The Chamberlain News

‘Our clients don’t like us, but we’re winning them over’, council building company chair insists

A building consultancy company set up by Birmingham City Council to trade with the private sector is the subject of a highly critical report 18 months after being established.

Acivico – formerly the buildings services and urban design departments – has a difficult relationship with its clients, does not always pay contractors on time and value for money is a major concern, according to a progress report.

A new accounting system costing £800,000 is a year late in being delivered, leaving Acivico attempting to pay bills and organise contracts with unsuitable computer software.

The report reveals that key performance indicators have been suspended “due to ongoing poor performance”, while Acivico’s help desk is failing to deal with 35 per cent of calls a month.

Acivico was established by the council’s former Tory-Liberal Democrat coalition as a last-ditch attempt to save jobs in the buildings services and facilities management directorates.

The aim was to forge design, construction, facilities management and building control into a single specialist unit capable of winning private sector contracts and generating income for the council. The company is about to be made larger with the addition of the civic catering, council security and office cleaning sections.

The company’s mission statement says that Acivico’s aims to be “a first class service in our industry – outranking competitors on value for money, customer service and technical excellence”.

And while Acivico has worked on prestige building projects including refurbishing New Street Station and the Digital Plaza scheme at Birmingham Science Park, a report to the council’s contract performance scrutiny committee raises numerous questions about performance.

The scrutiny report concludes that the “culture change” required to enable Acivico to compete with the private sector has been slow to get underway.

Acivico chairman, Cllr Barry Henley, told the scrutiny committee that the company was struggling to overcome the “legacies inherited from when it was a Birmingham city council business”.

He said Acivico was attempting to improve the quality of its performance while also cutting costs – more than £1 million has been trimmed from the budget along with a voluntary redundancy programme.

Cllr Henley explained that Acivico had been granted a five-year exclusivity period, during which time it would automatically gain every city council building project. This caused resentment at the council where officials believed they would get a better deal if they could award contracts to other companies, he admitted.

Cllr Henley said: “Some people don’t like the fact that we have exclusivity and think we over-charge as a result. We don’t think we do, we think we provide value for money and are competitive.

“A lot of our clients don’t like us for historic reasons, but we are winning them over with the quality of our services.”

Despite the difficulties,  Acivico is breaking even and parts of the company are making money. All surplus funds being handed back to the council, Cllr Henley said.

The scrutiny report warns: “The large number of calls being missed by the Acivico helpdesk was raised as a concern in November 2012. A second line was established in February 2013 to allow Acivico to distinguish between contract and external client calls, however the helpdesk continue to drop an average of 35 per cent of calls each month. Acivico are implementing a number of solutions to address this.

 

“The contractor payment process is currently dis-jointed resulting in delays in paying contractors and invoicing the council within contractual timescales. As a result significant accruals have developed. Acivico are now aware of this issue and are reviewing opportunities to improve these processes. “

Issues are raised about Acivico’s relationship with Contract West Midlands (CWM) – a council partnership to deliver new buildings.

The report warns of “a number of areas where Acivico do not appear to have effectively managing the performance of CWM contracts”.

It continues: “This creates a number of apparent risks for Acivico and the council as opportunities to deliver value for money not being realised and the required level of service delivery not being achieved.

“The CWM Contract contains a number of key performance indicators for which failing to achieve the required level of performance incurs a five to 10 per cent reduction on the final invoice cost of an individual job. Historically these penalty clauses were never been invoked.

“The above issues have resulted in contract leakage.”

The scrutiny report underlines the difficulty of probing the affairs of Acivico, which is a private company run by the council. Details of a strategic change programme and a “number of challenges inherited from the former Urban Design department” had to be considered by the committee in a private session – on the orders of council lawyers.

Scrutiny committee chairman Cllr Majid Mahmood said issues of possible legal claims against Acivico could only be discussed in a private session.