Fix the broken procurement system to boost housing quality

28 February 2020 | By Shelagh Grant

Quality check: a clerk of works inspects a housing scheme in Edinburgh (Image: Hickton)

If we want to see the quality of new and refurbished homes improve, then the systemic problems with construction industry procurement must be tackled first, argues Shelagh Grant.

Shortcomings in construction have rarely been more evident or under such scrutiny. But if we’re really going to raise the bar in the homes we build and refurbish, it’s time to take a hard look at the way they are procured.

Problems around quality are often the unwanted side effects of the systemic problem of short-termism in the industry – and particularly in housing – coupled with fragmentation of the supply chain, lack of clear lines of responsibility and a ‘race to the bottom’ in pricing.

In the affordable sector, selecting on price has become pretty much the norm. Opting for contracts based purely on the lowest price means corners are more likely to be cut in design and construction.

“Procuring for value will pay dividends – not necessarily by selecting the lowest price but by a thorough assessment of what reduces costs over the life cycle and increases performance and quality.”

Shelagh Grant, The Housing Forum

Clients and their advisers may say they’ve followed the balanced score card approach, but the reality is that even if the bidder scores highly in, say technical competence, it won’t carry that much weight compared to scoring well on price.

Bids are often won on single-stage tender, before the design is fully worked up and with no input from the construction team. Then, when the contract is signed, there’s a mad scramble by the design-and-build contractor to ‘value engineer’ to bring down costs and make a margin. As Dame Judith Hackitt has remarked, these processes do not represent ‘value’ nor ‘engineering’.

Ideally, the project is designed and fully costed in an environment where risk is properly understood and managed with input from the contractor and specialists to ensure buildability – following which the project starts on site and is constructed as specified. Quality should also be assured by improved processes on site and finishing.

It shouldn’t be so difficult. The contract forms are there – and there’s been plenty of good practice in the past. You don’t need a long memory to recall when partnering was in vogue.

Reviewing the selection model

So, is it time to summon up the spirit of Latham? Revisit Egan? Maybe. At the very least, clients need to spend more time, some of it with their advisers, developing a brief and understanding risk. It’s essential to spend more time in the design phase to work properly to co-ordinate the design and consider buildability.

Selecting design teams using criteria more heavily weighted for quality than price will pay dividends, as will procuring for value – not necessarily by selecting the lowest price but by a thorough assessment of what reduces costs over the life cycle and increases performance and quality. And that means reviewing the entirety of the selection model, particularly the scoring rules and the methodology.

The overarching message from our dedicated conference, Quality Counts, at the end of last year, was a resounding call to fix the broken procurement system. In the wake of that, The Housing Forum has made procurement reform a central message for 2020 and a key feature of our National Conference on 6 May.

The principles we are most likely to set out – in a Housing Forum guide to procurement later this year – are more detailed proposals before work starts on site, tighter control mechanisms put in place to ensure accountability and that the work is delivered as designed. This should be a modus operandi for all in the housing sector to consider. In tackling poor quality – in all its manifestations – procurement can no longer be the weakest link.

Shelagh Grant is chief executive of The Housing Forum

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