The cost of ’least-cost’

Ian Preston sees weak links in the solid wall insulation supply chain

28 May 2015

If you’d have asked me two years ago about how the UK’s supply chain for solid wall insulation (SWI) would develop, I’d have got two things wrong; I would have overestimated the rate at which installations would increase, and I’d have underestimated the costs.

Two years of working to deliver practical advice and energy efficiency schemes means I’m a little wiser, and one thing that concerns me about the current SWI market is the focus on cost in the procurement process.

Policy makers in the energy sector tend to take a least-cost delivery approach. That is, they look at the total number of measures needed to meet their target – be it fuel poverty or carbon emissions – and the lowest cost of achieving this that is practically possible in order to make the economic case to the Treasury. (I suspect, for example, that those local authorities which won Green Deal Communities funding made their case based on the highest numbers of SWI installations for the least cost.)

And whilst value for money is a critical consideration – what about other factors, like quality? From what I can see, least-cost delivery is not getting us very far.

The market for SWI for social housing is reasonably buoyant. This is at least partly because installers can treat a number of similar neighbouring properties at once, benefitting from economies of scale and using systems and specifications that they are familiar with.

By contrast, the market for one-off installations in private owner-occupied homes is less well developed. Here, the cost of installations varies hugely depending on property size, detailing (e.g. how you treat fiddly things like window sills, drainpipes, flues, etc), the system design and the materials used. If the procurement process – from the top of policy design at DECC to the local selection of contractors – has a focus on price, then the cost of the installation will be squeezed, and savings are likely to be sought in labour and materials which will have a knock-on effect on quality.

Having spoken to local SWI installers, it’s clear that this is already happening. I’m thinking particularly about local authority SWI schemes aimed at take-up among private home-owners.

What’s also apparent is that if you use cheaper materials you need a skilled workforce to achieve a decent quality of installation and finish. And whilst there are skilled contractors who are working in the social housing sectors, in the private sector the pool is relatively small. There are main three reasons for this:

  1. As the social housing market carries less risk, contractors may be unwilling to transfer
  2. Their business may not be big enough to win a local authority tender process requiring large volumes of work in private sector housing
  3. They may not be PAS 2030/Green Deal accredited

So what seems to be happening is that a large contractor who is PAS 2030/Green Deal accredited wins the tender but sub-contracts the job(s) to local installers who work to their specifications. Ideally – though not always - a ‘master of works’ from the main contractor or from the insulation system supplier provides oversight and quality control.

Here in the South West, installers from as far away as Gateshead and Warrington are being sub-contracted onto SWI works on local homes. They’re typically using expanded polystyrene-based systems rather than higher quality, but more expensive, products like phenolic board, and the thermal performance of the installations will be lower as a result. It also suggests that heritage properties are not being treated with an appropriate natural and breathable product that is more sympathetic to the buildings’ needs. Furthermore, as labour rates are squeezed, less-experienced installers are being used. I’ve seen examples of poor detailing and finish, and buildings where cold-bridging risks may be overlooked (or simply not understood).

But it’s not just the South West; I’ve heard similar concerns about the quality and suitability of works from people working across the UK.

And what of the 25 year guarantee that these works come with?

Well, given the way the market is working, the company that guarantees the measure is very likely not the one that installed it. That’s fine if the quality management systems are robust, but from what I’ve seen they are too light-touch to ensure the quality of delivery. And I’m not alone. In the recent Chief Construction Advisor’s call for evidence,  the National Insulation Association has argued for an urgent review of the PAS2030 framework for SWI to ensure more robust controls are put in place.

And from experts like the Sustainable Traditional Buildings Alliance (STBA) and similar organisations I’m hearing widespread concern that poorly installed SWI may lead to damage in the country’s housing stock in the future. Conscious of the potential risks to Blackpool’s characteristic of Victorian and Edwardian terraces, the town council has commissioned STBA to develop a solid wall insulation contractors’ code of conduct and approval list to ensure quality of work.

So what’s needed? I see three areas for improvement:

  1. Policy design and procurement processes that focus on quality as well as cost
  2. A better set of quality control systems
  3. More local skilled tradesmen that can install the measures people want

On the final point, CSE is running a local trade support programme as part of Bath and North East Somerset Council’s Trade Support programme. We’re providing courses to help local skilled tradesmen, like plasters and renderers, enter the market for external SWI. But much more work is needed to ensure that the materials and systems used are also fit for purpose, especially in heritage buildings, and that the quality control of installations at design and installation stages is adequate.

Ian Preston is CSE's Head of Household Energy Services

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