Part 1	ITEM NO.4

JOINT REPORT OF STRATEGIC DIRECTOR FOR SUSTAINABLE REGENERATION AND OPERATIONS DIRECTOR URBAN VISION

To Sustainable Regeneration Scrutiny Committee – 7th February 2011

TITLE:	Re-thinking Construction Partnering: Value for Money

RECOMMENDATION:

That Sustainable Regeneration Scrutiny Committee consider the background to Re-thinking Construction Partnering and how Value for Money is established by this form of partnering.

EXECUTIVE SUMMARY:

This report provides the detailed outline of Re-thinking Construction Partnering as it sits currently within the Council. The report was requested by Lead Member Planning for Scrutiny Committee specifically to report the Value for Money aspects of this form of partnering, however to do so we have drawn from a wider source of knowledge to ensure that Committee has sufficient detail to appreciate where Value for Money lies within the structure of this partnering.

Re-thinking Construction is the Council’s construction partnering programme, which is managed on a daily basis by Urban Vision Partnering Limited so as to use the technical skills and knowledge required for the projects that are undertaken.

Officers apologise that this report was not available for Members to consider earlier in January 2011.

BACKGROUND DOCUMENTS:

(Available for public inspection)

Report to the Lead Member for Development Services entitled “Procurement of Construction”- 10th March 2003.

Report to the Lead Member for Housing entitled “Procurement of Construction” - 21st March 2003.

Report to the Lead Member for Development Services entitled ‘’Re – thinking Construction Progress Report’’ – 7th July 2003.

KEY DECISION:	NO – report submitted for information

KEY COUNCIL POLICIES:

Connecting People to Opportunities, Salford’s Sustainable Communities Strategy; and

Procurement Strategy

EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS: There are no direct implications

ASSESSMENT OF RISK: Low

SOURCE OF FUNDING: each project is subject to separate funding arrangements.

LEGAL IMPLICATIONS : There are no direct legal implications.

FINANCIAL IMPLICATIONS: Each project is subject to separate budget reporting.

OTHER DIRECTORATES CONSULTED: All Directorates participate in the governance structure for this form of partnering and in their individual Project meetings

CONTACT OFFICER:	Pauline Lewis	TEL. NO.	0161 686 6281

Steve Gogarty 0161 770 6062

WARD(S) TO WHICH REPORT RELATE(S): No direct implications

1.0 Background

Since 2003 the Council has implemented the recommendations on procurement of construction and construction-related projects from the report by Sir John Egan (1998); initially advertising nine categories of construction work and later two further categories. This strategy ensured the council was compliant with one of the recommendations in the National Procurement Strategy.

An independent report into the Council’s Construction Partnering / Salford Construction Partnership was commissioned from Kitshoff Gleaves in 2007; this report gave a valuable understanding for officers of the benefits to be gained from the partnering model and how / where improvements could be made. In addition, officers, supported by an Independent advisor from Turner Townsend, undertook a review of the construction partnering from an operational level and identified a number of improvements that could be made to systems, the majority of which have been implemented.

It should be acknowledged that officers in the Council and/or those seconded to Urban Vision have gained considerable knowledge about construction partnering through the management of the existing Frameworks. This knowledge and experience is being used to assist other Local Authorities who have implemented or are in the process of implementing the same or similar models to the one Salford City Council adopted.

Members are currently considering whether or not to re-procure the Frameworks.

2.0	Benefits

2.1	The anticipated benefits when setting up the partnerships was to gain:

Better value for money - capital and revenue;

Improved predictability of out-turn costs and time;

Better design;

Higher quality;

Fewer defects;

More effective procurement;

Fewer disputes;

Reduced accidents;

Better use of scarce resources;

Increased client and community satisfaction;

Better whole-life value; and

More respect for people.

Assessment of the benefits is continuous.

Some of the key benefits gained from the existing arrangements have been

Earlier contractor involvement in projects, from which transpire:

Reduction in costs; and

Reduction in risk;

Ability to commence work on site earlier and therefore complete and hand over at the earliest opportunity;

Significantly improved site Health and Safety data collated and monitored monthly;

Greater collaboration including alternative methods of delivering projects and/or introduction of innovation and sharing of ideas and opportunities;

Increased site monitoring of waste and recycling of materials;

Sharing of training and facilities;

Increasing focus on local employment opportunities; and

Focus on local Supply Chain Management.

3.	ALLOCATION OF PROJECTS

3.1	Projects are initially allocated to a specific framework based on:

Type of work; and

Estimated value or budget of work.

If the work is of a ‘specialist nature’ or a ‘one trade project’ then consideration is given to tendering the works to avoid paying a Contractor simply for managing such a specialist/single trade Contractor. Each project which could fall into this category is assessed individually.

3.2	Once a project has been allocated to a specific framework it is then allocated to a specific contractor within that framework after taking into account the following factors:

Open discussion with the Contractors for their views, time permitting;

The Contractor’s experience in that type of work;

The Contractor’s capacity during the proposed project programme;

The Clients viewpoint;

An equal sharing of the work between the framework contractors if possible;

Specific allocation - under the Highways framework where works under £100K are automatically allocated to Urban Vision Highway Services; and

Single contractor on framework. .

3.3	It is envisaged that a future Framework would introduce ‘Mini Competitions’ to the majority of Frameworks as part of the allocation process. This would consist of competitively tendering the preliminaries and overhead elements with the lowest being awarded the work.

4. PROJECTS COMMENCED Quarter 4 2010

4.1	The purpose of this section is to show the allocation of work for individual partners for 4Q2010 within each of Salford’s Construction Frameworks, based on methodology detailed in Section 1.

Minor Works Framework (£0k to £20k)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Allenbuild	Q4 2010	2	£240,000	83%	Target Cost used for value of projects allocated.
G Jones	Q4 2010	1	£50,000	17%	Target Cost used for value of projects allocated.

Minor Works Framework (£20k to £125k)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Cruden Property Services	Q4 2010	0	£0	0%
E & J Kane Ltd	Q4 2010

New Build Framework (£125k - £500k)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
G&J Seddon	Q4 2010	2	£362,881	100%	Target Cost used for value of projects allocated.
Warden Construction	Q4 2010	0	£0	0%	Target Cost used for value of projects allocated.

Major New Build Framework (£500k - £5m)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Cruden	Q4 2010	1	£2,162,080	100%	Target Cost used for value of projects allocated.
G&J Seddon	Q4 2010	0	£0	0%	Target Cost used for value of projects allocated.

Major New Build Framework (£5m - £30m)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Cruden	Q4 2010	0	-	0%	-
G&J Seddon	Q4 2010	0	-	0%	-
Lang O’Rourke	Q4 2010	0	-	0%	-

Landscape Works Framework (All Values)
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment/Further information
Horticon	Q4 2010	12	£1,118,188.55	75%	Target Cost used for value of projects allocated. 2 of the 17 projects do not have a value identified to date.
Casey	Q4 2010	1	£369,741.53	25%	Target Cost used for value of projects allocated.

Highway and Civil Engineering Work [<£2M] Framework
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Birse	Q4 2010	2	£641,000	40%	Target Cost used for value of projects allocated.
Tarmac	Q4 2010	4	£980,744	60%	Target Cost used for value of projects allocated.

Demolition Framework
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
P McGuiness Ltd	Q4 2010	1	£47,996	15%	Projects allocated and started.
Palmer Demolition	Q4 2010	3	£148,000	46%	Projects allocated and started. Two projects value based on target cost, one final account has not been received and the other is ongoing.
Forshaw Demolition	Q4 2010	1	£122,697	39%	Projects allocated and started.

Responsive and Routine Maintenance Framework
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
E J Kane Ltd	Q4 2010	4	£245,057	100%	Target Cost used for value of projects allocated.
Cruden Property Services	Q4 2010	0	£0	0%	No Information provided. Breakdown to be provided for the next meeting (April 11)

Electrical Building Services Engineering Works Framework
Partner	Period	No. projects allocated	Value of projects allocated	% of Works (value)	Comment / Further information
Piggott & Whitfield	Q4 2010	No Information provided. Breakdown to be provided for the next meeting (April 11)

5.	PROJECTS COMPLETED Quarter 4 2010

5.1	The purpose of this section is to show the projects completed for individual partners for 4Q2010 within each of Salford’s Construction Frameworks. The closedown meetings have not yet occurred on these projects.

Minor Works Framework (£20k to £125k)
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Allenbuild	Q4 2010	-	-	-
G Jones	Q4 2010	2	£150,095	£149,360
Cruden Property Services	Q4 2010	-	-	-
New Build Framework (£125K - £500k)
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
G&J Seddon	Q4 2010	1	£253,881	£253,881
Warden Construction	Q4 2010	-	-	-
Major New Build Framework (£500,000 - £5Million)
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Cruden	Q4 2010	2	£4,681,945	£5,363,648
G&J Seddon	Q4 2010	2	£3,851,148	-

Major New Build Framework (£5Million - £30Million)
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Cruden	Q4 2010	-	-	-
G&J Seddon	Q4 2010	-	-	-
Lang O’Rourke	Q4 2010

Landscape Works Framework (All Values)
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Horticon	Q4 2010	2	£50,849	£45,938
Casey	Q4 2010	3	£954,230	£769,125

Highway and Civil Engineering Work [<£2M] Framework
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Birse	Q4 2010	-	-	-
Tarmac	Q4 2010	-	-	-

Demolition Framework
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
P McGuiness Ltd	Q4 2010	1	£30,341	£30,341
Palmer Demolition	Q4 2010	2	£159,400	£190,166
Forshaw Demolition	Q4 2010	0	£0	£0

Responsive and Routine Maintenance Framework
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
E J Kane Ltd	Q4 2010	2	£122,508	£129,789
Cruden Property Services	Q4 2010	-	-	-

Electrical Building Services Engineering Works Framework
Partner	Period	No. projects completed	Value of projects (Target Cost)	Value of projects (Estimated Final account)
Piggott & Whitfield	Q4 2010	-	-	-

6.	HEALTH AND SAFETY

6.1	Health and safety has always been a high priority for all Council contracts. A formal monthly Health and Safety and Environmental report was developed at the client’s request and is shared with all Client Directorates, and monitored by the Directors and Assistant Directors in Sustainable Regeneration as well as other officers including those in the Council’s Health and Safety Team. This shows a high standard of Health and Safety on Salford projects which has drawn favourable comments from HSE inspectors.

6.2	The sharing of Health and Safety information and good practice takes place by the regular issue of Health and Safety Alerts led by the Directorate, however all parties are encouraged to be involved, The Project Meetings, Framework Management Meetings and the Principals Group Meetings also act as a key communication tool for circulating all relevant Health and Safety information.

6.3	Health and Safety is also discussed and monitored at a number of other formal and informal meetings in the governance structure, this is outlined in the diagram attached

7.	SUSTAINABILITY

7.1	The current national initiatives on sustainability have led to a strongly focussed approach by our partner contractors to reductions in site waste and increases in the recycling of waste, whilst post-contract problems are now dealt with by dedicated contractor aftercare teams.

7.2	Sustainability is a key component in the modern construction industry. A key part is the reduction in and recycling of site waste. Recycling of waste has improved dramatically with monthly reports showing over 80% of waste being recycled on a regular monthly basis.

8.	LOCAL LABOUR

8.1	Salford like many large cities has areas of severe deprivation within its boundaries which the city council are constantly trying to remedy in an attempt to reduce social exclusion and economic inactivity. Long-term partnering relationships with a sustainable workflow were seen as a way of creating employment and training opportunities for economically inactive Salford residents thus developing a sustainable and skilled workforce. Also by engaging with local companies and partnering, the supply chain, local businesses and communities would be able to take advantage of construction activity in Salford. In addition some of the Partner Companies are members of the Salford Construction Partnership and support the work of the partnership in various ways.

8.2	The continuous workload has enabled the two longest serving contractors, G&J Seddon and Cruden Construction, to provide training and employment opportunities for over 125 residents in the Salford and adjacent Greater Manchester areas. Some of these operatives have been in full time employment for virtually the duration of the framework and where some have left they are still employed in the building industry.

8.3	Cruden Construction have monitored the percentage of each contract value that is retained in the local community as a result of the local employment of operatives, goods and services on Salford contracts. On average the percentage retained in the community is 25-28%.

9.	KEY PERFORMANCE INDICATORS

9.1	KPIs are seen as a fundamental facet of partnering. The Council and Urban Vision will reassess the effectiveness of the KPIs and whether these should be refocused and create new KPIs. Of the four incentivised KPIs: -

The Health & Safety KPI has been questioned because it could incentivise the underreporting of accidents in order to gain the “Bonus”;

The Zero defects KPI although improving defects at handover has, according to site supervisors, not been as affective in reducing defects as it could be due to an unwillingness to enforce it scrupulously.

New KPIs under consideration could focus on Sustainability and Job Creation.

9.2	The following table indicates the KPIs that apply to most of the frameworks:

Indicator	Performance Related Incentive Weighting	Assessment Based On:
KPI 1 Customer satisfaction Comprising: - End-user satisfaction 50% Commissioning Officer satisfaction 25% Compliance with social inclusion issues (Commissioning Officer decides) 25%	25%	Judged by the Customer or Client representative who attends the site meetings, or building occupants where work is taking place in an occupied building. (Target: 80%. Aspirational target 90%)
KPI 2 Time Predictability E.g.: appropriate resource levels, materials and plant delivered on time, skilled tradespeople and site agents to ensure things are right first time.	25%	Assessed only on matters within the Constructor Partner’s control as judged by the Project Team. (Target: completion on time)
KPI 3 Safety	10%	(Target: 15% better than the annual national average (based on most recently published figures))
KPI 4 Defects at handover	40%	(Target: zero defects)

9.3	Supporting Local Employment development / training opportunities (opening a more structured route for employability and those returning to work) not only is a link to Salford Construction Partnership but also very recently a new trend is emerging from Government Grants, whereby Council’s are being asked to monitor and report on these as part of the terms of the Grant. Therefore building this into future procurement will be of increasing importance.

9.4	Monitoring of Corporate Social Responsibility and working with local communities is another area of monitoring that could be developed although it is unlikely that it would be developed into a KPI. Nevertheless, nationally there are awards and accreditations for companies who participate in demonstrating their social responsibility, beyond local employment, recycling and training opportunities. Customer Surveys and End-User Surveys to build up trust and communication will have a key part in developing such monitoring. An example of recent social responsibility has been a one-off grant to a new school for the purchase of uniforms.

10.	Communication

10.1	Regular Communications to all Contractors has been requested and three times each year an e-Bulletin is issued, to which all parties contribute. The e-bulletin is called Foundations. In addition a Web Site www.rtcinsalford.info was created in late December 2009 to provide wider information about the partnering. All Partners can contribute articles and further development of the site is underway. A bi-annual Partnering Forum is held to encourage focus on specific topics and greater collaborative working amongst the different categories of partners. In some categories Partners have developed strong working relationships and the Forum is an opportunity for these relationships to work across a broader group of companies. For example the three Demolition Partners have shared training arrangements and utilise one recycling facility operated by one of the companies in that category.

11.	Value For Money

11.1 In trying to review the last six years of partnering under the framework partnerships, it is inevitable that we could only compare the data to the period before partnering was in place and competitive tendering was the norm for the procurement for the city’s projects. Prior to Partnering all major building contracts administrated for the Council were let through competitive tendering. The tender list was drawn up according to standing orders from the winner of the most appropriate recent tender, the second and (to make the tender list up to six) four from the Salford City Council Standing list of Contractors, with the contractors selected in rotation. To some extent this would mean one or two proven contractors were included, the first two having been active on city contracts in the recent past, with the possibility of the remaining four being less familiar but on the list by rotation rather than direct client choice, design team recommendation or known reputation. As a result of this process inevitably the successful contractor would be the one who submitted the lowest price, irrespective of whether the level of monies within the tender was sufficient to carry out the contract which often led to potential problems due to the contractor having tendered a little “too competitively” and in effect, “buying”, the contract.

11.2	Value for Money was gauged by price, lowest price being perceived or perhaps more accurately accepted by default as “Best Value” since no other yardstick was available. In such competitive projects, particularly those of any size and complexity, the following inevitably occurred:

Excessive claim consciousness. The contractor in attempting to address and finance a tight tender would become claims conscious. This would result in time and money being spent by the professional team fighting these claims on a day to day basis.

Competitive construction methods. The contractor would suggest alternative ways of constructing the project or utilising alternative (i.e. less costly) products that were not in accordance with the drawings and specifications. These were sometimes, but not always, well-intentioned or well-founded suggestions but there were undoubtedly cases where construction short cuts were being proposed which were in the contractor’s rather than the client’s interest. Unfortunately it was frequently impractical or costly to accommodate any advantageous changes at a relatively late stage in the construction process.

Inflated claims at the end of projects. Every large project would have to address an inflated and usually spurious claim from the contractor, for example on Ellenbrook Primary School, and the Springwood Special School Barton Road Road, both of which were major 6 figure sums, these claims had to be fought, reduced to a small percentage of the original sum and then any residual monies required to satisfy that claim sourced. This activity involved expenditure of time and money by both professional team and client including the employment of specialist advisors to fight the claim on behalf of the client.

11.3	The result would be a situation where costs would be at large until the final account was finally resolved. This could be many months (or even years) after the completion and occupation of the building and if further funds were required to close the final account, the acquisition of these funds could be both protracted and embarrassing.

11.4	This may have been accepted custom and practice but it was time-consuming and inefficient for all parties. As a result:

Project programmes became extended

Design team costs were extended

Client costs were open ended.

Build quality was variable

11.3	The overall result was that confrontation was the norm rather than the exception. As a result Sir John Egan produced his report, Rethinking Construction where he significantly identified the need to replace competitive tendering with long term relationships based on clear measurement of performance and sustained improvements in Quality and Efficiency, in other words advocating “partnering”, as a way forward.

11.4 Accessing the following five drivers for change in the Salford context draws the conclusion that these drivers have been influential and effective in developing a partnering culture within the Partnering Frameworks: and they have delivered as follows against what Egan envisaged:

a). Committed Leadership.

Whilst carrying out the appointment process we were able to take a view on the commitment of the potential partner contractors to partnering. This was extremely positive and well informed in the case of those appointed. However this could only be substantiated over the longer term. From the outset the maintenance of an efficient system of frameworks governance was seen as essential. This has been maintained by ensuring that regular meetings occur at all levels of the framework structure. This was ensured by setting up:

Project Teams of client, contractor and design team meeting on a regular, (maximum monthly) basis throughout the project to deliver the individual projects.

Framework Management Group of client and contractors’ management and designer team managers, senior staff involved in the running of partnered projects, meeting every two months to discuss working practices, monitor progress and performance of current projects, resolve any disputes and allocate projects.

Principals’ Group of senor management or directors of the client, contractor and design team meeting every four months to receive reports from the Framework Group, review performance, agree any changes to the overarching legal framework agreements and jointly assess with the client the long term overview of potential framework projects in the pipeline.

Involving those included in the framework at all levels, particularly at a senior management level, on a regular and consistent basis has helped build up a healthy team-working ethos. This does not mean that problems do not occur or that there are no differences of opinion but this approach has succeeded in resolving potential problems before they have a chance to develop a life of their own, whilst the consistency of personnel attending these meetings, particularly from the contractors and designers, is a major contributor to the partnering culture.

Client participation at the Principals level has been poor, however, and it is noticeable that there is still difficulty in engaging with and convincing some of the wider city client body, especially those who are particularly “budget sensitive”, that partnering is an appropriate way to procure construction projects, when they know that they can “get the job done cheaper”.

b) A Focus on the Customer.

Egan perceived that the construction industry tended to consider its own needs before those of the customer/end-user. This is perhaps not unusual when the constructor joins the team at a relatively late stage in the whole procurement process. His interests at that stage will inevitably be divided between a successful commercial outcome and ensuring he has a happy customer. Part of becoming customer focussed has to be the total involvement and commitment to the project and customer that partnering can promote; not only by the fact that all three parties work from the outset to deliver a project but the nature of the prolonged contractual relationship.

Customer satisfaction surveys which feed into one of the Framework KPIs have shown increased levels of customer satisfaction, particularly on housing refurbishment projects, where both client and end-users have consistently commented favourably on project management and results.

c) Integrated processes and teams.

One of the principal advantages of partnering is the opportunity to assemble the full delivery team - Client, Contractor and Designer - at the inception of a project to negate the traditional fragmentation of the design and delivery process. However whether full advantage is being taken of this opportunity is open to debate. Although this may happen on larger projects there is evidence that on some projects there is reticence to involve the contractor at the outset. This could be because there is a belief that until there is, “something on paper for the contractor to comment on”, contractor involvement would not be beneficial. Whether this idea originates from Client or Design team (perhaps reflecting their individual lack of confidence in their own and the contractors’ ability to work together meaningfully, and adapting to the Flexibility in the early design process’s as the brief is developed) is unclear, but “late involvement” is a constant criticism being made by contractor partners.

d) A quality driven agenda.

Like Egan we saw zero defects, delivery on time and to budget, innovation, waste reduction and prompt aftercare as essential elements of successful partnering. Competitive tendering repeatedly failed to deliver these on a consistent basis. Our partnered projects have successfully addressed these points, defects are reduced, and programme dates and budgets are met often with substantial savings being made on budgets, savings that are shared between client and contractor.

e) Commitment to People.

Egan realised that to be successful contractors needed to re-invest in the training and development of their prime asset, their staff in order to maintain and develop the business. To do otherwise would be to fail to recognise the importance of their staff in the success of the company and in selecting contractors for our framework we chose companies who embodied this ethos. Environmental awareness and Health and Safety were also of paramount importance and as our monthly Safety, Health and Environment report reveals, we have a sound record in these fields born out by recent spot inspections from the HSE.

f) As well as appreciating the Egan drivers in adopting partnering as its preferred method of procurement Salford City Council had it own drivers for change that were of paramount importance to the city. These were:

Having a delivery mechanism, such as partnering, in place was perceived to provide a tactical advantage when dealing with central government when bidding for funds since central government was always keen to see quick results. Several client directorates were able to emphasise this point when applying for central government funding for educational, Surestart and housing projects.

Design and Delivery Improvements. These were seen as critically important in the delivery of construction projects where traditional tendering projects had resulted in uneven performance and outcomes. Partnering offered added value through:

Faster Start up through early contractor involvement.

Opportunities for innovation in procurement and construction.

An integrated design team approach

Improved Health and Safety

Flexibility

Continuous improvement

g) Under competitive tendering it had been relatively easy to consider value for money in terms of “lowest price”. However, by partnering, Salford City Council aspired to attain long term social advantages which would be impossible to attain through a single, competitively tendered relationship. Thus the definition of Value for money will undoubtedly include cost as a key determinant but it should also include factors such as:

An improved built product with fewer defects and lower long-term costs.

Enhanced client and end user satisfaction

Completion on time and on budget

An achievement of wider social aims.

h) Cost certainty was always elusive under many tendered contracts where the resolution of the final account would be delayed by the consideration of, often spurious, claims. However the early involvement of client, consultants and contractor designing the project allied to the joint setting of the cost plan and target price during the design process was seen as having the potential to ensure fewer claims and cost certainty to the client.

The Roman Catholic Diocese was able to procure the new Holy Family primary school, in Langworthy, by utilising one of the framework contractors when their delivery programme became unduly compressed and there was a strong possibility that the school would not be delivered on time.

Delivery of Salford Sports Village Phase 1 would not have been possible in the time available without the City having a partner contractor in place. The contract was procured in packages as elements were finalised and the contract was completed on time and below the target price. Failure to achieve the programme raised the possibility of the funding being withdrawn.

Willow Tree Primary School in Seedley was also procured on a package-by-package principal allowing a target price to be set which could then be verified through an ongoing tender process with large savings achieved.

The early involvement of dedicated contractor teams working on block improvement projects has resulted in shorter start up times on this type of contract. Team continuity between both designer and contractor has resulted in block improvement schemes commencing quickly with a clearer understanding of the quality of work that has to be achieved. It is also noticeable that site facilities and procedures have improved whilst the employment of local Tenant Liaison Officers has facilitated clear communications between contractor and residents.

The ‘no defects at handover’ policy has improved the general standard of workmanship and end product.

Partnered contracts aim to complete their final accounts within three to six months of project handover. This is a vast improvement on the situation under tendered contracts, where the post-contract period was extended often due to ongoing discussions regarding claims and extensions of time. Any disputes are generally now resolved as the project proceeds.

Cost certainty is critical to the client. The setting of the target price and, at 5% higher the Guaranteed Maximum Price(GMP), ensures that the client always knows what their maximum financial commitment will be on any one project.

The Client portion of savings on projects is now invested back into the project, if appropriate, to the benefit of the end-user, rather than being retained by the contractor.

This is not to say that there have not been problems. There are complaints that at the lowest values of contracts, say below £0.5 million, “Partnering does not work”, meaning it does not provide value for money. Clients are still on occasions risk averse and full early engagement is still not ideal; the design team does not always gain the benefit that early involvement of the contractor affords whilst contractors are sometimes criticised for exhibiting undue commercial caution in costing. There is still an ongoing education process that needs to be done.

12.	Conclusion

12.1	This report provides the detailed outline of Re-thinking Construction Partnering as it sits currently within the Council. The report was requested by Lead Member Planning for Scrutiny Committee specifically to report the Value for Money aspects of this form of partnering, however to do so we have drawn from a wider source of knowledge to ensure that Committee has sufficient detail so that the value for money aspects are not taken out of context.

12.2	The Council has yet to take a final decision on whether to accept the recommendations for re-procurement of this type of partnering. However the benefits and good practice learnt to date from the existing arrangements will, wherever feasible, be utilised in whatever form of procurement process is applied to projects in the future.