White Paper: Price evaluation models for the housing sector
Housing providers operative in complex and challenging times. They are required to deliver more for less within strict regulatory framework, as well as relied upon to lever in added value through social, environmental and resident-led initiatives.
Squeezed budgets make any savings attractive: but how can housing providers procure contracts in a way that does not encourage a "race to the bottom" response from bidders but delivers quality and safe outcomes?
How price is evaluated in tenders impacts on the ensuing contracts – getting the price wrong results in contracts that fail to secure quality and safe outcomes, promote variations and disputes and set the relationship off on the wrong footing. The price evaluation model selected by a housing provider (whereby prices are converted into scores for evaluation purposes) sets the tone for the entire relationship, and a model that incentivises a race to the bottom should be avoided at all cost. So what are the alternatives?
Trowers & Hamlins has led a working group looking at alternative pricing models and how they can be used in the housing sector to secure sustainable outcomes. The findings of the working group have been set out in this White Paper – designed to act as a "conversation starter" and commence a series of discussions and workshops so that the sector can explore alternative pricing models, decide on their utility and application for the sector and obtain an enhanced awareness of their importance and impact in procurement processes.
To download a copy of the White Paper, please click here.
Our launch event featured Tom Copley, Deputy Mayor of London for Housing and Residential Development and key members of the working group discuss the importance of price evaluation.
Tom Copley succinctly summarised the problems facing the housing sector:
"The outcomes of procurement practices are fundamental to our health, well-being and our safety. Done well, procurement can drive quality, innovation and sustainability. However, done badly it can lead not only to much greater financial cost down the line but to misery and sometimes tragedy."
"Housing is too important for procurement to be purely a matter of who can deliver for the lowest price".
"I welcome this White Paper because it sets down an important challenge to lowest price tendering and provides a helpful array of alternative pricing models to help reverse the race to the bottom. The paper is also a timely addition to the conversation about the need for fundamental and lasting change of culture and practice within the UK housing sector which must be underpinned by proper oversight and regulation."
The webinar recording can be viewed below. During the launch we received a variety of questions from the audience and the speakers have set out the answers to these questions here.