Part 1 / ITEM NO.

______

JOINT REPORT OF STRATEGIC DIRECTOR FOR SUSTAINABLE REGENERATION AND OPERATIONS DIRECTOR URBAN VISION

______

ToSustainable Regeneration Scrutiny Committee – 3rd October 2011

______

TITLE:Re-thinking Construction Partnering: Value for Money – Highways and Civil Engineering Projects

______

RECOMMENDATION:That Sustainable Regeneration Scrutiny Committee notes the performance of the Highways and Civil Engineering projectsFramework as outlined in this report where the principles of Sir John Egan’s report ‘Rethinking Construction’ (1998) have been applied.

______

EXECUTIVE SUMMARY:

In February 2011 Members were provided with a report on the background to Re-thinking Construction and how this had been developed by the Council. Members may recall that the Council has a number of categories of construction or construction related services that have been subject to the partnering principles.

This report focuses on the delivery of highways and civil engineering projects and the benefits and value for money that has been gained through the partnering relationship. Reports are to be submitted quarterly to Members and each report will now focus on a specific construction service category.

Re-thinking Construction is the Council’s construction partnering programme, which is managed on a daily basis by Urban Vision Partnering Limited so as to use the technical skills and knowledge required for the projects that are undertaken.

______

BACKGROUND DOCUMENTS:

(Available for public inspection)

Report to the Lead Member for Development Services entitled “Procurement of Construction”- 10th March 2003

Report to the Lead Member for Housing entitled “Procurement of Construction”- 21st March 2003

Report to the Lead Member for Development Services entitled ‘’Re – thinking Construction Progress Report’’ – 7th July 2003

Report to Sustainable Regeneration Scrutiny Committee – 7th February 2011

Report to the Lead Member for Planning entitled ‘’Approval of Constructor Partners for the delivery of Highway and Civil Engineering projects in accordance with the principles of Rethinking Construction’’ – 27th February 2006

______

KEY DECISION:NO – report submitted for information

______

KEY COUNCIL POLICIES:

  • Connecting People to Opportunities, Salford’s Sustainable Communities Strategy
  • Procurement Strategy

______

EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS: There are no direct implications

______

ASSESSMENT OF RISK: Low

______

SOURCE OF FUNDING: each project issubject to separate funding arrangements

______

LEGAL IMPLICATIONS : There are no direct legal implications

______

FINANCIAL IMPLICATIONS: Each project is subject to separate budget reporting

______

OTHER DIRECTORATES CONSULTED:All Directorates participate in the governance structure for this form of partnering and in their respective Project meetings

______

CONTACT OFFICERS:Pauline Lewis TEL. NO.0161 686 6281

David A Dean TEL NO. 0161 779 4895

______

WARD(S) TO WHICH REPORT RELATE(S): No direct implications

______

1.0Background

1.1 As part of the Best Value agenda, Salford City Council decided to procure its construction works on a ‘partnering’ basis in accordance with the principles of Sir John Egan’s report ‘Rethinking Construction’. This report details progress made to date with the Council’s Highways and Civil Engineering framework with Particular reference to the performance of constructor partners Birse Civils Ltd and Tarmac Ltd. The report excludes consideration of Urban Vision Partnership Limited (UVPL)Highway Services.

1.2In his report ‘Rethinking Construction’, Sir John Egan states that the’ rationale behind the development of an integrated process is that the efficiency of project delivery is presently constrained by the largely separated processes through which they are planned, designed and constructed. These processes reflected the fragmented nature of the industry at the time and were considered to be sustaining a contractual and confrontational culture’. In Sir John Egan’s view the industry should:

  • Address the needs and expectations of the end user more closely;
  • Move away from traditional ways of doing business which are restrictive and confrontational; and
  • Aim to achieve targets for reductions in cost, time and defects
  • Aim to increase predictability of cost time and profitability

1.3In procuring its construction works on a ‘partnering’ basis, in accordance with these principles, Salford City Council aimed to achieve higher standards, with greater efficiency and effectiveness by working in collaboration with partners who commit, with the Council, to always strive for continuous improvement.

1.4The introduction of these principle coincided with the establishment of Urban Vision Partnership Ltd. (UVPL); a joint venture organisation through which Salford City Council now deliver it’s construction, design and maintenance services.

1.5 In February 2006, following an extensive OJEU procurement process, Lead Member for Planning approved the appointment of Tarmac Ltd, and Birse Civils Ltd to work with Urban Vision to deliver highway and civil engineering schemes up to a value of £2m from the 1st April 2006. Schemes above this value are to be tendered separately outside the Framework.

1.6The Framework had an operational period of 5 years with the option to extend for a further 2 years. The initial term of the Framework expired on the 31st March 2011, though a temporary extension has been granted to the partners whilst the Council considers future delivery mechanisms.

1.6The Framework contract documents do not include a specific definition of ‘value for money’, but the partner selection process included a cost /quality assessment. The specification documents also contain a series of specific objectives and service standards which were included to ensure that Salford City Council get high quality, sustainable construction to meet the expectations of the local community for a fair price.

1.7All highway and general civil engineering capital projects up to £2 million in value are now managed and delivered by UVPL in conjunction with two constructor partners, Birse Civils Ltd., and Tarmac Ltd., under a framework agreement (the Framework). The constructor partners were appointed in February 2006 following an extensive procurement process based on quality and price submissions. The Framework became operational on the 1st April 2006 and will run for a period of five years with the option to extend for a further two years.

1.8The Framework does not include works funded from annual revenue budgets, or those improvements being carried out under the highways investment programme which is subject to prudential code funding. The City Council’s annual capital programme of highways and general civil engineering work (up to an estimated individual project value of £2million) is divided as equally as is practical between UVPL, Birse and Tarmac on the basis of the estimated value of each project, and assuming that all partners perform satisfactorily and have the expertise and resource to undertake the works required in accordance with the programme. Projects with an estimated value up to £100k are allocated directly to UVPL. However, the total value of these projects individually valued up to £100k counts as part of their 1/3 share of the programme.

1.9Any highway and civil engineering projects with an estimated construction value in excess of £2m will be tendered on an individual basis and do not form a part of these arrangements. To date there have been no such projects

1.10Projects in addition to the annual capital programme may be allocated under the principles defined above if acceptable to the City Council

1.11Typical projects carried out to date include;

  • General improvements to highways and road junctions,
  • Provision of measures for cyclists and pedestrians,
  • Waterside walkways,
  • Traffic Calming Schemes,
  • Environmental Improvements,
  • Structural Maintenance of the Principal Route Network,
  • Car Park construction and improvement,
  • Footway Improvements / Resurfacing,

1.12In order to deliver the service outcomes identified above, the partnership is committed to the following principles;

  • Mutual trust and co-operation
  • Development of long term relationships to ensure ongoing improvements in the serving of Clients’ needs
  • Membership of the ‘Considerate Constructors’ scheme preferred
  • Membership of the ‘Construction Skills Certification Scheme
  • Non- adversarial problem resolution
  • An integrated design / supply / construction process
  • Design development with specialist / Constructor Partners contributions at an early stage of design
  • Encouragement of innovation
  • Development of good supply chain management with local suppliers and contractors
  • Joint selection of supply chain partners
  • High levels of productivity
  • Maximum safety levels
  • Reasonable profitably for all partners (including supply chain partners),
  • Open book costing / accounting
  • The use of Target and Guaranteed Maximum Prices with an agreed maximum shared risk percentage
  • Use of incentive related Key Performance Indicators to measure service outcome, drive improvement and monitor the overall success of the Partnership and to offer incentives to achieving good performance and high quality standards
  • Working with and attendance at meetings involving Clients, other Constructor Partners, Officers and Members the Council and other third parties
  • Endorsing the Council’s agenda for building an economically prosperous City, providing jobs with good prospects, supporting the local economy through local enterprise and business development
  • The requirements of the City Council’s Social Inclusion model

2.0 Development of the Partnership

2.1The original highways constructor partners Birse Civils and Tarmac were appointed for the delivery of the highways capital programme only. Both partners were appointed on a price and quality basis following an extensive OJEU process and both were considered equally capable of providing the City Council with civil engineering project delivery alongside UV Highway Services as term contractor. In practice, it was acknowledged that the appointment gave the Council the flexibility of proven project management skills from Birse, and technical expertise and innovation on surfacing materials from Tarmac. The partners were considered very well suited to complement the skill base of UVPL Highway Services.

2.1As the framework developed, the Council’s highways capital programme has declined in overall value whilst the proportion of the programme consisting of small element works and hence those given to UV has risen disproportionately. In an attempt to maintain and develop the efficiency of the framework, it has been brought to the attention of private developers and other organisations working within the City.

As a result, a considerable proportion of the recent works given to Birse Civils and Tarmac comes not directly from the Council, but from section 278 type agreements and similar. The partnership has also been used to deliver former Urban Regeneration Company works around central Salford, though most of these schemes have involved mini tenders amongst the partners to satisfy the additional requirements of the funding bodies

.

2.3The framework formally expired in the spring of 2011, though the Council have awarded a temporary extension.

2.4The Annex marked ‘A’ attached details schemes awarded to date and concludes that whilst Birse Civils have been awarded more work thanTarmac when measured against value of works delivered, Tarmac have completed a greater number of smaller value schemes.

3.0 Health and Safety Performance

3.1Health and Safety performance within the construction industry has traditionally been poor. Salford City Council and UVPL are committed to the Construction Industry’s drive to reduce accidents on construction sites and this commitment is reflected in selection process and in the Framework’s operational standards which require partners to demonstrate an equal level of commitment.

3.2The Reporting of Injuries, Diseases and Dangerous Occurrences Regulation 1995 (RIDDOR) places a legal duty on employers to report work-related deaths[1], major injuries[2]orover-three-day injuries[3], work related diseases[4], anddangerous occurrences (near miss accidents)The information enables the Health and Safety Executive (HSE) and local authorities, to identify where and how risks arise, and to investigate serious accidents. To date neither Birse Civils or Tarmac have reported any incidents under these regulations whilst employed under the Framework.

3.3As a further example of the commitment made by both Birse and Tarmac to improving health and safety performance, it should be noted that from January 2009 to December 2010, in excess of 43,000 hours were worked over 15 different projects, and no accidents of any sort were recorded.

3.4The Framework has also been keen to involve the community in local initiatives with respect to health and safety. As an example, Birse Civils presented a site safety talk to pupils at BartonMossPrimary School. The school children were shown a film about the dangers of playing on or near construction sites. An interactive session followed with the children able to ask questions about site safety and the construction works in general.The children also took part in a competition to design a safety poster. The school was raising funds to provide a new climbing frame, to which Birse Civils made a donation. Tarmac have also promoted a similar initiative in local schools through ‘Digga’ a publication produced by the North West Safety Group, which is aimed at teaching primary school agedchildren about the dangers of construction sites.

3.5 Birse and Tarmac along with Urban Vision are currently supporting an initiative as sponsors and judges of a competition for primary and secondary schools in Salford. This competition is managed through Treeinspired ( the autumn competition is to ‘Build a bug hotel’

4.0Protecting the Environment

4.1The Framework acknowledges the importance of sustainability to the City Council and has purposefully taken a number of steps to ensure it is delivering sustainable construction by:

  • Seeking guidance from the region’s experts in buying recycled products
  • Identifying materials that can be re-used and looking for more acceptable alternative to first generation materials
  • Developing new initiatives and materials

4.2Envirolink Northwest programme supportsthe development and growth of the low carbon and environmental goods and services sector in the North West of England, which contributes to sustainable economic growth within the North West region.Early in the life of the Framework, a representative of Remade from within Envirolink undertook a presentation and seminar with the Framework partners to review objectives and provide specialist technical support. As a result, the partners undertook to ensure

  • Where possible, hard material that is excavated goes to recycling facilities. Here it is crushed and made into aggregates for general sale. Often the new product ends up being re-used on the framework sites.All metal products are taken to recycling facilities
  • Project teams always look for materials that can be re-used directly in the works. Invariably bituminous road planings, for example, are utilised under new footpath surfacing and sub-base material is always reused
  • Unavoidable waste is streamed. It is separated in the site compound skips to facilitate off site recycling
  • Pallets are reused, as are bulk storage material bags.

4.3On the CityAcademyhighway scheme, constructed by Birse Civils, it is estimated that approximately 70 fewer deliveries were made to site because recycled materials and products were utilise. In particular the following products that incorporated a recycled content were procured:

  • Pipe bedding material composed of recycled aggregate
  • Bituminous pavement
  • Type 1 granular sub-base
  • Kerb drains (100%)
  • PFA blended concrete mix

4.4Following recommendations made by Envirolink, products and materials procured for the project were analysed for recycled content. On the Academy scheme the following figures were achieved:

  • Overall recycled content by materials value was over 49%
  • More than 1131 tonnes of waste material was diverted from landfill via value engineering and recycled content product usage
  • £59,836 was spent on recycled content products
  • Savings of £15,208 were made through using recycled materials and implementing effective site waste management
  • Savings of 4.5% of the total spend on materials were made through the use of recycled materials and effective site waste management

The figures above were determined by Envirolink and can be regarded as conservative because of the way in which the measurements are taken. The recycled content percentage for a product is counted as zero if the exact content for a product cannot be determined. The recycled content by value of the project is therefore higher than those stated above.

4.5 The partnerships targets towards sustainability are strongly mirrored by Tarmac’s commitment to the environment and the use and promotion of recycled products where possible. Key aspects of the sustainable initiatives undertaken on Tarmac sites are listed below:

  • 93% of excavated waste material generated from site goes to Tarmac Recycling which screen and process the material to produce secondary aggregates for the North West market.
  • Planings generated from the surfacing operations are directed by Tarmac Recycling for use either as secondary aggregate for the North West market or as a replacement for primary aggregates in the manufacture of asphalt materials. Between 10-15% is currently added to the manufacture of materials which invariably find there way back on to Urban Vision schemes where coated materials are required.
  • Foamix as a recycled replacement for Roadbase is being promoted as a product on schemes where full reconstruction is required. A recent example of its use is on Roe Green Phase 2, where 1,123 tonnes have been used, generating a saving of £4,492 over conventional binder.
  • The use of 100% recycled products such as Envirokerb on the Cadishead Way repairs scheme.
  • Maintaining a level of minimum defects has been undertaken on all schemes we have been involved in for the partnership since our involvement with the resulting benefit of reduced waste and energy consumption.
  • On Moss Lane in Walkden, a new material ‘ Masterlayer’ has been laid which has enabled reduced construction depths and a more economical and environmentally friendly project to be delivered

4.6Tarmac have just had an application approved for the for recycling and processing of road planings at their Agecroft depot in Salford which will enable them to be re-processed for use in asphalt materials. The process will reduce transport movements, through Salford, and enable the use of recycled materials higher in the value chain. Effectively, it will enable the roads to be visualised as a ‘virtual quarry’. It will also open up other opportunities to enhance the use of associated environmentally friendly products.

5.0Contributing to the local economy