Northampton Partnership Homes is an ‘arm’s length management organisation’ owned by Northampton Borough Council to manage the council’s social housing. In March 2017 it let a 10-year NEC3 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule) to Keepmoat Regeneration to deliver its planned £160 million property maintenance programme.
The programme is designed to improve all 11,700 properties from the UK’s current Decent Homes Standard to a new Northampton Home Standard, which reflects local residents’ aspirations. The focus is on regenerating whole estates, including landscaping and improvements to the inside and outside of homes as well as regenerating neighborhoods and community spaces. Ongoing maintenance works such structural repairs and fire safety are also included.
To ensure a more strategic and cost-effective delivery approach, the client decided to move away from its traditional use of multiple contractors employed under JCT contracts to a single delivery partner employed under NEC. Construction consultancy Stradia was engaged to help ensure this step-change in procurement was a success.
Delivering strategic objectives
According to Jenny Swainson, procurement manager at Northampton Partnership Homes, ‘NEC was chosen as we considered it the best contract suite available to deliver our strategic objectives. These included developing a true partnering relationship with the contractor, in which it contributes to achieving our vision, mission and values.
‘Using NEC is enabling us work to collaboratively with Keepmoat to improve performance and share good practice and innovation through true joint working. It has also helped us to develop a robust pricing framework, ensuring proven value for money and providing full visibility of costs for each work package.
‘In addition we hope the collaborative nature of NEC will help us to develop opportunities for small-to-medium businesses in the supply chain and to maximise opportunities for social investment and community engagement activities.’
Innovative payment system
Stradia managing director Nigel Barr says, ‘The payment system we set up within the ECC Option C target cost contract is based on actual validated costs, subject to an agreed maximum price and a pain/gain share mechanism linked to achievement of option X20 key performance indicators of time, defects and customer satisfaction. Non-achievement of the key performance indicators leads to a tapering reduction in the contractor’s share of savings.’
He says the contract has created a successful partnership between the client and contractor based on full open-book accounting with clear cost visibility. ‘Like all NEC contracts, it is designed to deliver best value, cost savings and improved performance throughout the potential 10 years contract duration. The contract is still in its early stages but both the client and the contractor report a very successful start.’
Stradia won the Chartered Institute of Procurement & Supply 2017 award for Best Procurement Constancy Project for its work with Northampton Partnership Homes. The award acknowledged the innovative payment and incentive system possible in NEC and the way in which costs can be validated.
Benefits of using NEC
- NEC helps to develop a true partnering relationship between contracting parties, ensuring the contractor shares the vision, mission and values of the client and its residents.
- NEC collaborative approach helps to improve performance, practice and innovation and maximise opportunities for social investment and community engagement.
- ECC Option C offers full open-book accounting with a robust pricing framework, ensuring proven value for money and providing full visibility of costs.
- ECC payment mechanism can be linked to key performance indicators of time, defects and customer satisfaction.