Achieving the Gold Standard and the case for three-year budgets
At the end of last year, David Mosey, professor of law at King’s College London, published his independent report and recommendations on the future of public sector construction frameworks.
‘Constructing the Gold Standard’ is the result of many discussions with clients, suppliers, advisers and procurement specialists like LHC. Commissioned by the Cabinet Office, the report’s 24 recommendations build upon earlier guidance in the Construction Playbook. LHC was pleased to be involved in this review process and welcomes the recommendations outlined in the report.
Taken together with the government’s recent green paper on Transforming Public Procurement, plus Mosey’s latest report published this month on collaborative procurement for design and construction to support building safety, it’s fair to say that I have never seen in my career such a concerted focus on procurement, frameworks and alliancing as key mechanisms for achieving excellence in the built environment.
According to a poll last year by Build UK, an average of 40 per cent of its surveyed members’ income had come from frameworks over the past five years, with the figure rising to 75 per cent in some cases. Frameworks are an important part of the market today, and framework providers have a key role to play in the delivery of construction programmes.
Reflecting on the report, in many areas LHC’s own work meets the Gold Standard requirements already, including early engagement with the market, use of standardised assessment approaches and evaluation processes that identify local SME strengths, a focus on quality over cost and the use of standard forms. Through our long-established use of the Framework Alliance Contract (FAC-1), we provide a contractual system that supports integration, information sharing and mutual commitment. But we recognise there is more to do and we’re grateful to have this benchmark standard which aligns well to our own strategic objectives.
The report makes it clear that a strategic alliancing approach, built on a foundation of collaboration, long term commitments and clear strategic priorities, is needed for frameworks to deliver on the benefits they promote. To achieve this, clients play a pivotal role. Whether it’s newbuild construction or the refurbishment and maintenance of existing portfolios, a long-term view is needed. This is why I want to put forward my own additional recommendation for every local authority, housing association and public sector client to have a committed, and ideally approved, programme of work for at least three years ahead.
As an industry we all acknowledge that contractors compete for clients’ work, but what is generally less recognised is that as a client, the reverse is also often true – clients are competing for the attention of contractors’ bid teams. Regardless of the value of the programme, longer term commitments, early warning, and a collaborative approach to the procurement itself are crucial to increase the attractiveness of the contract and to secure the right contractor.
And this is where well run, not-for-profit frameworks such as LHC’s can really support the sector, bringing our knowledge and experience from helping clients deliver more than 700 newbuild and refurbishment projects valued at over £400m every year.
By working in collaboration with clients and contractors to develop and nurture long-term strategic relationships delivered through our frameworks, LHC supports better outcomes for all parties in the long term, rather than delivering a short-term gain for a few.
We can pool the experience of our regionally based client and contractor support teams, as well as procurement and technical specialists within the LHC Group, to support early market engagement, securing your contractors and successful delivery of your social, environmental and community outcomes.
Our experience shows that genuine social value comes from this long-term approach, allowing more meaningful community engagement and the chance to plan local initiatives with positive impacts on diversity, sustainability, innovation and economic regeneration.
As an asset or project manager in housing in particular, you can plan better and absorb the common problems that arise from a lack of data. This means spending less time tendering urgent, ad-hoc projects with multiple suppliers, rushing around towards the end of the financial year to complete jobs you weren’t expecting. Instead, you have more time working on the important things, delivering successful programmes on time, on budget and to the delight of your customers.
The wider business benefits are significant too. A three-year pipeline gives the ability to work with contractors and their supply chains from the outset to secure components at a competitive and agreed rates, and to reduce the common stop-start, bottleneck issues when tendering and managing projects on individual basis. You can also pre-assess the programme of works and provide better insights for the year ahead.
In short, clients, frameworks providers and contractors working collaboratively can drive significant economies of scale and operational efficiencies, giving the additional time and resource needed to jointly deliver everything that government and our local communities are calling for.
Professor Mosey is right that frameworks need to be better run and more efficient. As the report says, we all need to work together to tackle waste, secure value for money and drive innovation to achieve better, faster, safer and greener outcomes. Collaboration is an absolute fundamental, he says. I completely agree, let’s work together to achieve a golden standard future.
To hear from LHC and Professor David Mosey on his report and recommendations, sign up to LHC’s free public sector procurement virtual conference on 10 February 2022. Click here for further details and registration.