Title: Better Buys In Housing Procurement
1Better Buys In Housing Procurement The National
Change Agent for Social Housing Davis Langdon
LLP, 71 High Holborn, June 2007 Stephen Edwards
Communities and Local Government
2- Background to Principles of NCA Housing
- Egan Principles Re-thinking Construction
- Latham Report - More Collaboration in
Construction - Gershon Spending Review - 340million Efficiency
Target in Capital Works by 07/08.
3- Our Role
- Identify Potential Procurement Consortia
- Support them to Develop a Business Case
- Promote and Share Good Practice of Consortias
Efficiency Gains - Engage with Key Industry Stakeholders
4- Progress to Date
- Running since Easter 2005
- 15 Consortia Established with Funding Approved,
more in the pipeline - ECF Grant Regime Fully Operational 4.7million
has been awarded to date - Panel of Accredited Consultants
- Practical Support and Advice from NCA Housing
- Suite of Guidance Notes and Useful Template
Documentation in place - Visit our website www.ncahousing.org.uk
5 Targeted Savings by 2010 590 million
Targeted Spend by 2010 4.8 billion
15 Consortia 122 Social Landlords 1.2
million homes
6North East Consortium
Cumbrian Housing
Efficiency 4 North
Existing Consortia
IMPACT Manchester
GM Procure
Forming Consortia
Pennine Lancashire
Eastern Procurement
Procurement For All
CEPP
London Area Procurement Network
Orbit, Whitefriars, West Mercia
Herts/ Beds
Buy4London
Westworks
Hackney/ Greenwich
South East Consortium
Advantage South West
7The Benefits of Consortium Working
- Economic
- Projected cost savings broadly in the range 5
10 of capital spend - Whole-Life Costs (e.g. Improved warranties)
- Reduced transaction costs due to long term
partnering - Improved quality/specifications (more for less!)
- Increased productivity/reduced work times
- Work smoothing managing supply and demand
- Continuous improvement
8The Benefits of Consortium Working
- Social
- Stimulating local employment
- Improving local skills
- Small business development
- Engaging with BME groups
- Improved services to tenants
- Pride in the community
9- Tenant Engagement
- Listening to what Tenants want
- Increasing Tenant Choice
- Improving Quality of Products
- Improving Service Standards
10- Targeted Apprenticeship Schemes
4 South Yorkshire Training Programme
11GM Procure Training Programme
12The Benefits of Consortium Working
- Environmental
- Provision of community wide managemen
- Reduced CO2 emissions (e.g. better insulation,
efficient heating systems) - Use of local labour and materials
- less travelling distance
- less congestion and CO2 emissions
13- Environmental
- Whole-Life Cycle Costing
- Site Waste Management
- Recyclable Materials
14- Further information
- www.ncahousing.org.uk
- Contact
- Email colin.proctor_at_davislangdon.com T 020
7061 7820
15Better Buys improving housing association
procurement practice
- Janet Williams
- Senior Research Manager
- 22 April 2008
16Study aims
- assess housing associations use of modern
procurement methods - help smaller housing associations to improve
their approach to effective procurement and - assess the residents contribution to housing
association procurement. - Study scope
- Housing associations gt 250 units
- Repairs and maintenance, and housing management
17Housing associations expenditure is significant
18 and is under pressure to be more efficient.
- Efficiency agenda
- Role of the regulators
- - HC annual efficiency statements
- - AC emphasis on vfm in inspection
- Higher expectations of residents better quality
of services
19Procurement has a key role
- Efficiency gains represented 3.5 of aggregate
turnover 4 of total expenditure of sector in
2005/06 - A third of efficiency savings in a typical HA are
attributable to procurement - HA Chief Executives expect procurement will play
a bigger role in future
20And associations can demonstrate success
- Liverpool Housing Trust used supply chain
management to cancel out annual inflation
increases - CDS Housing has cut admin staff by 50 using
electronic invoicing and payments with its
suppliers - Medium sized Housing Association re-tendered
payment methods from April 2008 and will include
direct debits savings of 60,000 a year
21And associations can demonstrate success
- Swaythling Housing Society plans an annual 215k
saving through consortia contracts for boiler
purchase and installation - A Southern Housing Association uses a consortia
to procure its kitchens helped in terms of OJEU
tendering arrangements - Advantage South West Limited Liability
Partnership consortia who have jointly
appointed a procurement manager
22But procurements contribution varies widely.
Housing association savings from improved
procurement per unit Source AC
23There are still savings to be made - 100 per
home if all achieved top quartile performance
24But some associations are not even picking the
low hanging fruit
25E-procurement under used
Housing association and LA use of e-procurement
tools
Source AC and Inlogov
26HAs balance efficiency gains with other
considerations
- Diversity and equalities
- Regeneration and local economic development
- Sustainable development
- Resident/tenant choice/involvement
And procurement can be a powerful tool in
promoting these wider objectives if HAs want it
to
27It is the organisational environment that matters
- choice of method or contract is not the most
significant factor in successful procurement - no clear correlation between performance in
repairs performance indicators and delivery
method - no clear correlation between efficiency savings
and method of delivery. - You need
- strong contract performance management
- skilled staff
- open minds / performance culture
28And its not just a matter of group structures and
shared services
- Real opportunities - but limited uptake
- Process focus losing sight of benefits
- We are part of a group but it is early days and
we are keeping our own identities - We think we have a really strong partnering
approach to procurement but this hasnt been
taken up across the group as yet. - It was a requirement of joining the group that
we bought in to payroll and HR
29Associations that use procurement effectively
have
Small associations are less likely to have
these features
- A procurement strategy
- Procurement training for all staff
- Explicit use of procurement to achieve policy
objectives - Measurement of procurement performance
- Resident involvement in commissioning and
procurement - Systems for addressing issues of equalities and
diversity in procurement
- Competitive neutrality / a mixed economy of
provision - Critical appraisal of the costs and benefits of
procurement options - Procurement methods and approaches that are
proportionate and appropriate to their
requirements. - A strong driver business plan, inspection
report, corporate direction
30In summary, we found
- Danger of partnering/consortia seen as panacea
more caution, more sophisticated approach needed
in promotion financial support - Method of procurement less important than
organisational environment - Barriers to effective procurement exist in all
types of housing association but more acute for
smaller HAs - Effective procurement can achieve real benefits
for housing associations and their residents but
sector, and residents still not seeing full
benefit of good procurement practice more needs
to be done.
31In summary, key to success
- Actively managed contracts supplier performance
- Supply chain management
- A performance culture that identifies
procurements contribution to wider objectives - Senior procurement champion, investment in skills
and expertise
32What next?
- The Audit Commission will develop tools to help
housing associations make more effective use of
procurement - DVD of case studies
- Briefing for Board members
- Briefing for Tenants/Residents
- Model procurement strategy
33Thanks for listening.Any questions?
- janet-williams_at_audit-commission.gov.uk
34- NCA Housing and Audit Commission
- Better Buys and Procurement Seminar
- 22nd April 2008
- The Orange Studios, Cannon St, Birmingham B2 5EP
-
- Measuring Efficiency gains from Consortia
procurement Activities - Hilda Chagula
- ( Senior Consultant ,Davis Langdon LLP )
35- Measuring Efficiencies Contents
- Context
- Why measure efficiency gains
- What to measure
- How to measure
36- Measuring Efficiencies Context
- NCA Housing Programme focus on collaborative
procurement. - Diversity of new business models
- Need for consistent Benefit Measurement
methodology - Robust and Auditable
- Transparency
- Support Performance Management
- Benchmarking
37- Measuring Efficiencies Why Measure
- Gershon Targets
- Annual Efficiency Statements (AES)
- NCA Housing Programme
- Government Policies
- Best Value
- Decent Homes
- Sustainable Communities
- Commercial
- Demonstrate Benefits to Stakeholders
- Manage performance
- Optimise resources
- RoI
38- Measuring Efficiencies Performance Management
- Strategic
- Long term organisational outcomes
- Holistic
- Operational
- Short term
- Quick wins
39Strategic
Operational
Cashable
Non-Cashable
Value Added
Long term
Performance Management
Short term
40- Measuring Efficiencies Performance Management
- Balanced Scorecard
- Align operations with Corporate strategy
- Focus on Corporate performance
- European Business Excellence Model (EFQM)
- Systems Thinking
41- Measuring Efficiencies Types
42(No Transcript)
43(No Transcript)
44- Measuring Efficiencies How to measure
45 46- Measuring Efficiencies Key Principles
- Calculate Baseline ( Business Plan/ pre
consortia.) - Annual Baseline adjustment for
- Inflation
- Quality changes
- Volume changes
- Measure inputs (cost) and outputs (product/
quality) - Calculate Efficiencies against own Baseline
performance
47(No Transcript)
48Measuring Efficiencies The Process
49- Operational Measurement What to measure
- Cost
- Performance / Quality Improvements
- Community Benefits
50- Measuring Efficiencies Cost
- Year 1 Efficiency Gain ( A x Index 1 ) (B)
- Year 2 Efficiency Gain ( C x Index 2) (C)
51- Measuring Efficiencies Quality
52(No Transcript)
53- Measuring Efficiencies Workshop Discussion
- Two key Questions
- Benchmarking Methodology Metrics ?
- Business Process Gains from process mapping/
re-engineering ?
54 55 The National Change Agent for Social Housing
Housing Seminar, The Orange Studios, Cannon St,
Birmingham B2 5EP 22ND April 2008 Repairs and
Maintenance Russell Poynter-Brown (Partner,
Davis Langdon LLP) and Katie Saunders (Partner,
Trowers Hamlins)
56- Contents
- Background
- Context
- Challenges
- Approach
- How NCA can help
57- Background
- Historical focus on Capital Works
- Increasing focus amongst consortia on Repairs
and Maintenance (RM) - Consortia keen to integrate RM as part of asset
management programmes - CLG wish to support this initiative via NCA
58- Context
- Emerging trend towards more integrated and
comprehensive asset management contracts - Procurement/delivery mechanisms are responding
accordingly - Use of Term and Strategic Partnering, Frameworks
and Devolved Budget contracts - Increased scope for provision by NCA of
proactive advice, guidance and support in the
broader context of asset management
59- Challenges
- Selection of most appropriate procurement/deliver
y system - Logistics of service delivery
- Supply chain capability ability to respond
- Potential need for more sophisticated
arrangements such as Limited Liability
Partnerships and other Special Purpose Vehicles - Structuring consortia to optimise commercial
performance (e.g. saving VAT) - Process management and improvement
60- Approach
- NCA Housing is shortly to enhance its Body of
Knowledge by producing a new tranche of best
(positive) documents - Examples include
- An expanded template Supplier Framework
Agreement that links capital works to term
repairs and maintenance - Clarifying the template Consortium Agreement to
cover not only capital works but also term
repairs and maintenance
61- Approach (Contd)
- Examples include (Contd)
- An updated additional Guidance Note on EU
procurement as it relates to term repairs and
maintenance programmes - An additional Guidance Note on alternative
forms of Term Contracts - A Guidance Note regarding the evolution of
pricing and supply chain arrangements under term
repairs and maintenance contracts to enhance
value.
62- Approach (Contd)
- Examples include (Contd)
- Publishing Case Studies as consortia expand the
scope of their activity. - A Strategic Alliance Agreement to promote
collaboration between Constructors for capital
and asset management programmes - Focussed advice and support consultancy
interventions
63- How NCA Housing Can Help
- Best practice guides
- Authoritative guidance and support
- Process Management
- Review and improve processes for effective
asset management - Focus on ICT, Supply Chain Management,
Employment, Training
64- How NCA Housing Can Help (Contd)
- Overcoming barriers to change
- Legal barriers associated with TUPE etc
(integration of capital and term programmes) - Operational barriers associated with change
management and organisational development - Advice on organisational design (to minimise VAT
liability etc) - Informal sounding board
65- Further information
- www.ncahousing.org.uk
- Contact
- E russell.poynter-brown_at_davislangdon.com T 020
7061 7557 - E ksaunders_at_trowers.com
T 0161 837 2671
66- Delivering a Sustainable Decent Homes Programme
- The triple bottom line and Decent Homes
- Case study Waste management in Decent Homes
67- Sustainable development is not
- Using photovoltaics, installing green roofs,
cycling to work, building wind turbines, etc,
etc. - Sustainable development is
68Brundtland definition of sustainable development
is development that meets the needs of the
present without compromising the ability of
future generations to meet their own needs
Economic
Social
Environmental
The Triple Bottom Line
69- Sustainability opportunities within Decent Homes
- Economic opportunities
- Money saved can be invested elsewhere
- Reducing expenditure on core components could
allow more investment in higher quality - Social opportunities
- Tenant benefits (Improved health, comfort,
safety, security, quality of life) - Benefits to those involved in the Works
- training opportunities (employment / recruitment
/ retention) - Security of supply allows long term planning
- Environmental opportunities
- Energy efficiency (leading to carbon savings)
- Material selection sustainable sourcing
- Material lifecycles and replacement intervals
- Waste management
- Design / aesthetic / visual amenity
- How can the capital investment be used to
maximise all of these opportunities?
70- Consortia opportunities?
- Working within a Consortium provides a platform
to pursue cashable savings but - what are the opportunities to improve the
sustainability of the programme and get more from
the Consortium? - Tools at your disposal are
- Design, specification, procurement, tenant
engagement, others?
71- Case study Waste Management in Social Housing
Refurbishment Opportunities through Consortia
Working
Case study based upon research and support
provided by Davis Langdon on behalf of (Waste and
Resources Action Programme)
72- Characteristics of Decent Homes work
- Almost all new works involve some demolition or
strip-out - (e.g. for every new boiler, an old
one must be thrown away) - working in restricted spaces requires a high
degree of site cutting. - This means that housing refurbishment has one of
the highest wastage rates per capital expenditure!
73Not just strip out waste
New unused materials
Strip out materials
Packaging
74- Why is waste management important?
- Financial Waste is a substantial but often
hidden cost. Effective waste management can
reduce costs (reduction in quantity of waste
increased segregation reduced costs) - Environmental Reduced pressure on landfill
- Legislative compliance
- New regulations make Site Waste Management Plans
compulsory on all projects over 300k (introduced
6th April 2008) - Duty of Care Regulations.
75- More detail on the cost of waste
- Landfill Tax
- 32 per tonne for active wastes (plasterboard,
timber, plastics, cardboard, bio-organic)
increasing to 48t by 2010/11 - 2.50 per tonne for inert wastes (glass, brick,
concrete, soils, aggregates)
Sample costs for waste disposal for a 16yd3 skip
are
76- The Three Rs
- Reduce the generation of waste
- Reuse materials for the same or a different
purpose - Recycle the materials to recover value
- Dispose, using the best practical environmental
option
77- Opportunities to tackle waste in Decent Homes
programmes - Better planning improved segregation reduced
costs - Accurate forecasts Existing survey data can
easily be manipulated to quantify the volumes and
types of waste to be disposed of - High repetition Waste streams will be highly
regular, generating similar quantities of similar
types of materials - Consortia working amplifies the above scenario
- Large volumes of waste greater investment
potential in segregation
78- Key Recommendations
- Client requirements Clients need to lead this
agenda and make waste management a feature of the
contract with requirements to reduce waste and
increase recovery - Collaboration Tackling this issue together (or
at least your neighbouring RSLs) unlocks real
opportunities - Site segregation Explore opportunities for the
site segregation of materials - Site Waste Management Plans Ensure that
contractors develop and provide robust SWMPs that
have accurate waste forecasts
79- Some areas to think about
- Waste reduction What happens to unused
materials when a dwelling is signed off? - Packaging Is packaging always necessary, and
who ends up paying to dispose of it? - Logistics How can logistics work harder for
waste? - Reuse Should materials always be disposed of
(roof tiles?) - Segregation How can this be achieved?
(segregated at site, or at consolidation centre)
80- Conclusion
- This is an area where the client needs to take
the lead - Sustainability does not just mean more cost!
- Working with others could provide some larger
opportunities - What can you do about it?
81 The National Change Agent for Social Housing
Housing Seminar, Birmingham 22 April
2008 Legal update John Forde, Solicitor,
Trowers Hamlins
82- Remit of National Change Agent
- Facilitate and support procurement consortia
- Identifying and promoting best practice
- Advice on best practice in law and procurement
- Increased scope for provision by NCA of
pro-active advice, guidance and support in
broader context of asset management
83- NCA Guidance Notes
- Available to NCA consortia members
- Covering range of legal issues, including
- Procurement models
- Consortium governance structure
- EU procurement
- Leaseholder consultation requirements
- Selecting forms of delivery contract for projects
and term repairs
84- Advice on Procurement Models
- Consortia are adopting a range of procurement
models to date - No single prescribed approach
- Develops from members existing procurement
strategies and business plan objectives - Three main models
- Client-Contractor consortium
- Client-Contractor consortium with Supply Chain
integration - Client has direct relationship with Supply Chain
85Consortia are adopting a range of procurement
approaches
Supply Chain
Main Contractor/Package
Main Contractor
86- Analysis of procurement models
- All structures benefit from joint consortium
procurement - Use of Open-book pricing allows identification of
savings - Contractor-led models have benefits of Contractor
warranty - Supply chain integration allows flexibility in
selection - Procuring Suppliers through Contractors avoids
separate EU advertisement and Section 20
consultation - Client-Supplier model creates savings on
Contractor costs, but may have increased
management costs
87- Advice on Consortium Governance structures
- Guidance note on Governance options
- Consider three main models
- Corporate vehicle (company)
- Limited liability partnership
- Contractual consortium governed by Consortium
Agreement - Template NCA Consortium Agreement available for
use
88- Advice on Consortium Governance structures
- Other issues include
- Decision making and control of membership
- Tiers of membership
- How membership costs are levied
- Relationships with third parties
- Duty of care to other consortium members
- Tax and vires issues for consortium members
- Resourcing of consortium
- Ownership of assets
89- Advice on EU Procurement and Section 20
- Guidance notes available on EU Procurement and
leaseholder consultation - Major procurement issues include
- Framework Agreements vs term contracts
- Calling off work under Framework Agreements
- Provision for future consortium members to access
frameworks - Problems with interface between EU and Section 20
- New consortium members may have difficulty with
Section 20 when trying to access framework
contracts
90- EU/Section 20 Case law update
- Camden Council decision (Lands Tribunal), March
2008 - Leaseholder consultation
- Requirement to provide cost information to
leaseholders - Lianakis AE others v Alexandroupolis et al
(C-532/06), European Court of Justice, 24 January
2008 - EU procurement
- Can past experience be an award criterion
- Can new criteria be introduced after Contract
Notice and tender documents published
91- Further information
- www.ncahousing.org.uk
- Contact
- Email jforde_at_trowers.com
- Tel 0207 423 8353
92Central England Procurement Partnership
- Shaun Bennett
- Director of Investment Regeneration
- Derby Homes
93Derby Homes
- All 14,000 homes now decent
- Eliminated investment back log of 93m
- Partnering embedded across 95 maintenance
activity - 280 employees reducing to 250 over the next three
years - Focus on new build, decent estates, new business
and delivering excellent m m services - Developing partnering through the repairs service
94Derby Homes (last slide)
- Reducing management fee
- Pressure on the Repair Account
- Issue with sufficiency of MRA
- Continuing to seek out efficiency savings
- HRA time bomb still ticking!
- Need to work collaboratively more now than ever
95CEPP
- Midland ALMO technical officers group
- Linking up with an existing group of HAs and
LAs within the region - Desire to work together to strive for efficiency
savings - Some pressure to replicate the London ALMO
Procurement Network - Sharing of expertise, experience and procurement
resources - Opportunities to increase buying power by working
together
96CEPP
- Desire to extend partnership working through the
supply chain and identify true costs - Tender exercise to select organisation to
facilitate group - Established group of 8 organisations
- Currently working through the final stages of the
business plan, supported by Gleeds, working
closely with NCA
97Current Membership
- A1 Housing Bassetlaw
- Ashfield Homes
- Derby Homes
- Newark and Sherwood
- South Kesteven
- Nottingham City Homes
- Sandwell Homes
- Solihull Community Housing
98Current Membership
- Identified 22.5m savings across the partnership
over five years, at only 7.5 on aggregation, 5
materials, 2.5 on partnering efficiencies. (just
on MRA activity) - Scope for similar savings on repairs, new build
and other corporate procurement
99CEPP
- Interest from other organisations
- Working together to promote excellent procurement
practices, sharing best practice, supporting each
other. - Proportion of savings recycled though
CEPP to ensure sustainability of frameworks,
partnership
100CEPP
- Focus on quality
- Lower costs
- Sharing resources
- Best practice procurement
- Framework contracts
- Supply chain integration
- Target 250m by 2011 saving at least 10
101Learning so far
- Engage with the NCA as soon as possible
- Utilise their support, it will save time and
money - Maintain momentum within the group
- Agree a committed steering group and engage with
CEOs - Dont over rely on one individual, work as a team
- Dont underestimate the work required
- Remember it is an investment in potentially
massive efficiency savings into the future
102Learning so far
- Too many cooks can spoil the broth
- Agree mission and aims, be consistent.
- Continue to engage with the NCA
- Consultants are all becoming experienced
- Learn from other consortia
103Collaborative Working
- Focus on decent home work and repair services
- Develop best practice in procurement throughout
the group - Engage with Contractors and suppliers
- Collaborative purchasing through existing groups
where appropriate - Sharing resources across organisations
- Sharing service delivery in some cases
104Thank You
- shaun.bennett_at_derbyhomes.org
- 01332711033
105 The National Change Agent for Social Housing
Housing Seminar, Birmingham 22 April
2008 Consortium influence over sustainability in
construction David Mosey, Partner, Trowers
Hamlins
106-
- A development that meets the needs of the
present without compromising the ability of
future generations to meet their needs - Brundtland Commission, led by the former
Norwegian - Prime Minister Gro Harlem Bundtland
- What good is a house if you havent got a
decent planet to put it on? - Henry David Thoreau (1817-1862)
107- Capturing sustainability
- In an NAO survey of government projects 80
would not have met sustainability standards for
construction and refurbishment set by government - National Audit Office,
- Building for the future Sustainable construction
- and refurbishment on government estate (April
2007)
108- Capturing sustainability requirements at tender
stage - Clarifying client objectives in OJEU
advertisements and tender documents - Setting qualitative evaluation criteria
- Obtaining specialist bidder sustainability
proposals
109- Measuring achievements against agreed
targets/incentives - Setting clear key performance indicators
- Setting measurable targets
- Finalising measures/targets prior to contract
award - Establishing regular reviews and action plans
- Linking performance to incentives contract
duration/money
110- Encouraging training/employment/community
involvement - EU constraints
- Links to best value
- Benefit of joint initiatives among
contractors/service providers
111- Linking capital to whole-life costs
- Considering operation/maintenance from the very
start of each capital project - Obtaining proposals for operation/ maintenance
from capital works bidders - Using in-house DLO/DSO expertise
- Merging capital/repairs and maintenance contracts
112- Influencing subcontractor/ supplier
sustainability initiatives - To nominate or not to nominate?
- Parallel EU procurement
- Joint initiatives of clients/contractors/ service
providers - Subcontractor/supplier framework agreements
113- Additional benefits of consortium procurement
- Increased efficiency in terms of economies of
scale - Increased client influence on improved standards
and encourage greater innnovation - Greater opportunities to develop and share data
as to improvements/techniques
114- Consortium supply chain and waste management
- Large-scale consortium procurement can encourage
supply chain to adopt new practices - Large-scale consortium procurement can develop
two stage procurement processes to explore
sustainability proposals in detail - Consortium members can establish greater
efficiency through common practices for dealing
with supply chain members
115- Consortium procurement and training/employment
- Consortium procurement offers opportunity to
focus on social aspects of works programmes - Consortium procurement structures can draw in
local suppliers and develop training programmes - Potential to use specialist consultants to
develop sustainability initiatives - Platform for exchange of information at all stages
116- Conclusion
- Client influence is essential to develop
sustainability in construction - Consortium members working together can greatly
increase that influence - Stepping stones need to be included at all stages
in the procurement and contracting processes and
in the measurement of improvements