Thursday24 July 2014

‘Zero fees’ is all part of the squeeze

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Sanctuary deal can be traced back to government’s cost-cutting advice

If architects want someone to blame for the news that a housing association is imposing a “zero fees” condition as part of a framework deal, then blame Philip Green.

In the early days of the coalition, when the new government was busily snuffing out quangos and cutting costs elsewhere, Cabinet Office minister Francis Maude asked the billionaire retailer, who owns Topshop and Topman, to look at improving the efficiency of its spending processes.

He famously concluded that a company would not be in business if it spent its money the way the government did.

Last week, Sanctuary Housing Association, which manages 80,000 properties in England and Scotland, told architects wanting to get on its latest framework that they’ll get nothing in fees if schemes they’re working on either don’t get planning permission or are canned by the client before they go to local authorities.

Walter Menteth, leader of the RIBA's procurement task force

Walter Menteth

One of the recommendations that came in the wake of Green’s report was that groups receiving government money should follow a few basic rules. One of them, published in a Quick Wins Strategy, was: “Develop a procurement strategy — or borrow someone else’s capacity.”

That is what Sanctuary has done by teaming up with a local authority-run framework called Scape based in Nottingham.

Housing architect Walter Menteth, though, thinks frameworks of this sort will end up excluding smaller firms in favour of bigger, more established practices, which can afford to take them on.

“This is treating the profession as a cash cow, passing on the risk to those who cannot hold it”

Walter Menteth

Asking for zero fees, says Menteth, who is the RIBA’s head of procurement reform, “discriminates against SMEs and micro practices”. He adds: “This is just treating the profession as a cash cow. They’re passing on the risk to those least capable of holding it.”

RIBA president Angela Brady says only larger firms — with the resources of under-employed staff or unpaid interns — will be able to work with the framework. “They could get interns to run up a couple of schemes and see what happens,” she says. “It’s exploitative on both sides and will drive down quality.”

Dickon Robinson, who last year authored a report into the future of the profession, was a development director of the Peabody Trust housing association for 16 years before leaving in 2004.

Dickon Robinson

Dickon Robinson

“If anyone had suggested this to me, I would have stopped using them,” he says. “It’s repellent that not-for-profit organisations should be encouraging such unethical practices.”

Others point out that the stance taken by Sanctuary will eventually become self-fulfilling — because architects will spend so little time on making sure applications get through that they won’t.

“The level of attention will drop significantly,” says David Birkbeck, chief executive of Design for Homes, which aims to promote better-quality housing design. “How much time are architects going to spend on a planning application if they’re at risk?”

Robinson, whose report recommended architects become better businessmen to have any chance of surviving in the future, has a final piece of advice for firms tempted to work with Sanctuary: don’t.

Sanctuary says it has a responsibility to be as cost-effective as possible by working with its supply chain to ensure good value for money.

But Robinson is having none of it: “Anybody who signs up to this deserves to go out of business and they probably will.”

Scape’s vision

Scape is a local authority-run company based in Nottingham, with six shareholders including Derby City Council and Nottinghamshire County Council.

Active since April 2006, it says its role is to act as “contracting authority and central purchasing body as defined in EU procurement directives”.

Scape adds: “Our vision is to be leaders in collaborative working, providing cost-effective solutions by using simple, hassle-free processes.”

Construction consultant Faithful & Gould, which helps run the framework, said it does not advise its clients “on policies relating to zero fees”.


Readers' comments (1)

  • Sanctuary are missing the point here. Framework agreements should be a two way relationship. Projects in our office sometimes come via HA's, but sometimes we work with private developers who are looking for HA involvement. Why would we suggest using an HA who 'might' pay us, when we have fantastic HA clients who will pay us a good fee for our hard work?

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