16 November 2018

SHAP, CLC, ERDF WORKSHOP:

PROCURING FOR VALUE

1. CLC and Sector Deal - Context

2. Procuring for Value

3. The Value Model

4. Predictability of Outcomes

5. Procurement Behaviors

6. The Digital Agenda

7. Objectives

AGENDA

Presentation Name

CLC VISION – 3 STRATEGIC OUTCOMES – 3 ENABLERS

CONSTRUCTION SECTOR DEAL

The government and the construction sector,

through the Construction Leadership Council,

have agreed a Sector Deal to transform the

productivity of the sector benefiting the wider

economy.

Theme 1: Client Pull – Outcome Based

Procurement

Theme 2: Increase Transparency on the

Performance of Suppliers and Assets

Theme 3: Supplier Push – Improve

Procurement Efficiency and ‘Get the Basics

Right’

PROCURING FOR VALUE - THEMES

CLIENT PULL - OUTCOME BASED PROCUREMENT

Anglian Water

@onealliance

DEAL

Government Action Sector Action

Improve the lifetime performance of

buildings, through better procurement:

Improve the lifetime performance of

buildings, through better procurement:

▪ Embed ‘procure for value’ approach in

public procurement and build

capability to do this through the

Infrastructure Projects Authority (IPA)

and government departments across

Whitehall.

▪ Develop an industry wide definition of

value which takes into account more

than capital cost.

▪ Produce a universally applicable

methodology for procurement and

promote common and consistent

standards across industry.

UN-ALIGNED

OBJECTIVES

Procurement Behaviours

Predictability

The Value Model

The Digital

Agenda

PROCURING FOR VALUE – WORKING GROUPS

Outcome based Procurement

to drive capital programme

delivery and lifetime

performance

The Value Model Workstream

Chaired by Geoff Hunt,

COO, Arup

VALUE MODEL - SCOPE

▪ Propose a definition for Value; and

▪ Propose how to embed this definition in the

whole value creation process to achieve

enduring behaviour change.

QUALITIES TO BE ACHIEVED

▪ Business Imperatives: Health and Safety, sustainability, employment, training,

productivity, efficiency, reputation, perception, environment

▪ Value Enhancers: Innovation, trust, behaviours, risk management, Research

and Development, continuous learning

▪ Process Optimisers: Total cost, quality, programme, standardisation

PROMPTS

Ref Element

1 WHOLE LIFE VALUE

1.1 Outcome Metrics

1.2 Operational Cost

2 DIGITAL EFFECTIVENESS

2.1 BIM Model

2.2 Government Soft Landings

2.3 Digital H&S and O&M Files

3 DESIGN QUALITY AND INTEGRATION

3.1 Does the Design meet building functionality

3.2 Are we spending the monies in the right place?

3.3 % of manufactured components

3.4 % of standard components

PROMPTS

Ref Element

4 CAPITAL COST

4.1 Fixed lump sum preliminaries price - Construction

4.2 Building works cost including OHP, risk, fees etc

4.3 Apportionment of Risk and Reward

5 COLLABORATIVE BEHAVIOUR AND SUPPLY-CHAIN INTEGRATION

5.1 Supply chain robustness

5.2 Accessibility to client and design team

5.3 Supply Chain Management

6 SOCIAL VALUE OF THE DESIGN AND CONSTRUCTION PROCESS

6.1 Employment

6.2 Workforce skills

7 ENVIRONMENTAL SUSTAINABILITY

7.1 Carbon

7.2 Resource Efficiency

7.3 Waste and Recycling

PROMPTS

Ref Element

7 ENVIRONMENTAL SUSTAINABILITY

7.1 Carbon

7.2 Resource Efficiency

7.3 Waste and Recycling

8 PROGRAMME

8.1 Project Delivery

9 HEALTH, SAFETY AND WELL-BEING DURING THE CONSTRUCTION PROCESS

9.1 Construction H&S

9.2 Construction well-being

PROMPTS

Ref Element

10 OUTCOME BENEFITS

10.1 Community Benefits

Community development through the consultation process

10.2 Legacy

11 R&D, INNOVATION AND ALTERNATIVE BIDS

11.1 Supply chain incentivisation for delivery innovation

11.2 Sharing of innovation risk between client and suppliers

CALCULATING VALUE

Value

Influence of

design/

construction

Cost driver?Cost

£,000

Timing of

Cost/Value

Metric?

Value

Metric?

Value?

£,000

Incentive

/ Penalty Comments

Outcome

Metrics What will the measure of success by when the asset/building is in use?

Educational

performance

Design

developed

from case-

studies and

best practice

of what

worked in the

past

Extra-over cost

compared to a

school which is

simply

compliant with

current

standards and

guidance. Say -

10% additional

design cost but

no extra

construction

cost

£400 Cost -

during the

design

period, at

tender and

PC. Value

would be

after 5

years.

GMCA -

saving to

the

treasury

per pupil

per year.

£1,966 Designer Improved educational

attainment can be

valued - this would

have to be measured

over the full 5 year

period. How much

could be put down to

good design and how

much would be to do

with teaching and

management? Would

also need original

base-line attainment

for a school in that

area with that

demographic.

DESIGN QUALITY INDICATORS

A TYPICAL COST PLAN

VALUE CASE STUDY

Function / Value Weighting % Cost %

Access for people with Disabilities 11 791,658 0.5%

Building access / security 10 2,126,631 1.4%

Fire / Safety / Health, compliant with codes 14 9,284,522 6.0%

Flexible Functional Optimised office space 5 17,333,017 11.2%

Heritage preservation 13 5,188,248 3.3%

Iconic v Functional 4 689,991 0.4%

Improved internal environment - conference 14 11,129,255 7.2%

Improved internal environment - workplace 7 71,593,429 46.1%

Promotes collaboration / social interaction 5 3,037,500 2.0%

Reduced Energy Costs 5 7,982,778 5.1%

Upgraded/functional Conference IT/ systems 12 17,409,347 11.2%

Other / Envelope/ External 0 8,873,624 5.7%

155,440,000 100.0%

Information courtesy of Gardiner and Theobold

WHAT THE CLIENT WANTED V WHAT THEY PAID FOR

COST : VALUE RADAR

Predictability of Outcomes Workstream

Chaired by Ashley Bateson,

CIBSE Vice President

Partner, Hoare Lea

WHY FOCUS ON ‘PREDICTABILITY OF OUTCOMES’?

▪︎ Clients want to know that they

will get the intended

functionality and performance

that they expect from a

building/ infrastructure project.

▪︎ However, clients don’t always

get what they expected.

▪︎ Performance gaps are a

common problem in the

construction sector.

DEFINING THE PROJECT BUSINESS CASE AND

COMMUNICATING THE BRIEF

▪︎ The business case / proposition for

the project helps to define intended

outcomes.

▪︎ Engagement with end-users,

building managers and other

stakeholders will establish specific

priorities and targets.

▪︎ The supply chain must be informed

about relevant objectives.

Detailed design by

consultant teamConstruction works carried

out by contractor

Detailed design

by contractor

Construction works carried

out by contractorPerformance

requirements set by

consultant team

Client gets more

certainty on quality

Client gets more

certainty on

construction cost and

programme

Traditional procurement

‘Design and Build’ procurement

INFLUENCE OF PROCUREMENT MODEL / ROLES

AND RESPONSIBILITIES

ASSESSMENT OF OUTCOMES IS RARELY MEASURED

▪︎ Project outcomes are often not formally

assessed by the delivery team.

▪︎ Construction teams normally leave the

project promptly after completion.

▪︎ Designers are sometimes not retained

by the client during the construction

stage and don’t get feedback from the

success, or otherwise, of the completed

project.

More regular assessment of success and feedback

required

RIBA Plan of Work

MORE FEEDBACK ON OUTCOMES REQUIRED

▪︎ We need more

continuous

assessment of

whether

intended

outcomes will

be achieved.

▪︎ Feedback

mechanisms

are crucial.

Procurement Behaviours Workstream

Chaired by Professor John Nolan

Chairman of Construction Industry Council

Chairman, Nolan Associates

“ to come up with a challengeable

and measurable way of procuring

buildings, and their consultants

and contractors, by best value

over a whole lifecycle “

SCOPE OF PROJECT

PROCUREMENT BEHAVIOURS - DIFFICULT ISSUES

▪︎ Financial Model

▪︎ Legal Fears

▪︎ Capex/Opex

PROCURING FOR VALUE - GUIDING PRINCIPLES

▪ Client leadership must nurture conditions for success

▪ Culture

▪ People

▪ Resources

▪ Right Process

THE 10 STEP PROCUREMENT PROCESS FOR BETTER VALUE

1. Define clearly the strategic

definition

2. Set up the project with the right

skills and resources

3. Choose the right procurement route

for the project

4. Select the contract form to suit the

circumstances

5. Produce clear selection

documentation

6. Use a balanced scorecard to

select consultants and contractors

7. Engage with bidders

8. Building other requirements

9. Keep track

10.Undertake post-occupancy

reviews and evaluation

Digital Agenda Workstream

Chaired by Simon Rawlinson

Member of CLC

Partner, Arcadis

PROCURING FOR VALUE – BUILDING ON EXISTING FOUNDATIONS

▪

DIGITAL AGENDA – KEY PRINCIPLES

▪︎ Align to the priorities of the workstream

▪︎ Use existing work – don’t reinvent the wheel

▪︎ Prioritise the procurement issues in the digital agenda

DIGITAL AGENDA – OUTLINE AGENDA

▪︎ Develop Digital Procurement value proposition

▪︎ Look beyond BIM for other digital opportunities

▪︎ Review existing digital initiatives and propose how these can be used to improve

procurement

▪︎ Find and accelerate easy wins for Procurement of Level 2 BIM

▪︎ Agree a roadmap with other Procure for Value workstreams

OBJECTIVES

SHORT

Sharing Best Practice – sitting on the

Board of i3P. Ongoing

Working group heads follow up.

December 2018

PfV Website – working with Designing

Buildings Wiki. Questionnaire circulated,

business case to be written for BEIS

funding. November 2018

Innovate UK – potential for funding within

the Sector deal. AB invited to write

scoping document for next funding

competition round. January 2018

Sharing Best Practice – Transforming

Construction Network Plus. Launch 20

November

OBJECTIVES

MEDIUM

Working groups bring recommendations

to a head.

A “Value Dictionary”

An overall routemap for PfV Nurture interest from IT companies.

Produce the “perfect” balance scorecard

model ….in 5 dimensions - social,

environmental and commercial, cost,

evidence/data, H&S.

OBJECTIVES

LONG

Properly resourced delivery programme

Formally tie in with CIC, IPA, Government Construction Board and ICG and other

interested parties.

Questions?