.png)
The aim is to help reduce waste and improve contractual relationships.
The Government Construction Strategy sets out to a target of achieve savings in construction procurement of up to 20% by streamlining processes. It sets out procurement models such as Two Stage Open Book, Integrated Project Insurance and Cost Led Procurement, which have been shown to offer potential to reduce the cost of public sector construction projects, as well as contributing to reduced risk, greater innovation and improved relationships throughout the supply chain, the government said.
The new draft guidance is designed to encourage public sector clients to implement these new models.
For each model the guidance highlights the benefits of adoption at each stage, details the core processes and principals involved, provides step by step support and addresses the key client and industry questions. The proposals will be further trialled before publication of the final version in the summer.
The models seek to change the way public sector clients buy construction to a process where the supply chain responds to an outline client requirement and declared budget. This contrasts with the historical process of the supply chain building up a price against a detailed client requirement without understanding what the client can afford.
Minister for civil society Nick Hurd 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.
“In the past, suppliers have been burdened by a lack of consistency in the way that construction projects are procured. That’s why we’ve produced this guidance which will ensure more extensive engagement and provide consistency over the way that public sector construction projects should be procured in the future.
“It will build on the excellent trial projects - which have made average savings of 14 to 20% by applying these models – and should be followed closely to help drive innovation and eliminate waste from the process.”
Two Stage Open Book
Using Two Stage Open Book a client invites prospective integrated teams to bid for a project based on their ability to deliver an outline brief and cost benchmark. Following the first stage competition, the appointed team works alongside the client to build up a proposal, the construction contract being awarded at the second stage. This differs from Cost Led Procurement in reducing industry bidding costs, enabling faster mobilisation and in providing the opportunity for clients to work earlier with a single integrated team.
To read more, see www.gov.uk/government/publications/two-stage-open-book
Cost Led Procurement
Applying the Cost Led Procurement process, a client can use their knowledge of costs to set a challenging cost ceiling and output specification against which the supply chain can bring experience and innovation to bear in a competitive framework environment. On frameworks with a series of similar capital projects, CLP provides the opportunity to continually improve on the unit costs of the programme working collaboratively with the supply chain.
To read more, see www.gov.uk/government/publications/cost-led-procurement
Integrated Project Insurance
The Integrated Project Insurance (IPI) model offers clients the opportunity to create a holistic and integrated project team (an ‘Alliance Board’) to eliminate the “blame/claim” culture. The innovative “integrated project insurance” package limits the risk for the individual members of the team, fosters joint ownership of the project, and thereby reduces the likelihood of overrunning in terms of cost and time.
To read more, see www.gov.uk/government/publications/integrated-project-insurance
Got a story? Email news@theconstructionindex.co.uk
