Secondary schools: Rebuilding stalls as councils struggle to find contractors

21st August 2009 at 01:00
Projects delayed as high costs of competition make construction firms wary of signing up to smaller BSF schemes

Original paper headline: Secondary school rebuilding stalls as councils struggle to find contractors

The government's secondary school renewal programme looks likely to face further lengthy delays as smaller local authorities struggle to attract sufficient interest from the private sector.

The pound;55 billion Building Schools for the Future initiative has seen a slew of new local authorities enter the programme in the past year, leading to smaller local authorities being unable to secure enough bidders to compete for the schemes.

Since the recession, construction firms have been reluctant to enter into lengthy and often very costly competitions to win BSF contracts.

They often spend as much as 1 per cent of the value of a build in bidding for a contract with no guarantee of winning the job. The TES understands that it has led to firms becoming more selective and holding out for the contracts with the biggest values.

As a result, Portsmouth City Council has been forced to push back its pound;225 million BSF scheme by at least two months, and local authority bosses have had to raid a pound;1 million contingency fund to ensure the programme remains feasible.

The council had hoped to announce a shortlist of three bidders by the beginning of September, but it was unable to keep enough information and communications technology firms interested in taking on the project.

And it is understood that Oldham Metropolitan Borough Council is now facing delays after receiving just two expressions of interest from consortia made up of construction and ICT firms to take on its pound;180 million BSF project.

Too many local authorities bidding for projects

However, Oldham Council said it was not able to say how many expressions it had received as it is still undergoing its evaluation process.

According to Mark Chambers, chief executive of leading ICT group Ramesys, the problem is due to the number of local authorities entering the market.

"Until now you'd only see about five or six projects come to market each year," he said. "And you'd see about half a dozen consortia bidding for each."

But since the start of 2009, the number of local authorities in the market has doubled, leading to the big players in the BSF initiative ignoring the smaller schemes in favour of the larger, more lucrative contracts.

Mr Chambers added: "Initially, companies were bidding for everything but now they are more reluctant. Companies now want to make sure they are going for the right contracts. There are now less initial bids. But this could allow smaller local firms to get involved."

Partnerships for Schools, the agency that oversees the BSF programme, said it is still seeing competition for contracts despite the increase in numbers.

A PfS spokesperson said: "We are encouraged by the level of competition for BSF schemes. Many players are extending their investment in recognition of the growth in the number of local authorities coming to the market as the programme continues to gather pace.

"And while it is true to say that bidders are being more selective about the schemes they bid for - which is symptomatic of the market's increasing maturity - we are still seeing a genuine competition for schemes with robust competitive dialogue between two bidders."

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