Home owners

Leaseholders' guide to partnering

The contract is a long-term agreement (managed by United Residents Housing) between United Residents Housing (URH) and a group of contractors. The contract is for carrying out major works to the buildings which URH manages.

In recent years, the government has favoured replacing traditional competitive tendering with long term relationships or partnering contracts between contractors and clients. These relationships should ensure the quality and value for money of the work undertaken. They should be sustainable and based on measurable outcomes. URH wrote to all our leaseholders in August 2009 to explain the contract proposal.

Residents were invited to the presentations and interviews with contractors and asked to score the contractors' performance. The contractors' responses to the questions asked by residents were taken into account by the evaluation team. Key aims of the framework contract:

  • Substantially reduce tendering costs for the landlord, contractors and for leaseholders compared with "traditional" tendering.
  • Improve customer care and reduce complaints.
  • Introduce a more efficient method of cost control.
  • Identify areas of waste and reduce the environmental impact of construction.
  • Project Partnering Contract
  • A new way of working known as the Project Partnering Contract (PPC) has been introduced as part of the contract. This provides a foundation for partnership working by:
  • Bringing together all those working on a major works project.
  • Aiming to save time and money by using the experience of the construction firms before going on site.
  • Establishing a framework covering the development of design, the management of risk, the agreement of services and works and the agreed maximum price (AMP) before work starts.
  • Providing methods of problem solving, and shared objectives to avoid disputes.

Process for allocating a constructor to carry out the work

A notice was published In the European Journal describing the proposed contract and the type of works to be delivered, and firms were asked to submit bids.

The results from the pre-qualification assessment achieved a tender list of 15 The European Procurement Directives state a minimum number of contractors to be invited to tender is fifteen (five for each of the three contracts). Accordingly, the EU criterion was satisfied.

Based on the bids received a list was created of construction firms who would be able to carry out the work. Constructors with the appropriate skills were then invited to submit detailed bids for the programme of major works planned. Bids were scored the bids 60 per cent on price and 40 per cent on quality.

Fifteen contractors made successful bids. A constructor is selected based on the type of work and its value, the constructor's previously tendered price, their credit rating and their availability. As the contract progresses, selection will also reflect past performance on other projects.

A team is set up for each project made up of staff from the constructor and URH.
This team develops a project plan within the agreed budget (based on an earlier feasibility study). Competitive tenders are carried out for any elements (e.g. scaffolding) which were not previously tendered.

A first cost check meeting is held with leaseholders to tell them about the scope of work and provisional estimated costs. The project team finalises the details of the project, where possible taking account of feedback from leaseholders on the scope of the work. The agreed maximum price (AMP) is then finalised with the constructor. A review is held by senior managers. There are usually two such reviews with any questions answered by the project team.

When the senior managers are satisfied it is passed to the URH board for approval.
Details of the costs are prepared and issued to leaseholders as part of the Section 20 Notice. If the constructor selected is not the cheapest, a discount will be allowed to compensate for this difference. A further consultation meeting is then held with the leaseholders to discuss the costs they have received as part of the Section 20 Notice.

When work has been completed URH will agree the final costs with the constructor.
This will take account of any changes to the work (authorised by URH) since the AMP as well as any other financial changes. Leaseholders are sent a final bill based on their share of the actual cost of the works.

The agreed maximum price (AMP)

The setting of an AMP follows the same process for all projects:

  • Block-by-block assessment based on standard options e.g roof renewal, concrete repairs and external decoration.
  • Site management facilities e.g. site supervisors, accommodation, transport and tools.
  • Access costs e.g. scaffolding,
  • Defined risks e.g. further repairs not in the AMP.
  • Three to five per cent general contingency allowance. This and the risk allowance are not included in the final bills if they remain unspent.
  • Professional fees are shown separately and include things such as architects, quantity surveyors and other specialists.
  • An ‘indexation' which covers increases (and decreases) in the market price of labour, materials, plant, transport and energy. The rates and prices that make up the AMP are taken from the original tenders from the list of constructors.

Those tendering for work were required to submit their rates and prices. They also had to show the following:

  • Percentages based on a pre-priced schedule of rates that covered most of the normal building works.
  • Percentages on the cost of specialist works such as window renewals and scaffolding.
  • Weekly rates for site costs.
  • Percentages to cover overheads and profit.

Leaseholder consultation

The contract affects the way the formal leaseholder consultation (Section 20 consultation) is carried out before the works are undertaken. The tendering stage has already taken place, so once a constructor has been chosen, leaseholders are sent a Section 20 Notice which:

  • Gives a general description of the proposed works.
  • Says why the works are necessary.
  • Gives an estimate of how much the works will cost.
  • Gives a period of 30 days to make comments in writing about the proposed works or the estimates. We have to "have regard" to any observations we receive in writing in the 30-day period and write back with a response within 21 days.

For more information on the consultation process, see the Leaseholders' Guide to Major Works.

Leaseholders' Rights and Responsibilities

You have a number of rights and responsibilities and responsibilities as a leaseholder or freeholders. A leaseholder is someone who owns a lease. The leaseholder does not own the land surrounding their home or the building that their home is in. Read more about leaseholders' rights and responsibilities on Lambeth Council's website.

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