Making procurement work
Improving public procurement is a key priority for the profession and as the government looks to reduce costs and improve efficiency, it is an issue rising up the political agenda.
RIBA Council members Walter Menteth and Owen O’Connell have set up a new group on procurement. They discuss the barriers that exist and their priorities for change.
WM: Is UK particularly bureaucratic compared to our European EU partners?
OOC: You bet. It seems we are still the sick man of Europe. We appear to have stricter legal interpretations of the EU directives than any others. For example the OJEU procurement procedures in the UK are now netting small legally independent organisations in receipt of grants. This makes a nonsense of localism or any bottom up development. The EU defines requirements for the issue of notices as being applied to ‘Bodies Covered by Public Law’. The UK appears to interpret this as being any bodies where ever there a supervisory role under law (charity commission) So, beware as a taxpayer under ‘supervision’ of HMRC perhaps even house extensions may need to be OJEU.
This one of many examples which appear to be nonsense, that are constraining the market and imposing inefficiencies. As a consequence this is one example of why we have nearly twice the number of OJEU notices of any other EU country.
WM: What do you aim to achieve?
OOC: Firstly collate the wide range of convergent experience about the inequalities of the public procurement system. This is drawn from across the wider building industry, and is reflected in commentaries we have across mainland Europe – the same experience is happening there too. Secondly, we wish to define a simple ‘plain English’ position which we know can be done. A position which will offer ‘equality and opportunity’ to all professionals, embeds proportionality, and cuts down on the masses of redundant tick boxing and criteria. Thirdly, we will lobby, advocate, convince Government of the suitability and practicality of what we offer, such that within the UK (an potentially wider) we get an understandable, practical, form of contract that embeds quality, abilty and equality in it.
WM: Why do you think Local Authorities are so risk adverse? Is it laziness, lack of money or fear of mistakes?
OOC: There are clear examples of intelligent procurement and it certainly does exist – however it does so within a strait jacket. Poor procurement however appears most common –It is both easier and cheaper.
The majority however find that procurement has become a separate profession. There are no specialists in the teams conversant with the product they are procuring, few have any specific construction design experience and there is very little training. The environment of their employment places them as being ill equipped to construct adequate briefs or make selections. They are divorced from end users, and I believe frequently perceive their works as separate from the building output. Issue of team synergies, empathies with the client and end user are beyond the means of their evaluation and calibration.
Hence reliance is placed on defined processes for delivering contract awards with frequent emphasis being on financial competencies and lowest fee rates, than suitability or quality.
Ring fencing risk within the finances of a specific project whether PFI or smaller is also embedded in the policy model.
Societal issues arising with the failure of this model have been largely ignored. The banking hiatus and cost of PFI deals becoming untenable to hospitals are, at large scale, clear examples.
This directs questions towards competencies which may have little relevance to specific construction projects. Quality and the long term sustainability of the completed building, the opportunity it may provide to stimulate a less oligarchical economic structure engaging experienced practices, bespokes, young professionals and such is lost.
Procurement is a dreadful word. If we start talking about how as a society we acquire buildings best suited to our society we maybe able to see a sea change in attitudes.
WM: When did you notice the system had broken down and why?
OOC: When we had spent thousands of pounds and inordinate amount of time bidding through obscure PQQ and tender rounds, where feedback was limited and cryptic, and the will to carry on suffered incredibly. For small and emerging practices this is a totally inadequate position for a democratic governance to espouse. We also noticed that many of those operating frameworks, purposefully opted not to use them, but simply went back to the market on a competitive basis – effectively reducing to nil bidders costs and efforts.
WM: What are the most surprising statistics regarding cost and time?
OOC: When we build, everything is measured and costed. Extraordinarily in procurement there is no fully verifiable economic cost, but indicative sampling across the profession indicates the figures are absolutely staggering.
The EU commission reports that for all procurement at low threshold values procurement costs up to 28% of a contract value, with the UK average at £45,400 being nearly twice that of the EU mainland. They also report 75% of the cost is borne by bidders.
Sampling in the profession indicates costs in construction can be up to 4 times this figure. The numbers of PQQ’s submitted by architects amounts to approx. 65-75 % of all professional PQQ’s.
The National Housing Federation reports its members spent at least £30m p/a on procurement. (when financially geared up this represents a hugely significant number of houses)
If correct then in one construction sector alone the cost to bidders amounts to £90m p/a with architects spending approx. £65m p/a of this. Other sampling indicates that the profession overall maybe spending as much as £0.25m per procurement.
This massive economic depletion is being borne largely by professions composed almost entirely of Micro/SME’s – it seems almost absurd to be addressing value for money without verifying this data. So architects and others within the construction industry will shortly be asked to answer a series of questions in an endeavour to abstract cross industry costs.
WM: Does it surprise you that there is a lack of expertise reviewing the PQQ?
OOC: No! A cynical, but maybe not real view, a system created by lawyers and accountants, monitored by those who never leave the building, based on an ubiquitous understanding of ‘quality’, assessed by people generally ill-qualified to know good from bad, and in any case once they have made an ‘assessment’. They leave the building (literally). A bit like talking to monkeys about the price of oranges!
WM: Should a pilot be done to prove a better system?
OOC: Pilots can sometimes take you to the wrong destination. Given that the Government and cross party agreement has set a timetable, and are beginning to articulate an ‘emerging position’ (the lack of clarity is distracting), I think our best position is to set out a ‘position’ and argue it. Our foundation which lies across the industry, also mitigates the concept of a ‘pilot’ as what we as architects experience is also seen by other designers, engineers and producers.
WM: What are the other aspects or implications?
OOC: There are several, which are larger and more ground changing than the procurement process itself, by necessarily flow from it. Firstly, Education, where the impacts are significant, student costs, curriculum changes, design process impacts. All of these aspects have both positive and negative impacts, either way; we have seen no conversation on these implications. Secondly, and more deeply, the potential ‘dumbing down’ by a Fordist approach to contract and BIM will have significant if not sea-changing impacts on our sense of innovation, speculation and specialism in society. Culturally, our environments will become les and less unique and more and more the same. Difference will become something to procure ‘especially’. Societal impacts from downstream procurement built environment effects may be ‘Ballardian’ in consequence.