In the Budget and Spending Review in November 2021, the Chancellor Rishi Sunak revealed a £24bn investment pot for the housing sector. With a roll out schedule taking place over the next five years, the Treasury explained the allocation as £10bn for the affordable homes programme, £6bn to boost housing supply, £1.8bn on brownfield land regeneration, £3bn on Help to Buy and £3bn on building safety. The already accounted for £11.5bn funding for the Affordable Homes Programme (AHP) remains protected which is good news for the social housing sector.
As the Government embarks on plans to help the country to level up, Key Account Manager Conor Neild-Crabb, with assistance from GSSArchitecture, explores how we can help the housing sector to maximise budgets and get the best value from procurement.
1. Social Value
From 1st January this year a new Social Value model was introduced alongside The Public Services (Social Value) Act, which has been in place since 2012 to ensure public sector procurement considers socio-economic and environmental benefits. The new policy enables public sector buyers to understand how they can secure social value from the goods and services they procure and makes it clear that social value should not just be a consideration, but an essential part of the procurement process.
Social value benefits are important to the housing sector, particularly social housing projects, as they need to add value to the communities they serve. Embedding a social value strategy at an early stage of the project plan will ensure more successful and far reaching outcomes. Engagement with the local community is key to delivering priority projects on the agenda for local residents. Construction projects need to be well planned to allow for specific social value outcomes that add real advantages to their communities, such as generating employment opportunities by hiring local labour. Supporting an apprenticeship scheme will also create employment opportunities and upskill the local workforce. Discussions and feedback sessions with local charities and social enterprises will help to identify the requirements of the community so they can be incorporated into the project’s design and build, ensuring communities are happier, safer and more sustainable.
The team at Procure Partnerships have a wealth of experience when it comes to identifying our client’s social value objectives, with many of our clients operating within the social housing sector. We ensure our procurement frameworks deliver social value goals in a measurable and sustainable way. Social Value programmes and activities change the future landscape for communities, providing long-term and significantly beneficial results when delivered correctly. Our guarantee is that through our procurement framework a social value benefit is delivered in every local community equivalent to 12% of a project’s total construction value. This is achieved by ensuring that every project procured through the framework has its own specific and focused Social Value Plan.
2. Batching a Programme of Works
Procurement framework specialists can support the housing sector by conducting a review of the different phases and batching projects together for a consolidated programme of works. Batching allows for some key benefits, including consolidation of the workforce, which secures a cost saving by pooling resources to reduce the number of different teams required throughout the project delivery and ensures the number of people working on site is controlled, reducing project risk and creating a safe and collaborative working environment. Batching also delivers a cost reduction on preliminaries. In a construction framework contract, prelims refers to the section in the bills of quantities which group together items necessary for the contractor to complete the works, but will not actually become part of the works, such as scaffolding, plant machinery and equipment, water and other utilities. Batching projects together allows for an efficient procurement strategy where materials and equipment can be shared across the project sites, reducing the number of deliveries, and in turn reducing the project’s carbon footprint. Batch ordering of materials can also improve buying power and allows contractors to deliver better value to their clients. Consolidating the procurement of materials and equipment needed for the batched projects means larger quantities can be ordered and better pricing negotiated, seeing an improved return on investment. Batching a programme of works can enable quicker mobilisation of projects and help to strengthen the trust between client and contractor.
As a leading UK procurement framework specialist for public sector projects, Procure Partnerships implement flexible and innovative procurement practices, such as batching project contracts, to continuously improve value and deliver success for our housing sector clients. Our Framework Managers have sector specific expertise in construction frameworks that means projects are well managed and cost savings can be accomplished to reduce project budgets. Managing multiple projects is complex and time consuming, so leaning on our support gives public sector bodies the peace of mind that a trusted and reputable contractor has been appointed who can deliver the project’s key goals and objectives.
3. KPI Management
It is critical to monitor key performance indicators throughout the project timeline to effectively manage and evaluate project performance. At Procure Partnerships, we performance-manage our contractor partners quarterly at both a project and framework level across ten KPI’s. These are safety management, cost and design, time and design, satisfaction and service, defect management, fair payment, cost of construction, time and construction, satisfaction and product, and sustainability. Having a dedicated team analysing these key areas affords our clients the trust and reassurance needed to know that their project will be delivered on time, within budget and will deliver on socio-economic value as well as important sustainability targets. For the housing sector, where projects can be large and complex, procuring through a framework who will support these crucial aspects of project delivery is a huge benefit.
4. Soft Market Testing
It is beneficial to begin any procurement process by engaging at an early stage with potential suppliers. A soft market test is an activity designed to test the commercial market of its capabilities to meet a specific set of requirements, which would include enough interested suppliers to maintain a competitive process. The best route to achieve this for construction projects within the housing sector, is to issue contractors with a Project Initiation Form (PIF). This document defines the project scope, the management, and overall key criteria of the project, so bid teams have transparency over the basic context and specification of the project’s design and build. Contractors then have a fair opportunity to allocate resources for bidding, make informed decisions and establish if this is the right contract for them. Soft market tests allow for feedback and encourage open dialogue with potential bidders, demonstrating you are prepared to listen and be adaptable before committing to a particular approach or tender specification. This is positively perceived by contractors and will make you a more desirable client to want to work with.
5. Local Supply Chain Engagement
There are fundamental advantages for housing sector clients to procure via a local supply chain. A key benefit is the flexibility it can offer, particularly to scale up and meet supply and demand during peak times. Lead-times for production and delivery are significantly reduced because the materials are not being transported from overseas or subjected to delays at customs. Another important advantage is control. Being in control of your supply chain allows you to be reactive to market demand whilst keeping a tight rein on costs but without compromising on quality. It is easier to visit the manufacturing facilities of a local supplier to conduct quality inspections and resolve any issues quickly than it is when dealing with international suppliers. Sourcing from local suppliers and buying in bulk quantities for storage of materials on-site can also help drive down overall project costs, as well as reducing the project’s carbon footprint. Environmental benefits are climbing the priority list when it comes to public sector project delivery, so engaging with local SMEs and employing them within your supply chain can contribute towards greener manufacturing by reducing shipping and storage, and helping to reduce carbon emissions and energy usage. Using a local supply chain can also offer local community benefits by creating employment opportunities and meeting the housing requirements of local communities to improve the lives of residents.
Procure Partnerships is proud to host a number of local supply chain engagement events such as ‘Meet the Buyer’ sessions. These events help buyers meet suppliers that suit their requirements at any given point of the purchasing cycle and are used to identify new suppliers, maintain the relationship with existing suppliers or create opportunities for future collaborative partnerships.
Jonathan Hunter, Partner at GSSArchitecture, commented: “Procurement is a fantastic way to drive innovation within the industry, which in today’s climate is more important than ever. It is well known that the housing sector has social responsibilities to drive a better-quality product that has a lesser impact on the environment. Clients are demanding a higher quality product that has a lower carbon footprint, whilst still promoting value and efficiency.
Procurement can promote this by driving sustainability and the use of modern methods of construction within frameworks from the outset whilst providing training opportunities and support for the local supply chain to ensure they have the relevant tools, skills and knowledge to evolve and grow. These combined with the continuous monitoring and analysis of sustainability outcomes through key performance indicators provides clients with piece of mind that their development has been delivered both efficiently and sustainably.”