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‘Commercially unattractive’ PSBP schools to go to £5bn Regional Framework

Exclusive: The Education Funding Agency has removed 20 “commercially unattractive” schools from Priority School Building Programme batches to ensure greater tendering interest among contractors.

The shake-up is a response to the EFA failing to attract any bidders for some batches of priority schools in London and the South from the main Contractors’ Framework, through which PSBP 1 is procured.

It is understood that some of the schools were considered “commercially unattractive” against EFA rates by contractors who feared making a loss on those batches.

EFA capital director Mike Green told Construction News it had removed around 20 “tiny primary schools” from batches yet to be awarded to create more attractive, secondary school-heavy groups of schools.

Two reorganised batches of secondary schools have now been released to the Contractors’ Framework and have attracted bids, PSBP programme director Rachel Stephenson said last week.

The less commercially attractive schools will go through the EFA’s £5bn Regional Framework, which is aimed at smaller building and refurbishment projects worth between £3m and £7m, but which can range from £200,000 up to £12m.

Mr Green said the purpose of the Regional Framework was to deliver “one-off jobs that should go to regional contractors” but added that the EFA had not yet decided whether to release the 20 schools to the framework as individual projects or in small batches of “two or three at a time”.

A total of 16 contractors were appointed to the Regional Framework across six regions in July.

However, the majority of the 43 places on the framework were claimed by national contractors, and more than half of the spots were taken by contractors also on the main Contractors’ Framework.

The EFA will also try to attract greater interest among contractors in bidding school batches by slowing their release to the framework.

Mr Green said the increase in opportunities in London and the South-east was putting contractors’ bidding resources under pressure, and meant they could not bid for more than one group of schools at a time.

One managing director from a contractor on the EFA framework said he was able to be “choosey” about what to put bid teams on, and that PSBP batches were “not the most attractive things to go for when you’ve got things that have less risk for us and potentially better rates”.

Scape chief executive Mark Robinson said contractors were facing resource issues due to problems with staff retention and a “merry-go-round” of people moves.

“The merry-go-round has started in terms of people moving for an increased salary, both at a senior level and, more importantly, at a technical, middle-management and project management level,” he said.

Mr Robinson added that the supply chain “being more choosey” was another issue contractors had to grapple with and that they also had to make sure subcontractor resource was there to deliver smaller projects before bidding.

Mr Green said the EFA would keep a “close eye” on its cost per sq m rates for new schools, which some contractors have told Construction News are too low due to cost inflation across the industry.

The EFA has adjusted rates in London to account for inflation and will continue to make adjustments when necessary to ensure it remains attractive to contractors, he said.

“If we’ve got 10 bidding [for each batch] we’re probably giving away a bit too much money; if we’ve got a couple bidding then we’re probably in the right place.

“One bidder is a bit uncomfortable but [that] will do, and if there’s nobody then we’re below the line.”

Mr Green confirmed changes to batches would not have an impact on the overall timeline for the first phase of the PSBP and that all schools would be completed by the end of 2017 as planned.

The first phase of the PSBP will rebuild the 260 schools in the most urgent need of repair in England by 2017, which are being delivered by contractors in regional ‘batches’ of around six to eight schools.

To date, 14 schools have been completed and a further 59 construction contracts have been signed. One school that was due to be rebuilt under the PSBP has been closed buy its local authority and has been removed from the programme.

Readers' comments (1)

  • The EFA rates were considered unreasonably low during the recession. As the economy turns, contractors as simply voting with their feet and moving away from risk heavy projects with unrealistic rates attached to them. Good for them.

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