Davis Langdon to save government 340m on social housing contracts

Davis Langdon is drawing up plans to save the government £340m on renewing social housing stock by using a more efficient method of procurement.

The firm’s management consulting division has been appointed by the ODPM to oversee an efficiency drive in improving housing stock.

John Connaughton, partner at the division, said the drive followed a review into the efficiency of government spending by civil servant Peter Gershon last year. The ODPM is hoping to save £340m over the next three years.

Connaughton said the procurement method would involve housing associations forming consortiums that would jointly buy materials and labour at reduced rates.

It is likely to be similar to Fusion 21 in Merseyside, a group of one council and seven registered social landlords that set up long-term framework deals with suppliers and contractors.

Connaughton said the procurement method was not just about bulk buying. He said: “It is not just about getting volume discounts; it’s about encouraging the consortiums to engage with the supply chain and manage more efficiencies.”

Davis Langdon will offer the groups grants for business plans and loans of about £1m to carry out the new procurement strategies.

It is not just about getting volume discounts; it’s about engaging with the supply chain

John Connaughton

Connaught said the firm was already in talks with two or three groups, who will manage a total of about 50,000 housing units, to start the first deals and attract another five further teams at the end of the year.

Davis Langdon will advise on the deals and is working with law firm Trowers + Hamlin on the new procurement system. Connaught said: “We will be facilitating third party consultants to advise the consortiums. We will have a monitoring role and spread the good practice learned on the first wave of deals.”

Connaughton’s division also worked on a government review of public sector demand for construction between 2004 and 2008 called the Kelly Review.

The firm created a database for Treasury body the Office of Government Commerce to work out the number, type and value of public projects that were planned for each region in England. The database included 728 projects worth a total of £31.5bn nationwide and found that the busiest regions in the country were the North-west (with 130 projects worth a total of £3.5bn) and London (with 90 projects worth a total of £5.1bn).

Connaughton said the number of schemes in the North West was a potential problem. He said: “There is an argument that a greater number creates additional burden on supply. Most of these projects will be bid which adds extra costs.”