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Improving procurement in public sector construction

Source: Public Sector Executive Jan/Feb 2013

A series of departmental, government agency and local authority trials to improve public sector construction procurement reported back on progress so far at a Cabinet Offi ce event. Adam Hewitt reports.

New approaches to procurement can cut waste, boost effi ciency, and encourage a more collaborative supply chain, according to the Cabinet Office.

As part of a Government Construction Strategy initiative, nearly 100 representatives from the industry and the public sector met to discuss the lessons so far from trial projects and discuss how to further foster innovation.

The event on January 29 was held at the Royal Institute of Chartered Surveyors (RICS), with delegates explaining how they overcame challenges to build on lessons learned through feedback-gathering ‘Information Hubs’, which focused on the three models of procurement (cost-led, integrated project insurance and two stage open book), as well as associated crosscutting themes such as BIM, intelligent client and lean sourcing.

Cabinet Office minister Chloe Smith said: “The construction industry is a vital driver for growth, sustaining thousands of SMEs. It’s therefore enormously important for government to work collaboratively with industry, identifying ways to make sure those links continue to foster innovation within the supply chain. “It is only by sharing lessons learnt from these trial projects – which have already shown they can save money – that we can go even further to challenge the cost of construction, cut through unnecessary waste and streamline processes to get the best results at the best price within timelines.”

Case studies discussed at the event included:

• The Environment Agency’s Rye Harbour project, which saved valuable time and an estimated 10% on costs by engaging early to encourage competition amongst integrated teams of suppliers who are selected on their ability to beat the target cost through innovative collaboration.

• Surrey County Council/May Gurney’s Five Year Highway Programme, which has focused on sustainability to create a wider integrated supply chain, sharing their success with other authorities and their suppliers to signifi cantly increase the amount of recycling of construction material in the South East.

• The Education Funding Agency and Balfour Beatty’s Enfi eld Oasis Academy project, which has created six apprenticeships, targeted 60% of spend from the local supply chain and delivered a range of short-term placement and work experience opportunities for students.

Trevor Hursthouse, chairman of the Specialist Engineering Contractor’s Group, said: “The event is providing clients an opportunity to see how alternative and innovative procurement models adopted for trial are being applied. One particular approach, Integrated Project Insurance – which uses an independently assessed and verifi ed Integrated Project Team and collaborative processes – provides insurance against project-wide risk and any unforeseen extra costs. This reduces overall risk for all those involved including the many SMEs our group represents.

“Together with other innovative procurement models, IPI trials represent the Government Construction Strategy in action – real projects being delivered.”

The Government’s new chief construction adviser, Peter Hansford explained that the industrial strategy for construction is one of 10 Government strategies in partnership with industry, and emphasised that this strategy complemented other existing strategies.

He said that for strategic objectives to be delivered, there has to be behavioural change to shift the culture from ‘adversarial’ to a ‘collaborative’ mindset, and more supply chain engagement. He added: “I fully support the work of Trial Projects. They are an important platform for government and industry to work together to deliver construction projects that are completed on time, on budget and meet their output specification.”

Discussing the benefi ts of using two-stage openbook and supply chain management, David Mosey of Trowers and Hamlins LLP, a member of Trial Projects) said: “We achieved savings of 14% on Department for Communities and Local Government/Homes and Communities Agency National Change Agent programme, and created opportunities for over 500 apprenticeships; savings of up to 20% for the Hackney Homes/Supply Chain Management Group; and savings of 24% on the Department of Work and Pensions Job Centre Plus programme.”

The University of Westminster is the academic partner to the Two Stage Open Book projects. Rob Garvey from the university said: “The key feedback focused not on the technical aspects of the procurement models, but the candid realisation that no-one has all the answers; success will be predicated on strong leadership (intelligent client) and collaboration throughout the supply chain.”

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