As we make our way through the Coronavirus pandemic, as an industry we find ourselves in challenging and unprecedented times. It is difficult to predict what the world will look like ‘on the other side’, but one thing is for certain; those who supply to the public sector will be under increased pressure to demonstrate they are providing value for money. The NHS especially will be under strain like never before and it will be the responsibility of private sector organisations to assess (and possibly reconsider) their offerings in order to help alleviate some of these pressures. With commentary from Warrington and Halton Teaching Hospitals NHS Foundation Trust, in this blog, Framework Manager Louise Matthews discusses why batching smaller projects together in one contract is an effective option to help the public sector increase value for money.
Batching smaller projects increases interest from the contractor market
Public sector organisations with large estates often have challenging programmes of refurbishment and improvement works to deliver. Many of these works need to be undertaken within critical timescales whilst the facilities remain live, or during limited periods of shutdown. Appointing a specialist contractor who is reputable in their field and has the relevant experience managing complex requirements such as these, can help to reduce project risk significantly.
The prospect of a number of projects batched together is a far more appealing opportunity to a main contractor than a small, one-off scheme. This allows the public sector customer to open the project up to some of the main players in the market and to benefit from the contractor’s technical expertise, including their experience in health and safety management, logistics management, programme management and value engineering. Batching projects together increases the opportunity to engage with contractors who are focused on providing a better overall solution, with a greater potential for innovation.
Appointing one contractor allows for better continuity across projects
A good customer / contractor relationship is the cornerstone to any successful project. Batching projects together into one contract means the customer is only having to manage a relationship with one organisation, rather than two, three or possibly even more! Establishing and building a good relationship with a contractor can be time consuming and often requires joint planning sessions, design meetings and partnering workshops. Only having one contractor on board streamlines this process and allows for innovation to be shared across all projects. This is especially important for public sector customers such as the NHS, who have logistically challenging projects in sensitive environments, making the customer /contractor relationship even more critical.
Lee Bushell, Head of Capital Projects at Warrington and Halton Teaching Hospitals NHS Foundation Trust, explains “A benefit of batching minor works to procure through one supplier is the continuity of the contractor undertaking the works and the possibility of a flexible workforce who can work across numerous schemes at the same time. This efficient approach can speed the works up and reduce costs. Appointing just one team gives a better buy in and service to the Trust, as the contractor is on site for longer. It is therefore in the contractor’s best interests to build a good relationship and provide a high-level service to encourage future contract awards. A well-built relationship on site leads to a good working relationship between the contractor and the surrounding clinical areas. This creates a better communication flow, and works which could prove tricky or disruptive (due to noise, dust, etc) are often easily negated. This approach can also help the project team, who can find it easier to manage the work and to monitor progress as they are working with just one design team and have one supplier to liaise with.”
Batching schemes increases buying power
Batching projects together and carefully planning and scheduling the procurement of materials and equipment can lead to increased value for the customer. Developing a number of small projects individually requires various, separate procurement teams building relationships with a number of suppliers to source and purchase materials. Duplicating resources in this way misses an opportunity to rationalise the number of suppliers involved and to implement economies of scale.
Lee Bushell goes on to explain; “Having one supplier buying materials for batched works allows for efficiency savings with a greater buying power. For example, a supplier can buy 20 wash basins, IPS panels and taps in one go at a discounted rate, rather than split orders of 2, 5, 4, etc. If you can agree on the same finishes and colours for all the individual projects, the supplier can order the flooring, wall protection, etc at the same time to gain further savings.”
This approach requires extensive pre-contract planning and scheduling to ensure the opportunities to increase buying power are identified and exploited. Working with an experienced contractor who can engage with the design team is essential to help reduce the overall project budget.
Less suppliers means less carbon
The innovative and intelligent procurement of materials and equipment can mean a reduced amount of deliveries to site. A procurement strategy with includes all the batched projects allows for deliveries to be grouped together and made in fewer journeys. Resources such as plant and equipment can also be shared across projects which can help to decrease overall waste and increase efficiencies. As many customers and contractors have challenging environmental and sustainability targets, these efficiencies can prove to be a significant way to reduce the overall levels of carbon produced.
Shared resources mean lower overheads
If only one contractor is appointed across a number of projects, the customer is only paying once for resources such as Contract Managers, Health and Safety Managers or site supervision teams. Developing a trusted relationship with one contractor who effectively organises the batched projects to take advantage of shared resources in this way, provides the potential for significant cost savings.
Finding new ways to generate value for the public sector
As public sector clients come under ever increasing pressure to deliver construction works and services more efficiently and effectively, the drive to eliminate waste and avoid duplication increases.
Procuring a public sector project through a reputable framework such as Procure Partnerships, means that opportunities for innovative procurement practices, such as grouping projects together to improve value, are more readily identified. The additional support provided by our Framework Managers means these opportunities can be picked up early and project budgets can then be reassessed in light of the potential savings to help customers achieve more from their budget.
The logistical challenges associated with managing multiple, small projects under one contract cannot be underestimated and the importance of selecting the right contractor for the job is vital.Procuring through a framework provides public sector customers with the additional reassurances that they have selected an experienced and well vetted contractor who will work collaboratively to add value to their project. ‘The early bird catches the worm’, as the saying goes, and this is especially true for collaborative and innovative procurement practices. The earlier in the process that our procurement experts can review a project, the greater the scale of the efficiencies they are able to bring.