A question of place

Chris Plumley and Alex Tindall look at the nature of council engagement with developers.

Property development, no matter how you look at it, is about transforming communities. Yes there is profit to be made but a successful scheme has to resonate with the general public otherwise it just won’t work. This is something successful developers know but it is amazing how many developers still don’t get it and they are missing out big time.

Huge cuts in public sector funding means that councils are looking to engage ever more in property development to generate place-shaping, capital receipts or longer term income streams. If developers know how to engage properly with councils, understand what makes them tick and talk the right language then great (and profitable) things can be achieved. Conversely, far too many developers shoot themselves in the foot both reputationally and financially and miss out on deals with the public sector because they just don’t know how to put it together. 

Over the past number of years we have watched a string of competitive dialogues fall apart for bidders and really good quality development schemes go unfulfilled because those leading the bids did not understand the process or how to match the council’s aspirations. It is easy to attack the EU process and blame the complexities of the procurement rules on the failures but the mistakes I see are far more basic. To help here are some hints and tips aimed at developers to help both sides achieve a better outcome from the dialogue process:

1. “Get the best out of the procurement process”

• Developers could save significant time and bid costs if they acknowledge and understand the council’s desired outcomes. A huge amount of thought will have gone into the scheme requirements so only bid if you can meet or improve upon them. Don’t go in and offer something completely different.
• Under the new procurement regulations, it is perfectly acceptable to engage in pre-market consultation (in a fair and transparent manner) with councils. Be interested from the outset, let the council know that you want to be involved in these early stage consultations.
• Understand the selection criteria. The bids are scored and weighted so make sure your submission carefully matches the criteria. It is amazing how many marks (and schemes) are lost on this point.
• Understand what the process is and what is required of you at each stage. Don’t put all your eggs in one basket. The rounds of dialogue are designed to show your bid being worked up and improved. This is where you can engage with the council and work collaboratively to achieve a joint aim. Sounds fluffy but this is key to improving scheme viability.
• If a competitive procedure with negotiation is being used then make sure that your initial tenders are of good quality that may only require fine tuning through the negotiation process. This will make for an easier and more cost-effective process for all parties.

2. “What does the council really want?” 

• Councils are increasingly operating a place-shaping agenda. This means they are as interested in creating jobs and new places to live as they are in raising capital or revenue from the development.
• The developer who focuses too heavily on their own financial return isn’t listening to the brief. Obviously developers are there to make money, that’s understood, but the misalignment of objectives is what creates the competitive tension rather than the required collaboration.
• It is important for a developer to approach a council and understand the political and strategic context of the development rather than just thinking about what development is likely to bring about the best financial return.

3. “Appoint the professional team early”

• The professional advisers, including legal, don’t always seem to engage in the process. We often wonder if this is because of the conditional fee agreements upon which developers like to appoint their teams? Risk and reward fees can lead to cheapened bids, mistakes, increased costs for the council team and a general feeling that the developer isn’t really confident about the scheme. We know competitive dialogue is really expensive and the costs are front loaded. The chances of a success are, however, significantly increased if there is proper engagement with advisers.
• Given that the new regulations require procurement documents (the Invitation to Tender, the contract and so on) to be published at the time of the distribution of the OJEU notice, the early appointment of advisors means that they can start looking at them straight away. This means that they are involved from ‘day 1’ so limiting the scope for issues and delays arising if they are appointed further along in the process.

4. “Play nicely”

• In the 1980s property negotiations were always almost comically adversarial. Things have moved on. Councils can be highly commercial, innovative and solution focused. The best ones are also highly collaborative. It still amazes me how many developers turn up to competitive dialogue meetings with a really aggressive or commercially pious approach. It is a mistake for developers to think that councils and their officers are soft touches to be rolled over. Remember you have to work together for years and increasingly the approach and cultural attitude of a developer will be a scored criteria so play nicely. 

5. “One size doesn’t fit all”

• We have noticed a trend for developers’ legal teams trying to bring financial or legal models to councils which they have used on other deals. This can work really well and there is no point in re-inventing the wheel each time if it’s appropriate. If, however, it ignores the requirements of the council or misunderstands their desired outcomes then it is just wasting everyone’s time and money. Trying to shoe-horn one legal or commercial structure into a place it is not meant to go often doesn’t end well and creates more costs for all parties. 

6. “Utilise creative funding models”

• There are many new funding and grant models available to ensure new developments can become pump-primed. Developers having a really good knowledge of the different funding models that are available to the public sector have a tremendous advantage. If you understand what models the council can tap into, it can greatly improve the financial viability of the scheme. If you get it wrong though, it looks like an ill-thought through attempt to get the council to pay for its own development scheme. Working with funding lawyers, who understand both public sector and development, can get a much better financial return for the developer. 

Councils are a lot more innovative and willing to explore collaborative arrangements with developers than developers often realise. Not every council is going to have the right approach and, indeed, councils need to improve and continue to develop their own commerciality and freedom of thought. For the most part, however, in our experience they are open to listening to and engaging with developers who have something different say and an attitude which chimes with that of the council. Whether it is at the soft market testing stage or during the procurement it is worth exploring the options.

Developers must understand and appreciate the values of the council and the political pressure they are under in the current climate. If they do this then the dialogue process becomes much easier and cost effective for all parties. Ultimately this will lead to a finished scheme which really makes a difference to the local community. At the end of the day, this is what public sector procurement is all about.

Chris Plumley is a partner and Alex Tindall is a solicitor at Anthony Collins Solicitors. Chris can be contacted on 0121 214 3576 or This email address is being protected from spambots. You need JavaScript enabled to view it., while Alex can be reached on 0121 214 3709 or This email address is being protected from spambots. You need JavaScript enabled to view it..