Case Studies.

May 20, 2010 - Construction Framework for Yorkshire and the Humber

YORbuild Construction Framework for Yorkshire and the Humber

Overview

The YORbuild Construction Framework was set up with funding from the Yorkshire and Humber Regional Improvement and Efficiency Partnership (RIEP) in 2008. The framework was procured by a cross regional team and launched in December 2009. The YORbuild Framework covers all 22 local authorities in the Yorkshire and Humber area. The Framework Development and Performance Manager explains the vision for YORbuild:

‘The vision for YORbuild is to create a regional framework for procurement of construction contracts by local authorities, blue light organisations and third sector organisations. The framework is being procured to connect with the local supply chain, with the aim of a high economic multiplier’.

His current role is to bring in opportunities to the framework, and encourage organisations within the region to utilise the framework agreement. He reports to the YORbuild Board, whose members are senior officers from the contracting authorities, with a range of expertise. He coordinates the framework, but management of it is at sub region level, hosted by East Riding of Yorkshire Council (ERYC), Scarborough Borough Council, Leeds City Council, and Rotherham Metropolitan Borough Council.

Projects totalling almost £150m have been signed up, with significant numbers of apprentice weeks targeted. Apprentice weeks are split approximately 50% existing apprentices, and 50% project initiated apprentices:

‘To date close to £150m of projects have been signed up to the YORbuild Framework since its launch in December 2009. More than half of the signed up projects are in the East Area of the Framework with promising levels of commitment in North, West and South Areas. The anticipated number of apprentice weeks in the year 2009 / 2010 is 7000. The estimated value of projects in the pipeline is £300m in addition to the committed £150m. On this basis we could expect an additional 14000 apprentice weeks.'

The majority of the value is for the East Riding of Yorkshire Council’s affordable housing programme, with matched funding from Homes and Communities Agency (HCA). Other construction projects which are being procured through the framework include school extensions, libraries, entertainment facilities, Sure Start projects, and Humberside Police HQ.

There are 44 contractors on the framework; 60% of contractors are SMEs, the remaining 40% are a mix of larger regional and national contractors. The framework was structured so that a wide range of project size could be available to accommodate project types and size of contractor. Projects are categorised in 6 Lots by value: Lot 1 £1-100k, Lot 2 £100-500k, Lot 3 £500k-£1m, Lot 4 £1m -£1.35m, Lot 5 £3.5-10m, Lot 6 £10m+.

There are 2 key advantages for procurers using the framework

• Process savings. Contracts are much quicker to put in place, 10 weeks maximum, compared with 8 months to go through EU contract process. Contracts will cost less to procure than if procured on a case by case basis. Speed of set up can also help secure funding which has a time limit

• Effectiveness. The framework agreement is well structured, and includes added value clauses which public sector procurers wish to incorporate, including sustainability and employment and skills.

It is hoped that OGC will award the YORbuild framework accreditation as a quality framework.

Employment and Skills

The Framework Agreement incorporates an Employment and Skills Strategy to support local employment and skills development The YORbuild team engaged with Construction Skills in the region, and they co developed the model together. They took soundings from regional events, and also ran a SME event. Construction Skills has agreed to fund a Skills Coordinator and the process of recruitment is ongoing.

Each construction contract has an employment and skills plan. The Employment and Skills Plan for each project indicates outputs in eleven categories:

• New entrants - Skills development: school/college visits, School/college workshops, Work experience 14-17 yrs (person weeks), Work experience / entry level 1 qualification 18+ years (person weeks), Apprentices – existing (person weeks), Apprentices – project initiated (number), Projected initiated higher skills level (number)

• Existing Workforce - Skills Development: Health & Safety Touch Screen Tests, National Vocational Qualifications, Construction Skills Certification Scheme (CSCS cards)

• Employment: Progression into employment (number).

The Framework Manager, East Sub Region, describes the approaches to apprentice numbers:

‘The apprentice outputs are a ‘given’ contractual requirement for the affordable housing contracts. For other projects, we will allow contractors to submit apprentice outputs, which will from part of the assessment of the bid’.

He describes the first projects which have been contracted through YORbuild:
 
‘The East sub region is further ahead with take up of the YORbuild framework than the other three sub regions. ERYC has been successful in two bids to HCA to obtain match funding grants to build 330 houses in the area. The grants are conditional on the contracts starting and finishing within a set, tight, timescale, and on 15 project initiated apprentices being recruited. Four contracts have been let, and 30 sites went live in March 2010. All the contractors are based in the Hull area.’

The Framework Manager, West Sub Region explains that in the past there has been a piecemeal approach to the inclusion of employment and skills, and clauses in contracts did not have any teeth. However, there now are good intentions to use procurement to increase the take up of training and Apprenticeships. In the West Sub Region there are three projects under discussion for the YORbuild framework: housing refurbishment for Leeds City, heritage refurbishment (Heritage lottery fund), and Wakefield leisure centre.
 
Affordable Housing Programme

The Project Manager for East Riding Yorkshire Council’s affordable housing programme is leading the roll out of the £40m affordable housing programme. . There are 30 projects in phase 1; 275 houses on 30 different sites. The programme has a value of £40m in this 12 month period.

This programme is part of the Council’s policy to invest in the area, to add to the public housing stock, and support local businesses wherever possible. Capital expenditure allocated up to 2012 has been brought forward to help alleviate the effect of the economic recession. She explains:

‘The capital programme has been accelerated to help the local economy during the economic recession.’
The ERYC bid for HCA funding included commitments to employment and skills, especially apprentices. The driver for inclusion of employment and skills came from the Council’s view of best practise, rather than a stipulation by HCA.. The HCA approved the bid for match funding, subject to various conditions being met, one of which is on number of Apprenticeships. There are financial penalties if apprentice numbers are not achieved.

ERYC has a tradition of employing apprentices, and made a strategic decision to employ 12 apprentices to work on the affordable housing programme, some of whom will be available for contractors to use under the ‘host employer model’. About half of the apprentice time will be spent on YORbuild contracts. These Apprenticeships are in addition to apprentices which some contractors will recruit for this work. The Project Manager is aware of OGC guidance, but the driver for inclusion of employment and skills comes from Council policy:
 
‘We want all contractors to be working to the same parameters to deliver employment and skills outputs.’

The Project Manager was involved in defining the outputs, prior to contracts going out to tender. The YORbuild benchmarks were the starting point, they looked at what was achievable, yet still provide a challenge to contractors. Factors which were taken into account: length of time on site, size of projects, nature of project. Apprentice outputs are a mix of ‘existing apprentices’ and ‘project initiated apprentices’.

The Project Manager comments:

‘For very small projects, such as build 2 houses, then apprentice outputs would be defined as ‘existing’ apprentices only. Larger projects, such as 90 houses will have a greater potential to recruit apprentices.’

She explains that the project management team will have to be realistic about the extent to which ‘project initiated’ apprentices will be sustainable as time goes on. If a contractor employs an apprentice for a project which only requires 8 weeks ‘project initiated’, after that period, the apprentice is ‘existing’. Eventually, a contractor will reach saturation point as to the number of apprentices they can sustain. Subsequent projects may then stipulate existing apprentices. The aim is to achieve an overall increase in apprentices employed by local contractors, rather than put employers in a difficult situation. At each site meeting, contractors will be asked about employment and skills outputs.

‘The contractors are our partners…our aim is to achieve an overall increase in the number of apprentices employed. We want to provide a challenge, but we will be realistic about what is achievable’.

Host Employer Model

The Council wanted to minimise the risk to the HCA match funding grant, and decided to employ their own apprentices, in part to offer a service to small contractors. When the tender documents were sent out, contractors were given a choice to use their own project initiated apprentices or ‘buy’ ERYC apprentices on a project by project basis. 2 contractors opted to use the host employer apprentices. Contractors are charged 0.5% of contract value if they opt to use host employer apprentices.

The 12 host employer apprentices will be on different frameworks: 3 on Business Admin, 9 on trade frameworks. The intention is that the trade apprentices will work on construction projects. If there is insufficient work for periods of time, they will be able to work on building maintenance of the 12,000 housing stock. It is hoped that the apprentices can be employed in the building maintenance department at the end of their Apprenticeship.

The Council usually uses Hull F E College for apprentice training provision. They are investigating Bridlington F E College also. ERYC tends to attract high quality applicants for Apprenticeships; vacancies attract high number of applicants; over 500 applied for the 12 vacancies.
 
Supplier perspective

Two construction companies participated in the case study. Both are SMEs who are pleased to be accepted on the YORbuild framework, and to be 1 of 40 contractors who will be given the opportunity to bid for projects in the region.

Houlton & Sons anticipate there will be benefits to their business both directly and indirectly. Clearly there is additional work from the framework itself, but they hopeto be invited to bid for other public sector projects because of their inclusion on YORbuild, even if the client is not using this framework.

The company has won four contracts for affordable homes under the YORbuild framework, two small contracts in their locality, and two larger contracts in Doncaster. Each project has an Employment and Skills Plan, with specified outputs. The Construction Director has been active in making arrangements for site visits and placements. A4e has provided 3 site operatives for 4 weeks work experience. Houlton have since employed one of these on a full time contract:

‘We have held meetings with representatives from Jobcentre Plus, Humber Education Business Partnership and Future Jobs Fund to ensure we are aware of all the options available to us when we need to recruit staff’.

He explains that Apprenticeships are well embedded, and the company has close links with Hull College:

‘The company has a long tradition of employing apprentices, and we currently have 7 apprentices, on bricklaying and joinery frameworks’.

‘We usually go to the CITB for advice on apprenticeships and training’.

‘We signed the Skills Pledge 4 years ago and we were accredited as an IiP employer 7 years ago’.

The company has other public sector contracts at the moment, but only the YORbuild contracts have employment and skills as contractual requirements. They were mentioned in the ITT, not when the framework was being set up:
 
‘We have a close working relationship with East Riding Yorkshire Council. We hope that by being on the YORbuild framework that we will be able to broaden our client base. We had internal discussions about the employment and skills plan and we are 100% behind the employment and skills requirements. We don’t see apprentices as an additional cost for these contracts – we employ apprentices anyway. In reality we expect to have additional apprentices’.

The Construction Director is very positive, in principal, about employment and skills:

‘We would definitely not be discouraged from applying for any contract because of the training or Apprenticeship requirements. I don’t think these requirements should discourage other suppliers from applying for a contract. We are an SME, and we hope that this will segregate us from our competitors’.

However, he commented that they are beginning to identify practical problems with implementation which need to be resolved with the client. For example, ‘project initiated’ apprentice weeks are a new concept. He is setting up a monitoring matrix, so that the company can show who has worked on each site:

The company receives applicants for jobs all the time. Now they will be more likely to employ people via Jobcentre Plus, and other organisations to help the company meet the outputs set by the Framework.

The company cascades requirements of the framework contracts to subcontractors. There can be 30 subcontractors on a typical scheme, and it does not make sense to cascade employment and skills requirements to all subcontractors. However, thecompany may cascade apprentice outputs to subcontractors for projects in Doncaster, as there will be travel problems for their own apprentices:

‘We select which subcontractors are most appropriate for employment and skills. For instance, the window cleaning contract at the end of the build would not be appropriate. We’ve had a very proactive response from our subcontractors’.

The company is supportive of the employment and skills plans for the projects on the YORbuild framework. However, these projects are in their infancy, and there are still some key issues to be resolved.

Hobson & Porter have won five contracts on the YORbuild framework for the affordable housing programme for ERYC, varying in value from £500,000 to £1.5m.

The company has chosen to use the East Riding Yorkshire Council host employer model, rather than employ their own project initiated apprentices.

Hobson & Porter used to have 6 apprentices, but due to the recession, they currently have 2 apprentices. These 2 apprentices, 1 bricklayer and 1 joiner, are project initiated for a Gateway and Hull City Council housing refurbishment project. The company won this £12m contract in October 2009, and will deliver 2000 refurbishments over a 5 year period. There will be two apprentices recruited each year. Gateway is Hull’s neighbourhood regeneration agency.

The Improvement Manager comments:

‘I would like Employment and Skills to be taken out of the competitive process. I would rather share practise with other suppliers’.

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