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Cutting the cost of competitive tendering

Source: Public Sector Executive Aug/Sept 2014

As the West Midlands Contractor Framework (WMCF) comes to a close this month, Tony Hyde, chairman at Thomas Vale, explains to PSE how working as part of a collaborative, local-first regional framework has helped to deliver important cost-savings for the public sector while creating award-winning public facilities.

Improving public sector procurement and finding ways to make efficiency savings has been top of the public sector’s agenda since chancellor George Osborne first outlined the government’s goals for efficiency savings in the 2010 Budget. Announcing that public sector spending should be reduced by £83bn between 2010 and 2014, the chancellor set an ambitious target for public sector organisations across the country to become more efficient while still providing quality local services.

It was at this time that the West Midlands Contractor Framework (WMCF) was launched to help deliver some of these much-needed cost savings and streamline the way construction projects in the region were procured and delivered. The four-year framework consisted of a number of public sector partners including Worcestershire County Council, Herefordshire Council, Dudley Metropolitan Borough Council, West Mercia Police, Warwickshire Police and Hereford & Worcester Fire and Rescue Service and three contractors – ourselves, Kier Construction Central and Speller Metcalfe.

The basic principle was to remove the cost and resource-intensive process of competitive tendering and allow the contractors to focus on providing value for money – not just cost alone. By allocating work on a scored rotational basis, the framework partners could quickly and easily progress the delivery of much-needed construction projects while being assured that through a transparent process of monitoring performance, quality, consistency and best value would be guaranteed. Not only did this encourage greater consistency across the framework’s projects, it also ensured both the contractors and partners were working to achieve common goals and objectives.

This collaborative approach had a number of benefits. Chief among them, it encouraged the contractors and partners to meet regularly to discuss projects and report back on successes and learnings and look for ways to share knowledge. In turn, this allowed us to establish a consistent, standardised approach across similar projects, such as schools or leisure facilities. For example, the experience we gathered through working on Stourport Primary School in the very early days of the framework was shared and evolved across the other contractors’ schools projects – which accounted for the majority of our work.

This process of sharing information has encouraged the contractors to look for new ways to develop their services. By investing in new building methods, materials and tools, such as BIM, the contractors have sought to challenge and improve building design but keep costs – whether capital construction or running costs – to a minimum. As a result, we’ve delivered some truly innovative buildings consistently in time and on budget. One of these is St George’s Primary School, which received a BREEAM ‘Very Good’ rating and won a RIBA architecture award in 2013 for its use of natural light and sustainable materials to minimise running-costs and maximise opportunities to support local ecology.

This integrated approach has also allowed for greater partnership working between the public sector organisations looking for ways to pool resources and make efficiency savings without compromising the quality of service delivery. An example of this is the Bromsgrove ‘blue lights’ hub – the UK’s first ever purpose-built combined fire and police station in Bromsgrove. Identified as a cost-effective way of replacing two ageing facilities with one central hub, this pioneering project was a joint venture between framework partners Hereford & Worcester Fire and Rescue Service and West Mercia Police. Not only did the framework allow for more time to carefully plan and design the project over a six month pre-construction period, making vital space and cost-savings, but it also encouraged the two services to better coordinate crisis response and streamline back office functions to save time and increase performance.

The long-term relationships between the framework partners and contractors have also had a positive impact beyond the immediate framework. Through four years of operation, the contractors have spent a significant amount of time building local supply chains and encouraging community engagement.

By using local sub-contractor web-portals like Find-it-in-Worcestershire and holding ‘Meet the Buyer’ events, the framework has established strong relationships with local companies. For example, we sourced 85% of materials for Stourport Primary School from within 30 miles of the site and 60% of orders with sub-contractors within 30 miles. Not only has this reduced costs associated with the transport of goods and services, it has encouraged local spending, generating over £100m of economic value for the region.

What these examples show is how vitally important local frameworks can be in helping public sector organisations better manage construction projects and achieve and maintain high standards of service.

By speeding up the delivery process, reducing project delays and encouraging collaboration, the framework has encouraged contractors like ourselves to develop our services and look for ways to demonstrate value engineering. In turn, the partners have achieved overall cost savings of around 2.5% and established a new generation of building stock which is modern, efficient and cheaper to run. Not only does this meet government targets for ‘procuring collaboratively’ but it also goes some way to meeting the Communities and Local Government Committees benchmark of ‘best value, not simply lowest price’.

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