Buying better value in building

Richard Patterson, editor of a new themed ICE journal issue on best value in construction procurement, reviews the issues and problems facing industry buyers.

Buying success: Queensferry Crossing in Scotland is being delivered for less than half the original budget.
Buying success: Queensferry Crossing in Scotland is being delivered for less than half the original budget.

As a practitioner in construction procurement I, probably like you, am always looking to do things better. Part of that has to be making time to read - and sometimes to read a little outside your comfort zone. A good place to start is the June 2016 themed issue of ICE's Management, Procurement and Law journal on best value in construction procurement. It has taken sometime to pull together, but I am very happy with the result.

The main focus of my role at Mott MacDonald is helping clients do things better with NEC contracts, often in the water sector. Hence I was interested in our first offering, by Potts et al. (2016), 'A systems approach to strategic infrastructure delivery'. This takes us in detail through the setting up of a revised delivery system for the five-year asset management plan for one of the UK's water plcs.

Procurement, like many things in life, tends to swing one way and then the other: in this case the organisation moved from an 'alliance-type model' to what the authors call a 'competitive partnering model'.

Improving social value

The second paper looks at 'The role of contracting strategies in social value implementation' (Awuzie and McDermott, 2016). It introduces the UK Public Services (Social Value) Act 2012, which, perhaps concerningly, had me reaching for Google. The act encourages public organisations to define social value for themselves and encourage it through procurement.

My own work is often with international funding institutions, who routinely include provisions relating to, for example, using local subcontractors, running Aids prevention programmes, not using child labour and looking after the workers. They do not call it 'social value' but that is what they are trying to encourage.

I feel we will be seeing more emphasis on social value in the UK and elsewhere as organisations, public and private, start to try to align their procurement to the 'triple bottom line' – financial, social and environmental – goals that they espouse in their 'vision statements'. I can only see this issue growing in importance.

Adversarial buying prevails

And now for something very different. Aitken and Paton (2016) describe what they call the 'transaction X-ray'. They followed buyers' diaries through their transaction process and illustrated the frequency of actions on scales of approach (non-adversarial to adversarial) and way of working (arm's length to collaborative). The result is a fascinating picture – the X-ray – of how construction buyers are acting.

It seems buyers' actions are still predominantly adversarial in nature – clearly more so in construction than in the non-construction cases. The authors compare the patterns with what they infer Latham was hoping for in his famous report on procurement (Latham, 1994). They are somewhat different! Has anything really changed?

Finally, in 'Criteria and considerations for project work structuring' by Mitropoulos and Sanchez (2016), we get a view from the USA on how organisations break up their projects into work packages and assign them to different organisations. However, there are no magic answers.

Offsite manufacture and assembly

One trend is to break down the work based on 'products' rather than the disciplines required to deliver the works as a whole. The extreme case of this, of course, is a package that can be designed for manufacture and assembly. It can then be simply delivered by the subcontractor and installed at the site like www.buildoffsite.com.

As for public projects in the USA, contractors often have to allocate a percentage of the budget to particular types of subcontractors. Just as in the UK, they may have to meet targets for using small and medium enterprises – is this that social value I see creeping in again?

If you have comments on the papers that you would like to share, please send an email (up to 500 words) to journals@ice.org.uk. Your views will be passed on to the authors and it may appear in the next issue. You are also welcome to share your views via the journals new LinkedIn page. Let's get the conversation going.

For more information please contact the ICE Proceedings editor, Simon Fullalove on editor@ice.org.uk or call +44(0) 20 8744 2028.

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