Construction Industry To Work With Government To Lower Procurement Costs

The government has released a new strategy setting out the measures it will take to reform public sector construction procurement and reduce procurement costs by up to 20 per cent by the end of this parliament

The strategy aims to reduce waste and deliver better value for money by making the public sector a “better, more informed and strategic client”, with the government looking to work more closely with industry to achieve these cost reductions. Part of their challenge will be to end what they perceive to be the ‘bid low, claim later’ culture.

The Strategy dictates that:

• A new construction board, chaired by Paul Morrell, the government’s chief construction adviser, will be established to help foster "more effective relationships" between the public sector and building firms.
• The government will publish a two-year forward programme detailing the construction and infrastructure projects that have been selected to receive public funding. This will take place from autumn this year. It is hoped that allowing for the increased visibility of future workload will provide the industry with the impetus to take long term business planning and investment decisions.
• Building Information Modelling will be used wherever possible, to ensure that all of those involved with a project are working on a shared platform and from the same data. This will mean that design data can be fed direct to machine tools and enable alternate deign proposals to be evaluated with comparative ease.
• Cost benchmarking will be established to provide consistency of value for money on each project, in order remove any variation in cost that is not justified by project specifics. As well as construction work, this will also cover consultants’ fees and departmental administrative costs.

Two new procurement models have also been suggested as part of the proposals

• The first model will invite framework contractors to bid for work against tight cost benchmarks set out by government. If no contractor on the framework can beat that benchmark then the project will go to tender and framework contractors will be banned from bidding.
• The other model would offer a guaranteed maximum price underwritten by insurance that extends to protection against defects.

The Cabinet Office will lead the construction strategy implementation plan, co-ordinating with the Infrastructure UK Cost Review programme, and other activity across government and industry. Francis Maude, minister for the Cabinet Office, was optimistic that the new strategy would "stimulate growth by enabling more to be constructed within the funds available".

BWF Chief Executive Richard Lambert commented that, “You could be cynical and say this is just about the Government trying to cut the cost of construction.  But the Strategy seems to have accepted the case the industry has made over recent years that if Government were a better, more intelligent client, it would get better results at lower costs.  Replacing the fragmented experience of the past with a more co-ordinated approach would benefit everyone involved, at every point in the supply chain.”