As this survey shows, local authorities are making real headway toward being good clients, but insiders are warning that the hardest part is yet to come
Local authorities get a bum rap.
Criticised for bureaucracy, rising council tax and litter on the streets, they have become an easy target. But Peter Bishop offers a more balanced view: “Some are bloody good, others less so.”
Bishop should know. He is a director of the Local Government Task Force. The body works with Constructing Excellence at its base in London. It seeks to help local authorities deliver their services quickly and get value for money. Although construction is not at the core of the local authorities’ work, it is a part of nearly everything they do: “All those services, from refuse collection to education,” explains Bishop, “are heavily reliant on the built environment.”
There are nearly 400 authorities in England made up of five types. They vary dramatically, with populations ranging from 30,000 to more than 1m and maintenance budgets to match. The challenge is to persuade these very different, disparate institutions to agree and then implement across-the-board construction standards, helping the contractors bidding for work, and therefore ultimately themselves as the clients. The trick is to find common ground: “What unites authorities is that they are there to meet the needs of the common community,” says Bishop.
TheTask Force has tried to get local authorities to address three key issues:
- Quality, as well as price. This would help reduce whole life costs as maintenance problems are likely to be less severe;
- Integrated supply chains, so that subcontractors can be involved earlier in the design process; and
- partnering, frameworks and similar strategies that can build long-term relationships with contractors.
The survey featured here shows that much of this has already been achieved. The success of the Task Force has meant that its original shelf life of two years has been doubled. For example, 79% of authorities have relationships with their main contractors that extend beyond that of a specific contract. Half of these councils have relationships that stretch beyond five years.
The survey has helped the Task Force judge where its priorities lie over the next couple of years. Bishop says: “It is predictable, although deeply concerning, that only 9% involved sub-contractors and suppliers in the design of the contract. Getting them involved will be a big chunk of our work over the next couple of years.” Involving these specialist suppliers in projects late on in the process means that they cannot suggest alternative products that might reduce cost. Sub-contractors would be able to work out alternative approaches in their areas of expertise which could also create a more economical, sophisticated design.
And now, the hard bit
Mike Foy of St Helens Metropolitan Borough Council says the survey shows that the greatest problems lie ahead: “We have taken on the easy, obvious stuff. For example an authority can use hundreds of different funding streams for projects. That’s how complicated it is for us.”
Complicated funding streams exemplify how local authorities end up wasting time and money, forced as they are to mull over a ludicrous number of cost-benefit decisions. The Treasury-sponsored Gershon Review is looking to cut out such inefficiencies. It is asking local government to find £6.45bn in savings from its support services over the next three-and-a-half years. Much of this will come from construction procurement, and then be transferred to front line services, such as housing repair and education.
This is where the Task Force’s key recommendations to local government will come into their own. The savings they would conjure if properly implemented would cut deeply into the amount of cash that Gershon is talking about.
Much of the onus would be on smaller authorities. Large councils have bulk purchasing power. They can also offer big, long-term contracts that are attractive to contractors. Bishop suggests that smaller authorities should aggregate their demand for capital works by joining up with their neighbours. Between them they could then let a size of contract that derives economies of scale and tempts construction consortiums.
Joining with neighbours also means that framework contracts are also more realistic, with the wider geography meaning more projects: “They can then develop a long term relationship,” says Bishop. “There is a certainty about the workload over a period of years, deriving all sorts of economies.” The Task Force is currently working with the government to do this for registered social landlords. They want to set up 32 consortia to do all the capital works for these local authority organisations.
Local authorities might not have always been the most efficient client, but they do provide much work for the sector. But to attract the contractors they need, local authorities must continue to sharpen up their act. As Bishop concludes: “We know that demand massively outstrips supply. No local authority in the history of mankind has been able to completely maintain its estate.”
Shining a light in Norfolk
In 2002, local government minister Nick Raynsford announced the latest themes for beacon councils, and construction was included. The beacon scheme distinguishes authorities who excel in some way so other councils can learn.
The Local Government Task Force lobbied hard to get Sir John Egan’s Rethinking Construction agenda selected as a beacon theme, so that the importance of improving performance in the sector could be demonstrated. Finally, it had succeeded.
Six councils were selected as exemplars of meeting the Rethinking Construction agenda, and carried the beacon status from June 2003 to June 2004. They were:
- Barnsley Metropolitan Borough Council
- Mid Devon District Council
- Middlesbrough Council
- Norfolk County Council
- St Helens Metropolitan Borough Council
- Stockton-on-Tees Borough Council
Mike Britch is managing director of Norfolk Property Services. It is a wholly owned limited company of Norfolk County Council and was responsible for its beacon status. Britch says that the status raised the profile of construction in the authority. It was also able to share its experiences with the other beacon councils.
In that year it was able to make cost savings of around 10% on its education capital programme. Two of these schemes are pictured above. Britch adds: “We were also able to up the standard of site conditions, allow more community and school involvement in projects and achieve fewer defects. It also gave us a degree of kudos.”
The kudos meant that it was able to have more “adult conversations” with contractors. Britch says it was “value engineering at its best”.
Although Rethinking Construction was a beacon theme only until June 2004, the status it gave the council as a good construction client remains: “We have been able to offer information, presentations, site visits, and have run open days,” Britch explains.
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Over the first hurdle