Built to last

We’re building schools, hospitals and housing for the next 50 years. But are they up to scratch? Ben Tuxworth goes in search of the people buying – and building – the public infrastructure of tomorrow.

There are no greenfield sites in Sandwell. Building our next school will mean filling in two mine shafts and an air-raid shelter, demolishing a building full of asbestos, moving a stream and the millennium wood, avoiding a major culvert, and a three-year treatment programme for Japanese knotweed.” Sue Moore, asset team manager for Sandwell Council, is struggling to see how a flat rate set by the Treasury for school buildings can get her new projects off the ground. With so much work to do before they can even start, the financial squeeze is on – and despite good intentions all round, the sustainability features in the new buildings are in the firing line. Moore’s in-house team has partnered with Willmott Dixon Construction for three school projects in the borough. She’s proud of a relationship which she clearly feels has driven up the standards to which schools are being built. That means not just their environmental performance but everything from better design, and use of local labour in the construction phase, to a better experience for a wider range of end users. But it hasn’t been easy. Despite the council’s many stated commitments to sustainable development, when the going gets financially tough it has been hard to keep the ‘nice to have’ stuff in the frame. “If a feature like a renewable energy system has a payback period of several years, it becomes very hard to justify the capital outlay – not least because the council foots the bill, and the school gets the savings. That said, we’re doing much better on these schools than we have in the past – even the schools we built recently under PFI.” Willmott Dixon’s George Martin sees these projects as exemplars of all that’s going right, and wrong, with new public buildings. “The schools we’re helping to build in Sandwell are definitely a step forward, and there are more and more local authorities like Sandwell wanting to build them. But they’re still far from the norm, and creating the consensus and the necessary head of steam to build one doesn’t mean that the next one will be as good – often standards slip again.” The big picture confirms his concern. According to the Building Research Establishment, only 17% of new buildings commissioned by the public sector last year were constructed to the ‘excellent’ level of the BREEAM standard – a measure of environmental performance. And at present there appears to be no consequence for the 83% that were not, except for the higher price we will all have to pay for their impacts. It’s all a far cry from the stated intention five years ago that every public sector building would be built to the BREEAM excellent or equivalent standard by 2003. So, what can we learn from the 17%? When it goes well, procurement practice seems to enable the partners in a construction deal to break out of the vicious circle in which everyone blames everyone else for the low standards achieved. At Sandwell, Moore’s team interviewed all the tendering contractors and pushed hard for evidence that they shared the client team’s passion for local sourcing, environmental performance and reduced whole life costs. With expertise on both sides of the contract, there’s greater trust and flexibility. But the envelope in which the contract is set is still tightly constrained financially, and both Moore and Martin recognise how the top performing projects depend on some kind of X factor – guts, entrepreneurial spirit, fundraising prowess... The big question, says Martin, is this: should local education authorities see sustainable design and construction as a fundamental tenet of school design – or as a ‘value added’ element which is merely a target? “If the latter, it will always stand out as a bolt-on which doesn’t fit within standard Department for Education and Skills cost guidelines, and consequently it will feature at the top of ‘value engineering’ hit-lists whenever budgets are under pressure. If, however, we incentivise LEAs to deliver sustainable buildings through specific top-up funds, which are only released if the building design reaches set sustainable requirements, it is likely that this inherent sustainable design approach will become embedded and will deliver truly sustainable buildings appropriately and efficiently.” It all comes back to money, in this case the old chestnut of ‘capex’ and ‘opex’ – the capital expenditure it takes to build something, and the operating expenditure to meet the costs of running it. It’s been obvious for years that the true value of a building ought really to be understood as its whole life value – all the benefits it provides over its lifetime, minus all the costs – in conception, construction, use and disposal. Even more obvious, surely, when a public sector body is client, long-term end-user and ultimately responsible for disposal, that it is worth spending money upfront to reduce costs over the lifetime – on anything from energy efficiency to recyclable materials to design for flexible use, comfort, health or the productivity of the people who work in it. Yet the flexing of capex and opex is all but impossible within the current procurement culture. And if savings in the lifetime of the building can’t be shared, it’s better to shed risks to the other players in the construction equation. Martin sees the sector as two industries operating in parallel: the big contractors and consultancies in one world, working directly for the client, and in another, the small and medium sized businesses struggling in the mud trying to make it happen. Almost all actual construction work is done by this ‘industry B’, and the temptation for the big players is to push risk – of adverse impact and increased costs – as far down the supply chain as possible, often to organisations with the least capacity to manage it systematically. In the battle to make savings, the finer points of eco-building can easily go out of the window. It’s embarrassing enough to be building schools and hospitals with inadequate sustainability performance. But the Environment Agency knew it would look particularly daft if it were to be commissioning building work with unacceptably high environmental impacts. As the UK’s fourth largest construction client – all those sea and flood defences for a start – the EA has contracts with hundreds of ‘industry B’ operations throughout England and Wales. But the temptation to shed risk is tempered by the reality of what would happen if EA-built structures were found to contain unsustainable timber. “We’d be crucified by the environmental NGOs and it would be no excuse to say that subcontractors were responsible,” says Chris Browne, the Agency’s procurement strategy manager. For Browne, the EA’s risk-based approach is the key. “We assess all of our construction projects for risk as part of the procurement/project management process, then manage the risk at every stage of the contract. We evaluate the various risks we face for impact, likelihood, and how hard they would be to sort. We also realised that of the £0.5 billion we spend a year, about £220 million was going to 20 suppliers mainly in the construction sector. It was this recognition, that most of our money (and therefore a lot of our risk) was with suppliers, that led to our supplier development programme.”

“Engagement with suppliers improves the performance of the final scheme”

Developing a shared approach to risk now runs through supplier relationships. Prequalification includes an assessment of the supplier in terms of risk management, and, where the risks are deemed to be high, more work on substantiating and improving the approach. Once a deal is struck, a high-level meeting between the EA and the supplier looks at where the potential weaknesses lie – on both sides – and a plan is developed for addressing them. Then when contracts come up, there’s a greater sense of give and take. Browne is confident the approach yields results. “We’ve recently compiled case studies from around England and Wales – and find time and time again that more engagement with suppliers means we can improve the performance of the final scheme.” For instance? “When we brought in a contractor to renew the Bulverhythe coastal defences, a bit of lateral thinking early enough in the process meant we could replace timber defences with rock groynes. We reduced disturbance to habitats, cut the build time from two years to one, and the bill from £7.5 million to £5 million.” If the EA can do it, why can’t other public sector clients? Sea defences in Sussex and schools in Sandwell are just two small parts of a massive construction programme in the public sector. Health, education and other infrastructural schemes are benefiting from unprecedented levels of government investment. Though there are plenty of good examples, in every area, of procurement going the extra mile to deliver better buildings, it will still require substantial shifts in practice for these schemes to become the norm. The Willmott Dixon approach is to use the concepts of partnering and ‘rethinking’ to try to extend their involvement with construction projects – both upstream, into the inception and design phase, and downstream, into the operation, maintenance and ultimately the decommissioning of buildings. “It seems ironic that the contractor should have to join up these different aspects of performance, rather than the client, but at least we can help them think about the long term,” says Martin. Clients and contractors share the hope that the procurement Action Plan can finally break out of a vicious circle in which everyone blames everyone else for weak sustainability performance. And it promises much. As well as high-level restatement of policy and responsibility, the plan proposes a shift to ‘common management’ of capex and opex. And it calls on both the Treasury and DfES to work with the Building Schools for the Future programme to improve sustainability standards. It was Sir Neville Simms’ experience of procurement in the construction sector that gave him the authority to lead the Sustainable Procurement Task Force, and he’s optimistic that the Action Plan will make best practice the norm. “Sustainability and efficiency are both part of ‘good’ procurement as far as I’m concerned – and we can have both in construction projects as long as there’s a commitment to understanding and valuing the importance of non-monetary benefits. There needs to be top-level support from government, but once that’s in place there’s no reason why client and supplier can’t get on with creating the sustainable infrastructure we so desperately need.” www.willmottdixon.co.uk
www.environment-agency.gov.uk

Greening the supply chain The combined purchasing power of London-based organisations has huge potential in positively tackling the capital’s waste problem. London Remade helps them do that, by identifying opportunities to use recycled products (while ensuring value for money and quality of service), and by delivering the Mayor’s Green Procurement Code. Members of this Code, the free consultancy service launched by the Mayor of London in 2001, spent just over £188 million on recycled content last year, representing 386,532 tonnes of waste diverted from landfill. If you’re not buying recycled, you’re not really recycling. Buying recycled products closes the loop, creating a direct connection between goods coming in and waste going out. This becomes a hook on which to instigate change. Once achievements have been made, it is easier to initiate other programmes such as energy, water and fairtrade initiatives. Call London Remade on 020 7061 6388 or visit www.londonremade.com for further information on the recycled products available.

3 July 2006