Maximising procurement as an enabler for construction in the North-west of England

“Procurement has shaped our sector and continues to do so. Over the last 20-25 years, we have seen people [in procurement] trying to glue back together what has been fragmented,” said Peter McDermott, professor of science, engineering and excellence at the University of Salford.

McDermott was speaking at the Building the Future Think Tank’s regional roundtable in Manchester in June, which focused on the role of procurement in driving change within the sector, with a particular focus on the North-west of England.

The session was run in partnership with Constructing Excellence and sponsors AtkinsRealis, RLB, and Willmott Dixon.

Pipeline visibility

“There is a massive shortage at the minute, which is having an effect on resource and supply. If we had a better look at the pipeline, it would be a lot easier for us to resource things,” explained Steve Teare, director at Gleeds.

Sarah Morton, regional director at Kier, said: “We are seeing quite a range in the way that different clients are procuring at the moment, particularly some central government departments; MOJ [Ministry of Justice] is one of them. In terms of working on alliancing, we are actually working as contractors together to look at the best outcomes for a customer. That includes sharing programmes and designs and actually looking at a holistic programme rather than an individual project. That gives us the sightline to be able to plan.”

She added: “There’s a nervousness in the market around investment, particularly in the commercial sector. From our perspective, being in early, working together, and taking a proactive approach with all the parties at the table is really important.”

Peter Jackson, North-west lead for AtkinsRéalis, agreed: “A lot of our clients prefer to get into bed with contractors early because there is that trust you can develop in that early period and you are not in this scenario where you have five or six contractors fighting for a single piece of work – which doesn’t work any more.”

Call for collaboration

The group agreed that collaboration is a vital component in procurement processes. “Collaboration is key,” explained Clare Reed, construction litigation lawyer at Shakespeare Martineau. Reed believes that there is a move to collaborate more in relation to the procurement processes but that we must be “looking at the whole supply chain, all the way down, and working out a plan for that at the start is really helpful”.

Paul Beeston, head of service and industry insight at RLB, said: “I head up some of our research and development work and have been involved in our procurement trends survey for the last five or six years, which has given us great insight into changing procurement practices over what has been quite a volatile period.”

Beeston said: “A stand-out fact from the report for this year was that 54% of contractors are seeing a more collaborative approach to engagements with clients, more risk-sharing, and just a more collaborative approach overall.”

Too many frameworks

The consensus on frameworks was that the vast quantity of them is proving to be a problem.

“There is too much of a clutter of frameworks and routes to market, and that causes confusion for purchasers,” said Jackson. “They just want a simple approach to get to the market as quickly and effectively as possible, and that’s something we need to explore as an industry.”

“There is so much policy, rules – and everything that goes on inside local authorities, for example. It becomes a bit of an obstacle to kick-starting some of the procurement processes,” added Reed.

Jason Hallas, new business manager at Willmott Dixon, said: “The competition has moved up and it’s complicating things. The frameworks are becoming protective over their pipeline because they are trying to win the job, which makes it very difficult for the market to respond.”

Hallas added: “My opinion is that if a customer doesn’t get the answer from a framework, they think that framework is poor, and they go to another framework. So we are bidding for the same job multiple times, which is ludicrous. There has to be a selection process, but it has become ever more complicated.”

“There’s a need to think differently about how you build. Some of the climate bonds that banks and lenders are issuing are trying to move people in that direction. It’s not there yet, but hopefully, it is shifting.”

Clare Reed, construction litigation lawyer, Shakespeare Martineau

“I think there should be fewer [frameworks], and I don’t think they should compete with each other,” said Teare.

Jackson agreed: “I think there is an opportunity to trim them down or for them to come together to make it more simple for clients.”

Morton highlighted the distinction between the two types of frameworks currently at play, for single-client and those where you have multiple clients: “They do different things. Single-source, there is much more of a rulebook of how everything operates, but you always need vehicles that – for example, local authority clients can access to procure efficiently.”

“The trouble with playbooks and frameworks is that they can be too prescriptive. Then if you deviate from the playbook, you’re doing something wrong,” said Beeston.

He added: “Innovation in procurement is, for me, quite a challenge. It’s the stage of the project you want to do only once; you want to get it right – and it causes a bit of defaulting to what has always been done, or what the playbook says should be done, rather than recognising context. And context is everything in procurement.”

Risky business

Discussing changes in procurement that relate to an increase in outsourcing within the industry, the conversation turned to risk. “There are people that will take personal risk and some that won’t. People that will take on personal risk will have a different thinking process,” said Hallas.

Beeston added: “That’s why people will default to the playbook recognised way of doing it because it’s the least risk you can take as an individual to follow the best practice guidance you can find.”

Speaking on local authorities, Reed asked: “How do you resolve the poor communication that comes from [frameworks], which can create quite a lot of delay?”

Jackson raised an example of a good framework in action: “Look at what HMRC did at rolling out the regional estate programme. They would say their procurement framework was an absolute success.”

He said: “There’s a challenge there about whether frameworks work, because they can work. But there’s a different model that has and hasn’t worked based on scale.”

Focusing on the intent behind the framework, Hallas said: “Frameworks should never be in a competitive place. They should be servicing a need.” However, he did acknowledge that frameworks may function differently in the private sector.

Slice of the pie

The table discussed examples of bidding for frameworks where the end is reached without anybody winning work. “Unfortunately, there are examples of that, where they have not been converted into realistic opportunities,” explained Jackson.

McDermott said that “the idea of a framework was a response to what had happened in the marketplace. They were there to aggregate demand.”

Jordan Marshall, special projects editor at Building, asked the group if they believe there are ways for procurement to boost new areas of the industry or shape a direction of travel that would be positive for the sector.

“There is too much of a clutter of frameworks and routes to market, and that causes confusion for purchasers.” 

Peter Jackson, AtkinsRéalis

“Absolutely,” said Morton. “They need to be focused on what they are procuring and why. [Looking at] what the market is, what they are servicing and what types of organisations best fit that.”

Morton added: “It’s about getting the right people selected for the right work, for the right clients.”

“There’s a need to think differently about how you build,” said Reed. “Some of the climate bonds that banks and lenders are issuing are trying to move people in that direction. It’s not there yet, but hopefully, it is shifting.”

Beeston said: “What has changed is when we’ve asked contractors what the barrier is. It was cost. More recently, it has been around consultants.”

He said: “The reason is because of the complexity and the light being shone on high-profile failures […] it’s all led a bunch of consultants to worry about what they are buying and whether they have the control measures in place.”

A tick-box exercise

McDermott raised concerns with the current open market and process for creating frameworks: “You just need a compliant authority to sign it off […] and that’s what’s been allowed to happen. In other [countries], they are more on the ball with not letting these types of frameworks exist.”

“There has been a lot of innovation in the marketplace,” added Hallas. However, he highlighted the industry’s varying expectations for what a framework does and does not do.

When asked whether procurement was just another tick-box exercise, Jackson answered: “It’s not across the board that [frameworks] are a box-ticking exercise. We work with some local authorities, where they’ve invested a lot of time and effort into ensuring that any procurement exercise puts us on point for delivering social value.”

“As a contractor, our ultimate goal is to grow our employees,” said Morton. “It comes back to visible pipelines and being confident that your business will be where it needs to be so you can invest in the people.

She added: “We do it for our own reasons, not just to tick a box for social value. We need new people coming in and new skills. We’ve got an ageing workforce and green skills coming in… We need people.”

“Stick to good frameworks and stick to doing what those frameworks are designed to do. They should be designed to procure for good social, economic and environmental outcomes,” said McDermott.

The group discussed the delivery of hospitals during the covid-19 pandemic and how it demonstrated a willingness within the industry to reinvent processes because it was needed. They also discussed what they would want from the next government – with overwhelming support for more investment, alongside a more holistic approach to construction, more transparency within the sector and the adoption of more innovative approaches.

On the topic of whether the construction playbook is doing what it needs to do, Jackson argued that it doesn’t seem “fit for purpose” and that the new government needs to “make it more enforceable”.

Final thoughts

McDermott argued that new procurement approaches and models should be contemplated only after considering the supply side: “Strategic procurement means aggregating demand. We shouldn’t be doing that unless we put it out into the marketplace and allow the suppliers to respond, innovate and do things properly.”

“Any procurement is a market engagement. It will have a client pushing, but it needs a supply chain pulling. It’s in the middle that the magic happens. I love it when clients engage and invest in the procurement activity,” said Beeston. “Diversity of thinking drives better decisions.”

He added: “It’s complicated describing what you’re trying to buy. We list out all the ingredients but forget to tell you we’re baking a chocolate cake. We just expect you to figure it out… What we should be doing is describing and procuring the outcome.”