Housing Executive reaches agreement with ten contractors
The Housing Executive has today (Wednesday, October 26) announced it has reached agreement with ten contractors to release them from planned maintenance contracts, as a result of escalating construction costs.
Key to this decision is the prevention of job losses within the industry.
While this will lead to some delays in improvements to tenants’ homes, tendering will begin immediately to replace these contracts - the necessary budgets are available and work schemes are ready for delivery.
Currently, the Housing Executive has over 130 different contracts in place to deliver a maintenance and improvement programme in excess of £200m.
These 10 contracts had been originally tendered for up to 7 years in November 2020.
Today’s decision will mean the delay of work such as the installation of new windows, kitchens and bathrooms planned for around 3,600 homes.
Grainia Long, Chief Executive of the Housing Executive, said: “As has been widely reported, the construction industry is suffering from severe inflationary pressures caused by rising material and fuel costs as well as labour and skills shortages.
“Industry trade bodies have asked that contracting authorities be flexible in their approach to fixed price and fixed terms contracts.
“In response, the Housing Executive has sought to strike a balance between delivering for our tenants and preventing job losses and companies going under.
“Where the contracts and procurement law permit and where compelling evidence is provided, we have applied uplifts to contracts.
“In some cases, this has been relatively easy to manage.
“However, in others we have either not received sufficient evidence, or the contracts and wider procurement law has prevented us from applying the increased uplifts which contractors believe to be necessary.
“We have agreed to mutually terminate 10 contracts which were tendered in 2020 prior to the current inflationary price rises.
“This decision has been made in full agreement and consultation with the contractors.
“The alternative was to enforce the contractors to continue at the work which would have placed increased pressure on the contractors’ financial position, which could result in the contractors entering administration and putting a significant number of jobs at risk.
“Whilst many existing maintenance schemes remain unaffected and response contracts are currently in place, it does mean that some work we had planned to carry out in the next 12 months will be delayed until next year and when new contracts are in place.
“In forthcoming days we will be contacting tenants who are impacted by any delays to the planned schemes to their homes.
“I know this is extremely disappointing for those tenants who have been waiting for these improvements to begin. In some instances, this work has been subject to previous delays, which is especially frustrating.
"I would reassure everybody that work will be going ahead once we have new contractors in place.
“While two contractors have indicated that they are able to continue to work within the cost parameters identified by the Housing Executive, we will now be going out to the market with a range of contracts for those schemes which were not able to be delivered.
“We have been engaging with the industry, contractors and partner organisations, and it is clear that the economic environment will take a long period to recover.
“We must continue to ensure that there is minimal disruption to programmes of work while at the same time ensure that contracts are value for money and are sustainable for the construction industry.
This will require flexibility and cooperation on all sides.
“Our priority is our service to tenants.
The Housing Executive is committed to making sure every tenant’s home is safe, warm and dry.
Through our maintenance programme last year, we delivered improvement and maintenance programmes worth over £190m, which is the largest annual investment in our homes since 2008.
“We plan to increase this expenditure to over £200m in 2022/23, which is good news for our tenants and for the construction industry across Northern Ireland.
“I hope we can continue to scale up our programmes as we navigate extremely difficult economic conditions.”