Hampshire County Council

Buildings, Land and Procurement Panel

4 April 2006

Procurement Initiatives

Report by the Director of Property, Business and Regulatory Services

Contact: David Corcoran Ext: 7930 email: david.corcoran@hants.gov.uk

How the conclusion in this report fits with the Corporate Strategy

The key objectives of the Constructing Excellence (formerly Rethinking Construction) are to improve the quality and efficiency of construction and provide value for money, recruit and retain a skilled workforce; and to promote sustainability. These objectives significantly contribute towards:

Aim 2 Stewardship of the Environment - by considering whole life costs, and working closely with our partners to eliminate waste, we aim to develop more sustainable solutions

Aim 3 Achieving Economic Prosperity - encouraging and developing the use of local resources contributes to the local economy and leads to greater prosperity

Aim 5 Improving Services - the new arrangements involve closer working and collaboration with the industry, which is instrumental in driving continuous improvement into our services.

Aim 6 Developing councillors and staff - by developing procurement skills and competencies of staff.




The Executive Member for Policy and Resources approved at his meeting of

14 April 2005 the annual review of procurement initiatives for 2004/5 and a series of new initiatives to be implemented over the current financial year and beyond.


The purpose of this report is to summarise the actions taken during 2005/6, analyse the outcomes, seek approval to further procurement initiatives and set out a number of procurement development objectives for 2006/7 and beyond.


Analysis and Review


Over the last twelve months construction work procured through this department has continued at a very high level, with £120 million construction work committed - £10 million more than during 2004/5.


In addition to the Framework for Major Schemes work continues to be procured across a range of best value procurement, including preferred small to medium size contractors and specialist firms. Pilot arrangements are now in place for a second framework for small and medium size contractors as a precursor to longer term arrangements. In 2005/6 sixty five percent of the overall value of project work was procured was through collaborative procurement arrangements. The remaining thirty five percent was through conventional tendering. The level of commitment through collaborative procurement arrangements is within the ceiling set for best value procurement approved by Cabinet in September 2004 of seventy percent as a proportion of the overall value.


A summary of all best value procurement approved in 2005/6 is shown in Appendices 1 and 2:

· Appendix 1 details all of the work committed to the Framework for Major Schemes for 2005/6 and beyond.

· Appendix 2 details work procured through other best value procurement including preferred contractors and specialist framework arrangements.


Both tables are in the same format as previous reports to this Panel. The tables show the project title, name of contractor (where decided), current value of scheme, selection method and particular reasons for the procurement method proposed.


In value terms £60 million worth of major project work will have been committed by best value forms of procurement during 2005/6 through:

· Major Framework - 8 projects worth £47 million including the John Hunt of Everest project.

· Preferred contractors - 34 projects worth £9 million

· Preferred contractors - 12 packages of multiple projects worth £4 million


Appendix 3 details a number of further best value initiatives proposed:

_ Second tier framework pilots - Projects proposed for 2006/7

_ Hard landscaping framework - 2006/7 projects and proposed new arrangements

_ External redecoration - 2006/7 projects

_ Roofing Framework - 2006/7 projects and development of the arrangements

_ Castle Complex - tender of `Handyman' arrangement

_ SCOLA Panel Repairs - Phase 2

_ Yateley Infant School -Re-cladding of timber framed building

_ Portchester School - SAI and NDS modernisation works

_ Bridgemary Community School - Multi-purpose sports hall

_ West Meon Primary School - Classroom Extension

_ Cowplain Community School - MUGA and Synthetic Turf Pitch

_ The Mountbatten School and Language Centre - Fire damage reinstatement

_ Winchester Cultural centre- archaeological investigation

_ Asbestos Type 2 Surveys - appointment of surveying partners


Framework for Major Schemes


A total of £174 million of work has now been allocated to the Framework for Major Schemes since its inception in 2003/4. This includes work planned for 2006/7 and work already committed during the previous financial years.


Primary Schools


The Procurement Initiatives report to the Panel in April 2005 identified the requirement for up to fifteen new primary schools to be delivered during the next five to ten years due to plans for several major development areas of new housing across Hampshire. A programme for review of primary school provision across the County may generate further requirements for new schools.


As proposed, the first four schemes, at Pinewood, Kings Copse, Dowd's Farm and Whiteley, are now being developed with two framework contractors working as part of an integrated project team to establish a common approach to design and construction. Subject to the necessary approvals, it is anticipated that construction will commence on all four schemes during 2006.


Analysis of the outcomes of a similar approach to the procurement of the Enhance projects and the programme of NOF Sports Halls has demonstrated that significant benefits can be achieved through this approach in terms of cost savings for professional fees and construction costs, increased cost and time predictability and efficiencies in the pre-contract period as the learning is transferred from the early schemes to the later projects.


Feasibility work is now underway to review primary school requirements in the Aldershot and Andover areas and it is proposed that any new build schemes arising from these studies will follow a similar design and procurement philosophy to the schemes currently being developed.


Ashburton Court Redevelopment


As previously reported the Framework for Major Schemes will be used for the construction implementation and HBG Construction has now been selected for the project under the arrangements.


Future Schemes


It is proposed that the following further major schemes are developed under the Framework arrangements during 2006/7:

    · Basingstoke School Plus

    · Challenger Way, Dibden Purlieu

    · Key Worker Housing

    · Primary School Programme


Performance Assessment


The performance of all contractors is assessed against key performance indicators. Major projects undertaken over the last twelve have been measured against the following set of key performance indicators:

    · Programme management

    · Financial control

    · Quality achieved

    · Contractor performance

    · Supply chain management

    · Health and safety management

    · Customer satisfaction

    · Collaborative approach


A total of 31 major projects completed in 2005/6 has been assessed against these indicators. This includes 17 competitively tendered projects; 12 projects completed under the Framework for Major Schemes and 2 projects negotiated with preferred contractors.


The average score for all forms of collaborative working, which is mainly based upon the major framework, has increased from 81% to 85%. In particular the more recently completed Enhance projects have shown an improvement when compared against the first two projects, demonstrating the benefits obtained from the learning transfer across the programme of work.


The results show the average score for conventional competitively tendered projects has decreased from 72% in 2004/5 to 65% in 2005/6. This is mainly due to a fall in performance standards on a small number of projects, but illustrates the unpredictability of performance achieved through conventional tendering based upon lowest price. It is envisaged that the introduction of the second tier framework will deliver improved performance on a range of projects which are currently being conventionally tendered.


An assessment of a range of maintenance and improvement projects undertaken by Property Management also shows good performance with average scores of more than 80%.


A more detailed report on the performance of projects completed by Property Services during 2005/6, together with a review of building cost trends and efficiencies will be presented to a future Panel meeting.


Development of the `Hampshire Procurement Model'


The report to Cabinet on 27 September 2004 put forward a 'Hampshire Procurement Model' for the development of best value procurement over the next two years. The importance of developing the new arrangements was highlighted, both in terms of securing the capacity and quality of delivery, and to align with the strong national modernisation agenda.


Second Framework Development


The report to the Panel on 30 June 2005 included proposals to run a number of pilot packages as a precursor to establishing a second framework for small and medium sized projects up to £2.5 million. The purpose of the pilots is to develop and test procurement and project management templates prior to entering into longer term arrangements.


Two pilot packages have now been tendered and a total of five contractors have been selected to participate in the pilots. The pilot will last for 6 months with the possibility of extending by a further 6 months. Package 1 is intended to focus on minor building works such as small extensions and general alterations. The second package will have a bias towards general fitting out work including office accommodation and packages of alteration work such as WC upgrades and the like. An initial list of projects for each pilot has been compiled and is included in Appendix 3. The appendix also details the proposed call-off arrangements which will be put into place for the remainder of the pilot.


The framework arrangements will be divided into two value bands. The first will be aimed at the projects or programmes of work, generally over £500,00 up to £2.5m, and will be aimed at the regional contractors and will be the subject of EU procurement rules. A Contract Notice inviting expressions of interest will be issued in Summer 2006, with a view to the arrangements being in place by the end of the financial year. The tender process will be designed to select a minimum of five contractors, with the potential to increase the number of contractors engaged should the needs of the County Council require. As noted in previous reports to this panel these arrangements will be open to participation for other authorities in the South East Centre of Excellence, which the County Council is leading on the construction workstream.


The lower band will tend to align with the work currently being undertaken as part of the pilot study, specifically aimed at smaller projects and up to £500,000. This will typically focus on the regular or repeat packaged type work that utilises the skills and competence of the small local contractors. Examples of this work would include school laboratories, or toilet refurbishments, classroom extensions, office refurbishments or other similar upgrades or small extensions. This framework will be offered for a two year period with a possible extension period of a further year subject to satisfactory performance and the needs of the County Council at the time.


Term Engineering Contracts


The tender process for the renewal of the term engineering contracts is now underway. Expressions of Interest were invited in accordance with the EU procurement rules and eight contractors have been shortlisted to be invited to tender, with three contracts to be awarded. The tender documents are due to be issued during March 2006 with a view to selecting preferred contractors by the end of the summer. This allows sufficient time to finalise the details of the contracts and for the new contractors to mobilise, prior to commencing service delivery in April 2007. Updates on the tender process will be reported to future Panel meetings.


Reactive Maintenance Pilot


Following a best value tender at the end of 2005, two contractors, Tew Brothers and Dorelbury, have been selected to participate in pilot arrangements for reactive building maintenance. Each contractor will provide reactive maintenance to properties within a defined geographical area; cover for out of hours response to urgent repairs and major incidents such as fire or flood will also be provided through the pilot arrangement. The pilot will initially run for 6 months with each contract operating up to an initial estimated value of £150k. There is an option to extend the pilots for a further 6 months subject to the performance of the contractors and the requirements of the Council.


Consultant Partnerships


Consultant partnerships for structural engineering, services engineering and quantity surveying services were established in 2003 and 2004. The basis of each of these appointments was after an initial three period (two for Quantity Surveying), that subject to good performance and the needs of the County Council at the time that the arrangements may be extended by a maximum of two further years. The initial term of each of these arrangements ends during 2006.


Recent performance analysis for all partner consultants has shown that performance is generally very good with above average scores when benchmarked against the national KPIs for consultants. The exception has been Gifford and Partners within the partnership for services engineering, where poor performance on a number of major capital projects led to their suspension from the partnering contract in June 2005.


It is now proposed to extend each of the following partnering arrangements as follows:

_ Structural Engineering appointments for Evans Grant, Gifford, Price & Myers, Upton McGougan, RJ Watkinson and WSP extended to 31 October 2007.

_ Services Engineering appointments for Atkins, EDP, Gary Jones, RHB Partnership and White Young Green to be extended to 31 August 2008.

_ Quantity Surveying appointments for Grant Associates, Davis Langdon, Selway Joyce, Currie & Brown, James Nisbett & Partners and Faithful and Gould to be extended to 31 March 2008.


Value for Money


The Procurement Initiatives report to the Panel in April 2005 noted the use of whole life cost models for capital projects as an important component in demonstrating value for money. The report also highlighted the proposal to include a value for money statement in the project appraisal process.


Whole life cost is also a consideration in the BREEAM Schools environmental assessment method launched in October 2004 by the DfES. BREEAM Schools assesses the performance of buildings in the following areas: management, energy use, health and wellbeing, pollution, transport, land use, ecology, materials and water. The outcome of the assessment is an overall score categorised as pass, good, very good or excellent. There is evidence that future funding for school projects could be linked to a `very good' BREEAM rating.


BREEAM assessments are currently being undertaken on the Pinewood Infants School and Kings Copse Primary School projects, together with a review of whole life costs. An early assessment of both projects indicates that a `very good' rating will be achieved for Kings Copse and an `excellent' rating could be achieved for Pinewood. It is proposed to include the outcome of these assessments, together with an assessment of other relevant factors in a value for money statement in the project appraisals when these are presented to the Panel in the next few months.


Renewal of Register of Contractors


The current approved list of contractors established in 2001 is nearing the end of its intended term of five years. It is an open list comprising building contractors, electrical and mechanical specialists, hard landscaping and minor civil engineering, decorating and numerous other specialists.


It is now proposed to place an advert in the local press during April 2006, to invite new contractors to join the new Property Services Register of Contractors. Again this will be formed on the basis of an open list. Contractors currently on the Register will not be required to re-apply and they will be migrated to the new list following exchange of correspondence. The advert will direct contractors to the Procurement pages of Hanstweb which have been updated to include details on how to apply to join the Register together with information on Property Services' procurement strategy.


The application pack and associated administrative procedures have been reviewed and a number of changes made to provide efficiencies in both time and resource. These include the introduction of an automated telephone service providing advice for firms wishing to apply to join the Register.


That the Panel advises the Executive Member for Policy and Resources that:


Projects to be undertaken through the Framework for Major Schemes as identified in Appendix `1' are approved.


The procurement initiatives that have been implemented this year as set out in Appendix `2' are approved.


Approval be given to the proposed procurement initiatives set out in Appendix `3' relating to:

    · Second Framework Pilots - 2006/7 projects and call-off arrangements

    · Flat roofing framework - 2006/7 projects and re-tendering proposals

    · External redecoration - 2006/7 packages of work

    · Hard landscaping framework - 2006/7 projects and proposals for developing the arrangements

    · Castle Complex - tender of Handyman arrangements

    · SCOLA Panel Repairs - Phase 2

    · Yateley Infant School - recladding

    · Portchester School - SAI and NDS modernisation works

    · Bridgemary Community School - Multi purpose sports hall

    · West Meon Primary School - Classroom Extension

    · Cowplain Community School - MUGA and Synthetic Turf Pitch

    · The Mountbatten School and Language Centre - Fire damage reinstatement

    · Winchester Cultural centre- archaeological investigation

    · Asbestos Type 2 Surveys - appointment of surveying partners


The development of the following schemes under the Framework for Major Schemes and Programmes of Work is noted:

    · Basingstoke School Plus

    · Challenger Way

    · Key Worker Housing

    · Primary School Programme


The proposal to extend the Consultant Partnership arrangements for Structural Engineering, Services Engineering and Quantity Surveying is approved.


The proposals for tendering the longer term second framework arrangements are approved.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1 Published works

2 Documents which disclose exempt or confidential information as defined in the Act