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Construction Playbook – New Rules to Procure By?

  • United Kingdom
  • Construction and engineering
  • Litigation and dispute management
  • Central government
  • Energy and infrastructure

21-12-2020

The Government has published its Construction Playbook providing guidance on the sourcing and contracting public works projects and programmes. It builds on the Government’s previous publications of Construction 2025 and the National Infrastructure Strategy 2020.

The new Playbook is a forerunner to the new approach to delivery Government wants to introduce in relation to an upcoming £37 billion of contracts across economic and social infrastructure that will be brought to market in the next year. The Playbook sets out 14 key policies:

1.   Commercial pipelines – greater transparency as to the government procurement pipeline for public works projects to allow suppliers to plan and prepare for long-term demand and contract opportunities

2.   Market health and capability assessments – identifying opportunities and limitations in the market at the preparation and planning stage in order to take advantage of emerging technologies and innovation and to take actions to increase competition and improve market health

3.   Portfolios and longer term contracting – longer term contract planning across portfolios to give the construction industry confidence to invest in new technologies, such as Modern Methods of Construction to improve productivity and provide efficiency savings

4.   Harmonise, digitise and rationalise demand – as with longer term contracting, this policy is aimed at creating harmonised, digitised and rationalised approaches across government projects to give the industry the confidence to invest in and deliver Modern Methods of Construction.

5.   Further embed digital technologies – continued support of BIM and support the adoption of the Information Management Framework and the creation of the National Digital Twin

6.   Early supply chain involvement – early supply chain involvement in the scoping of projects and programmes to develop clear, out-come focused designs and specifications with the aim of reducing issues arising during the life of the project

7.   Outcome-based approach – emphasis on the adoption of outcome based specifications, rather than scope based specifications. A new Project Scorecard is being developed by the Infrastructure and Projects Authority to support the achievement of this

8.   Benchmarking and Should Cost Models – analysis of past projects and programmes to ensure lessons are learned and to provide key insights and data for future projects and programmes. All projects and programmes to produce Should Cost Models to forecast the whole life cost and ensure delivery of value

9.   Delivery model assessments – selecting the appropriate delivery model to achieve the project outcomes, offering the best value taking into account strategic risks and client and market factors

10.   Effective contracting – continued emphasis on collaboration to improve value and manage risk, with the preference remaining for using the NEC contract suite. A review of existing frameworks is to be carried out with the government identifying a ‘gold standard’ to be adopted, including standardised boiler plate clauses to be included in all government contracts

11.   Risk allocation – an attempt to rebalance and achieve an appropriate and sustainable risk allocation. There is a recognition that inappropriate risk allocation is a main concern of suppliers

12.   Payment mechanism and pricing approach – a clear statement that the fundamental principle is that contracts should be profitable. Tied with appropriate risk allocation above, there is a recognition that government procurement needs to move away from driving to the lowest cost for the lowest risk as this is often at the expense of quality and increases the probability of disputes and contract failure

13.   Assessing the economic and financial standing of suppliers – greater assessment of the financial standing of suppliers to safeguard the delivery of public works. It is unclear how successful this policy will be given that any company is at risk of insolvency, even large construction companies such as Carillion

14.   Resolution planning – tied with the above, and no doubt as a result of the impact of the collapse of Carillion, there is a requirement for all public works contracts to provide for the continuity of public works in the event of supplier insolvency

What is striking about the Construction Playbook is that it does not once, in its 78 pages, reference Brexit. However, it is clear that the implications of Brexit were in the drafters’ minds. There is a clear focus on driving innovation and sustainability, upskilling the UK workforce and creating new opportunities for workstreams within the UK, such as the manufacturing support required to achieve Modern Methods of Construction. The emphasis within the Playbook on collaboration, appropriate risk allocation, preserving the supply chain and not racing to the lowest cost, are reflective of the impact of COVID and the desire to ensure that the industry as a whole survives and thrives post COVID, as the Government will look to large public works and infrastructure projects to rebuild the economy.

The adoption of Modern Methods of Construction is obviously seen as key by the Government to achieving the laudable aims set out in the Playbook, as it simultaneously published on the same day the outcome of its consultation on the presumption in favour of off-site construction and which clearly favoured the embracing of a platform approach to design for manufacture and assembly (P-DfMA). Modern Methods of Construction through the off-site production of components to harmonised, digitised and rationalised government specifications,  reducing the reliance on skilled labour and a limited on-site presence, are seen as a way to drive costs down, improve quality and standardisation and meet the dual challenges of COVID and Brexit.

Whether policy can and will be put into practice will be interesting to see. Public procurement faces the perpetual challenge of having to prove that taxpayers are getting value for money. The Playbook, whilst retaining this requirement and seeking cost certainty with an emphasis on Outcome based projects, also promises the adoption of an equitable approach to risk transfer and the promise of a fair return. This resetting of the overlapping interests of cost, time and quality/ safety, with the clear message that cost will not be the sole determining and driving factor will no doubt be welcomed by the industry.