For a Client to obtain cost savings on a project may suggest a reduction or compromise in quality or some other aspect of the project. However, as considered in Section 6.4, collaborative ESI provides mechanisms to achieve cost savings that do not cut corners, that are agreed in advance and that are not to the financial detriment of any team member. In addition, the Trial Projects reported how agreed cost savings can be combined with other improved value such as extended warranties, social benefits and sustainability initiatives.
The Trial Projects show how consultants working together with contractors and subcontractors early in the design phase can improve cost certainty by building up accurate fees, margins and cost components rather than a single stage bid price with little evidence of how it was arrived at. The Trial Project case studies also provide robust evidence of agreed cost savings that are attributable, for example, to:
■ Accelerated mobilisation so as to increase productivity
■ Revised designs such as a more efficient site layout
■ A revised programme with a more economical sequence
■ A revised approach to risks, for example following additional site investigations
■ Revised working methods to improve efficient interfaces between team members.
Example: In the use of collaborative ESI for the development of a residential care home by Bath and North East Somerset Council, Leadbitter Construction commented that they were 'involved in the whole process from inception to completion, assisting the client and design team to find the most cost-effective solution throughout each stage of the design.' |
A collaborative approach to risk management activities during the pre-construction phase can also identify ways to save cost by reducing or eliminating risk contingencies. For example, Trial Projects have required that all proposed risk contingencies are notified to the Client by other team members prior to their pre-construction phase appointments and are only included in agreed prices after joint reviews and after implementation of agreed risk management activities.
Trial Project results also show how savings can be enhanced by learning from project to project and by Supply Chain Collaboration.
Example: The cost savings on the housing procurement comprising the SCMG Trial Project averaged 14% over the life of collaborative frameworks led by Hackney Homes and Homes in Haringey, plus average price rises substantially below the tender price inflation forecasts provided by independent consultants. |
Example: Glasgow Housing Association used collaborative ESI on its stock refurbishment and new build programme, where Savills as independent adviser commented that 'The ability to get the constructors on board early and to involve them in the design, programming and scoping decisions before works began undoubtedly saved the client - and the constructors - hundreds of thousands of pounds.' |
Example: Under the Royal Borough of Greenwich term alliance governing housing repairs: 'Performance for the first full year showed immediate improvements with time to re-let vacant properties down by 23% from 43 to 33 days, average time for non-urgent repairs down from 18 to 11 days, complaints down by 50% and post-job satisfaction scores of 95%.Improved communication and joint working were key changes. "Open-book" accounting and supply chain management led to savings to such an extent that the client agreed to extend the scope of work to compensate for falling contract values.' Example: Early housing sector users of the FAC-1 contract reported significant cost savings, for example 9.3% recorded by Futures Housing Group. |