|
|||||||||||||||||||||||||||||||
sustainable placemaking forum 79 Parkway London NW1 7PP tel. 020 7485 8555 fax 020 7485 1232 |
|||||||||||||||||||||||||||||||
|
seminar proceedings |
|
|
A seminar series organised by HTA Architects Ltd Report of seminar held on partnering on 5 May 2000 in London Main conclusions Sustainable placemaking is a long term project. Partnering and PFI are complementary because they too are based on long timescales, and have a significant role to play, alongside other initiatives. Building trust is key: the best chance of success in achieving it, is to involve all the partners - including the community - from the earliest possible stage. Attention must be paid to the whole neighbourhood and not simply to isolated estates; initiatives are most likely to succeed where the surrounding area also has a future. Investment is needed in the initial stages of developing partnering arrangements: the lessons learned in first stages are likely to provide the real benefits in second, third and subsequent developments, and help repay the original input. Specific points relating to individual partners: It is vital that politicians and government (including the Housing Corporation) appreciate that they need to abandon short-termism. All partners must make gains from reductions in cost: local authorities and housing associations should take into account that builders need to make profits. Although cost cuts may take a while to achieve, clients want to see the prospect of contractors and developers achieving genuine savings within a reasonably short term horizon. Introduction - Ben Derbyshire, HTA Architects Ltd Aims The aim of the series of seminars is to clarify what we mean by placemaking and our objectives. It may be we can achieve a joint 'manifesto' or at least an agreed definition, and how we envisage the role of partnering in helping to deliver. By talking through the issues we might get to an understanding about types of partnership arrangements and how we might begin to develop the process. HTA's other objective is to try and establish strategic partnering arrangements. So far, our involvement has amounted to a number of post competitive partnering arrangements, some of which, frankly, have been 'shotgun' marriages: some have worked better than others. We also aim to hold a final event with a wider audience to explain what we have achieved. What is sustainable placemaking? Placemaking involves making places which are popular and where people want to live. We believe it is a complicated issue and success is difficult to achieve. We emphasise the importance on generating ideas up front - ideas that are exciting that motivate and create a vision - as well as on delivery. Ken Bartlett of the Joseph Rowntree Foundation has coined a working definition which we use a lot to describe sustainable placemaking - it is to provide housing that is affordable and everlastingly sybaritic. Affordability is vital. We believe that generic solutions need to be found to help achieve this through reducing costs, both in processes and products. We are finding increasingly on large projects that we end up with a very tight programme, working with people we have never met before, getting to know each other on a timetable which requires us to deliver extremely ambitious objectives. Each time we are working on a prototype. We are working on schemes which involve, at a rough estimate, some 20 000 homes: with that we should be able to get the benefits of scale but it seems very difficult to do so - hence our search for strategic partnering arrangements. Despite the difficulties we are making some headway. Our plans for Greenwich Millennium Village were based on a 'flatpack' prefabricated systems subsequently taken up by the Amphion project and by Wimpey. With Peabody we are working to recycle our experience of urban house types involving high-ish densities, and aiming to develop a partnering process to find others to help build them, and also to market and promote them. Everlasting comes from the environmental issues and Agenda 21. We have a landscape of layers - looking at such issues as topography, water, and ecology, and site choreography and where there is often a depleted ecosystem. It is also about providing choice and diversity. Sybaritic - with its connotations of luxury - may appear to be overstating matters. But in one of the richest economies in the world people expect to be able to enjoy their lives at a fairly sophisticated level. Those of us working in social housing need to move out of the mindset that we are providers of basic accommodation, into an understanding that we are trying to provide what people want, in what is going to be a market place in which they have choice. It is also about planning for the full enjoyment of life - living, learning, enjoyment, leisure, good health and freedom from crime. This is what will make places popular. We believe it is vital in placemaking to employ people with skills in all these areas. Vital in all this is the need to consult people, to understand their needs and aspirations. We have our own in-house User Research subsidiary because we think it is extremely important for projects to have a real understanding about aspirations, whether people already live there or not (there are techniques such as opinion surveys and focus groups where they do not). In building communities we believe there is a real need for capacity building. Our experience shows that highly stressed communities often find it difficult to engage in these very complex projects. Understanding of governance is required: ways are needed to enable community trust to organise management and ownership around devolved structures. There is also the important aspect of community infrastructure - often referred to as social capital. It covers the degree to which people interact and the capacity of the community to engage with itself and its surroundings. We believe that information technology can be a very powerful tool in all of this; a virtual community infrastructure enhances the physical infrastructure. A community intranet can complement good urban design and physical facilities such as community buildings to help bring people together. The revolution of the dot.com economy should be able to provide new resources to areas which have been deprived of success. Partnering is a clearly long term agenda. We need to look at the ways that the various projects organise themselves and the working arrangements that make it all possible. Analogies can be dangerous but the structure of partnering arrangements can be likened to the idea of molecules. We need to find the 'chemical process' to enable the molecule to come together in a stable way - it needs an nucleus and strong bonds. We need to decide what are the elements needed to combine to create that nucleus. Partnering - A contractor's view Making money from social housing has not necessarily been the priority for contractors: turnover has been more important. Partnering has come along and seems to offer a way forward, a vision for the future where everybody can work in unity. Construction is no longer an exciting area for investors. Firms in the construction industry making a profit of 1% are doing extremely well - most of the industry makes less than that. This has led over the last 20 years to lack of investment, training and innovation. It has led to a rationalisation where particular the big companies have sold off subsidiaries such as housebuilding and aggregates. They are big contractors who can no longer survive through subsidies from other parts of their organisation. There are too many players in the market. Our client base is social housing - traditionally local authorities though increasingly housing associations. They are ultimately driven by price and the transparency of the process and has lead to lowest price tendering - if you accept the lowest price nobody can point the finger that you have been manipulated. It has led to design and build - a fine product but cleverly hijacked by housing associations. It has led to fixed price tenders. A lot of schemes were built and refurbishment was achieved but a lot of problems arose from it. Along came Egan with all the percentage improvements that could be gained. But I think you have got to ignore those. The principle should be to achieve improved performance and how you can all do better out of it. So rather selfishly I got interested in partnering as I could see it as a way of achieving continuity - which is the biggest problem for a contractor. We used to agree to do a project whatever the size. You created a big machine to do it in the hope for repeat business. But often the client walked away. But you kept your team together because you hoped you were going to get the next job. Often it has meant taking a job at a low price in anticipation of future work through which to claw back that initial investment. Partnering seems to offer like-minded souls the ability to create a long-term relationships. I do not want to build a single block of flats for say £2million. I am aiming for what follows so that we can learn the lessons of the first block and apply them to the second and third. But how can clients - who have to answer to a board or council meeting - be sure they are getting value for money? The question is how to overcome that. Another issue is the elongated interview processes. You go through enormous complicated questionnaires. But in the end the weighting comes down to 80% on the cost. If a contractor is tendering at below cost he cannot provide the additional benefits. If one company wants a 10% margin and the rest of the market wants 8%, much of the environment and community benefits get is squeezed I have not yet met a client yet who is strong enough to resist. The pressure comes on to reduce the price so it's back to confrontation. As yet there is no form of contract for a formal partnering agreement. Everything so far is bolt on. You cannot ask a contractor to tender in a competitive market place and then add on a partnering agreement and share the savings a contractor makes - I would argue that you should share the losses as well. Many schemes involve long periods of consultation with tenants - by the time the contractor comes along 80% of the programme has been agreed. That's alright if you are merely a contractor, but as a partner you have had no influence on that part of the programme. An important issue is to ensure that everyone should 'own' the scheme to build trust. But partnering can work. We are involved in several partnering agreements. One of them will cost us - and the housing association - about £400,000 each. Enormous lessons are being learned. We have a very good relationship - It is a very open .The chief executive of the association says that money is the cost of providing democracy - tenant consultation is expensive. The benefit to us is that we have been guaranteed continuity of another very major scheme. We don’t think we will incur those costs a second time but certainly we will be able to start to make savings in the basic technical things - in the way we approach the job and, more important, in the way we programme things. The trust is now there. Building trust One scheme has involved refurbishment packages - kitchen, bathroom, central heating and new windows. In the first stage the scheme was set up so that each flat was completed in five weeks. That caused enormous programming problems. In the next stage we are going to break it down into different projects - so the heating goes in first, then the kitchen and renewal of the mains as a separate package. You are in each flat perhaps three or four days for each section of the work and the disruption is going to be over a much longer period, but the programme that it is going to be much more flexible. We believe it will enable much more innovation and choice to the individual tenants. It may be only layouts of kitchens and whether you knock the loo into the bathroom, but because it is not such a rigid programme carried out within five weeks, we can cater for individual tenants needs. If you tendered for that flexibility it would cost more. But because it's all been part of a programme and on a formula, we believe it will reduce cost by 6-7% compared with current costs. (contractor) Partnering - A local authority approach We got interested in partnering for the refurbishment of tenanted properties - fairly bog standard external refurbishment. It was not for any idea about placemaking but because we were sick and tired of the traditional adversarial approach, with schemes above budget and beyond deadlines, increasing conflict with contractors and the amount we spent on litigation. We set up 18 month pilots - in other words, not long-term. We set up two packages of about £3.5m each which aped our overall programme. After a two stage tendering process, which was weighted 80% towards quality, two contractors (Willmott Dixon and Llewellyn) were appointed. We monitored them intensively using external consultants. The intention was to benchmark them against each other, against other partnering schemes and against our traditional programme. We did it on a guaranteed profit margin and on an open book basis. We found that they did come in on budget and time, with about £0.5m of extra value that would previously not have been achieved. Teamwork encouraged people to make savings. We introduced innovation in processes, holding awaydays, facilitated sessions with contractor, council, tenants and, increasingly, sub contractors, so we were getting into the supply chain. Satisfaction levels were quite high. We only put a toe in the water on concepts such as value and risk management. We were unable to develop generic processes during an eighteen month pilot. We didn't prove a highly scientific case, but it encouraged us to want to go into this in a bigger and more strategic way. We wanted to extend it to a five to ten year basis and on a geographical basis so that the partner could really get to know the local area and get a longer run at it to gain the benefit of repeated processes. Overall we believe partnering - or the principles of it - are still the way forward to get away from the short-termism that pervades the process. We need to align the diverse objectives of all parties. Developing teamwork for real, changing cultures and developing new skill is not about changing contractors. Our biggest problems have come from elected members who can be very distrustful and traditional, the staff who have learned to bash contractors under CCT, and the internal regulators such as the lawyers and finance people who have got hooked on the idea that it is all about lowest price when you write the contract. What have looked at the sort of things in our bids which might promote partnering, including best value, resource accounting, PFI, new technology and joint working. Best value which is broader than CCT might help force people to look at partnering. It looks at outcomes but there is not anything particularly long term about it. The introduction of resource accounting with a 30 year framework ought to be a push in the right direction, though it is only an accountancy convention. We are also involved in a PFI Pathfinder scheme. This is over a 30 year period that introduces a more direct relationship with a lender and partners. It will introduce lifetime costing, transferring the risk not just for the improvements, and will stop contractors walking away. I think that modernisation through new technology presents opportunities for building up social capital, getting feedback and for exchange of ideas. When local authorities get seriously into what joint working means on the ground - not just on the construction site but in terms of service delivery and dealing with social exclusion - we will need to move away from clear roles to 'co-productions'. I suspect this is something that needs to happen outside individual contracts and projects - along the lines Egan and Movement for Innovation, to build up some kind of national understanding and translate it to skills and accreditation and investment from different parties. I would like to see whether there is the possibility of developing ideas 'offline' developing the ideas, approaches and skills. We have stuck out necks out and put in a huge amount of effort and think it is the right thing to do, but our elected members are not so convinced. (Neil Litherland, Camden) The role of PFI - a developer's view Much of what we are discussing is very close to neighbourhood strategies. We should not be looking at one vehicle. We should be looking at a number of different but compatible approaches - PFI is just one but I think it has potential. At the moment there are eight Pathfinders with an average capital value of £40-50m. Although it makes a lot of difference to the different estates, it is not necessarily going to mean a lot in the local neighbourhoods. That is where the funders come in. My construction group has an investment company. They will be taking an equity stake involved through the concession period of 25-30 years: they are investors with a banking background. I think I must have spoken to every funder interested in PFI housing and they have all raised the issue of sustainability in the wider community. Is it just going to be one estate which is going to be upgraded? If it is just going to be that, it is liable to fail. The real key to it all is what happens beyond the PFI estate. In one case, the PFI sum is £40m but in the wider area, the investment needed is £500-600m. PFI won't be the only resource needed. That is what concerns funders. What will happen in that surrounding area - how is that going to be tackled? Funders are being very influential talking to the Treasury task force and 4Ps. And the message that is coming out of that is we have got to do something that is sustainable - we are talking about a 30 year timescale. One approach is setting up a special purpose vehicle. In Liverpool a joint venture company is being set up with a range of stakeholders. Everybody is included from the start - it is valid that everybody should be in at the earliest stage. It is no good coming up with a blue print and then bringing in the community. My own view is that the community should have ownership through the JVC. I will be tracking Liverpool which also seems to enhance wider funding than simply PFI. Funders will simply vote with their feet if they think a scheme is unsustainable. (Keith Carey, Laing) Comment and discussion Risk Demand risk is obviously an issue and that will be included in the risk matrix. It is a very complex issue and varies considerably. If you are operating in the north, demand is a real risk now, whereas in Camden it will be seen quite differently. Funders will carry out a risk analysis based on the area: will the local authority take on some of that risk or put it all on the operator? Thus it is not simply demand risk but how it is dealt with. If investors have to get out at any time - and they always look at the worst case situation - they will look at the value of the asset, the collateral. They will look at alternative issues and the process at some stage may require disposal of property. For example, if the demand isn't there, is there a mechanism to sell on the properties for private sale or rent? (Keith Carey, Laing) The private sector is risk averse. I believe there will not be a lot of transfer of risk because costs would go up to underwrite it. The public sector will continue underwriting the essential risk. We aim to transfer the risk which they are good at handling. We are proposing to retain housing management. We do not believe there is a lot of demand risk. The private sector is taking on design, delivery and on-going maintenance where they have expertise and which we are not so good at. (Neil Litherland, Camden) Funders - understandably - are very concerned about sustainability as it affects cash flows and wherever possible, wants the local authority to take on all the risks of long term downturn in demand. The problem is: how do you define structural changes in demand versus unpopularity caused by poor management contractor performance? (Chris Withnall, Sanctuary HA) Building trust I think we are moving into a new dimension when talking about projects lasting 10, 15 or 20 years. The issues of value-for-money and how people are going to work together is going to create whole new problems. We currently have distrust - we say to the local authority we will work with open books, but the question we get back is: how do we know you won't cheat? We are looking at creating sustainability in much bigger communities. To make it work we are going to have to bring in mixed tenures and mixed uses. There is a lot of risk money at the beginning - in one scheme we have spent more than £1m and we still have to wait for the tenant vote. At the end of the day we have to make a profit. One local authority we are working with has accepted this. The only way forward is that we both benefit out of any future enhancements - if we create profits, they can reinvest it back into the community and we reap the benefits of our initial investment. Both the local authority and the partners have to be hungry, both have to share the same goal. If the local authority gets all that it wants from day one, there will be no incentive for them to get more out of it over 10 years or more. If there is a share for everybody it will be a winner. We will have a development agreement with the local authority where they will benefit at some point in the future but underwrite an element of the works. Discounted cash flow over 10-15 years is mind-blowing - you would never start anything. You have to believe that there is going to be some improvement and gain in value to offset higher initial costs. I think it is going to get harder - and I think there are not many big players out there who are going to be able to do it. (Contractor) Facing up to obstacles There are many things about partnering and place making that are positive and to which we would sign up. However, we are quite sceptical about the whole concept of partnering, Egan compliance and so on, because of the way in which the concept is being hijacked by government as a tool to exert downward pressure on costs. Governments are the people who can make it work, but they are not yet fully signed up to the concept. For example, it took us five years to get to the starting gun for an estate regeneration scheme in Hackney. The rules changed in that time, as did the project. Everything that was driving that project was essentially lowest cost in terms of estate regeneration grant. The concepts of quality, planning for the long term and non-confrontational methods where wholly displaced by a desire by Hackney and the DETR to achieve lowest grant costs. Similarly, the Housing Corporation see partnering and Egan as opportunities for costs reduction. If you mention partnering to a regional office at the Housing Corporation, they say "ah yes, that means your schemes are going to cost 30% less in two years time". Even Nick Raynsford quoted Egan and partnering as reasons for not increasing the grant rate at the last review. So the Government agenda seems to be about cost cutting, not doing things better. This is the context in which we are being asked to invest quite a lot of research, energy and commitment and cost into relationships which would be based on partnering on the Egan principles, but which a new government or a new housing minister, might suddenly decide are no longer a priority. If the rules change in a few years, a considerable investment may be wasted. The DETR, the Housing Corporation and local authorities as funders and commissioners of projects, also need to sign up to the partnering concept. If they could see that there are very difficult obstacles in the way of delivering the partnering concept, that would be a very worthwhile result. (Mick Sweeney, Community HA) We have been working on a major regeneration project in Scotland for two years and have involved all the partners from the outset. These include HTA, Wimpey and Dundee City Council. The project has been extremely successful and has produced a scheme with which residents are happy with. It involves the demolition of 1400 properties and the redevelopment of the site with 1000 new homes for private sale, low cost HO and rent and comprehensive regeneration of the infrastructure. We have been negotiating for two years and the project is all but finalised yet we became bogged down in negotiating and substantiating every input - both revenue and capital - to the financial appraisal to a project with a development period of over seven years supported by a discounted cash flow modelled over 30 years. Understandably the public sector partners must be able to demonstrate when audited that a project of this nature represents value for money to the public purse. However, this is different from being able to show conclusively that the project was delivered for the most competitive price and the absolute minimum subsidy. The partnering approach has produced a scheme with which the local residents, the public and private sector partners are very pleased: however this approach does not fit well with the traditional public sector ethos of competitive tendering to prove value for money. The regulatory and auditing regime must accept that if the public sector is going to get the benefits that partnering can bring, projects will have to be judged on whether they represent good value for money not merely whether they have been delivered for the cheapest price. It is an impossibility to assess precisely either the capital or revenue cost of such complex, long term projects and if the partnering approach is to work, a high degree of trust is necessary between all the partners. (Chris Withnall, Sanctuary HA) Tackling short-termism Long termism is anathema in the area of public policy - the bain of public policy over the past few decades has been quick fixes. My fear is that the same politicians who appear to have taken the agenda on board will fall into the trap of wanting to look for short term gains and the success of partnering will be judged on this. The seven Egan success criteria are quite obviously the short-term agenda. Sustainable placemaking should start off from having identified the problems in local communities covering education, health and so on. Is it going to be acceptable that improvements can only be tracked over a very long term period - there are not necessarily going to be that many changes short term. My fear is that while national and local administrations come and go very quickly, a lot of the projects have 15-20 life spans and 30 year funding profiles. (Andrew Cobb, Oakfern HA) PFI There is a midway between contracting and PFI. Under this contractors would have a maintenance contract for the first seven years, setting out from the start what they will be responsible to maintain. Then you can see the costs; you are likely to end up with a better product because more care would be taken throughout development. I think there are contractors who would want to get into that type of business. (Contractor) Size matters A lot of the talk is about mega projects, PFI and very substantial schemes. We are doing a number of projects which are much smaller. We have done a lot of 'serial contracting' and see that turning into a partnering approach. I would like to hear more from contractors about how those reducing costs are going to come. I think we are prepared to invest and expect higher costs initially, but we do want to see costs and defects reducing, greater efficiency and greater customer choice on the near horizon. I don't hear a lot of that at the moment. Until contractors start to address these issues, I don't think partnering will be considered a success by organisations commissioning building work. My organisation is already involved in a number of partnering projects and will continue to develop our partnering approach- we are of course responding to the Housing Corporation's agenda for achieving Egan objectives. (Howard Hughes, Southern) Other points Assessing benefits Several speakers pointed out the difficulties - even "impossibility" of costing and quantifying the softer regeneration issues and outputs. In one PFI Pathfinder crime reduction has been included in the specification. Our 30 year timeframe is a way of starting to introduce longer term arrangements. But we have resisted trying to wrap up a whole host of open-ended regeneration, local employment and other benefits into an output specification because of the difficulty of pricing it: how do you evaluate those things? We want a third party that is going to deliver us buildings that perform very well. We can work with them on whether the tenants and have got jobs, training and that sort of thing… that's slightly to one side. What I have learned about PFI is that it is a good way of getting money. It provides a framework for 20-30 years but I don’t think it is a very dynamic and flexible framework for regeneration vehicle. I think there's quite a lot of misunderstandings about PFI - it's primarily a financial vehicle that presents other opportunities. (Neil Litherland, Camden) Looking ahead A suggestion was made by Mark Lucas, Haringey, that the seminar had concentrated on major developments with capital budget solutions. There was a place for considering non-development driven alternatives. In his authority, notwithstanding substantial investment in estate improvements. the image and reputation of Broadwater Farm had been turned round without a single home being pulled down. He believed there were also very exciting opportunities for revenue based 'social' solutions, which had been shown to work at Broadwater Farm with substantial resident involvement. Neil Litherland pointed out that a lot of frustration had been expressed about the lack of trust or even innate distrust between sectors. He suggested the need for an 'honest broker' to gather and promote good practice for the general good. He also pointed to the need for contact with government bodies to ensure that new initiatives to build trust, efficiency and joint working which require long term effort did not founder on an unbalanced requirement for short term cost savings. This seminar series operates on a 'Chatham House rules' basis. However, many of the participants have already expressed their willingness to have their contributions credited to them. In the other cases, speakers have not yet given clearance - no inference should be drawn from this. Anyone wishing to quote the speakers should speak to them direct for their permission. For further information, contact Chris Bazlinton, Editor on 01279 771468. HTA Architects Limited 79 Parkway London NW1 7PP telephone 020 7485 8555 fax 020 7485 1232 email hta@hta-arch.co.uk ISDN 0207267 0061
|
Home · Introduction · Seminars · Discussion Forum · Participants · News · Resources · Search · Contact Us