The soon-to-be-launched Green Deal
– the government’s energy efficiency scheme – poses a multitude of procurement opportunities and challenges for suppliers and housing providers.
Millions of UK homes will be refurbished to bring fuel bills down. To do this, social landlords will purchase large volumes of products and labour from a relatively immature green market. The scale of this procurement programme and the rapidly developing market in which it operates could spell a multitude of problems.Rogue traders without good training may try to benefit from skill shortages. High demand on an immature market may mean commodity prices rise faster than expected reductions. As the market place innovates, agreements must respond to new technologies, early adopters and everything such a young market throws up. Procurement systems must remain open and flexible at all times.
But many of the solutions to making such a major procurement initiative work can be found in the past. This is something I’ll be discussing with public sector procurement professionals at purchasing event PfH Live
on 14 June. Green deal providers must remember the supply lessons learnt from the Decent Homes programme
– the £22 billion government scheme that improved housing for vulnerable people between 2000 and 2008.
- Coordinate the purchase of Green Deal improvements with wider maintenance and capital works. Local co-ordination of procurement activities was key to delivering decent homes so apply this experience again. This will drive down supply and installation costs and minimise disruption for tenants.
- Get tenant liaison right. Decent homes proved the value of tenant participation within the procurement process, replacing landlord command and control with tenant engagement and choice. As a result default rates and project times reduced. Tenant liaison is equally important with the Green Deal to maximise both uptake of works and bill reductions. But don’t underestimate the cost and manpower involved.
- Understand the true cost of works. Decent Homes demonstrated the importance of looking not just at the capital costs but also at costs within the supply chain, costs of ongoing repairs and maintenance and factoring in inflation. Use this experience to be realistic about whether the value of savings will offset the true cost of works and use the procurement process to minimise costs wherever possible.
- Consider estate-wide regeneration. The success of Decent Homes proved how central social landlords are to improving entire communities. Green Deal providers shouldn’t restrict themselves to buying for just their own stock. They should use their procurement expertise to make other local homes more energy efficient. Landlords can generate revenue by taking on this wider role and this income could be ploughed back into housing.
This is an exciting time for the Green Deal supply chain. No one should under-estimate the scale of the challenge but the opportunities are immense. They key to it all is ensuring the ‘golden rule’ remains unbroken. The cost of works must not be greater than the fuel savings generated. Intelligent procurement will play an important role in guaranteeing this golden rule.
☛ Steve Malone is managing director at Procurement for Housing and will be discussing these issues at procurement event PfH Live in Manchester Central on 12-14 June 2012