One contractor or two
10/07/2012 9:28 am
I would be interested in your views (from experience or not) about appointing one contractor or two.
This is in relation to repairs and/or planned work. I believe most landlords appoint just one contractor to manage their whole housing stock, but I'm aware that others split their stock and have different contractors working in different areas.
- How hard is it to manage two contractors in reality?
- Does it increase costs significantly?
- What do you do if one contractor consistently outperforms the other?
- How do you manage tenants' perception if they hear the contractor in the other area to them does a better job?
- Is having two or more contractors a good idea in terms of competition?
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10/07/2012 12:49 pm
Our's employed two one for day to day maintenance
other for Major Works liken to Decorations and installting Kitchens and Bathrooms
Its should be Value for Money, Right First Time and Solid Audit trail (ha ha)
10/07/2012 1:38 pm
Sorry, just to clarify in case I wasn't clear before:
I mean, for example, two contractors to only do responsive repairs for the whole housing stock; or two contractors to only do planned works; or two contractors to do responsive and planned.
Raindrop, thanks for your reply. I appreciate many have one contractor for repairs and another for major planned works. What I would be interested in is if someone has two different contractors for repairs and two for planned works.
25/07/2012 11:14 am
Assuming that your business case and contract strategy leans towards two or more contractors, the principles and benefits of collaborative working can work equally as well within both framework and long-term contract arrangements.
It must be remembered that under the Public Contractor Regulations 2006 a framework agreement must be set up with either one contractor or 3 or more contractors.
There is general recognition that longer-term contracts can, within legal constraints, encourage investment and actively seek to maximise a range of social values and employment opportunities. Whilst doing this, it acknowledges that social housing procurement decisions are not just confined to ‘bricks and mortar’ but about ‘people and the wider communities’.
In the current economic climate an important consideration is the impact of having only one construction partner should the service in question need to be terminated. Factors that impact on such a serious decision would be the mandatory and essential nature of the service, economies of scale, customer needs and the reputation of the organisation etc. In the event of termination, the advantage of having originally engaged more than one construction partner may make it possible for the remaining contractor(s) to continue the programme of works for a short period whilst accommodating re-procurement of the service. The advantages and disadvantages must be dovetailed with your strategy and would be dependent upon the type of procurement route you finally adopt. For example choosing between a framework or long term contract together with the size and scope of work impact enormously! My personal view is; how can you expect to maximise employment and training opportunities within a framework over 4 years?
To answer your specific questions:
• How hard is it to manage two contractors in reality?
Depending upon the nature and scale of the works appropriate performance management structures and governance procedures for each constructor would need to be established. These meetings would range from: - Annual Reviews, Core Group, Steering, Commercial, Procurement and Specification, Customer Relations, Health and Safety, and Environmental meetings etc. Relationship management, communication at all management levels and collaborative working is key to the success of any partnership. Do not underestimate the value and importance of frequent open and sometimes frank discussions between respective directors in the success or failure of frontline service delivery.
• Does it increase costs significantly?
Not in Wolverhampton! The success of having multiple constructors has provided significant savings. Not just by benchmarking costs and understanding supply chain management but by providing joint training opportunities like asbestos, equality and diversity and customer services. However, this does not mitigate the careful thought needed to the level of commissioning costs reflected in the client management structures
• What do you do if one contractor consistently out performs the other?
Manage it! Ideally this is what you want! You won't achieve excellence with mediocrity. You need to hold them to account, you must ensure they have effective timely recovery plans in place that are monitored and actioned through contract performance supervision meetings. QA procedures may need to be stepped up with client presence on site being reinforced. This may include undertaking work in progress inspections and post quality reality checks with tenants.
• How do you manage tenants' perception if they hear the contractor in the other area to them does a better job?
Not an issue. All tenants want is for a good job to be done, in a timely manner with the minimum of disruption. A key part of this is that they have reassurance that the client is in control and appropriate action is being taken. In line with the bullet point above, early warning notices and the cessation of work soon gets a response. The last thing any construction company wants to see is a dip in turnover!
• Is having two or more contractors a good idea in terms of competition?
Absolutely, Contractors can easily be benchmarked against each other. Subject to contract terms and conditions, if a contractor fails to meet KPI’s work can be allocated to one of the other contractors – thereby incentivising all contractors to meet KPI’s. In contrary, good contractor performance can be rewarded through the award of additional work. Mini-competitions can be used to drive down prices, and all contractors can work together in a Core Group environment. This implements innovative ideas that improve the performance of all, provide shared learning opportunities that ultimately leads to an ethos of continuous improvement .
25/07/2012 12:33 pm
Many thanks for your reply and taking the time to answer each question individually.
Your raise some interesting points - some of which I hadn't considered before. So, thanks again.
I would still be interested to hear the views of anyone with first-hand experience of using two or more contractors. Please feel free to share your opinions.