When the contractor that the University of Liverpool had hired to deliver its £52m, 1,259-bed Crown Place student accommodation development was unable to fulfil its contractual obligations, the University was left with a dilemma.
Under the terms of the construction company’s contract, it had to provide a parent company guarantee and, as it could no longer do so, the obvious answer for the University was to terminate the contract and put the scheme out to tender again.
However, the obvious answer raised significant cost and delivery questions. A tendering process would cause further delays which would make it impossible to deliver the scheme for the 2014 student intake and effectively set back delivery by a year. The change of contractor would also involve a new company guaranteeing work already carried out by the original team, creating complex liability issues. The associated costs of re-tendering were estimated by the University to be as much as £1m.
Against this backdrop, the University had been happy with the contractor. The company had already delivered Vine Court, the first major scheme in the University’s £250m student accommodation strategy: a high-profile £35m project to provide premium accommodation that could also be used for conference delegates. It had also put an experienced project team in place that had worked collaboratively with the University’s estates team from the outset.
The net result of this confidence in the delivery team and eagerness to progress the project on time without the added cost or risk of changing contractor prompted the University to make a bold move.
Deputy Vice-Chancellor of the University of Liverpool, Patrick Hackett, explained: “I joined the University in the estates department and my background is in architecture and project management so I knew immediately just how much impact the situation would have in terms of cost, delays and risk.
“The only alternative was to create an in-house construction company and novate the existing construction team across so that we could minimise delays, maintain continuity and avoid the costs and liability issues associated with putting the job out to tender again.”
The idea was well-received by the construction team and, after some candid conversations was also accepted by the University’s council. The University then had to work fast to set up the new company and complete the TUPE transfer of the 15-strong construction team within a four-week window before the administrators were brought in.
“Persuading the University’s council was the first challenge,” Patrick continued, “because there simply is no precedent for this in the education sector and they were concerned about increased risk. However, the alternative was much riskier on every front and the urgency of taking this up as a viable solution was clear.”
As Patrick pointed out at the time, the new delivery vehicle actually reduces the level of risk for the University rather than increasing it. As both client and contractor, the new in-house construction company, ULCCO Special Projects Ltd (University of Liverpool Construction Company) now puts liability for quality and completion of each package into the hands of the subcontractors, so the only risk remaining with the University is health and safety.
Better quality, greater value
And reduced risk is not the only tangible benefit of the new approach. Even before Vine Court was constructed, the University had put controlling its own accommodation at the heart of its strategy for delivering high-quality and profitable student accommodation: using an in-house construction contractor has taken this goal one step further.
Patrick explains: “Our student accommodation strategy was aligned to the University’s commercial and operational priorities and student living trends. As a result, we are enhancing our University-owned accommodation with a variety of mid- to high-end student units in the city centre where the majority of our students want to live. We’re also increasing the amount of catered accommodation available because that’s a big priority for a lot of parents… and, as they are now much more involved in making decisions about their child’s education, they are an important customer group.
“The in-house construction company means that we can control the type and quality of accommodation we offer throughout the delivery process. What’s more, because ULCCO will be involved from the earliest stages of any project, buildability, value, delivery, quality management and streamlined procurement will also be embedded from day one.”
ULCCO was formed in March 2013 and while the University was busy with creating the new company and managing the TUPE transfer, the project team put together a new delivery strategy to bring the programme back on track.
“At the time, the project had fallen behind programme by about 12 weeks,” explained senior contracts manager, David Harding. “Our initial recovery programme had one of the blocks completing late in September, so we looked at how we could re-sequence the work, work multiple faces at the same time, utilise innovative techniques and programme both interior finishes and the external façade finished on the lower storeys while the upper storeys of the concrete frame were still under construction. We also looked at how we could divide some packages to limit the risk, utilising a wider supply chain and thus drawing on a much wider pool of labour resources.
“The University had shown considerable creativity in the way they approached the scheme and now it was our turn to do the same. As a result, we were able to overcome the delays and complete the scheme on time in September 2014.”
Those high standards have now been recognised by the University and have far exceeded the client’s expectations. The approach to quality control and attention to detail has paid dividends with both air tightness and acoustic testing results coming in much lower than the specified figures. As both client and contractor, ULCCO was able to adjust the spec to build in greater quality and service life as the scheme was constructed. The not-for-profit, in-house structure has removed the necessity of a profit margin within the project costs, effectively enabling a higher budget to be ploughed into the scheme, enhancing the end product.
“Creating ULCCO was an experiment born out of necessity,” Patrick added, “and we could never have pulled it off without the enthusiasm and expertise of the senior project team.’