Procuring for Value

By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

Earlier this year, the Construction Leadership Council (CLC) called for an outcome based, transparent and efficient industry in its Procuring for Value report.

The report outlined how the industry needs to change to improve productivity, end user satisfaction and safeguard those in the industry, providing recommendations on how government, clients and the industry can develop a brand-new approach to procurement. Bringing construction productivity up to the national average would deliver an extra £15bn of value each year. We need to get clients away from just accepting the lowest bids regardless of quality and the report suggests ways of doing that. It recommends the development of an industry-wide definition of value that takes into account more than just capital cost.

It advocates the production of new forms of contracts that reduce the role of lawyers in the industry. What tends to happen is that most companies hand over the responsibility of administration of contracts to legal advisors with an enormous focus on the theoretical transfer of risk downwards, rather than the placement of risk. Failure to fully understand obligations under the contract, coupled with commercial pressures exerted to ignore the contract (payment terms being the best example of this) create a very uncertain landscape in which some construction activity takes place. The lack of contractual recognition of the whole-life value and the failure to incorporate whole-life risks mean that there is a growing view that current industry forms of contract will not meet future requirements. Contractual models need to be versatile enough to accommodate changes in the sector such as offsite manufacturing, BIM and other advances in technology.

This is the perfect opportunity to make the next generation of contracts cloud based. A contract that creates a living set of priced risks where every relationship has transparency. We need to investigate how contractual forms within the built environment can become digitally enabled and SMART-cloud based to introduce transparency and whole-life project focus.

Based on how the industry has always delivered, the current forms just won’t facilitate innovations, so something needs to change. Construction needs to change. Ann Bentley urges ‘every rung of the supply chain to take responsibility and understand their impact on the industry and the larger financial picture that is at play’ and the report highlights as an industry how we can do just this.

The report builds on the 2016 Farmer Review and proposes steps to implement the construction sector deal by extending existing government policy and industry best practice.

Constructing Excellence in the North East are holding an event on Procuring for Value, looking at the report and what the industry can be doing. It will feature talks from Ann Bentley, Global Director at Rider Levett Bucknall, and Procuring for Value lead for the Construction Leadership Council and Rob Charlton, CEO, Space Group.

 

To register for this event please contact Grace on 0191 5007880 or grace@cene.org.uk