John Skivington, director at LHC, explains how collaborative procurement might help the sector embrace innovation, considers the key ingredients to successful collaborations, and offers advice for social landlords who are keen to collaborate more.
How much interest are you seeing in collaborative procurement?
Central government did a lot of work exploring how the public sector could harness collaboration to achieve more for less in the mid-2000s. In terms of social housing, that thinking then underpinned the Decent Homes Programme, which established collaboration was a highly successful way of generating procurement savings.
Today, there is a resurgence of interest countrywide. With the efficiency challenges the sector faces today, many social landlords seeking better ways of working are choosing to tackle these challenges as a group, rather than as an individual organisation. Many opportunities are also better seized when working together.
What do you see as some of the main benefits to greater collaboration on procurement?
The first point to make is that this isn’t just about cost savings. There are savings to be made from aggregated demand, where a group of organisations can negotiate a better response from the market, but collaboration is far more about driving efficiencies, identifying and mitigating risk.
One straightforward efficiency would be the harmonisation of ‘standard’ contracts. All housing associations have standard contracts but many have their own that have evolved. There are efficiencies to be made by re-harmonising those documents, and that applies equally to standardising design documentation for construction and refurbishment.
But collaboration is especially relevant when it comes to the kind of unprecedented change that the sector is facing. One example would be off-site construction. It’s a complex, costly and high-risk challenge to handle on your own. So by a group sharing experience and knowledge you can collectively understand the issues you face, avert pitfalls and de-risk your investment by pooling it.
Are there other examples of where you think collaborative procurement could help drive innovation?
Digital information transfer is another example. Everyone is looking at Building Information Modelling (BIM). Within a group you get a benefit from organisations sharing their experiences, some will know more than others. And then when you engage with the supply chain they can you can work with your supplier to shape and ease the process.
You develop a collective response to the challenge, as opposed to a client-supplier relationship. You can enter the market more quickly. It allows you to engage from the start of the process, which once again helps to de-risk a project.
Where you have these cross-sector challenges – be it low carbon, efficiencies, whole life initiatives – few are best faced alone. All organisations are looking at these issues, and as groups they could develop a product and process to meet all their needs and engage a manufacturer’s interest.
As a group you have a critical mass of demand that attracts a better market response. That is essential when it comes to off-site construction, for example. Off-site relies on volume.
How does collaborative procurement work?
Organisations can choose how they collaborate; all groups work differently. Some meet regularly and work on a secondment basis – individual members carry out specific strains of work on behalf of the group, pooling their time, knowledge, and skills.
At LHC, we’re involved with facilitated collaborations: a collaboration expert, such as LHC, will bring social landlords with common needs and goals to together. In these groups, the facilitator will do a lot of the work and a lot of the delivery.
What are the obstacles to a successful collaboration on procurement?
Many of the barriers to a successful collaboration are perhaps most visible among groups working on a secondment basis, where they rely on each other to deliver work. Many organisations work at near full capacity prior to joining a group. When they then enter a collaboration they can find themselves with so much to do that it isn’t always obvious where the benefits are.
Groups are rarely perfectly balanced. Organisations can often be mismatched in size, resources and ambition. Problems can arise where an organisations is perceived to be dominating the agenda. It is also vitally important that all members benefit from the group’s work, otherwise they will just walk away.
What are the ingredients to a successful collaboration?
One of the keys to a good collaboration is that it is based on clear objectives and deliverables. Some falter because they become seen as nothing more than talking shops.
I would say the most successful groups are those that are facilitated. There is an expertise in drawing out the key issues, understanding priorities, and drawing out common deliverables that can benefit everyone at the table.
From our experience, working with groups such as the Scottish and Welsh procurement alliances, we rely on the clients coming together to share their learning. We learn from them, and then go away and deliver. They shape the work but the facilitator carries it out.
How can social landlords move towards greater collaboration in procurement?
There is resurgence in collaborations in the market currently and we have hubs countrywide that focus on key sector issues, such as new housing. There are also more informal groups springing up across the country.
What individual landlords have to ask themselves is: ‘What challenges have I got, are other like-minded organisations facing the same issues, and could I deal with these challenges better by collaborating?’ If the answer is yes, then it’s time to get involved.
The next step is taking the opportunity to join or form a collaborative hub. My advice is to see what’s out there, talk to organisations in their areas or pick up the phone and talk to us.
John is director of public sector procurement specialist LHC, a not-for-profit organisation which works with over 200 UK social landlords to improve outcomes on building and construction projects. LHC developed the UK’s first framework agreement for offsite housing offering volumetric and panellised units through pre-selected manufacturers and contractors. John has 35 years’ experience of working in the construction industry, half of which has been closely associated with offsite construction.