Using procurement to drive up value
A new procurement model which will help clients make value-based decisions is being tested on projects in 2020. Ann Bentley explains.
The Construction Leadership Council (CLC) helped shape the Construction Sector Deal, which includes £170m of government funding and recognition of construction as an essential enabler of prosperity.
This level of resource, over a four-year period, means that programmes of research and development can be planned and executed in a much less ad-hoc way than in the past.
The focus of my CLC workstream has been to consider how procurement can be used as a lever to drive up value, rather than, what is often the case, a means of finding the cheapest way of meeting a minimum set of compliance standards.
Following wide consultation, we determined that the causes of poor procurement practices include fear of challenge, lack of knowledge, lack of time and a desire to minimise client risk. But the biggest single factor was a confusion between price and value – and where these are understood, the lack of a robust way of assessing value.
Our objective is to develop a procurement model which gives a systematic framework in which different elements – such as capital cost and end user satisfaction – can be brought together, compared and refined, thus enabling an optimum solution to be developed which delivers maximum value to the client.
This work is being taken forward by the Construction Innovation Hub – which was established as part of the Construction Sector Deal, working with the CLC, professional institutions, trade bodies and companies across the sector. The model will assist clients at every stage of the project, enabling them to make value-based decisions on what and how they procure, which should lead to improved decision-making and behavioural change.
The system uses the established model of the Five Capitals – Financial, Manufactured, Social, Human and Natural – as its framework, backed up by metrics taken from existing credible sources with supporting benchmark data. Our development programme will see this being tested on projects during 2020 and available to the whole industry in 2021.
Ann Bentley is a global director of Rider Levett Bucknall and a member of the Construction Leadership Council