Keeping sight of what we are trying to achieve when procuring construction projects

In the 1980s as a Procurement Director – “You would never get sacked for buying IBM”; Similarly, today the ‘Estates Director’ is on pretty safe ground going down the tried and trusted route of traditional tendering. This may well be the best way forward, particularly if tender information is well developed and the bidding contractors and wider supply chain are suitably enthused about the project. However, to me traditional tendering feels like the safe option, the IBM option, where process is more important than outcome.

If you are part of a Board of Directors, governing body or the like and the “Estates Director” reports that he has scoured the market for contractors, received three quotes back, and lawyers have tweaked the contract to pass on a greater level of risk to the contractor, you may feel impressed by his effort to follow due process. As the “Estates Director” you feel safe, as what you have done will stand up to scrutiny or, if all goes horribly wrong, an independent audit.

However, “what the customer is actually trying to achieve” often gets lost in the desire to be safe and be seen to follow process. Customer needs will obviously vary from project to project, but can often be summed up as:

  • A quality project at an affordable price, delivered on time
  • A final account that reflects the original tender
  • A project journey that is enjoyed by all parties
  • A contractor and wider supply chain that will put the customer’s project priorities on a par or above their own priorities.

To achieve such outcomes, a customer and his consultants firstly need to fulfil their own responsibilities fully and enthuse the contracting community about the project. How hard the customer needs to work to enthuse contractors depends in part on their own reputation and the type of project, but also on the state of market. If Brexit leads to less immigrant labour and lower industry capacity; customers will have to re-double their efforts to enthuse contractors about their projects.

At Beard, we have benefited from a number of customers working hard to create an attractive environment in traditionally tendered work, framework projects, negotiated and various two-stage opportunities. All of which have their merits, however, a hybrid approach recently used by a smaller Oxford College for a £8m student accommodation project really appealed to me. For simplicity, let’s call it “two-stage negotiation”. The customer scoured the market and decided they wished to work with us, provided we could deliver their proposed new building for the set budget. Solely inviting ourselves to bid for the work, set an excellent collaborative atmosphere from the start of the process. We then had eight weeks to confirm our solution, budget and project plan, which in this instance included fundamental redesign of building structure and other aspects of project. Once both parties had agreed outline scheme and budget, we had three months to complete the detailed design and contractors’ proposals.

We are two months into a 16-month project and there will be many hurdles to overcome before we hand over the keys to the customer, but the customer has created a very strong collaborative working environment, where its objectives are central to all that we, and our supply chain, are trying to achieve. In my view, securing this level of contractor goodwill and keeping key project priorities at the forefront of everyone’s thinking trumps “following due process” every day. However, we will need to wait a further 14 months for a definitive answer!

My hope is that consultants will increasingly ask their customers searching questions about the final outcomes they really want to achieve from the project, what they want from their contractors and become a little more creative about how they procure their construction work, rather than continuing to follow the IBM route!

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