Insurance & Finance Feature
Finance & Procurement
Housing maintenance procurement – a menu of options
AM Bid’s Andrew Morrison examines procurement and bidding trends including the outsourced service versus in-house delivery debate, in order to help housing clients, buyers and bidders pause and reflect about what will work best for them
A
s we begin a new financial year (2019/20) that will take us into a new decade, it’s a good time to look both back and ahead at social housing maintenance in the UK.
OUTSOURCED VERSUS IN-HOUSE DELIVERY This can feel a bit like the fashion world where styles come in, go out and then come back again some time later, perhaps with slight modifications. Go back 10 to 15 years and outsourced delivery seemed to be the way to go. However, the financial crash in 2008-10 saw some large contractor names go to the wall, such as Connaught, Kinetics and Rok. These failures meant that social housing clients had to source alternative
contractors in very short timescales. This experience, along with the VAT savings being able to be channelled into the service, saw some movement towards bringing maintenance back in-house. The sector has examples of in-house service delivery working very well, and
of it failing to provide the expected improvements. It also has examples of outsourced delivery working very well, especially in partnership working rather adversarial contracting models. Some organisations choose frameworks which
allow them to select a range of contractors and not be too closely aligned with any single contractor. An options appraisal approach usually works best when selecting which model is right for an organisation.
BREXIT EFFECTS The 2016 referendum and its aftermath have seen some significant market fluctuations. The value of sterling declined in the international currency markets meaning that the price of imported materials has increased – this alone has caused some construction sector contractors to fail, perhaps due to over-exposure to contracts with no price increase or change control provisions. We have also seen a reduction in the availability of EU national labour.
Taking the uncertain times into account, the banks are becoming less keen to lend to the sector and this has been exacerbated by some significant business failures including Carillion and Interserve.
BID TRENDS In trying to square the price versus quality value for money conundrum, many buyers have been on a journey of moving from a high emphasis on
www.housingmmonline.co.uk | HMM April/May 2019 | 35
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