Hampshire County Council

Buildings, Land and Procurement Panel Item

19 October 2004

Procurement Initiatives

Report by the Director of Property, Business and Regulatory Services

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.

1

Summary

1.1

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

8 April 2004 the annual review of procurement initiatives for 2003/4 and a series of new initiatives to be implemented over the current financial year and beyond.

1.2

This report is an interim review of the arrangements for the current financial year of all of present initiatives, including the Framework for Major Schemes and Programmes of Work and other Strategic Partnerships. The report also proposes a number of new initiatives which it is proposed to introduce over the remainder of the year.

2

Framework for Major Schemes

2.1

The report to BLPP on 24 March 2004 (approved by the Executive Member for Policy and Resources on 8 April 2004), provided the first review of the Framework Agreement for Major Schemes and Programmes of Work and detailed the award of the initial schemes, procured through the arrangements. It also proposed that a number of further significant capital projects would be undertaken through the arrangements. An earlier report to Cabinet on 27 May 2003 explained the philosophy behind the approach principally designed for major projects and programmes of work exceeding £1m.

2.2

A key function in deciding on the award of further work has been the emergence of key performance information for the six contractors on projects in progress or completed. The report to BLPP in March 2004 also provided the results of an analysis of 34 recently completed major capital projects procured on the basis of best value and traditional lowest price competitive tendering . The results were presented in the form of a `Radar' diagram against a set of eight key performance indicators.

2.3

Following on from this analysis, a sample of work undertaken by the six contractors who are involved with the Framework Agreement for Major Schemes and Programmes of Work has been assessed against the same headline KPI's comprising:

· Contractor performance.

· Health and Safety Management

· Supply chain performance

· Quality achieved

· Customer satisfaction

· Time predictability

· Cost predictability

· Avoidance of claims and disputes.

The sample includes earlier procurement with the contractors prior to the implementation of the Agreements .

2.4

The earlier report showed a 21% improvement between best value procurement and traditional lowest price tendering. The recent analysis of the six contractors shows a further 7 % improvement . This is illustrated by the `Radar' diagram in Appendix 1.

2.5

The report to BLPP in March identified that some £47m of capital expenditure had been committed through the Framework Agreement for Major Schemes and Programmes of Work . A similar value of work has been committed since that report (see 2.10.1 below).

2.6

The first major package of work committed through the Framework Agreement for Major Schemes and Programmes of Work is the Nursing Care Strategy, in particular the initial phase of schemes comprising 6 projects worth £30m. These projects are being undertaken through three of the contractors, each having two projects. Currently all of the projects are running to programme and to budget, and the work is of an excellent standard. A gateway review has recently been carried out with all of the new build elements now at a fairly advanced stage (see item 20 on the agenda). As part of this process each of the contractors' performance has been assessed and measured against the same set of performance indicators previously applied to other forms of procurement (see 2.3 above). The result shows that the level of performance achieved is on average 9% above the best value work sample and 30% higher than lowest price competitive tender sample.

The effectiveness of the collaborative partnering approach is also demonstrated by the construction progress achieved only 18 months from approval of the design project appraisal (presented to this panel in March 2003). The speed and effectiveness of the delivery could not have been achieved through a traditional procurement approach.

2.7

On the basis of this strong performance the final Nursing Care schemes will be awarded to the same three contractors who are delivering the first six projects. This strategy will also:

· provide continuity in terms of maintaining the same integrated team arrangements who will move across to the next schemes

· utilise established supply chains

· provide opportunity for continuous improvement through learning and development.

2.8

It should also be noted that the project has been selected as a demonstration project by the Movement for Innovation, which promotes the Government's modernisation agenda for construction procurement through `Constructing Excellence'.

2.9

John Hunt of Everest

2.9.1

This project been awarded to Wates Construction following a best value review process of submissions invited from four contractors under the Framework Agreement for Major Schemes and Programmes of Work, on the following basis:

· preliminary costs (site management and facilities)

· proposed team

· approach to the project

· programme

· supply chain approach

· risk management

· sustainability

2.9.2

The written proposals were evaluated and provisionally scored against financial and ability criteria using a pre-determined scoring matrix. This was supplemented by contractor presentations and interviews after which revised scores were agreed for each contractor. The submissions from all four contractors were of a high standard, supported by strong performances at the interviews giving confidence that any of the contractors could successfully deliver the John Hunt of Everest project. Based on the combined financial and ability scoring, and site visits, Wates' submission emerged as the strongest.

2.9.3

The second stage design development is now underway with Wates and a start on site during the summer of 2005 is planned.

2.10

Overall Summary of Projects and Performance

2.10.1

Appendix 2 summarises the projects allocated under the Framework Agreement for Major Schemes and Programmes of Work since the start of this financial year. A total of £55M of construction work is identified of which £49M has so far been awarded to specific contractors.

3

Current Initiatives

3.1

The attached summary in appendix 3 details best value procurement (excluding the Framework Agreement for Major Schemes and Programmes of Work) which have been implemented this financial year, as follows:

· Negotiated projects - £2.86M

· Short listed preferred contractors (competitive tender) -£1.46M

· Negotiated Packages - £3.09M

3.2

Appendix 4 attached details a number of new initiatives which it is proposed are implemented in the current financial year related to:

· Replacement of Wet Cooling Towers - Winchester

· Response after Fires and other emergency work

· Hiltingbury Infant School - improvements

· Replacement Uninterruptible Power Supply (UPS) to the IT Suite

· Fire Suppression and Alarm system in the IT Suite

4

Term Contract for Temporary Buildings

4.1

Tenders were invited on 18 February 2004 for the supply, transfer and hire of volumetric buildings for an initial two-year term, which may be extended by a further three, subject to satisfactory performance and mutual agreement. Initial expressions of interest were sought through the Official Journal of the European Union (OSEU) under European Procurement Rules and six firms were invited to submit tenders which would be assessed for best value. Following the selection process, two firms were recommended for appointment, there are the Elliot Group Ltd and SGB Rovacabin. Approval is now sought to make an initial appointment for two years w.e.f. 1 November 2004. The arrangements include a set of key performance indicators and future reports to the panel will comment on the outcome of the first year's review.

5

Asbestos Survey Strategic Partnerships

5.1

To improve the quality of asbestos registers through a Type 2 resurvey programme an OJEU procedure will be followed in the near future. This will seek expressions of interest for professional services to undertake surveys. The overall estimated value of the commission is £300,000 per annum for four years. The process will commence shortly with a target date for partnering firms to be in place by June 2005.

6

Strategic Partnership for Quantity Surveying Services

6.1

The report to BLPP in March 2004, identified that following an OJEU advertisement for Quantity Surveying Services, 10 firms would be invited to tender for the services. Tenders were assessed on the basis of best value. As a result six firms were selected. The appointment will last two years, subject to satisfactory performance and mutual agreement, and may be extended by a further two years.

The firms selected are:

· Davis Langdon

· Currie and Brown

· James Nisbett and Partners

· Selway Joyce Partnership

· Faithfull and Gould

· Grant Associates

7

Planning and Urban Design Strategic Partnering Arrangements

7.1

The Town Planning and Urban Design Consultancy Partnering arrangements with Tibbalds Planning and Urban Design have been operating since 2001 assisting the surplus land disposal work of the Estates Practice. As this initial contract was for a three year period it is now due for re-tendering and a "Contract Notice" inviting expressions of interest in the next partnering period is proposed to be placed in the OJEU. This will seek two Planning and Urban Design Strategic Partnering Consultants for the next three year period. It is expected that a decision on these and appointments will be made in early 2005, based upon the current European Commission timeframe requirements.

8

Transport Planning Strategic Partnering Arrangements

8.1

The Transport Planning Consultancy Partnering arrangements with MVA have been operating since 2001 assisting the surplus land disposal work of the Estates Practice. As this initial contract was for a three year period it is now due for re-tendering and a "Contract Notice" inviting expressions of interest in the next partnering period is proposed to be placed in the OJEU. This will seek two Transport Planning Strategic Partnering Consultants for the next three year period. It is expected that a decision on these and appointments will be made in early 2005, based upon the current European Commission timeframe requirements.

9

Landscaping Consultancy Partnering Arrangements

9.1

Following a tender exercise, strategic partnering arrangements are now in place with two partners, Hyland Edgar Driver and RPS, who were formally appointed from the 1st July 2004 for a three year period up to 2007.

10

Ashburton Court

10.1

To implement a major project of this scale will require significant professional resources. It is therefore proposed to supplement resources by selecting a number of the lead design consultants/specialists following an OJEU tender process. An advertisement seeking expressions of interest will shortly be placed in the Official Journal.

10.2

It is proposed to undertake the construction work through either the Framework Agreement for Major Schemes and Programmes of Work , with selection of the contractor based on best value from a shortlist of no less than three contractors , or a similar arrangement specifically for this project. A key to the success of the project will be early involvement of the construction specialist with the construction strategy, design management, procurement and complex phasing required.

11

Fire Damage at Eggars School

11.1

Members are asked to note that during the evening of 26 August 2004 a fire broke out at Eggar's School, Alton. The fire caused damage to a number of rooms in the school's Technology Suite and light smoke damage to other areas of the building.

11.2

Officers from Property, Business and Regulatory Services and employees from Mansell Construction Services Ltd (a County Council Framework Contractor) attended the site on 27 August to assess the damage and ascertain the extent of the initial emergency works required to make the site safe.

11.3

It was agreed at that time to instruct Mansell Construction to instigate emergency works and initiate proceedings on site. This work included fencing of the area, the isolation of services and emergency clearance of asbestos debris created during the fire.

11.4

Following on from the initial emergency works the extent and estimated cost of a full fire reinstatement scheme to return the school to normal conditions has been completed and a contract has been arranged with Mansell Construction. The cost of the work is £199,000 and will be a charge against the County Council's Fire Reinstatement budget. It is estimated that works will complete on 5 November 2004.

Recommendations

1

2.

That the Panel note the following:

1. the projects to be undertaken through the Framework for Major Schemes and Programmes of Work as identified in Appendix `2';

2. the appointment of Strategic Partners for Quantity Surveying services;

3. the appointment of Landscaping Consultancy Partners.

That the Panel advices the Executive Member for Policy and Resources that approval be given to:

1. the procurement initiatives that have been implemented this year as set out in Appendices 2 and 3;

2. the procurement initiatives set out in Appendix 4 relating to the:

· replacement of Wet Cooling Towers - Winchester

· response after Fires and other Urgent Works

·Hiltingbury Infant School - Improvements

·replacement of uninterruptible power supply to the IT suite

·fire suppression and alarm systems in the IT suite

· replacement of Warwick windows at Swanmore and Hayling Schools

3. the appointment of Asbestos Surveying Consultancy Partners

4. the appointment of both Town Planning and Urban Design and Transport Planning Strategic Consultancy Partners

5. the appointment of lead design consultants and key specialists for the redevelopment of Ashburton Court and the process to select a contractor for the project

6. the arrangements following the fire at Eggars School, Alton

7. the appointment of Elliot Group Ltd and SGB Rovacabin for the supply, transfer and hire of temporary buildings wef 1 November 2004 as set out in para 4.1.