) to deliver partnership contracts in relation and the Corporate Procurement Unit. to capital works • Delivering extensive programmes of work as part All quality related submissions were scored and of capital works to Council housing stock held confidentially by the Procurement Unit before • To work creatively and diligently as a team and pricing submissions were made at the end of June individually to deliver goals and objectives 2005. • Experience in working with tenant groups and undertaking work in and around tenanted homes Form of Contract • A commitment to delivering best value and continuous improvement in relation to economy, The Partnership contracts are based on NEC efficiency and effectiveness Option C. • Willingness to engage proactively with other framework participants The framework agreement is for a five year term • To listen, learn and deliver a service together which, subject to satisfactory performance, is exceeding customers' expectations extendable by a further two years. • To work in a spirit of openness and cooperation to achieve outstanding quality through shared Basis of Contract Award: experience, knowledge and innovation • A high degree of financial stability The agreed ratio for quality to cost/affordability was 35% - 65%. A total of 41 organisations expressed an interest across the three framework areas. After detailed Basis of Tender and Works Pricing evaluation of submissions by representatives of the ALMOs, Property Services and the Corporate Outline specification and contract preliminaries 57 Procurement Unit, tender lists were agreed as were given with schedules of appropriate rates and follows: items with quantities. Contractors were required to provide all-in labour rates overheads and profit and • Whole House Improvements 14 a written quality submission. The pricing matrix • Kitchens and Bathrooms 16 related to framework examples like typical kitchen • Defective Housing 8 or bathroom types, roofs, and this links to the brief for the specific projects assigned. Tender Evaluation Projects are costed on an open book basis which The tender process involved interviews, the in the early stages of the Partnership will relate evaluation of written submissions and cost back for comparison to the unit rates submitted at analysis. tender stage.
The qualitative element was measured through Projects are confirmed to proceed at the stage written submissions (method statements) and by when the price is agreed between the ALMO, interview and presentation. The tender evaluation Property Services and the Contractor. criteria required tenders to provide a written submission showing how, if successful, they would Measuring Performance Efficiency demonstrate; The management sub groups under the Partnership • Ability to provide a high quality customer focused Boards include one devoted to Performance service management and one concerned with supply chain • Operational efficiency management. • Service delivery • Framework operation The frameworks came into operation late in 2005. Although performance data is being continuously Method statements were evaluated prior to collected, it is too early to be able to compare interviews in mid June 2005. capital cost efficiency with that achieved under previous arrangements (involving bespoke project At interview stage, contractors gave presentations design and procurement). By the end of 2006, on ’The methods and tools used to successfully there will be sufficient data to begin to make and effectively manage contractual programmes meaningful comparisons. including contract supervision and supply chain management giving consideration to customer The ALMOs have all signed up to the West focus, operational efficiency, service delivery and Yorkshire Strategic Property Alliance (WYSPA) to framework operation’. The presentations were coordinate and share performance data assembled given to a panel of 29 comprising ALMO to agreed common standards. WYSPA includes representatives including Board Members, officers, Kirklees, Calderdale (Pennine 2000), Bradford tenants, independents in addition to officers from Wakefield and Leeds. The ficiency through ef ovement Impr members of the alliance benchmark individually Process of management and jointly with other similar organisations across the UK through Building Software Ltd. Management of the processes prior to tender were managed by a Partnership Board chaired by the The performance measures being benchmarked Head of Property Services on which all ALMOs include time, cost, time in property, client and were represented. contractor satisfaction, investment in local area, investment in region, employment of local labour, Post Tender, Leeds Homes Construction safety and defects. Partnership oversees framework management through a Main Partnership Board comprising Leeds is part of the newly formed Housing ALMO Chief Officers and Property Directors, the Community Network. This group is facilitated by Head of Property Services and the Partnership and Building Software Ltd and includes representatives Procurement Manager. from the other benchmarking clubs they manage across the UK. Membership includes Local Reporting to the Partnership Board are a number of Authorities, ALMOs Housing Associations, sub-groups to manage and deliver key objectives Contractors and Consultants. There are also links such as, equality and diversity, programming and to both Davis Langdon and Audit Commission planning, local employment and training, representatives who assist in developing and marketing, innovation and efficiency, supply chain advising the group. management, customer experience and performance and information management. The aim is to share best practice and knowledge, Framework Contractor partners are to be jointly developing new ideas. The group is integrated into these groups. currently working on implementing a range of 58 efficiency measures based on Gershon. An action plan has recently been formulated jointly by the client, contracting and technical partners Local training - The partnership will provide local setting out how the Partnership will develop. All people with employment and training opportunities. ALMOs have been asked to provide a three year By ensuring local employment in local projects, programme of works. This will assist in setting Leeds City Council will succeed in instilling pride more realistic targets and achieving real benefits and interest in the City. overseen by key partnership sub-groups.
Time efficiencies - The establishment of a framework of contractors has ensured both time and efficiencies savings linked to the procurement process. Contractor partners are actively involved in the preparation and preplanning of projects through collaborative working with ALMOs and PMS, leading to greater cost certainty in delivery.
Contacts Marie Milner Head of Property Management Services Neighbourhoods and Housing E-mail: [email protected]
Phil Rigby Partnership and Procurement Manager Neighbourhoods and Housing E-mail: [email protected]
Mandy Grace Partnership Coordinator Neighbourhoods and Housing E-mail: [email protected]
Impr ovement through ef ficiency PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 59
Lincolnshire County Council Highways Framework Contract
Authority • Improve safety on sites and on roads subject to construction work. The OJEU notice limited the scheme to highways • Benefit from more forward planning in resource projects of Lincolnshire County Council. procurement and obtain increased discounting of materials costs. Aims and Objectives • Through partnered relationships with the contractors, to create shared ownership in the The scheme was designed to take advantage of process, improve problem solving, and reduce the benefits in terms of time, cost and general conflict and confrontation. efficiencies obtainable from adopting the principles of Rethinking Construction. More specifically there Work area - project size range was a desire to: Major highways improvement schemes (including • Save on the repetitive production of tender new bypasses) over £5.0m and related professional documents. services, excluding trunk roads • Reduce the time taken to deliver projects. and motorways. • Involve the contractor earlier and take advantage of his technical expertise during the design process. • Engage more fully with the local community. Number of Contractors Basis of Framework Award
Two contractors were appointed in January 2004, The contract was evaluated on a 70/30 May Gurney and Morgan Est, for a period of eight Quality/Cost split. The quality questions were years. A framework Partnership Board comprising devised to find out the contractors' proposals to the Lincolnshire County Council portfolio holder, manage, measure, monitor and improve all issues Highways Director, Head of Service, and including involved in scheme delivery and other matters such Directors from the framework contractors allocates as Value Engineering and Innovation. Scoring was schemes. based on the principles of quality management ie What? Why? When? Where? How? Who? and Development Schedule Examples? and compliance with SMART (Specific, Measurable, Accurate, Resourceable and Timely). The business case and committee approval to it For every quality question asked, the criteria above took approximately 6 months. The prequalification were used to challenge the content of the answer process allowed the candidates one month to and points were awarded for every item addressed. complete their submissions and was evaluated The cost element of the evaluation involved a over a two week period. In parallel with this, and schedule of labour rates, percentages applied to during the following nine month period the legal the CECA Equipment rates and a percentage for documents and the contract details were prepared. profits and overheads. These were all fed into a A tender period of six weeks was allowed which typical model scheme to produce a scheme cost was extended by one week to deal with several for comparison. tender queries. The initial evaluation period took one month but the process included an interview Pricing with answers to supplementary questions that 60 extended this period by a further three weeks. Final The framework contractors' project costs are appointment and agreement of terms occurred priced from the framework schedules and the over the subsequent three month period. margin or discount applicable plus agreed profit and overheads on an open book basis. Major The prequalification process focused upon the subcontract components of the works are tendered basic capacity, capabilities and necessary to three potential subcontractors for each package. structures to support the standards of business Annual pricing adjustments are agreed by reference behaviour expected from a local government to national inflation indexes such as Baxter or organisation. The quality submission in the tender similar. then focussed on the contractors' approaches to the many facets involved in a Framework Measuring Performance Efficiency Partnership. Document preparation was carried out under the Project KPIs measure predictability of cost and control of a steering group manager covering three time, safety, environment, defects, client distinct areas. These were LCC staff defining satisfaction with product and service. Other features and coverage of the contract, a consultant measures look at how the framework is operating partner drafting NEC Services and Works elements in terms of team working and innovations. EFQM for scheme delivery and a legal company models are used. The number of projects producing the binding Framework Partnership undertaken in the first year of operation has limited Agreement that would effectively “glue things the scope for comparative performance together”. measurement to date.
Form of Contact Risk The Framework Agreement effectively commits the Council and Contractors to manage a large A system of risk allocation operates between the programme of scheme delivery. It allows payment various participants to place the identified heads of to the contractors for this service and very little risk where they may be best managed. Risk status else. is subject to a process of regular review.
Delivery of schemes is by the NEC Professional Incentives Services contract for assistance in design and by the NEC Works contract “Target Cost” for The framework provides for scheme specific construction of the works. pain/gain by percentage share based around the difference between outturn cost and agreed cost estimate of the detailed design.
Impr ovement through ef ficiency Process of Management
The framework is managed by a Framework Partnership Board. In addition to scheme allocation, this examines project performance against agreed KPIs, looks at the performance of the framework partnership and its development. Procedures have been agreed within the partnership for change control and dispute resolution. The framework was audited by Lincolnshire's auditors and the results shared to help promote continuous improvement.
61
Contacts Dave Fenton Framework Manger, Technical Services Partnership. E-mail: [email protected]
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 63
Capital Programme Division Corporate Technical Services Manchester City Council
Authority Aims and Objectives
Manchester has set up a number of frameworks. Considerable time was invested at the outset in Initial examples related to building construction clarifying objectives through working parties with include Education Framework One (F1), for the clients, users and elected members. They included design and build of schools from £500k to £5.0m raising educational standards and results, and Education Framework Two (F2) for BSF design contributing to neighbourhood renewal, creating an and build over £5.0m. The OJEU notice was not effective design and delivery process, improving exclusive to the City Council's work. safety and environmental performance and reducing demands on school budgets by Frameworks for housing market renewal (HMR) addressing whole life costing. The aim was to including facelifts, environmentals and empty build productive associations with contracting property and small works projects (SWF) up to partners and achieve continuous improvement £500k for all council clients are scheduled to through regular performance reviews become operational in 2006. using national KPIs.
The Manchester OJEU notices are exclusive to the City Council's work. Added value was sought in terms of product and Basis of Contract Award component development. Quality/cost matrix 70% - 30% cost. Quality Programme Estimates assessments involved written submissions, interviews and site visits. At the interview day, The F1 framework anticipates expenditure of constructors are invited to introduce key personnel around £12.0m annually. Planned expenditure and supply chain partners. under F2 on the first wave of BSF projects approaches £170.0m. The HMR framework is The cost component of the tender focuses on expected to spend £14.0m annually, with a further assessment of design fees, preliminaries, £20.0m under the SWF programme. overheads and profit on a range of hypothetical projects typical of the particular framework. Numbers of Contractors Project Pricing Three contractors were appointed as partners for Education framework F1- Amec Construction, A target cost including design fees as appropriate, Bramall Construction and Wilmott Dixon. preliminaries overheads and profit is agreed. An allowance for unidentified risk above the target Two contractors were appointed as partners for cost establishes an agreed maximum price (AMP). Education framework F2 - Balfour Beattie The contractor receives 50% of any saving on the Construction and Laing O'Rourke. target cost. The client bears the cost of unidentified risk up to the AMP. The contractor Four are proposed for the HMR framework with meets costs which exceed it. between four and eight for the SWF framework. 64 Retentions Development Schedule None Each framework has taken about a year to develop, the dominant issue being to achieve clarity about Measuring Performance Efficiency client requirements from the process. Project documentation was prepared in house with KPIs measure client satisfaction with both service external consulting assistance and there has been and product, defects, predictability of cost and regular engagement from the Centre of time, with targets based on DTI Construction Best Construction Innovation in Manchester. Nine Practice Averages. Client performance is months were needed to work through the measured by the constructor whose performance is processes preparatory to contractor appointment. in turn measured by their supply chain.
F1 contractors were appointed in December 2003 Financial efficiencies - some 1% - 2% of for three years extendable to five. F2 contractors construction cost annually on procurement costs were appointed in December 2004 for three years from the client side. Manchester is aware of the extendable to four. potential to increase this from savings in contractor overheads by cutting out abortive tendering costs. Prequalification and Tender Evaluation Time savings in the early stages of projects is Past performance and ability to meet a range of producing savings of 10% - 15%, and the potential performance objectives form the basis of initial to complete a school for example up to a term screening under the published criteria. Short listed earlier. contractors' submissions were rated according to criteria measuring the most economically All F1 projects carried out under the framework advantageous. Shortlisting and tender evaluation have been delivered within budget. were undertaken by a panel comprising senior client, procurement and technical officers. KPI levels on F1 are generally above the targets set and the average performance is classed as 'high Form of Contract end of satisfactory / bordering on good'. Delays have been reduced, client satisfaction levels are up Under the framework agreement, NEC Option C and working relationships with contractor partners with X12 Partnering Option has been adopted on are seen as productive and delivering positive F1 and F2. The HMR and SWF frameworks will benefits employ the Federation of Property Societies 'Perform 21' Public Sector Partnering Suite of Contracts.
Impr ovement through ef ficiency Performance Incentives
Financial incentives are available for performance better than cost targets, with contractors carrying costs where they are exceeded. After the completion of opening projects, the framework agreement provides for KPI performance to influence future project allocations. Continuity of work is seen as the most persuasive incentive.
Risk
A risk workshop is held prior to agreeing the target cost. Identified risk is costed and allowed for in the target cost.
Process of management
The framework agreement creates a framework management group comprising Council and Contractor representation with responsibility for the strategic management of the initiative. It is responsible for:
• Preparing work programmes, 65 • Monitoring KPIs and other objectives • Reviewing performance on all projects • Developing strategies for continuous improvement.
Contacts John Lorimer Director, Capital Programme Division, Corporate Services. E-mail: [email protected]
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 67
NPS Property Consultants Ltd Framework
Authority Aims and Objectives
Prompted by reorganisation, the building design Objectives were established through seminars with department of Norfolk County Council, NPS clients, users and elected Members. They included Property Consultants Ltd (NPS), was constituted in continued improvements in quality of service 2002 as an arms length company wholly owned by delivery, health and safety and cost; achieving best the County Council. Its primary focus is the value in project delivery and providing a more construction work of Norfolk County Council, but in customer focused approach. The dominant addition it works for a number of other bodies emphasis was on adding value rather than saving including the Police, Fire and Ambulance Services money. and Primary Care Trusts. The Contractor Framework OJEU notice reflected the range of the County Council's work but did not include the wider range of public sector clients for whom NPS provides services. Framework Organisation examples of collaboration. Shortlisting and tender evaluation was undertaken by a panel comprising The Framework covers construction of schemes NPS, Norfolk County Council's Legal Services and over £100k in value and operates in three bands representatives of the Council Client Departments. covering projects from £100k to £500k for which up to six contractors were sought; projects from Form of Contract £500k to £1.0m for which up to six contractors were sought and projects over £1.0m for which two Contract forms were a matter for negotiation. NPS contractors were sought. NPS provides all tended to favour PPC2000 whilst some contractors consulting design services. Projects include favoured JCT. In the event, several forms are used, schools, leisure facilities, buildings for social care including JCT. and offices. Capital investment was projected at around £50.0m per year. With the recent inclusion There was a body of opinion which questioned the of additional schools work in Great Yarmouth, need for any formal contract, though ultimately it current investment levels are significantly higher. was felt that such a move was perhaps a step too far at the commencement of a new initiative. Numbers of Contractors Basis of Contract Award In August 2003 a total of eight contractors, national and regional, were appointed for a period of three This was based on a quality 70%, cost 30%. years with the possibility of a further two-year Shortlisted contractors priced profit, overheads and extension, some carrying out work in more than preliminaries on specimen projects but not trade one band of the Framework. The Framework costs. Quality assessments probed skills and requires the contracting partners to develop experience through presentations, interviews and 68 common supply chain and procurement site visits. Considerable importance was attached arrangements. Initial emphasis focused on to presenting evidence of collaborative working and mechanical and electrical engineering services, but continuous improvement tracked by performance common procurement now extends to structural measurement. steelwork and more generic material such as blocks, sanitary ware, ironmongery and carpets. Project Pricing
Development Schedule Projects start with the need identification, outline scope with the rate added, a rough cost plan Norfolk was an early Authority to appreciate the including funding and a sketch. NPS provide the benefits of project partnering. It had acquired design service throughout, but in the development considerable experience in the development and stage the chosen contractor assumes the lead in operation of collaborative contracting relationships terms of buildability and specification referenced to on a single project basis before moving to the next common materials procurement arrangements. stage of creating longer term frameworks. The Pricing is on an open book basis. At the end of investment already made in the important design development the price is set and operates preparatory stages of objective setting enabled as a guaranteed maximum. Thereafter increases NPS to draft the Framework documentation over are permissible only if the client requires a change. the relatively short period of three months. The OJEU notice was placed on 22 January 2003 and The minor differences in profit and overheads the Prequalification processes took six months. All which distinguished the appointed contractor project documentation was prepared in-house. partners were retained, but are not allowed to influence the target rate set for a particular project. On appointment of the contracting partners, Higher rates therefore exert pressure on the extensive seminars were held over a period of three contractor to achieve compensating efficiencies months where, through joint working, NPS and its elsewhere. partners developed and agreed the operational arrangement which would govern the management Retentions of the frameworks. Guiding principles were that there should be no architects' instructions, no None. retentions and no variations. Measuring Performance Efficiency Prequalification and Tender Evaluation Project performance is measured through the The pre qualification questionnaire required application of the national scheme of KPIs covering presentation of basic company/financial time, cost, defects, service quality and health and information, experience of similar projects, safety. A separate set of quality indicators in which technical capacity structure and resources, and team members score each other's performance provide a means of examining the successfulness of the process and the performance of the Impr ovement through ef ficiency participants. Performance assessed in this way is Process of management a factor which influences the process of work allocation. NPS managed pre-contract stages with inputs from clients and end users. In terms of financial efficiencies, NPS has calculated that the Framework is delivering NPS ensures that there is continuity of involvement secondary schools at 12% below the prevailing of staff throughout scheme development. The DfES rate, whilst primary schools and small works training through which technical staff and are achieving savings of 4%. The gains are construction partners have jointly moved is attributable to savings in tendering costs, the extended on a project basis to key figures like benefits of common procurement of services and Head teachers to ensure their engagement with all other materials across the programme, and the others in the framework process and with the open shared approach to risk management. principle of collective ownership. Monthly meetings are held between NPS and its contracting Service quality has improved. Client satisfaction partners for the management of the Framework as increased rapidly in the early stages, raising well as reviewing all aspects of its performance and expectations to levels more difficult to achieve. development. Users report feeling much more engaged in the process. The increased engagement of contactor and supply chain partners is adding value in terms of the quality of design solutions.
The concentration of effort over the first two years has been to ensure consistency of data measurement and comparisons between the 69 various constructors and against the previous traditional procurement of projects. The next phase is to compare with the national benchmarks to drive further improvements in performance.
Performance Incentives
Contracting partners wanted gains recycled into the programme so savings go back to the client. The achievement of KPI targets impacts on the work allocated to a particular contracting partner. NPS is considering for the future a proposal which Contacts will assure half of the profit element, but link the other half to the achievement of KPIs. Adrian Blakely Strategic Framework Manager for NPS Risk Strategic development of the Framework E-mail: [email protected] A risk register is prepared at the outset for each project. Decisions are taken jointly between NPS Anna Davidson and the contractor partner on which elements are to be managed by the contractor and which are KPIs Performance monitoring retained in-house. NPS regards this as generating E-mail: [email protected] the biggest share of the financial efficiencies it is making. George Roberts Director of Architectural Services Delivery of the Consultancy approach to partnering E-mail: [email protected]
David Goode Practice Manager for NPS Allocation of Work and delivery E-mail: [email protected]
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 71
North Tyneside Council The North Tyneside Partnering Agreement
Authority and sustainable improvement on a measurable basis, cost savings and flexibility of resources to North Tyneside Council created its strategic better respond to client needs. partnering alliance in 2000 as a part of its approach to obtaining best value, and to manage project Work Area - Project size range arising from the reorganisation of its schools. It has since grown to cover all areas of capital and The framework was to cover schemes from £10.0k planned maintenance on the Council's buildings. to £10.0m covering education, housing, leisure and The initial framework came into operation in 2000 general projects including programmed for a period of three years. It was re-advertised maintenance. Over 50 projects at a value in excess from 2003 for a further three years extendable by of £80.0m have been completed. The Council's two. OJEU notices were exclusive to the work of programme of capital construction investment is North Tyneside Council. running at £38.0m per year and rising. The largest current projects include a school at £10.0m and Aims and Objectives Leisure Centre at £9.5m
These derived directly from adoption of the principles of Rethinking Construction, and included improved quality with zero defects as a target, improved construction timescales, cost certainty, value for money, continuous Numbers of Contractors Retentions
Three contractors were appointed, Rok Property There are no retentions by the client, no liquidated Solutions plc. a national company, Gordon Durham and ascertained damages and no loss and expense Ltd, a major regional contractor and North Tyneside claims from the contracting partners. Construction Group (NTCG), the Council's DLO. Work allocation between the contracting partners is Measuring Performance Efficiency not related to KPIs but includes consideration of prevailing availability of managerial, technical and These are derived from the North Tyneside other resources. The more complex technical Partnering Charter and focus on defects reduction, projects are undertaken by the larger contractors client satisfaction and cost and time predictability. with NTCG carrying out the smaller projects. KPIs are applied to all projects over £500k.
Development Schedule North Tyneside has measured the performance differences pre and post partnering as follows: Framework documents were prepared in-house with an extensive system of workshops facilitated Client Satisfaction by the University of Northumbria. From initial NTPA 95% briefings to the start on site of the first project took Pre-Partnering 40% seven months. End User Satisfaction Prequalification and Tender Evaluation NTPA 85% Pre-Partnering 39% 32 firms completed a prequalification 72 questionnaire. After assessment and scoring, seven Reduction in Defects were shortlisted to go forward to the secondary NTPA 95% qualification questionnaire and interviews from Pre-Partnering 59% which three contractors were selected, with a fourth in reserve. Time predictability NTPA 53% Form of Contract Pre-Partnering 42%
There are no work guarantees under the Cost Predictability framework. Individual project contracts follow JCT NTPA 72% forms. Pre-Partnering 61%
Basis of Framework Award Pre-construction stages of projects are now much quicker. The trust which has developed within the The original framework was awarded on the basis partnership has enabled the Council to successfully of quality only with emphasis on quality, safety and take advantage of funding opportunities becoming partnering experience. Teamworking, collaborative available late in the financial year including having working and supply chain management were also the confidence to authorise a start on site without explored. Profit and overheads were agreed after prior agreement on the project cost. Cash savings the partners were selected. Whilst profit and are often reinvested in projects to meet client overheads were considered when the agreement aspirations. was re-advertised, quality remained the overriding consideration. Research has shown that in primary schools completed before the NTPA final account might be Project Pricing up to 10% over budget; afterwards they were 6% below. Working with supply chain partners has In house quantity surveyors prepare estimates for brought about significant reductions in elemental every project. The contractors sign up to the target costs which can be as much as 30% as illustrated cost at stage D and lead on the detailed design by an example involving windows. and buildability. Design work is generally provided through in-house resources but external NTPA shares performance information with other consultants are appointed in some cases. The authorities in the Tyne & Wear area. Partnership works together through the supply chain forum on procurement of materials and Performance Incentives principal subcontractor works particularly mechanical and electrical engineering services. The Partnership works on the basis of a 50% / 50% pain / gain split
Impr ovement through ef ficiency Risk
Risk is assessed on a project basis and assigned between client and contractor according to who is best placed to manage it.
Process of Management
A hierarchy of management structures has been put in place to manage the framework. At the highest level, the management group comprising elected members, heads of function and others takes the strategic role in relation to partner selection, the partnering charter, targets, principles for work allocation and the future direction of the framework. The Council Champion leads on the partnering philosophy, targets and work allocation, working through the Partnering Core Group. This includes contracting partners and overviews performance against targets, innovations and joint working, workshops and problem resolution.
73
Contacts
John Hollingsworth, Manager, Design and Partnering E-mail: [email protected]
Phil Stevenson Partnering Coordinator E-mail: [email protected]
ficiency through ef ovement Impr PRACTICE GOOD SHOWCASING
ficiency through ef ovement Impr 75
Scape System Build Ltd Framework Agreements Scape Second Generation Strategic Procurement Arrangements S2G SPA
Authorities Work Area - Project Size Range
Scape System Build Ltd is wholly owned in equal The frameworks are primarily focused on the shares by Derbyshire, Derby City, Gateshead construction of school projects both new build and Council, Nottinghamshire, Nottingham City and extensions, but the OJEU notice covers all public Warwickshire and is a project sponsored by the sector building types. They may involve the use of East Midlnds Centre of Excellence. SPA One is a Scape technology (CLASP System) or other framework available nationally. SPA Two will be construction types. The contractor may be called limited to the East Midlands Region. upon to provide design services, facilities management, ICT and finance according to client Aims and Objectives requirements.
To enable local authorities to achieve efficiency SPA Two will also extend to elemental work savings and deliver Best Value. The frameworks building on existing procurement arrangements are seen as reducing procurement costs, delivering for roof and window replacements. continuous improvement in time, cost and processes, culture change throughout the team including the supply chain and the provision of improved facilities. SPA One envisages projects from £2.0m to £20.0m Retentions whilst SPA two will operate from £5.0k to £3.0m. There is an aspiration to move to no retentions, no Numbers of Contractors liquidated and ascertained damages and no claims from contractors for loss and expense. However SPA One will be awarded to a single contractor, the contract will be not be amended at the outset with the right to appoint subsequent contractors with regard these items. reserved. SPA Two envisages three contractors with the intention to create an ongoing panel Measuring Performance Efficiency tender on rotation to meet the requirements for capacity and particular workstreams. Project performance will be measured in terms of client satisfaction with product and process and Between contractors, work allocation will be on the cost performance and predictability using the basis of work streams ie recladding work, capacity, industry standard suite of indicators. A separate geographic location and measured performance. system will enable team members to assess each others contribution and effectiveness in the delivery Development Schedule of the projects.
SPA One will go live in summer 2006, with SPA Performance Incentives Two following in autumn 2006. Both frameworks will run for four years. Within the projects shared savings below the target price will provide the performance incentive. With Documents have been prepared by Scape and regard non financial matters a demonstrable high Nottinghamshire County Council Legal Services performance will be fundamental in securing future 76 with inputs from Scape's constituent authorities contracts. and CWC Ltd. Risk Prequalification and Tender Evaluation Project risks will be jointly assessed between the Prequalification will require the presentation of client and the contractor and allocated and basic company and financial information, managed by agreement between the parties. experience of partnering experience, supply chain development, the ability to deliver continuous Process of Management improvement and related commercial skills. From this up to five companies will be invited to submit Scape will manage the overall process in strategic formal tenders. terms with joint structures including contractors looking at performance involving individual Form of Contract projects. The strategic overview will take a close interest in training workshops to ensure that key There is no assurance of work under the overall staff in authorities using the system will understand framework arrangement. Project contracts with the nature of the operating relationships within it authorities using the arrangement will be NEC and the culture necessary to release the benefits option C. Available under the framework. Disputes will be dealt with by a Review Board including a Scape Basis of Framework Award Director and contractor representative.
The most economically advantageous bids using a quality/cost matrix with ratios 80% /20% The assessment will include written submissions, interviews and site visits. The cost component will consider profit, overheads and staff costs.
Project Pricing Contacts Projects priced under both frameworks will be based on profit and overheads. Pricing is open David Mackness book and subject to elemental checking by client Chief Executive Officer quantity surveyors. Scape System Build Ltd E-mail: [email protected]
Impr ovement through ef ficiency FIFTEEN references
15 References
REFERENCES Collaborative Building Procurement - 77 Making it Work Constructing the Team South East Centre of Excellence (2006) Sir Michael Latham (1994) GERSHON EFFICIENCY TARGETS Rethinking Construction Sir John Egan (1998) The Government appointed change agents for the efficiency targets set out in the Gershon Modernising Construction Report are the ODPM for construction The National Audit Office (2001) generally. Trowers & Hamlins and Davis Langdon are the ODPM’s national change National Procurement Strategy for Local agent for social housing capital works. The Government in England (2003) Highways Agency leads in respect of highways. Releasing Resources to the Front Line Sir Peter Gershon (2004) ADVICE, GUIDANCE AND Improving Public Services CONSULTANCY through Better Construction The National Audit Office (2005) The following organisations have provided assistance in the form of advice, guidance, Delivering Efficiency in Local Services facilitation or consultancy support to the ODPM (2005) authorities whose schemes are featured in this report Achieving Efficiency Gains from Collaborative Roads Procurement Constructing Excellence Highways Agency (2005) Local Government Task Force J R Knowles Efficiency Matters - The Annual Efficiency Cyril Sweett Statement and the bigger Picture Davis Langdon IDeA and Regional Centres of Excellence Collaborative Working Centre Ltd. (CWC) (2005) Centre for Construction Innovation North West
Improving Public Services Through Better Construction The National Audit Office (2005) Transforming nment local gover construction ACKNOWLEDGEMENTS David Mackness Scape System Build Ltd I am grateful to the following for making their Trevor Gee time available to meet me, discuss their work, Bramall Construction Ltd assist in preparing scheme profiles, proof text and providing more general guidance, John Hammond assistance and support: Bramall Construction Ltd
Steven Sitch Paul Hughes London Borough of Barking and Dagenham Bramall Construction Ltd
Steve Vickers Paul Stanion Birmingham City Council Davis Langdon
Chris Tunstall Barrie Harper Durham County Council Davis Langdon
Burney Johnson Rob Pugh Durham County Council Laing O'Rourke Ltd
Andrew Smith Andy Cartwright Hampshire County Council Laing O'Rourke Ltd 78 David Corcoran Chris Allison Hampshire County Council East Midlands Centre of Excellence
Keith Heard Peter Bishop Hampshire County Council Local Government Task Force
Marie Milner Don Ward Leeds City Council Constructing Excellence
Phil Rigby Tim Embley Leeds City Council Constructing Excellence
Yim Kong Adrian Blumenthal Lincolnshire County Council Constructing Excellence
Barrie Jackson Natalie Clinton Lincolnshire County Council Constructing Excellence
Dave Fenton Peter McDermott Lincolnshire County Council Centre for Construction Innovation North West
John Lorimer Steve Jessop Manchester City Council Centre for Construction Innovation North West
John Hollingsworth Neil Jarrett North Tyneside Council Collaborative Working Centre Ltd.
Phil Stephenson Alan Coole North Tyneside Council Collaborative Working Centre Ltd.
Michael Britch David Holt NPS Property Consultants Ltd Highways Agency
Mark Kumar Highways Agency SIXTEEN notes
16
PHOTOGRAPHS
Photographs supplied courtesy of:
• Scape System Build Ltd
• Cambridge Housing Association
• Redrow
• East Midlands Housing
• Franklin Ellis Architects
• Metropolitan Housing Trust
• Nottinghamshire County Council
• Manchester City Council
• Centre for Construction Innovation 79 • Constructing Excellence
Transforming nment local gover construction
www.emce.gov.uk www.rcoe.gov.uk
April 2006 (DP&P 4673)