New Housing Supply Programme - Procurement Update
North Lanarkshire Council · 10 May 2023
Back to Housing Committee — 10 May 2023 and its agenda
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North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☒ Yes ☐ No Ref PH/TM Date 10/05/23 New Housing Supply Programme – Procurement Update From Pamela Humphries, Chief Officer (Place) E-mail mallaghant@northlan.gov.uk Telephone Tony Mallaghan, Housing Development Manager, 07970 016251 Executive Summary The purpose of this report is to update the Committee on current procurement activity relating to the new build housing programme and seek approval to progress procurement arrangements as outlined in the report. Recommendations 1) Approve the procurement of call off contracts in line with the Scottish Procurement Alliance (SPA) New Build Housing Construction H2 (Scotland) framework, for the construction of new build housing to McTaggart Construction at Thorn Road, Bellshill up to the revised value of £5.30M, including contingency allowance. 2) Approve the procurement of call off contracts in line with the Scottish Procurement Alliance (SPA) New Build Housing Construction H2 (Scotland) framework conditions for the construction of new build housing to McTaggart Construction at Airdriehill Street, Airdrie, up to the revised value of £15.6M, including contingency allowance. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (1) Ensure a housing mix that supports social inclusion and economic growth
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1. Background 1.1 The Council has an approved programme to deliver 5,000 new homes by 2035. The delivery of such a large scale programme presents a number of challenges, not least of which is the procurement of contractors to build the houses to the required standard, within the timescale required and at a competitive cost. In order to increase the pace of delivery, secure best value and minimise risk to the Council, a range of procurement options have been utilised. 1.2 The Housing and Regeneration Committee on the 25 November 2020 approved the procurement route for the next phase of the new build programme to commence procurement activity with the Scottish Procurement Alliance (SPA) and Scotland Excel New Build Residential framework to deliver the next phase of new build sites approved by the Committee. As reported at the Housing and Regeneration Committee on the 8 September 2021, due to the current capacity issues in the market we intend to utilise the ability in the SPA and Scotland Excel Frameworks to direct award to available contractors, including to contractors who are not highest ranking. Justification for the identification of a contractor can be made by complying with the direct award criteria listed in the respective frameworks, with a contract award being subject to value for money assessment against the framework rates. A benchmarking appraisal was carried out for each project and is identified in each project’s Contract Strategy. 2. Report • Thorn Road, Bellshill, (26 units), at the revised value of £5.30M, including contingency allowance. The feasibility costs obtained are considered to represent best value and, subject to benchmarking against the appropriate framework rates, it is proposed that a final tender price be agreed to allow the contract award, subject to the council acquiring the site and securing planning permission. 2.2 The Council has engaged with McTaggart Construction who are a contractor on the Scottish Procurement Alliance (SPA) New Build Housing Construction H2 (Scotland) framework. Feasibility costs have been obtained for the project detailed below: • Airdriehill Street, Airdrie, (65 units) at the revised value of £15.6M, including contingency allowance. The feasibility costs obtained are considered to represent best value and, subject to benchmarking against the appropriate framework rates, it is proposed that a final tender price be agreed to allow the contract award, subject to the council acquiring the site and securing planning permission. Next Steps 2.3 The next batch of sites will be reviewed, and a suitable procurement route will be identified to progress these projects to deliver new build housing to align with the Plan for North Lanarkshire. 2.1 The Council has engaged with McTaggart Construction who are a contractor on the Scottish Procurement Alliance (SPA) New Build Housing Construction H2 (Scotland) framework. Feasibility costs have been obtained for the project detailed below:
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Price Savings / Increases 2.4 There are no cashable savings attributed to the contracts outlined within this report. Price Stability 2.5 The pricing mechanism is a Priced Contract with Activity Schedule offering a good level of cost certainty. Community Benefits 2.6 The Council is committed to maximising the delivery of community benefits. The procurement included a community benefit requirement, this approach is designed to deliver local community benefits where possible. Fair Work Practices 2.7 All contractors appointed to the SPA and Scotland Excel frameworks have evidenced Fair Work Practices within their organisations as part of the procurement procedures to be appointed to the respective frameworks and have further demonstrated how they will promote them in the delivery of Council call-off contracts. Contract Strategy 2.8 Officers from New Supply will be responsible for managing contracts which will be undertaken in accordance with the council’s agreed approach to contract and supplier management. 3. Measures of success 3.1 The proposed contract awards detailed within this report will deliver the following outcomes: a) The appointment of Contractors who have the experience and capability to deliver new build social housing; b) The procurement procedure is compliant with the procurement legislation and internal procedures; c) That best value is both demonstrable and achieved; d) That the Contract secures a range of community benefits; e) That the Contract supports payment of the real Living Wage to staff employed in the delivery of the Contract; f) That the Contract performance is proactively managed against a number of Key Performance Indicators. Pamela Humphries Chief Officer (Place)
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5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Council’s new build programme helps reduce inequalities through a number of design specifications including: • Housing for Varying Needs; • Secure by Design; • Achieving the Scottish Government requirements for “Greener Homes” to reduce the incidence of fuel Poverty; and • The inclusion of design standards relating to access to internet capabilities including ‘fibre to the property’. If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☒ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The funding for all of the projects referred to in this report can be met from the Council’s Housing Revenue Account budget for the New Supply Programme. Grant support is also provided by the Scottish Government. The costs associated with contract delivery will be contained within the New Supply budget. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People Resources? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact?
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5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The proposed award of contracts detailed within this report will ensure that the impact on the Council’s carbon footprint is mitigated. The specifications incorporated within the contract documentation will: deliver reduced energy need; encourage sustainable construction; promote health and wellbeing; reduce waste and resources through effective storage, collection and composting of waste and recyclable materials and include measures which will reduce CO2 emissions. 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The implementation and delivery of the New Supply programme will be promoted through the New Supply PR plan and via communications with elected members and local stakeholders. 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Risk associated with the New Supply Programme is managed within the New Supply Risk Register process. The risk register has been updated to reflect the impact of the current national issues affecting the costs and availability of materials and labour
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along with general high inflation on programme timescales and costs as well as how the risk to the council will be mitigated as far as possible. The tender cost increases over the past 12 months are on average 16% to 20% and this trend of tender price increases will extend into 2023 excluding the additional changes to legislation and meeting Scottish Government energy targets. Comparing similar sized projects the tender costs over past 18 months are on average 25% higher. The council will also undertake detailed ground investigation and other relevant site assessments prior to proceeding with the development of any particular site to help mitigate the risk of unforeseen costs relating to ground conditions, although this risk cannot be eliminated entirely. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.