Essential Living scraps £1bn contractor framework

Aaron Morby 8 years ago
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Essential Living is standing down its framework of main contractors for a direct procurement strategy on its £1bn development pipeline.

Brookfield Multiplex will no longer deliver the £90m Helix twin-tower contract in London’s docklands
Brookfield Multiplex will no longer deliver the £90m Helix twin-tower contract in London’s docklands

The private rented scheme developer will now directly engage with subcontractors and suppliers across its entire portfolio, expanding its in-house construction management capabilities.

This will enable different forms of package management delivery across forthcoming schemes at Greenwich, Acton and Swiss Cottage.

It is understood that the firm will no longer go-ahead with plans to use Brookfield Multiplex to deliver its £90m Helix twin-tower contract in London’s docklands.

Essential Living’s main contractor framework included Balfour Beatty, Brookfield Multiplex, Vinci and McLaren.

The company has developed a trade contractor framework, in addition to its core framework, delivering key elements of its branded standard specification, such as kitchens and bathrooms.

Ray Theakston, Essential Living’s construction director, said the firm would also increasingly use a range of modern methods of construction to reduce its reliance on labour-intensive on site trades and operations.

Today’s announcement comes at a time when many projects are increasingly suffering from viability challenges as construction costs spiral. Risk transfer is increasingly difficult and on site construction delivery has deteriorated.

Ray Theakston, construction director at Essential Living, said: “This is about giving us greater control and will allow us to have a more hands-on management of cost and crucially, risk, which we are simply no longer willing to pay for using a main contractor.

“Design and build contracts have been on the rack for a while now and we are of the opinion the market has now reached a tipping point.”

Mark Farmer of Cast, a development and construction consultancy which is supporting Essential Living with the implementation of its development programme, said: “This decision is all about recognising the changing dynamics in the construction supply chain.

“Certain clients, such as Essential Living, are able and willing to take a much more hands-on role in risk management and are structuring their supply chain to deliver at a portfolio level not just project by project.”

He added: “In a market where the appetite for taking risk in a conventional contracting environment has fallen away and clients are questioning the price of lump sum conversion, it no longer makes sense to force the issue and pay a premium that brings into question scheme viability when there might be a different method of delivering that generates better value.”

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