The papers seem to be full of doom and gloom when it comes to public sector projects.
However, while perhaps there might be a decline in new build, there is plenty of potential for maintaining what’s already there.
Government spending cuts are driving public sector clients such as councils and constabularies to outsource various parts of their work, including maintenance. Analysis from maintenance contractor Morrison and consultant Credo last summer showed that local authorities alone have the potential to double the amount of work they outsourced (of which maintenance can be a part) in 2008 to £82.5 billion from £42.1bn.
According to Glenigan, the top 30 public sector maintenance projects available for tender at present are worth a combined total of £632.6 million. These contracts in particular are primarily reactive maintenance works – and public sector clients have particular specific requirements that contractors need to get right to stand a chance of picking up the job.
One of the most important factors is the ability to deliver a genuine 24/7 service – many public sector clients, including both police forces and councils, need to be sure they can call a contractor at any time to carry out work. Wolverhampton City Council procurement manager Haydn Poyntz says: “It’s really important they have experience of running callout facilities as we need a service that is available at all times, every day.”
Norfolk Constabulary procurement manager Andrew Taylor agrees, who unsurprisingly as someone working for the police, also puts a premium on response times: “We need to know how a contractor would manage delegated spend on emergency repairs. If, for example, a tree went through a roof, it would be down to that contractor to organise that repair,” he says. “Past experience of operating a 24/7 service is important although that doesn’t necessarily have to be with the police. The contract is reliant on the response time. If the contractor can be in any location within an hour of the call being placed, it doesn’t really matter where it is based.”
However, some public sector clients place importance on involving the local community. Bracknell Forest Council head of building surveyors Tony Chadwick says: “We are increasingly looking at whether a contractor will take on staff from certain sectors of the local community, such as the long term unemployed.
Mr Poyntz agrees, saying local involvement is becoming an integral part of Wolverhampton City Council contracts. “We want to know whether appointing a contractor will benefit the local economy, particularly through its supply chain. We want to maximise the impact in our area of every pound we spend,” he says. “One of the things we’re doing now is writing it into the contracts that the contractor needs to take on local apprentices and provide work experience slots for school children in Year 9.”
Who provides the work
Councils prove the largest clients, by volume of projects for maintenance works. The majority of council works are medium to low-value projects, with the exception of Tower Hamlets’ £240m housing maintenance contract is the single largest job on offer by a considerable margin. Therefore for a lot of projects, it’s possible for both small businesses and large national contractors to bid on the work.
As a result, some councils have taken steps to safeguard opportunities for smaller contractors. Mr Poyntz says that Wolverhampton City Council is deliberately putting together packages, so that while big firms still have opportunities, local firms can compete too. “We want to make our contracts attractive to local SMEs, so all our contracts over the last couple of months have included packages specifically designed to prevent larger contractors coming in, taking all the work and subcontracting it out,” he says. An example of this is the £20m maintenance framework, which comprises of two lots; one for projects up to £50,000, and another for projects from £50,000 to £500,000.
Although project values for public sector maintenance remain low, with government cuts likely to deepen in March with the 2011 Budget, this total value could grow. Large firms have said they expect to pick up some of this work. For instance, Willmott Dixon Support Service has forecast it will grow by 300 per cent in support and maintenance work over the next four years. Firms best placed to fulfil the agenda of always-available response and local engagement are likely to pick up the lion’s share of work.
Outside of London, the majority of available public sector maintenance contracts by value are located in the North West. Both the South West and Northern Ireland are also strong sources of contracts, which should come as no surprise given the overall dependence the construction industry has on the public sector in Northern Ireland. Water programmes are particularly lucrative for maintenance works in the Six Counties with £20m worth of projects available in the top 30 projects alone, more than the work in Yorkshire and Scotland combined in the same sample.
Back in the capital, London Underground’s structural maintenance contract is split into two lots; one covering vegetation clearance, drainage, small repairs, maintenance interventions and support services, worth between £40m and £60m, and a second package dealing with masonry, concrete, painting and metal element replacement, worth £32m to 48m.