Hampshire County Council

Buildings, Land and Procurement Panel Item *

24 January 2006

South East Centre for Excellence - Building Construction

Work stream - Progress Report

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

This scheme will impact on the delivery of the following Corporate Aims

Aim 2 - Stewardship of the Environment - by considering whole life costs and working closely with the industry to eliminate waste and develop sustainable solutions.

Aim 5 - Improving services by working closely and in collaboration with the industry to drive continuous improvement into services

1

Introduction

1.1

The report to this Panel on 13 October 2005 described the progress made on developing the construction workstream for the South East Centre of Excellence (SECE). This report details the further significant progress made towards the introduction of a new regional framework and describes how it is intended to develop the workstream over the coming year.

1.2

There has been significant contact and consultation with the 74 SECE authorities, associated groups and wider national interest in the work being undertaken through this work stream. Appendix A briefly summaries 50 separate contacts since commencement of the SECE initiative.

2

Regional Framework Agreements

2.1

Primary focus is currently being given to the development of a major project framework for SECE. A Contract Notice was recently published in the Official Journal of the European Union resulting in 39 expressions of interest from national and large regional contractors. These have now been evaluated and 21 separate organisations will be invited to tender. Tendering will be underway later in January with the aim of making first appointments for a number of demonstration projects in the late spring. It should be noted that SECE is currently the only regional centre of excellence embarking on such an initiative which offers the opportunity to link up construction procurement on a very large scale, potentially creating significant leverage with the industry and bringing the benefits of economies of scale.

2.2

For example over the next five years the County Council and a number of neighbouring authorities will each be embarking on similar programmes of work for the provision of new primary and secondary schools, as a result of major development areas and to replace ageing building stock. The SECE major framework strategy would offer the opportunity of linking up all of this work into a single programme of work using a similar design methodology and supply chains. Such a strategy would maximise potential efficiencies across all the participants and ensure that the best resources are aligned with a common programme; at a time when resources could be more scarce on account of the 2012 Olympics and other major regional developments.

2.3

A study has recently been undertaken of aggregated procurement methods which have been used on two major programmes of work for the County Council. This included the Enhance projects and the recent NOF sports hall programme. The study revealed a 10% saving in construction costs and professional time reduced by up to 40% compared to equivalent single projects through conventional tendering.

2.4

Analysis shows that a potential work stream in the region of £200 million per annum of construction work could be channelled through such an arrangement. There will be three distinct phases to this work:

· A procurement phase to select between six and fifteen contractors to work within the SECE region

· A demonstration project phase to develop the working arrangements and governance arrangements

· A formal gateway review to assess the arrangements, establish central governance, and formalise specific arrangements for participating organisations.

2.5

By carrying out similar projects with an expert supply chain, standard models and templates will be delivered for any authority to use. This will in no way stifle design, but allow common works to gain the cost and programme benefits.

2.6

The framework will be available for all major public building work, and could include schools, libraries, civic offices, sport and leisure facilities, care homes, housing and the like.

3

Sub Regional Arrangements

3.1

Work is also underway on the development of second tier frameworks. These arrangements will operate sub regionally around clusters of authorities and will be most suited to the small to medium size contractors who predominantly carry out smaller projects ranging up to £2.5 million.

3.2

The details of arrangements throughout the region will vary, as will the requirements of various authorities. However, the County Council is currently establishing a second tier framework as part of it's own procurement development agenda , and has taken steps to initiate a process of promoting a methodology for the introduction of arrangements to individual authorities, or clusters of authorities within a sub-region of SECE, by publishing a Prior Information Notice in the Official Journal of the European Union. Such cluster groups are currently under discussion with the Berkshire Unitary authorities and the Sussex counties and this approach will be promoted further around the region over the coming year.

4

Demonstration Projects

4.1

As part of the development of the SECE framework a number of projects have been offered by the SECE authorities as pathfinder schemes. The object will be to fully develop a representative sample through the arrangements to establish the working practice and central governance. In all some £40m of work will be undertaken as part of the development stage comprising:

· Major extension and improvement to the Alfred Sutton Primary School for Reading Borough Council

· New Special Educational Needs School and Adult Day Care Centre for Wokingham District Council

· Civic Offices relocation for Reading Borough Council

4.2

Each of these projects will be developed through an interactive process requiring full engagement with each authorities' officers or professional staff. The County Council will provide its own professional resources and expertise to SECE to facilitate this process. Funding for this involvement is being provided by direct grant from SECE and the authorities concerned as the schemes progress into design.

4.3

In addition to the pathfinder schemes detailed above, further schemes are being discussed with a number of other SECE authorities and an initial programme of work will be generated later this year. The role the County Council will play with the longer term arrangements has yet to be determined but is likely to involve at the least acting in the capacity of a `critical friend' for a significant portfolio of work around the region.

5

Collaborative Maintenance Arrangements

5.1

A meeting is planned with interested SECE authorities in the near future to establish requirements in this area. There is likely to be a wide and diverse range of need and indeed interest in common development work throughout the region. The current work is mainly focussed on capturing information to discern best practice, identifying areas of interest for development, and scoping of requirements.

5.2

Some early work is already underway with Royal Berkshire Fire and Rescue Service to develop collaborative arrangements for planned and reactive maintenance works.

5.3

It is intended to establish templates for the procurement and delivery of maintenance work which could be applied elswhere within SECE. The arrangements being proposed will draw upon the County Council's experience of engaging with competent contractors in a collaborative partnership to deliver high quality services with demonstrable value for money.

6

Governance

6.1

In establishing such wide ranging arrangements it will be essential to create appropriate common governance arrangements. Initially a SECE Steering Group will be formed to review the development work, provide srutiny, direction and agree the final form of arrangements. The group will report directly to the SECE Management Board. The Steering Group should be large enough to be representative of the demonstration projects, and authorities showing active interest in SECE progress, but manageable enough to facilitate decision making and setting strategy.

6.2

The County Council, as lead authority will chair the Steering Group. Under the Steering Group there would be several futher levels of management required:

· Local or sub-regional management arrangements (cluster groups)

· Call off and support arrangements (Framework Agreements)

· Project Specific (underlying contracts)

· Supply chain management

6.3

The final form of the goverance arrangements will be dependant on the emergence of work programmes and the extent of commitment and political sign up. It is anticipated that as the goverance develops other councils would take on the `lead authority' role.

7

The County Council's Role

7.1

The County Council's role in the Centre so far is to provide leadership to the workstream and the intellectual capacity on best practice and how local authorities can develop improved procurement practice.

7.2

The Department, depending on the authority and the project, can act as the resource to:

· define the project and opportunity

· undertake the feasibility and scoping of the project

· act as a `critical friend'

· develop procurement and project management arrangements

· provide the `complete' service akin to our role in Hampshire

· promote and advocate opportunities and best practice

This work is financed by the South East Centre.

8

Other Areas of Work

8.1

The work stream will also later focus on specialist works (services, roofing, landscaping etc) and consultants, as well as unified approaches to contractor selection, performance management, and e tendering.

Recommendation(s)

That the Buildings, Land and Procurement Panel advise the Executive Member for Policy and Resources that the County Council's involvement in, and the progress made to date with the SECE Building Construction Work stream be approved.

Organisation

Nature of Contact

Adur District Council

Building Construction Workstream and potential collaboration with Mid Sussex and Horsham Districts

Alyesbury Vale District Council

Workstream conference attendee

Arun District Council

Collaborative maintenance arrangements

Bracknell Forest

Participation with the major framework

Brighton and Hove City Council

Sub regional frameworks with the Sussex group

Buckingham County Council

Work Plan development meetings

Canterbury City Council

Assistance with the procurement of a major scheme through SECE

Cherwell District Council

Workstream conference attendee

Chichester District Council

Workstream conference attendee

Crawely Borough Council

Regional and sub regional framework opportunities

Dfes

Creating capacity through procurement and case study on efficiency savings

Dorset County Council

Developing Framework arrangements

Dover District Council

Workstream conference attendee

East Sussex County Council

Development of regional and sub regional frameworks

Eastleigh District Council

Workstream conference attendee

Fareham DistrictCouncil

Workstream conference attendee

Hampshire Fire and Rescue Service

Workstream conference attendee

Horsham District Council

Building Construction Workstream and potential collaboration with Adur and Horsham Districts

Isle of White Council

Potential demonstration projects, sharing best practice and work plan development meetings

Kent County Council

Regional host and meetings on work plan development

London Borough of Enfield

Participation with the SECE major framework

London Borough of Harrow

General interest in the SECE Construction workstram

London Borough of Southwark

Developing Framework arrangements

Medway Council

Work Plan development meetings

Mid Sussex Council

Building Construction Workstream and potential collaboration with Adur and Horsham Districts

Milton Keynes

SECE major framework demonstration project

Mole Valley District Council

Workstream conference attendee

Nottinghamshire County Council

Framework collaboration national template

Office of Government Commerce

Efficiencies savings models and case studies

Portsmouth City Council

Have offered a new primary school as a demonstration projects, also involvement with the development for a second tier Framework

Reading Borough Council

SECE major framework demonstration Projects for New Civic Offices and a Primary School Extension

Royal Berkshire Fire and Rescue Service

Collaborative maintenance arrangements and broader collaboration with SECE

SEEDA

ECO build pilot project through SECE

Sevenoaks District Council

Workstream conference attendee

Shepway District Council

Workstream conference attendee

Slough Borough Council

Capacity building

South Centre for the Built Environment

Joint working with SECE

Southampton City Council

Adopting the SECE framework and work plan development

Staffordshire County Council

Overall procurement template for the council which will be closely modelled on the Hampshire County Council Template

Surrey County Council

Work Plan development meetings

Tonbridge and Malling District Council

Workstream conference attendee

Tunbridge Wells

Workstream conference attendee

Waverly District Council

Workstream conference attendee

Wealden District Council

Workstream conference attendee

West Berkshire Council

SECE major framework demonstration project and involvement with the development of a second tier framework for Berkshire

West Sussex County Council

Development of regional and sub regional frameworks

Wiltshire County Council

Developing Framework arrangements

Winchester City Council

Workstream conference attendee

Wokingham District Council

SECE major framework demonstration Projects for a new SEN School and an Adult Day Care Centre