Watts Sector

More for our money: getting to grips with the Government’s new construction strategy

Will the Government’s new construction strategy prove effective and deliver better public buildings at lower cost?

Earlier this year, the Government set out a new strategy that aims to change the way public buildings and infrastructure are procured. The aim is to promote value for individual communities and the country as a whole. The new construction strategy has been described as the most comprehensive government proposal yet, identifying ways to “drive efficiencies and cut costs in public procurement” (source: Building). The government is already committed to making savings of 20% across public sector schemes by 2016; now it has set out how this target might be achieved.

The strategy (which can be downloaded from www.cabinetoffice.gov.uk) calls for “a profound change in the relationship between public authorities and the construction industry” and sets out a detailed list of measures which will be taken to ensure this happens.

At the heart of the strategy is the introduction of new forms of procurement, aimed at squeezing greater efficiencies (and lower prices) from the supply chain with less emphasis on lump sum tendering. A public construction board chaired by Paul Morrell, the Government’s Chief Construction Advisor, is to drive the 20% savings on public sector schemes and a steering group, drawn from government and the construction industry, is to coordinate strategy implementation. Building Information Modelling (BIM) is to be introduced across the public sector to promote supply chain integration and strict cost benchmarking will feature on all new projects. Greater visibility and forward-planning are central to the success or otherwise of the Government’s plans. The new construction board will coordinate projects to gain best value and will publish a rolling two-year advance programme of funded projects on a quarterly basis.

It is intended that value for money and competitive tendering will be ramped up as a result of effective benchmarking and cost targeting. In other words, knowing what projects should cost in advance and encouraging contractors to better that price should provide the public sector with a better deal on projects. By initially setting cost benchmarks for a job within a contractor framework, the public sector will have the option to pursue direct tendering to achieve better value if none of the framework contractors meets the price.

What could make all this redundant is that changes in government often leads to changes in policy; if a construction project straddles that change how will an existing output-based specification match the ultimate performance criteria?  What guarantee is there that one government’s centrally accessible construction programme will be honoured by the next? Also, with the public sector in a state of flux and discussions everywhere hinging on shared services and cost-cutting via built assets, how can the industry be expected to provide buildings that will be fit for purpose several years down the line? Benchmarking costs is an admirable aim but what if the building specifications themselves turn out to be a moveable feast?

Reading the 43 –page document, you can’t help but get a feeling of déjà vue. The detail may be different but the thinking behind the new strategy is nothing new: integrate, collaborate and innovate. However, what may set this strategy apart is the attention being paid to a visible – and costed - construction pipeline and the will to create a more coordinated and cost efficient public sector construction client.

By far the biggest challenge being laid at the door of the public sector is the much-publicised 20% saving on construction to be made over the next five years. Local authority estates directors and their teams are facing – and adapting to - a rapidly changing working environment.  But will the change to the way projects are procured be driven forward fast enough to meet the Government’s ambitious targets?

For more information, contact Mark Few, Director at Watts Group, on 020 7280 8000

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