Government procurement

According to the Department of Trade & Industry (DTI), in 2003, £33bn was spent on public sector construction in such key areas as schools, hospitals, roads and social housing. This figure excluded the capital construction costs within PFI schemes. The DTI noted that this capital investment was set to continue expanding.

Despite this colossal spend, it has long been recognised that procurement practices for construction work in the public sector lack consistency and focus. It is difficult to find examples of well-managed and successfully delivered public sector construction. A study by Bath University revealed that 73% of public contracts exceeded the tender price, while 70% were delivered late.

It was against this background that in March 1999, the government launched its Achieving Excellence in Construction initiative. Achieving Excellence set out a series of initiatives to provide a radical change in the performance of government as a client of the construction industry.

In the health sector, Achieving Excellence was addressed by development of the NHS Capital Procurement Initiative called ProCure 21. At the conclusion of its first three years, the National Audit Office reported that
£800m-worth of gains had been achieved through these initiatives and that potential gains of up to £2.6bn per annum could be achieved across the entire public sector through wider application of these principles.

The Office of Government Commerce (OGC) acts as the co-ordinator of the Achieving Excellence programme. The OGC has published a series of procurement guides that encapsulate the principles underlying the initiatives. Also included are targets for government performance under four headings; management; measurement; standardisation and integration.

What, then, are the key tenants of Achieving Excellence? There are nine components as follows:

1) Project organisation
Achieving Excellence dictates that the project should be organised in such a way that everyone in the integrated project team, from both the client and the supply side, is committed to successful delivery. Design, construction, operation and maintenance of a proposed project must be considered as a whole, and sound project management skills are essential for projects to be delivered on time and within budget.
2) Health and safety
The OGC note that there are good business and ethical reasons to ensure that health and safety performance is critically examined at all stages of a project. Clients are required to set requirements for healthy, safe working conditions and facilities on construction sites, and to select supply teams that have demonstrated a commitment to health and safety.
3) Sustainability
The four key aims of the government’s sustainability programme are that there should be: social progress; effective protection of the environment; the prudent use of natural resources; and the maintenance of stable levels of economic growth and employment. In its guidance document on sustainability, the OGC sets out the manner in which the UK construction industry can contribute to these objectives and sets down a number of strategies that procurers of construction work in the public sector are required to follow.
4) Design quality
Achieving Excellence requires government clients to commission projects of which present and future generations can be proud. Publicly funded projects are required to adhere to a set of time-honoured objective principles that determine whether or not a facility works well for all users and the community. It is recognised that good design takes account of functionality, build quality and impact, and does not necessarily involve high cost.
5) The integrated project team
It is in this area that the industry has seen the most sweeping changes across its procurement practices. The underlying principle within Achieving Excellence is simple; the client and the supply team working together can reduce waste, improve quality, innovate and deliver a project far more effectively than in a fragmented and adversarial relationship.
How this is achieved in practice is often over simplified. For example, some commentators have implied that the selection of the construction contract itself will bring about the success of an integrated project team. In reality, if the procurement processes are such that an early collaborative regime can be established between those responsible for both design and construction, the contractual relationships can be managed equally well whether under an NEC or a JCT contract.
6) Procurement and contract strategies
Achieving Excellence calls for a procurement route that allows the integrated project team members to work together regardless of whether they are involved in the design, construction or delivery of the project. Government clients are required to seek long-term relationships with their supply teams, providing this is consistent with EC procurement rules.
7) Risk and value management
Achieving Excellence guidelines require that risk and value management should be carried out throughout a project life-cycle with early involvement of the entire project team to establish and manage a joint risk register.
8) Whole life cost
The guidance notes that quality and costs over the life of the asset are the real indicators for value for money, and that the lowest price tendered for construction rarely leads to this outcome.
9) Performance measurement
Achieving Excellence includes guidance on performance evaluation to ensure that improvements in quality, cost and time are achieved and maintained.
There can be little doubt that in certain sectors of the industry the Achieving Excellence initiatives have radically altered the way in which construction is procured and managed. Whether all of the aims of the programme are being achieved is more difficult to measure and it may take longer to convince certain sectors of the industry that the benefits are real.