1 Pioneering Jaarevenement 17 november November 2011 Pioneering Jaarevenement De Grolsch Veste2 Opening Dagvoorzitter Jan Bron voorzitter bestuur Pion...
• Weinig vergankelijk • Voor de lange termijn • Gebruiksvriendelijk • Rendabel • Vanuit gezamenlijke doelen • Vanuit gezamenlijke verantwoordelijkheid
Ten slotte
Andere producten vragen andere processen en andere verhoudingen
Een kans voor Twente, een kans voor Pioneering
framework contracting
Professor Peter McDermott Salford University CCINW Manchester
Innovative Procurement: A UK Perspective
Innovative Procurement: A UK Perspective Professor Peter McDermott Director, Centre for Construction Innovation University of Salford, UK Pioneering Foundation Annual Event 17 th November 2011
Agenda • • • •
Introduction UK Construction Context Innovative Procurement Propositions Example Regional Procurement – Local Government The North West Construction Hub (NWCH)
Themes: • Justification for not selecting on lowest price • Selection process for projects • Behaviour change and client competencies • Local economic impact and SME Engagement
Introduction • Centre for Construction Innovation • University of Salford Enterprise Centre
Scotland North East Northern Ireland
North West
Yorkshire & the Humber East Midlands
West Midlands
East of England
Wales London
South East South West
• Constructing Excellence in the North West • Regional Innovation / Best Practice Platform • Working to integrate industry, policy and research
A time of radical change... “This strategy calls for a profound change in the relationship between public authorities and the construction industry to ensure the Government consistently gets a good deal and the country gets the social and economic infrastructure it needs for the longterm”.
A time of radical change... “This strategy means that the public sector will become a better client more informed and better coordinated when its requirements are specified, designed and procured”. “The strategy also challenges industry business models and practices. It will replace adversarial cultures with collaborative ones; and will demand cost reduction and innovation within the supply chain to maintain market position”.
UK Construction: The Big Picture Industry output of about £110bn: 7% of GDP Public sector procures c.37% of all construction output (approx. £41bn) Commercial and social, £49bn (£20bn public, £29bn private) Residential, £42bn (£14bn public, £28bn private) Infrastructure accounts for £18bn (£7bn public, £11bn private) Government spend impacts on UK economy and facilitates service reform and improvement A fragmented industry: it employs over 2m in c.300,000 firms; of which 99.7% of contracting firms are SMEs
Construction Policy Context
1994
199 2002 2006 2008
Growth and Construction “A successful construction industry
is vital for sustainable growth” “Building and maintaining homes, commercial properties and economic and social infrastructure are activities that underpin the entire economy” “Use government procurement to drive innovation”
Infrastructure Implementation Plan Radically different delivery models are required to achieve integration in the infrastructure delivery process and in order to promote early involvement and innovation at all levels of the supply chain. New model competition and procurement processes Guidance on selection of procurement models and contracting options
Infrastructure Implementation Plan
Construction Strategy Key goal for centrally funded government projects, the target is: “Deliver centrally coordinated actions to reduce construction costs by up to 20% by the end of the 5 year life of the current Parliament (2015)” A sustainable 20% cost saving through efficiency and removing waste... Not through slashing prices...
Construction Strategy • A brief that concentrates on required performance and outcome; • Designers and constructors work together to develop an integrated solution; • Key members of supply chain involved in the design; • Value for money and competitive tension are maintained by knowing what projects should cost; • Serial orders of sufficient scale and duration to incentivise research and; • Industry is provided with sufficient visibility of the forward programme to make informed...
...Live experiments, trial and pilot projects
Low Carbon Construction Low Carbon Construction Innovation and Growth Team (IGT) Report Q: “Is our sector fitforpurpose for a future low carbon economy?” 26% carbon reduction by 2020, 80% by 2050 (1990 baseline) “integration [and collaborative working] is key”
“If cash is king, carbon is queen”
BIM BIM to connect design and construction information with asset operation and management BIM identified as a key driver of change and means to bring about integration A progressive programme of mandated use of fully collaborative Building Information Modelling for Government projects by 2016.
Procurement Models on Trial? Proposition 1 – Change the competitive drivers Proposition 2 – Integrate Project Insurance and Assurance (a guaranteed maximum price) Proposition 3 – Evidence the performance of procurement routes including frameworks…
North West Construction Hub
Innovative Procurement Case Study
Where does the North West hub operate and who can use it
All North West Public Sector Bodies have access. Over 200 organisations were been listed in the OJEU notice
Cumbria
Lancashire
Gtr Manchester Merseyside
Cheshire
Develop skills across the region
Sub regional lots
Generic model for framework management Encourage participation from sub regional contractors
Promote sub regional engagement & ownership
Contracting Authorities able to use the Framework: • • • • • • • • • •
County Councils City Councils Unitary Authorities District Councils Universities Further Education establishments National Park Authorities Housing Associations Police Authorities Fire and Rescue Services and other Emergency Service organisations • Health Services including Primary Care Trusts.
Linking policy with procurement • Government Priority Reduce the Budget Deficit SAVINGS but also... • Fair payment • Support for SMEs • Apprenticeships / Youth Employment • Low Carbon • Shared services
Framework benefits
7.5%
Saving on project costs
1015% Time savings 12%
Capital cost savings – result of not tendering
What does it mean for local clients • Reinvesting in the local economy (CLEM) • Fair payment • Local supply chain participation • Support for SMEs • Apprenticeships / Youth Employment • Local employment • Low Carbon
The business case for X against lowest price tendering • • • • • • • • • • •
Cost overrun Time overrun Inhouse management costs Legal costs Legal challenge Poor lifecycle performance Cartels Risk of insolvency Low morale Damage to our reputation No repeat business
What do clients really want? Lowest lump sum tender price OR Lowest actual/outturn cost OR Best whole life value for the client and end users
Never waste a good crisis... • Business and economic models • Capability • Delivery model • Industry structure
