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Demonstration Projects

Portsmouth City Council Gas Central Heating Partnership

Project Number: 1116

In 2000, Portsmouth City Council's residents were consulted as part of a review of the Housing Investment Programme and identified the installation of central heating as highly important. Accordingly, the Housing Committee allocated approximately £11m of capital finance to be spent between 2001 and 2005 installing new heating in 4,500 homes.

Portsmouth City Council recognised that on a project of this scale, they could secure better performance for the Council and residents by working with a contractor who understood the need to reduce costs and increase customer (resident) satisfaction over historic levels.

Gas installation technicians are both highly trained and a diminishing resource. The Housing Service recognised that a traditionally procured inflexible lowest-price tender was unlikely to achieve the best results. The five-year period of the project allowed for a strategic partnership.

In conjunction with Dr Neil Jarrett from Warwick Business School, a partnering strategy was developed to procure a contractor that would allow Portsmouth City Council Housing Service to work collaboratively towards joint objectives using joint business processes and performance indicators (PIs). It was a radical departure from the lowest- price, at arms-length practise in local government at the time. The solution had four facets: procurement, contract, objectives and integration.

The Gas Heating Partnering arrangement was instigated as an outcome from the Procurement Service Review and the Response Repairs Service review. The pilot was designed to achieve the Egan targets of reduced cost and increased customer satisfaction.

The project was advertised in the technical press and the Official Journal of the European Union and a pre-qualification questionnaire led to four companies being shortlisted. A panel, on which residents held 15% voting rights, scrutinised their business plans. Two successful bidders emerged- United House to survey and install the systems and Clenmay to maintain them. Portsmouth City Council briefed the unsuccessful bidders.

The contractors were selected using a new process developed in conjunction with the Portsmouth City Council Procurement Service that focused much more on quality issues rather than simply lowest cost. Contractors were appointed on 70% quality criteria and only 30% on cost.

To this day residents take part in all monthly progress meetings.

The collaborative relationship was established with the objective of capturing greater value for all stakeholders from limited financial resources.

The framework for the relationship is the Engineering and Construction Contract (ECC) (formerly NEC) with Option C "Target Contract with Activity Schedule", which extensive performance targeting, measurement and benchmarking, subject to annual reappointment based upon cost and other performance criteria.

Alignment workshops were held and a Collaborative Working Charter developed. Performance measures were jointly agreed and systems established for measuring and reporting performance in order to prove that collaborative working actually facilitated higher project performance than traditional approaches.

Portsmouth City Council's historic performance was analysed, potential risks identified and target costs and performance levels agreed.

Key Performance Indicators (KPIs), which would provide a basis for continuous improvement in overall satisfaction, cost and profitability and for comparison of performance with other Demonstration Projects, were agreed.

The KPIs are supported by operational Secondary Performance Indicators (SPIs) that drive this overall performance.

KPIs:
  • Unit cost
  • Profitability
  • Client satisfaction
  • Customer (resident) satisfaction
  • Contractor satisfaction
SPIs:
  • Accesses during installation
  • Installation time
  • Call-backs after handover
  • Urgent repairs time
  • Risk cost ratio
  • Client overhead productivity
  • Contractor labour cost productivity
  • Safety (AIR & AFR)
  • Waste

Improvements in cost performance are managed using the Engineering & Construction Contract Option C framework which provides a pain/ gain share mechanism to incentivise/ penalise/ reward United House Limited's performance against Portsmouth City Council's historic cost.

Nominated By
Client Portsmouth City Council
Client Industry Local Authority
Construction Product Housing
Sector Public
Region South East
Total Value £11.0M
Construction Value £9.0M
Status Completed
Demonstration in Org Yes
Demonstration on Site Yes
Work Type Refurbishment
Site Type Refurb/R&M
Site Location Portsmouth
Primary Theme Partnering and Supply Chain Management
Secondary Themes Sustainability
Procurement (Client)
Training
Health & Safety - HF
Measurement
Partnering and Supply Chain Integration
Regeneration and Refurbishment
Whole Life Costing, Value, Performance
Client Leadership
Customer Focus
Selecting the Partnering Team
Assessing and Managing Risk
Measuring, Managing and Reviewing Performance
Social responsibility
Choosing a Procurement Strategy
Dealing with Regulatory Controls
Involving Residents and Tenants
Selecting the Contract Strategy
Focusing on Sustainability
Using Performance Incentives
Delivering Wider Community Benefits
Developing Industry Learning and Skills
Procurement Route Collaborative Procurement (Partnering)
Form of Contract Other
Demonstration Start Date 01 September 2001
Design Start Date
Construction Start Date

For more information on these innovations click below:

Strategic Partnering
Choosing a Procurement Strategy
Dealing with Regulatory Controls
Integrating the Supply Chain
Delivering Wider Community Benefits
Using Performance Incentives
Measuring Managing and Reviewing Performance

Team Members

CompanyCompany Role
Alpha Boilers
Portsmouth City Council Local Authority Client
United House Ltd Contractor

Additional Resources

February 2004 Case Study

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