Family-owned building firm Higgins has launched a pre-construction department to keep its social housing clients happy. Steve Leakey explains why to Steve Menary
PARTNERING and frameworks are now so ingrained in the industry that the thought of large numbers of them being ditched and then let as individual deals is a nightmare for many firms.
That is exactly what Steve Leakey, head of Higgins' pre-construction department, is having to cope with.
Having seemingly already landed the work, the Essex-based firm is having to re-bid jobs to try and keep hold of social housing work that was practically entered into the order book.
With a £200 million turnover, the familyowned firm is one of the biggest social housing contractors working around the capital and had a dozen frameworks with big housing associations, or registered social landlords as they are now known.
With so much work com ing th rough frameworks, two years ago Higgins looked at what its clients thought of them.
Mr Leakey explains: 'The RSLs were fairly critical that we were still operating as a traditional tendered contractor and always operated with distinct departments.
'A general criticism of contractors by RSLs is that are very departmentalised, that they bring up a problem and someone will always say that's an issue for whoever, speak to them.' Keen to overcome this pre-conception, Higgins decided to create a pre-construction department aimed at servicing the needs of their big RSL clients on the frameworks, such as Circle Anglia, William Sutton Aldwick, Notting Hill, Swan, Mosaic and Acton.
Each team had five people: two technical members, a quantity surveyor and a pre-construction manager. Some had two cost managers and some three QSs, depending on the clients.
'We had identified 30 schemes to start on site and the idea was the each client would have a principal contact, and that was the preconst ruct ion manager, ' explains Mr Leakey.
The divisions did not include estimators as such but quantity surveyors that operated as cost managers.
A qualified QS, Mr Leakey had experience as an estimator after brief ly leaving Higgins for St Albans-based residential contractor Mount Anvil.
'I did cost planning while I was there as the estimating department was binned as they didn't want to tender for work , ' says Mr Leakey. 'I learnt a lot from that.' Putting this into practice, he also used preconstruction managers as key account managers, which is a concept that is prolific in the advertising industry but only just creeping into construction.
This system was looking like a major step forward for Higgins ? until the European Union introduced new legislation that forced the RSLs to tender any work over a value that has since risen to close to £5 million through the Official Journal.
'When our government went with the EU, that scuppered all the partnering agreements, ' says Mr Leakey wearily.
'That almost caused a complete collapse of the partnering ethos in our sector and since January this year we've been replying to about 15 Official Journal notices a month.' Higgins lost some jobs due to the changes but has renegotiated a large number of the original framework deals.
As part of these renegotiations, the RSLs commit to set costs worked out per square metre but the costs are not index-linked in all of these deals.
With tender pr ices expected to rise by 32 per cent until 2010 according to Building Cost Information Service, deals that are not index-linked are a major problem for firms such as Higgins.
'That's what we're worried about, ' adds Mr Leakey. 'That's why we're looking at modern methods of construction and we've got a working group that I sit on.' Higgins is buying bathroom and kitchen pods and insulated panel board systems that can be erected with the insulation pre-attached and electrical conduits already fitted.
Th is is par tly to help overcome futu re cost problems but also because RSLs get preferential funding credits for using modern methods of construction.
The Housing Corporation insists that 30 per cent of its grant to an RSL is used on schemes featu r ing some form of modern method of const ruct ion but this percentage is likely to r ise to 45 per cent.
Higgins is not just trying to change perceptions of clients but also the nature of the business, whose founder Derek Higgins unfortunately passed away last Christmas.
'I was with him at a contract meeting at the end of the week then he never came in again, ' says Mr Leakey, clearly fond of Mr Higgins, who tempted h im back to the fold four years ago after he brief ly left.
Mr Higgins' son Richard is chairman of Higgins, which has two businesses.
Mr Leakey's business is part of a £130 million construction arm, which started out refurbishing social housing but now builds about 1,000 new homes for RSLs a year.
In addition to Mr Leakey's division, Higgins also has a £70 million turnover private housing business that builds about 500 units a year for private sale.
The construction division does mostly social housing but also some education work.
Higgins had started to branch out into Private Finance Initiative work on a scheme for East London University but the scheme was wound down when it did not get enough PFI credits from the government.
The firm is down to the last two from a five-strong bid list for a PFI stock transfer of social housing in Brockley in south-east London that has taken up one member of staff full-time for 18 months.
With a workforce that has risen to 380 people ? 230 of those are operatives ? Higgins has enough staff to cope and the firm wants to double turnover by 2010.
Re-bidding work has proved time-consuming but during the period when the frameworks were renegotiated, Mr Leakey glimpsed into the abyss that faces firms which miss out.
'We did bid some schools and street scene work but it's got really fierce over the last six months with all these firms that are left out of the partnering deals, ' he adds.
'You're either in or you're out now and people are doing work at almost cost pr ice. It will be interest ing to see the results for a lot of these firms next year.' Having returned to Higgins and resecured much of the work that temporarily went m issing, Mr Leakey is clearly glad to be in.
Steve Leakey: the CV LEAVING school at 16 in 1985, Steve Leakey joined Walter Lawrence, then a large London contractor, as a trainee quantity surveyor but at the time was not impressed with life at a bigger firm.
He says: 'They had just merged their city and southern departments.
'When I walked in, they had a row of filing cabinets down the middle to keep the two apart. That wasn't how I wanted to work.' After two years he decided to join what was then a small, family-run contractor called Higgins, turning over just £12 million a year and based in his home county of Essex.
Mr Leakey adds: 'They were working out of two or three houses in Woodford. They were pretty relaxed; they even had a fridge full of beer.' Completing his surveying qualifications in 1994 at Anglian Polytechnic, he became chief QS in 1999 but left two years later to join Irish businessman Killian Hurley at his contracting-to-housing business, Mount Anvil.That proved shortlived. Higgins never filled the chief QS's job and Mr Leakey was offered his old job back within six months. After a year, he relented and returned, despite Higgins being far larger than Lawrence ever was, to set up the f irm's pre-const ruct ion depar tment in 2003 with par tner ing director Paul Cook.