South Eastern Consortium

1
South Eastern Consortium Contractors Forum
27th November 2007 Hilda Chagula NCA
Housing Davis Langdon LLP
2
Contents

• Background to NCA Housing
• The Role of NCA Housing
• Progress to date from the NCA Housing Initiative
• Consortia Case Studies Examples of Actual
  Benefits Achieved from Procurement Consortia-
• GM Procure, Greater Manchester
• 4 South Yorkshire, South Yorkshire
• Six Point Plan for a Successful Consortium

3

• Background to NCA Housing

4
Background to NCA Housing

• Eight million tenants will be living in better
  homes by the end of the decade
• By 2010 the Government's Decent Homes programme
  will have improved 3.6 million homes, with
  investment of over 40 billion.

5
Gershon Public Spending Review Efficiency
Targets
6
Response to the need for efficiencies

• Efficiency Challenge Fund (ECF)
• National Change Agent for Social Housing Capital
  Works
• Managed by Davis Langdon in association with
  Trowers Hamlins
• Drive change across the sector
• Assist Consortia development
• Administer ECF on behalf of Communities and Local
  Government
• Provide practical guidance, advice and tools
• Other Change Agents and best practice
  initiatives, e.g.
• Housing Corporation
• Audit Commission
• Regional Centres of Excellence

7

• Role of NCA Housing

8
The role of NCA Housing

• We are a change agent that
• Facilitates and supports procurement consortia
• Focus on capital works procurement
• Provide initial and on going support
• Provide guidance documents and templates
• Manage the Efficiency Challenge Fund
• Facilitate the provision of specialist consultant
  support
• Supports the measurement and reporting of
  efficiency gains
• Works with others to identify and promote best
  practice
• Regional Centres of Excellence
• Other best practice initiatives and organisations
• Focused on lessons learned and how to achieve
  efficiency gains.

9

• NCA Housing Programme How does it work ?
• Feasibility Study (triggers eligibility for BP
  Grant)
• Assess the opportunity for collaboration
• Business Plan ( triggers eligibility for
  Implementation Grant )
• Make the business case
• Develop the business model
• Implementation of BP (start up support to
  consortia )
• Start up activities in Implementation Plan.

10

• Progress to Date from NCA Housing Initiative

11

• Progress to Date

NCA 30 of national DHP
Total Targeted Savings 402 million by 2010
12 Consortia 1.17million homes
3.5 million awarded from the ECF
12
North East Consortium
Cumbrian Housing
4 South Yorkshire
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
SCMC
South East Consortium
Sappling Partnership
Advantage South West
13

• The Benefits

• 5-10 Savings on Capital Works
• More for Less e.g. Improved Quality /Spec.
• Whole Life Costs
• Work Smoothing
• Continuous Improvement

• Community Wide Asset Management
• Local Labour and Materials
• Less Travelling Distance
• Less Congestion and Carbon Emissions

• Stimulating Local Employment
• Supporting SMEs
• Improved Services
• Engaging with BMEs

14

• Consortia Case Studies
• Examples of Actual
• Efficiency Gains and how these have been Achieved

15
Actual Efficiency Gains and How this is Being
Achieved

• Two NCA Housing consortia can now point to the
  actual benefits achieved
• from consortium working
• We will look at two trailblazer consortia -
• GM Procure, Greater Manchester
• 4 South Yorkshire

16
(No Transcript)
17
GM Procure

• 10 Members (ALMOs, RSLs and LSVTs) in the
  Consortium-
• Calico Housing Ltd
• Harvest Housing Group
• Home Group
• New Charter Housing Trust Group
• New Prospect Housing
• Northern Counties Housing Association
• Rochdale Borough wide Housing
• Six Town Housing
• Stockport Homes
• Trafford Housing Trust

18
Consortia are adopting a range of procurement
approaches, for example
More intervention into the Supply Chain Greater
Cost Transparency Better Value for Money Higher
Risk
No single solution!
Supply Chain
Main Contractor/Package
Main Contractor
19
GM Procure Direct Supply Chain Procurement Model
Consortium Member 1
Consortium Member 4
Consortium Member 3
Consortium Member 2
Valueworks Interface allows Members to buy
directly from framework of suppliers at agreed
rates and specifications
Framework Installer 4
Framework Installer 1
Framework Installer 3
Framework Installer 2
Framework Supplier 3
Framework Supplier 1
Framework Supplier 2
Framework Supplier 3
20
GM Procure Direct Supply Chain Procurement
21
GM Procure Business Plan Volumes

• 195,000 units Total consortium housing stock
• 269.9 million to be spent through the consortium
  from 2006 to 2010
• This represents 48 of expenditure from
  Consortium members
• 102 million projected efficiency target by
  2010/11
• Current Work streams include-
• Bathrooms, Kitchens, Windows, Doors and Heating
  Systems

22

• GM Procure
• Savings achieved since implementation in July 06-
  Feb 07

23
(No Transcript)
24
GM Procure Critical Success Factors

• Delivery
• Monitoring of contractor performance (valueworks
  software solutions)
• Savings
• Sufficient uncommitted volume
• Willingness to collaborate
• Pooling of procurement programmes and a common
  system
• Local Regeneration
• Partnering with Manchester Enterprises (Economic
  Development Agency) to create sustainable
  employment/training opportunities

25
(No Transcript)
26
4 South Yorkshire

• Four ALMO members and their respective Local
  Authorities
• Berneslai Homes
• Rotherham 2010
• St Leger Homes of Doncaster
• Sheffield Homes
• The respective Local Authorities are
• Barnsley
• Doncaster
• Rotherham
• Sheffield Metropolitan Borough Councils.

27
4 South Yorkshire Main Contractor and Package
Procurement Model
Consortium Member 1
Consortium Member 4
Consortium Member 3
Consortium Member 2
Members have their own contract framework for
Main contractor. Contractors performance managed
and benchmarked collectively via Panagraph.
Main Contractor framework 4
Main Contractor framework 1
Main Contractor framework 3
Main Contractor framework 2
Tier 1
E-Auctions identify component suppliers for
framework.
Component Supplier 3
Component Supplier 3
Component Supplier 1
Component Supplier 2
Tier 2
28
4 South Yorkshire Main Contractor and Package
Procurement
29
4 South Yorkshire Business Plan Volumes

• 120,000 units Total consortium housing stock
• 1,439.8 billion Expenditure committed from 2006
  to 2010
• 58.2 million Targeted savings to come through
  this expenditure
• Works streams Bathrooms, Kitchens, Windows,
  Doors and Heating Systems

30

• 4 South Yorkshire
• Savings achieved since implementation in July
  2006

31
(No Transcript)
32
4 South Yorkshire Critical Success Factors

• Value Engineering Existing Contracts
• Benchmarking contractors performance (price and
  quality)
• Management
• Adopting common performance measurement tool
  (Panagraph Management)
• Commitment from Members
• Knowledge Sharing and Good Practice
• Developing the capacity and improving the
  efficiency of the supply chain
• Local Regeneration
• Partnering with Construction Job Match to
  create sustainable employment /training
  opportunities.

33

• Six Point Plan for a Successful Consortium

34

• Six Point Plan for a Successful Consortium

35

• Questions ?