Print page
Utility procurement monitoring study – 2004
Best practice case studies
As a national agency, one of English Partnerships’ key roles is to ensure that lessons learned in one part of the country are transferred across regions; especially when the lessons demonstrate best practice in regeneration and development.
English Partnerships published its first Utilities Infrastructure Study in April 2002, and this highlighted the key issues that impact upon regeneration and development. The report was critical about the general public sector procurement process, together with the lack of effective competition within the power industry. Few innovative solutions were demonstrated that reduced the cost of supply reinforcement.
In 2003 English Partnerships embarked upon a search for best practice examples of primary power utility procurement, especially where lessons could be learned from the private sector developers and translated through to the public sector. English Partnerships instructed OGCbuying.solutions to commence a procurement monitoring exercise and this task was undertaken during 2004.
|
OGCbuying.solutions is the trading arm of the Office of Government Commerce (OGC), which is itself an office of HM Treasury. OGC was launched on 1 April 2000 as a result of a review of civil procurement in Central Government. OGC’s aim is to achieve substantial value for money improvements in the Government’s procurement budget. It is responsible for identifying and producing value for money purchasing initiatives offering measurable cost savings to the taxpayer. |
It was agreed from an early stage that the 2004 English Partnerships / OGC monitoring exercise would consider the key issues faced when procuring and reinforcing primary power supplies into new developments.
The key study objectives included:
- To identify the procurement process that will achieve best value;
- To identify options for meeting the cost of utility infrastructures;
- To look at issues relating to provision of infrastructures;
The process adopted by OGC was to investigate a number of public and private sector projects with a view to identifying best practice or innovative solutions in the procurement of electricity network infrastructures. The exercise identified several best practice examples and these were first published in 2004. The relevance of the findings are reviewed annually (last reviewed in March 2007) and we consider the best practice lessons learned to still be valid today.
This OGC exercise (and our previous study from 2002) highlighted a number of positive and negative procurement issues that were taken forward during 2005 and 2006 into consultative dialogue between English Partnerships, Government Departments, the utility industry (especially power distribution / supply) and the Regulator. The dialogue concentrated upon a wide range of procurement issues and explored opportunities for a new approach to utilities infrastructure and regeneration. Whilst this unpublished work stream provided a greater understanding of the key issues relating to traditional power distribution and supply methods, English Partnerships has now moved forward to examine the benefits of local power generation projects, such as Combined Heat and Power (CHP) facilities; and renewable energy supplies such as building-specific photo-voltaic (PV) power generation.
Further updates on English Partnerships' CHP and PV projects will be posted on this website at a future date.
English Partnerships & OGCbuying.solutions - procurement case studies
Key messages from the case studies:
Airbus, Broughton - an innovative site-specific CHP solution
Airbus avoided conventional capital expenditure and ongoing maintenance costs, critical at a time of huge and expensive investment elsewhere in the business. They also gained guaranteed performance and a valued and respected business partner to share risks and plan for the future over the long term.
Buro Happold, London – huge savings via competition.
Buro Happold recommend that developers should undertake a strategic review of options first and then seek the assistance of expert professional advice to act as a guide through what can be a complicated regulatory and legal landscape. They advise resisting the calls to “get on with the design” to give oneself enough time to negotiate productively; and above all introduce competition into the process.
Cobalt Park, North East – joint service arrangement.
The need for some level of regulation within the utility sectors is understood, however there must be a common understanding that, for ventures like Cobalt Park to attract investment, jobs and prosperity, it is in everyone’s interests to create a flexible and innovative environment. A joint service arrangement is one way to meet the customer’s needs and at the same time provide the power supplier with a stake in a key geographical territory, thus improving the prospects of winning further business in the area.
Royal Docks, LDA – public sector strategic approach.
The London Development Agency takes a strategic approach to the power needs of the Royal Docks as a whole. By adopting this approach, the LDA aim to achieve real economies of scale, with an aim to make the area a more attractive prospect for development partners.
© English Partnerships 2003-2008