Please don’t use the C word when you don’t mean it. The CIOB’s Construction Manager and the RICS’ Construction Journal recently published articles from me on modern procurement. As the government’s new industrial strategy consultation paper says: “…we must use strategic government procurement to drive innovation and enable the development of UK supply chains.” Both journals singled out this phrase from my article: “Hastily arranged one-off subcontract arrangements bought on lowest tender price are not supply chains…”. Here’s the context:
I would hope that most Constructing Excellence members know about the three new models of construction procurement being trialled by government and monitored by us: two-stage open book; cost-led procurement; and integrated project insurance. These all feature early involvement and aligned commercial arrangements to incentivise collaboration.
The first two approaches are quite well known and proven. In our programme they have delivered on public sector projects in terms of value, cost savings of 10%-20% or more, time, quality, sustainability and social value. Proven good practice, provided that Tier 2 of the supply chain and below is also fully engaged on a collaborative basis – more of this in a minute.
The third model under trial, Integrated Project Insurance, has exciting potential to be a game-changer. Its first project is Dudley College’s Advance II building, which is progressing well as a look at its project webcam shows.
Detailed guidance and case studies on all three models are available on the IPA website as well as our own, and the government’s Crown Commercial Service has included capability in the new models as a core competence expected for its latest frameworks.
So, the government has progressed, it has good policies in place and while there remains a gap between policy and implementation, that gap is closing. The supply side has a responsibility to respond – and to mirror the demand side improvements by procuring for collaboration, early involvement and value in their own arrangements with their supply chains. Hastily arranged one-off subcontract arrangements bought on lowest tender price are not supply chains. Neither will they be, until for example procurers actually procure supply chains, not individual companies at each tier, and are incentivised on the amount of repeat business they do with their suppliers, not how much they can shave off an initial tender price which may be illusory anyway and bear no relation to outturn price. And “working together” only becomes “collaboration” when the parties have ‘skin’ in each others’ success, a true alignment of goals, win-win. If you aren’t investing in your suppliers, and customers, you aren’t Collaborating.
Every event in the Constructing Excellence movement this month, and probably this decade(!), will focus on Collaboration as key. Certainly all the national events will, including the forthcoming theme group meetings on Digital, Offsite, Procurement, Nuclear – but please don’t use the C word unless you mean it.