Meeting the value for money challenge
Graham Collie, technical support manager at the Scottish Procurement Alliance, discusses how collaboration and innovation could help the sector deliver excellent quality at reduced cost. Picture by Getty
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What are the main challenges facing the Scottish housing sector when it comes to delivering value for money?
There are three main issues. First, the ongoing skills shortage means labour costs across the country are escalating. This is now being compounded by the uncertainty surrounding Brexit. Bricklayers in particular are in high demand and can practically name their price.
Second, there are tight deadlines. The Scottish government’s ambitious target of delivering 50,000 affordable homes by 2021 – 35,000 of them for social rent – is one we are all striving to meet. In some cases, if there are not spades in the ground by a certain date then grant can be lost. This, along with internal targets, means organisations are rushing projects. Many contractors are provided with designs late and, to keep the project on target, are expected to cost the project unreasonably quickly. But this leaves them unable to fully evaluate the requirements, and inflated tenders are the result.
Finally, efficiency within the sector is still not where it needs to be. Scotland has at least made a start on factory-based offsite construction but much more could be done.
How might individual housing associations begin to drive better value?
Collaboration is key. Many smaller registered social landlords and councils have lost expertise through reduction in grants, the financial crash, budget cuts and retirements. There is often a reliance on external consultants. But teaming up with another association or council can increase expertise, purchasing power and drive economies of scale.
An example of this sort of set-up is the partnership between Ochil View Housing Association – of which I am a board member – and Kingdom Housing Association. Kingdom acts as a development lead for Ochil View, managing the full project lifecycle in return for a reasonable fee.
Combining this approach with procurement through our Scottish Procurement Alliance (SPA) frameworks really does help. We now have 90 partners throughout Scotland so the purchasing power with us together is huge.
What bigger shifts need to happen in the Scottish housing sector if value for money is to be consistently achieved?
We need innovation within the sector from the contractor side and the client side. All public procurement contracts should be at BIM Level 2 but many are not. Using virtual reality software with BIM – or Building Information Modelling – practices allows deeper collaboration by showing a 3D model of the building.
It means contractors can accurately cost the project as the software will instantly produce reliable bills of quantities. If the design changes, all drawings and bills are automatically updated.
“The possible impact of offsite on value for money in the Scottish housing sector is colossal”
We also need a change of thinking at government level. The Scottish government recently published the Construction Procurement Handbook, which relaxes Quick Quote requirements. But we fear that going back to this approach will result in the old ‘approved list’ scenario, which stifles SMEs and discourages innovation. And it is clear that we need innovation, including in the form of
offsite construction. Many companies in Scotland are now capable of this through various timber methods. It is possible to have the structural walls of a house fitted out in a factory with the windows, doors, and external and roof cladding pre-installed. This vastly increases the quality of the product, as it is fitted in a warm, dry environment.
Some companies can even supply apartments or a whole house that is craned into place fully fitted out and ready for connection to services. All of these innovations will drive value for money if we focus on them.
Are there examples of Scottish projects or organisations that are already making progress on embracing innovation and so delivering improved value for money?
A recently completed project in Weirston Road, Kilwinning, is a great example. This was one of the first projects procured through our offsite construction NH1 framework. CCG constructed the site using its own panellised timber frame system. The 64-property development, which was for Cunninghame Housing Association, was windproof and watertight in 115 days.
Another good example is a project that the Construction Scotland Innovation Centre recently supported in Queen Street in Alva, with Link Group. The aim was to prove that a gold standard project could be completed offsite with a 20% reduction in site time. It easily achieved 50%.
“Share your resources to ensure that your communities will thrive, and you will be rewarded”
The possible impact of offsite on value for money in the Scottish housing sector is colossal. Automation from machinery means minimal waste as well as efficiency gains. Meanwhile, the reduction of site time means a reduction in preliminaries – which occur on every construction contract and can vary from 10-20% – and therefore in the cost associated with these. The social landlord is then able to move tenants in quicker, start the return on their investment earlier and benefit from a higher-quality product.
What is the most important step housing sector leaders in Scotland can take to ensure value for money in the sector?
I’ve mentioned it many times but it bears repeating: collaborate. The only way the sector will improve is by working better with one another. Share your resources to ensure that your communities will thrive, and you will be rewarded with better value for money as a bonus.
Collaborate with us, too. Our free-to-access framework service thrives on achieving best value for the Scottish housing sector. We currently have 90 members consisting of housing associations and local authorities. Any organisation that is partly or fully funded by public funds is eligible to use us. We are driven by our sector and would love nothing more than for all involved to influence our offering.
Through this approach with our housing frameworks, we have now delivered 3,500 homes in Scotland – 10% of the government’s 2021 target for social rent housing. It’s something we’re immensely proud of and we hope you’ll join us to deliver even more.
Graham Collie: biography
Graham Collie is technical support manager at the Scottish Procurement Alliance (SPA).
He is a qualified quantity surveyor working towards MRICS, and during his career has worked within local authorities, housing associations and private contractors.
The SPA is backed by LHC, one of the UK’s leading and most respected procurement organisations.
