Winter Newsletter 2021

In this issue:

Better Procurement For Better Homes

Since the Grenfell Tower disaster, there has been a concerted effort by the construction industry to instigate reforms aimed at improving quality and safety within the built environment. One key area is procurement practices which often see Design & Build contracts awarded to the lowest tenderer who may have priced aggressively based on limited information and may be forced to seek savings which have a detrimental impact on quality and programme.

As part of the industry response to this, the Housing Forum has published a guide for Local Authorities and Housing Associations which offers advice on the procurement processes needed to ensure that the houses they build are safe, are built to a high-quality standard, and achieve best value. The report emphasises the importance of effective collaboration between clients, consultants and contractors.

The report was developed by a Housing Forum cross-sector working group, with Martin Arnold’s Chris Martin contributing to the guide and providing insight into how successful Cost & Risk Management can have a positive impact on the quality of a finished scheme. In the report, Chris highlights how single-stage, Design & Build contracts are often favoured by Registered Providers as they shift a large proportion of the risk of a project to the selected contractor. However, while they provide an element of cost certainty through a fixed price lump sum, such contracts can often lead to contractor’s cutting corners to minimise their expenditure and/or complete as early as possible.

In his contribution to the report, Chris suggests that a more collaborative approach, with successful early contractor involvement, can pay dividends through a shared project vision, a robust project business plan, a detailed project cost plan which is reviewed, agreed and adopted by all parties, and a project risk strategy which is fully detailed, quantified and adopted by all parties:

“Experience shows that a higher level of detail and understanding of the project throughout the procurement process translates into a more successful transition from design to construction. The contractor becomes knowledgeable about the project and buys in to the project’s objectives. All parties can then work closely to ensure that the project delivers on all of its requirements.”

The full guide can be downloaded from The Housing Forum’s website.

Case Study – Fred Styles House: Innovation in Regeneration

A few minutes’ drive from Martin Arnold’s offices brings you to Fred Styles House, a sheltered housing block which formerly provided 42 bedsits near Charlton train station. Fred Styles House closed in 2013 and stood empty before the Royal Borough of Greenwich recognised the site’s potential for redevelopment.

Fred Styles House is a fresh approach on a traditional architectural solution to affordable housing within the Royal Borough of Greenwich. The scheme is comprised of 37 no. new-build houses which re-establish connections within the urban fabric to create a better neighbourhood and access to Charlton Village High Street. The development reinforces the existing street edge, providing a series of 5 terraced houses along Charlton Church Lane and three pedestrian mews streets which are created within the site.

The innovative design of the scheme features curved roofs and parapets. As Employer’s Agent and Clerk of Works, MA worked closely with the Principal Contractor to ensure appropriate execution and sequencing solutions were employed to ensure quality standards were upheld throughout the construction of these areas. Additional testing was also employed to ensure the high standard of the end product and MA dedicated additional resource to ensure an increased site presence to monitor the execution and testing of these elements were satisfactory.

The scheme provides generous one-, two- and three-bedroom accommodation for young people who are struggling to make the first step on the housing market, as well as small families with children and spearheads the commitment of the Client to provide high-standard with generous living space and external amenity spaces affordable housing within the borough.

Construction Risk Management Decision Making

Martin Arnold’s very own Dr Alex Arthur recently published his new book, “Construction Risk Management Decision Making, understanding current practices.” The book provides a step by step advice on assessing and prioritising risk using qualitative decision making systems and explores the relevance of systems thinking and behavioural science in construction risk management

“Construction Risk Management Decision Making” focuses on the behaviour patterns of real people in the industry and highlights the current practices of construction risk management while helping readers view risk and decision making from a broader perspective. Throughout the book, Alex presents invaluable insights into the ways construction professionals think and behave in the real world.

Alex’s publisher, Wiley-Blackwell, has described the book as “an excellent textbook for advanced students in project management, engineering, construction, and surveying courses, and a must-have guide for practitioners of construction management, surveying, and architecture.”

Dr Alex C. Arthur BSc MSc PhD FRICS MAPM is a chartered project management surveyor with more than 14 years’ experience. He is a Fellow of RICS and an examiner of their Assessment of Professional Competency programme and he is also a member of the Association of Project Managers.

His book can be found on Amazon or direct from Wiley-Blackwell.

Case Study – Energiesprong, Fuel Poverty & Climate Change

Working with Moat Homes and Engie on a pilot Energiesprong project, we successfully retrofitted five of Moat’s homes in Maldon, Essex. Originating in the Netherlands, Energiesprong is a fully integrated, zero-carbon approach to delivering deep retrofit ‘whole-house’ refurbishments with guaranteed energy performance levels.

The homes in Maldon are in a highly exposed rural location with coastline nearby. This meant that the residents were previously paying very high energy bills of up to £2k a year, with some resorting to trying to keep just a single room warm in the winter. A super insulated shell was wrapped around the existing homes to dramatically reduce heat loss and reduce noise from the road. This led to comfortably warm, near net zero energy homes which has made a significant difference to residents’ lives and energy bills.

Uninsulated voids under the houses’ flooring worsened their heat loss. This was addressed by installing bonded polybead insulation below the floors of the pilot properties. Additionally, insulated wall panels were installed, extending below the damp proof course, while existing windows were replaced with triple glazed windows which were slightly larger than the original windows to let in more light. Air Source Heat Pumps were used to provide an energy-efficient alternative to traditional heating systems, providing significant reductions in heating costs and environmental emissions. Photo-voltaic panels were also installed to provide an additional energy source, with unused power directed to charge on-site batteries where it was stored for later use and excess electricity directed towards the National Grid. Mechanical Ventilation and Heat Recovery units were installed to reduce internal humidity levels and improve indoor air quality.

An additional challenge was posed by the local planning department’s stipulation that the external features of the buildings had to remain in keeping with their neighbouring properties and that the existing aesthetics of the pilot properties had to be retained. To achieve this, the external insulation panels (which formed the shell that was wrapped around the building) were made with an acrylic brick-effect and colour-matched to the brickwork they covered.

Martin Arnold acted as the Employers Agent for the programme, providing key procurement advice to our Client and working closely with the Contractor to develop the design at the latter stages of the process to ensure that the deliverables were in line with the Client’s goals and objectives. We closely monitored the progress and quality of the works on site, managing all stakeholder expectations and providing regular cost reporting in our role as Cost Consultant.

Tender Prices & Market Commentary

In our last newsletter in September, we reported a 2.5% increase across a 6 month period. The BCIS Tender Price Index has moved more significantly since reporting a quarter on quarter change to 4Q 2021 of 3.5% and a 6% increase across the 6 month period. That means our imaginary project that cost £10m back in June now costs £10.6m in December – that is a huge change in terms of scheme appraisal and viability and is only marginally reflective of the difficulties facing all levels of the supply chain in the current market.

The BCIS are also forecasting a further 3.3% increase over the coming 6 months which would bring the 2Q 2021 to 2Q 2022 change to a shade under a 10% increase.

The upshot of the volatility in the market is that the supply chain are not fixing prices or having to charge extremely high fixed rate premiums in order to fix prices. Tried and tested alternative mechanisms to fixed price contracts are low on the ground and as a result the industry is progressing with bespoke solutions which need to be carefully considered by all parties prior to progression.

Trying to estimate construction costs at any level becomes much more difficult in this type of market as benchmark data becomes outdated so quickly and so our recommendations generally at this time are more than ever to work as closely as possible with the supply chain and undertake as much market testing as possible.

This is also applicable to tendering and procurement strategies for client organisations – clients need to also be open minded, but cautious, in respect of alternative contractual arrangements and where possible to spend additional time and money prior to taking a scheme to tender on the market to ensure that the level of information and therefore the attractiveness of the scheme to potential constructor partners is maximised. The supply chain, where it is so busy, is in a position to pick and choose work and so the least risk they are taking on in a new project will clearly put it at the top of their list.

We are currently envisaging similar market condition to continue well into Spring 2022.

Martin Arnold’s New Website

Martin Arnold is pleased to announce the launch of our new website, designed to give our clients the best online experience possible.

The new website is the culmination of months of redesign completed in-house and was developed in response to feedback we had gained from clients and colleagues. We hope our new site provides visitors with easier navigation and faster access to information about our knowledge and experience in the sector and gives you an insight into our people.

“One of the most important things we do at Martin Arnold is to make sure that the right people have the right information at the right time,” said Roger Arnold, Managing Director. “Our new website ensures that visitors will be able to find exactly what they need to find, when they need to find it.”

We hope that you enjoy our News section, which will allow visitors to stay up-to-date with Martin Arnold’s latest news and features and our projects page which will showcase some of the amazing projects we have been worked in collaboration on.