Rok solid

Rok is partnering with timber frame suppliers to drive down costs and drive up quality

THE NATION’S local builder, Rok is on the brink of signing an agreement with South West-based timber frame supplier Frame UK to supply the whole of its business.

Frame UK was already supplying Rok through its framework agreement with affordable housing provider, South Somerset Homes. But Kevin Willetts, Rok’s housing director explains that the deal grew from the framework’s success.

“The three of us: Frame UK, Advantage South West, to which South Somerset Homes is the principal player, and ourselves, came together because we saw that we could add real volume that would allow costs to be driven down and the quality to be driven up,” he says.

Willetts is optimistic that the agreement, which is the first one it will roll out, will be in place for the foreseeable future. “We’re going to review it in six and then 12 months, but I can imagine it being a relationship that will go on indefinitely.

“We’ve got agreements where we’ve gone in to win work with particular timber frame manufacturers, but this is the first one that Rok has said: ‘Come on board with us as an equal partner and let’s see what we can achieve.’”

Willetts says he is on the hunt for a similar agreement north of the border. “It is early days,” he says. “We haven’t got any names in the frame just yet.”

Framework frenzy
While private housebuilders are either halting work on new sites or scaling back their activities, Rok is doing anything but.

The group already has visibility on 70% of next year’s revenues, through its framework agreements on current orders.

Willetts says that if Rok didn’t win another single piece of work in new-build housing and did 25% of the available workload from its existing 121 frameworks, it would build 4,000 properties a year. “That is a ready-made market that has lock out,” he says. “The Wimpeys and the Barratts can’t touch it.”

Willetts joined Rok in 2003, previously spending eight years as director of development services at Mercian Housing Association.

He is both anxious and honest when we speak, explaining how Rok is working towards an in-depth understanding of the marking strategy used to award frameworks. In his own words, he has “18 years experience of what the customer wants”.

On a recent framework win, it pitched itself to come fourth on a framework that was naming four contractors. “We could have shaved another 2% off our margin and finished second, but we wouldn’t get anymore work.”

Property development
It has trimmed its operations in the wake of the global credit crisis. In August, the group announced the closure of its commercial development arm, which saw revenues plummet by more than 50% in the six months to June.

The decision was seen as a hasty conclusion by the market, but its finance director, Ashley Martin explains there was no running away from the problem.

“We didn’t believe that we could make the returns we’ve been able to make historically out of property development,” he says.

But Martin says the group is still on the prowl for up to three more acquisitions to add to building maintenance firm Pitkerro, and social housing business Richardson projects, both of which it acquired this year.

The funds, he explains, will be used for further acquisitions. He says since the credit crunch, the group is receiving more enquiries than ever from firms touting their businesses to Rok. “I think people see us going into a tighter economy and what that might do to their business,” he says.

But one thing it won’t be doing is buying any more construction-led businesses. “We are moving firmly away from that,” says Martin. “You’ll see us looking at refurbishment, planned maintenance, response maintenance, plumbing, heating and electrical firms as oppose to construction-led businesses.”

And when you consider that 90% of its profits come from new build, planned repairs and refurbishment and response maintenance – reinvesting in its core operations will only expose the group to higher margins.

Timber in social housing
Willetts says the government’s green agenda is driving the demand for timber. Currently all new public sector homes must now meet level 3 of the Code for Sustainable Homes (CSH). Willetts says that the bulk purchasing power of the group is allowing it to reach higher levels of the code. “We’re building to code level 4,” he says. “Because of our bulk purchasing power we can offer the customer exactly what they deserve and what they want.”

He says the barriers to timber in social housing are perception and tradition. “[Clients] feel they could be more prone to tenant abuse ie that the walls are perceived not to be as robust internally. That’s an issue that we’ve resolved as it’s clearly a fallacy and not a fact.”

He adds that aesthetic appeal is also a factor. “That’s why we’ve said we need to put a brick or rendered skin on the outside, so people walking past or a person on the street would consider it to be a traditional property.”

Social divide
In normal market conditions, 60% of social housing is provided by section 106 agreements. Because spec builders, such as Taylor Wimpey, Persimmon and Barratts are either halting work on sites or scaling back activities, Rok is capitalising on the lack of section 106s coming through.

“We’ve tried to capitalise by acquiring or employing land finders. There has been an abundance of good quality land finders on the market for obvious reasons and we’ve employed a number of them.”

Willetts doesn’t perceive Gordon Brown’s pledge to spend £200m buying up unsold new homes in order to rent them out to social housing tenants, as a concern for Rok.

“The standing stock has two issues with it as far as intelligent landlords are concerned,” he says. “Firstly, it is not the right size and secondly it costs too much to heat and maintain as it isn’t to the same standard as they would build on a clean sheet of paper,” says Willetts. “However I’m not naïve enough to think that will never happen, because if it’s at the right price, I’m sure some organisations will acquire them.”

The £200m pledge will also see the government u-turn over its sustainability commitments. “The Housing Association stock has to be delivered to code level three and yet spec housing doesn’t,” says Willetts. “I find that bizarre and yet [the housebuilders] are trying to offload stock to a housing association that doesn’t adhere to code level three.”

He says that the Rok home of choice – a standard template home, which adheres to all of the Housing Corporation’s criteria – provides its framework partners with a ready made option. “This is a fantastic opportunity for Rok, whom have got a standard house type, which fulfils all of the criteria necessary to satisfy both the Housing Corporation and the registered social landlords.”

Willetts explains that what sets Rok aside from the spec builders is that it can offer its clients a tenancy of choice, as oppose to a tenancy of last resort. “We go through a regime of what you would do when you buy a car. So we say, here are your 30 houses, would you like a winter pack, because it’s [suited] for the elderly, so we then have an enhanced heating system. Or would you like our security pack, which has enhanced security systems and alarms because it’s in the poorer parts of the estates.”

Having 60 offices nationwide it also gives Rok an infrastructure of local knowledge. “It’s not huge sways of land we’re looking for,” says Willetts. “Therefore, because of our 60-odd offices, our market intelligence of when a pub is closing down or when an old garage site isn’t being used is vast. That model fits in incredibly well and that for me is nowhere near a threat on the contrary it’s an opportunity.”

The average size of housing schemes that were funded through the Housing Corporation last year was between 12 and 20 homes. “Very few, other than perhaps local builders, would be interested in that,” says Willetts. “The national guys are interested in huge regeneration schemes, but because we’re the Nations local builder 12 to 20 homes fits our model very well.”

The credit crunch has also seen the major players in the housing market axe their own bricklayers and joiners in favour of casual labour, which unions claim will lead to an increase of deaths in a sector that already has an appalling rate.