Government to cut costs through joint procurement

The publication of the government’s £40bn pipeline of construction work is set to enable departments to procure jobs jointly in a bid to drive down prices.

Speaking at Ecobuild yesterday, Terry Stocks, head of project delivery at the Ministry of Justice, said the overview of procurement given by the construction pipeline meant departments would increasingly “work collaboratively together,” enabling, for example, two departments building a similar concrete accommodation block to procure jointly.  

“We can actually start to work together to see if we can sweat some of that scale,” he said.

He added that if collaborative procurement was not possible, departments could consider standardising their specifications: “If we make it easier for industry to engage in the products we want, and if we can further that by collaboratively bringing out procurements together, then it really helps start to bring up the volume of procurement opportunities […] which starts to drive down some of the costs.”

Under the construction strategy drawn up by the Cabinet Office, departments are tasked with reducing the cost of construction projects by 15%-20% between 2010-2015.

As part of the strategy the government committed to publishing a pipeline of its construction projects, which now includes £40bn of work across central and local government. In addition, it has published a £300bn pipeline of priority infrastructure projects, though many are private sector-led.

Stocks said the construction pipeline was also being used within the Ministry of Justice to give an overview of expected projects, enabling work to be bundled and packaged more effectively, again to reduce costs. He said money saved would go back out to the industry in the form of additional projects.

Lord Deighton, commercial secretary to the Treasury, speaking at the same event, said the pipeline was being used as a “very important management tool” to ensure low-cost delivery.

Deighton added that he was intending to give more detail on the timing of projects contained in the government’s infrastructure pipeline.

For more from Lord Deighton see here.