New standards for construction procurement
20 years of best practice on procurement has been enshrined in a new British Standard. Will Hughes outlines why it should be widely adopted
A few years ago, a series of specialist workshops, under the heading “Rethinking Standards in Construction”, were sponsored by the then Department of Trade and Industry, later succeeded by the Department for Innovation, Universities and Skills. These were organised by the British Standards Institution (BSI) and Constructing Excellence in the Built Environment (CE).
The main conclusion of the workshops was that there was real potential for a new standard on construction procurement, based on guidance that had been developed by the Office of Government Commerce, among others.
Even so, the move towards a British Standard was particularly welcome as a means of ensuring that such guidance has a broader base, independent of the life cycle of contemporary representative organisations and stakeholder groups. This was the background that resulted in the publication last year of a new British Standard, BS 8534:2011 Construction procurement policies, strategies and procedures — Code of practice.
Meanwhile, the International Standards Organisation (ISO) was independently drafting a standard related to construction procurement, with a focus on tendering. Various international bodies have developed their own approaches to tendering for major construction works, and the ISO felt that this caused too much confusion and complexity.
ISO 10845 was developed to help procuring organisations develop generic procurement systems and organise tendering processes that are fair, equitable, transparent, competitive and cost-effective. The group working on the British Standard commented on and contributed to the development of ISO 10845. This international standard is now also a British Standard, in two parts: BS ISO 10845-1, Construction procurement — Part 1: Processes, methods and procedures; and BS ISO 10845-2, Construction procurement – Part 2: Formatting and compilation of procurement documentation.
The distinction between ISO 10845 and BS 8534 is that the former is focused on developing a detailed framework for tendering and selection; the latter is focused on the development of policies, strategies and procedures that underpin collaborative working in both public and private sector construction.
BS EN ISO 10845: Construction procurement
ISO 10845 goes to considerable detail in setting out the steps and documentation involved in the tendering process. Without getting into the detail, the underlying principles that guide the work are:
- Fair: Impartial and providing simultaneous and timely information, not prejudicing interests of the parties.
- Equitable: Non-award to a compliant bidder only if there are restrictions from doing business, incapability or incapacity, legality, conflicts of interest.
- Transparent: Procurement process and criteria for each project/programme to be publicised; decisions publicly available with reasons, and verifiable.
- Competitive: System provides for appropriate competition to ensure cost-effective and best value outcomes.
- Cost-effective: Processes standardised with flexibility to attain best value in respect of quality, timing and price.
Promotion of other objectives such as use of SMEs, local job creation and local economic development, ensuring criteria is measurable, quantifiable and monitored.
BS 8534: Construction procurement policies, strategies and procedures
The British Standard complements ISO 10845 and is aimed at a more strategic level, seeking to represent in one document all the various “best-practice” guidance that has been issued over the preceding couple of decades. The standard goes through the stages of procurement in sequence that will be familiar to those who develop procurement strategies:
- Initiation: business need, roles, responsibilities, objectives, outcomes, scope, stakeholder identification;
- Procurement strategy: client brief, procurement routes, work packages, market engagement, control, approvals;
- Procurement tactics: contracts, liability, selection, pre-qualifications, award, performance, progress, evaluation;
- Exit strategies: discharging contractual obligations, settling disputes, signing off, moving on.
Whoever is procuring construction work, whether clients, main contractors or large specialist trade contractors, would benefit from this standard. Given the huge complexity in putting major procurements together, this straightforward guide to navigating the complexities of construction procurement should be welcomed in all quarters.
Ultimately, there is a “political” battle between interest groups. Professional “procurement advisers” would clearly continue to promulgate their own approaches. Indeed, RICS is currently engaged in a consultation exercise to develop new guidance on construction procurement and RIBA has issued a report calling for reforms in EU procurement rules. These professional institutions seem to make no reference to the new procurement standards in their public pronouncements. However, once funders and investors realise that there is a document to which they can refer in their compliance demands, it will soon catch on!
Also, the government may well be keen on these standards, particularly BS 8534, because it ensures that what was the OGC best practice guidance will live on and evolve, without the need for government departments to be continuously updating it. For all of these reasons, I think that BS 8534 will become widely adopted.
Will Hughes is professor of construction management and economics, School of Construction Management and Engineering, University of Reading. He was involved in the drafting committee of BS 8534:2011