Procurement
The procurement methods to be considered are:
Conventional contract
The CLT employs an architect to design the scheme producing not just the
layouts needed for planning but detailed working drawings to be used by the
builder. A Quantity Surveyor would then be employed to prepare a bill of
quantities detailing the estimated costs of the project before putting this out
to tender to 3-6 contractors. This method of procurement does provide cost
certainty: cost over-runs and delays incurred by the contractor may lead to
disputes over who is responsible. It does however allow the CLT to have a large
input into the design of the homes through their own architect and for on-site
management. The architect has design liability; the contractor liability for
what is built. 10 year guarantee can be requested.
Design and build
This method involves the client passing responsibility for the design of the
homes to the contractor, essentially allowing their expertise to manage the
project from design to construction and completion. A design and build contract
is typically carried out for a fixed price, giving the CLT greater cost
certainty which is particularly useful given the tight financial margins you may
be operating in. This approach provides the best mix of control while still
benefiting from your developer’s knowledge and skill in securing an economic
design.
The scheme is first taken to the stage by the CLT’s architect where a mix and
layout is agreed and planning permission has been obtained. Tenders are then
invited on the basis of the planning permission together with the drawings and a
specification (the “employer’s requirements”) which can be detailed or general
depending on how far the CLT wants to control aspects of the build. The
architect may be “novated” to the developer or the developer may employ their
own design consultants: either way liability for both the construction and its
design lies with the developer which also avoids one of the areas where disputes
can arise. The contractor will also provide 10 year guarantees.
Turnkey
In this instance the contractor provides an 'off the shelf' package of a
pre-designed house. It is suitable for a fast track development and certainty of
construction costs, though it allows for minimal input into the design of your
buildings. It is likely only to be possible where there is a larger development
taking place of which a number are then provided to the CLT at a price which
enables them to be kept affordable. Otherwise off the shelf designs may not fit
on small rural sites with their own specific access or aspect requirements.
Self-build/self-finish
One option in order to cut costs is a self-build approach generally using the
Walter Segal method which is by far the most tried and tested. Self build
involves your potential residents putting in their own time to assist with the
construction of the homes thereby reducing some (or even all) of the labour
costs. They become in effect the contractor or one of the subcontractors and a
site manager will need to be employed to support, advise and supervise them. The
scheme will need to be designed with self-build in mind and the self-builders
will need to be identified/selected immediately – before the homes are built.
You will need to ensure that your self-builders understand the considerable
demands on their time and receive appropriate pre-contract training such as at
the Centre for Sustainable Technology at Machynlleth. When the homes are next
sold of course, the self-builders receive their equity and at this point the
affordability advantage is partially lost.
With self-finish, the self-builders either buy or rent the partly completed
home with a requirement that they then complete certain works or act as
subcontractors to the main contractor for the self-finish component.
A good example of a self build CLT is that of St Minver in Cornwall. Twelve
residents were provided with the plots ready with planning permission,
foundations and timber frames allowing the self-builders to fill in the rest. A
project manager was appointed to oversee the process. If considering a
self-build project Visit the Community Self Build Agency’s website for more
information.
Management contract
Rather than employing a single main contractor, the CLT employs a site
manager who organizes the work through a succession of subcontractors, in effect
taking on the role the developer would play.
The most frequently used route is design and build. It enables the CLT to
decide on the main design and layout principles but brings to bear the
development expertise of a contractor to avoid unnecessary design cost. It also
means the CLT has a build cost quotation from an early date and can make changes
in the specification or design to achieve a target price before the design is
too advanced. Generally the build price can be fixed; there are fewer
opportunities for disputes about delays in issuing instructions; and it avoids
arguments about whether the design or build quality is the reason for any defect
since both are the contractor’s responsibility.
For more information on procurement methods
the factsheet produced by Constructing Excellence in the Built Environment
is a useful resource, providing details and comparison on a variety of
approaches.