Procurement's progress: new approaches are leading the way in construction

David Mosey comes up with five good reasons to be cheerful about procurement in 2019

By chance on Christmas Eve I bumped into Noel Foley, an architect and pioneer of collaborative construction procurement, now retired to Sligo in Ireland to study calligraphy and Islamic art. In 1999 Noel led the adoption by the London borough of Hackney of the first ever PPC2000 project alliance contract. We discussed how, 20 years on, there is a wealth of evidence showing the positive impact of good procurement and contracting practices. We also reflected on recent terrible reminders of what can go wrong if real cost and quality issues are not examined and agreed ahead of start on site, and if supply chain members and occupiers are not fully involved.

The past year produced several reports showing us intelligent new approaches, including the Project 13 Blueprint principles of leadership and integration, the Construction Leadership Council recommendations on Procuring for Value and the Housing Forum guidance on how alliances, BIM and early contractor involvement can contribute to Stopping Building Failures. As we head into a new year, these reports invite questions as to what we can do differently in practice and whether the changes will benefit our businesses.

New approaches need to be led by people like Noel Foley who want an alternative to failed orthodoxies that defend waste, overspending, animosity and blame-shifting between team members - all to the cost of the client. The collaborative procurement models recommended by the government's Trial Projects programme have not only demonstrated improved value but also reduced risk for all team members. As a result, their roll-out includes over £5bn of projects procured by Hampshire and Devon county councils using "two-stage open book" through the Southern Construction Framework. We can hope for more clients to lead wider adoption of these value-adding approaches in 2019.

A good sign is the imminent advertisement of a Crown Commercial Service £30bn framework alliance. Its objectives are expected to include encouragement of supply chain collaboration, adoption of BIM, and integration of capital works with ongoing operation, repair and maintenance. As a cross-departmental initiative, this procurement should enable improved value through learning between projects and alliance members.

At a project level, it is sometimes suggested that contract forms make no difference, and we have new food for thought in the multi-party NEC4 Alliance Contract. This form triggers procurement questions such as why, unlike PPC2000, the NEC form treats early contractor involvement only as an option, and how else alliance members can build up agreed design, cost, risk and programme data ahead of start on site. Through debate and trials, this NEC initiative can breathe new life into project alliancing in 2019.

Some collaborative enthusiasts suggest that "no-blame" clauses are needed in order to coax the construction industry away from a claims-based mentality. While shared risk and reward incentives are well proven, a no-blame clause limits legal liability to deliberate acts or omissions and this may unintentionally fuel disputes as to the meaning of "deliberate". One way to overcome that risk is project insurance without rights of subrogation, and this has been explored through integrated project insurance (IPI) on the Dudley College trial project. The new cover includes design defects and cost overruns unrelated to any team member's legal liability and has attracted a lot of interest. Hopefully, 2019 will see a robust IPI offering in the insurance marketplace rather than an experiment restricted to more trial projects.

Improvements in the efficiency of construction have been linked to offsite solutions, currently termed "design for manufacture and assembly", and at the end of 2018 the Infrastructure and Projects Authority put out a call for evidence to explore this in more detail. The "three Ts" underpinning a successful offsite manufacturing approach are throughput, throughput and throughput, which in turn demand a convincing strategic procurement model. In 2018 the Construction Leadership Council completed research into a new model strategic agreement for the offsite procurement of housing, through which multiple clients can create a more reliable production line. In 2019 clients and manufacturers should put this strategic model into practice.

Finally, as we enter an extended period of Brexit uncertainty, we can still look at construction procurement opportunities outside the UK. Digital technologies such as BIM and smart contracts are not constrained by geographical borders or differing legal systems, and procurement models can also support a transnational approach. For example, the FAC-1 framework alliance form has been adopted in multiple jurisdictions, and its first use in Italy creates an overarching system to support the integration of BIM contributions on design and construction of the Liscate School in Milan.

We have reasons to be cheerful this year about procurement, especially if we follow the examples set by leading clients and industry representatives and if we use the guidance, contract forms and case studies that emerged during 2018.

Professor David Mosey is director of the Centre of Construction Law at King's College London

Original link - Building.co.uk