The Government Construction Strategy
As part of its efficiency agenda, the Cabinet Office published the Government Construction Strategy in June 2011. It is a core part of the government’s strategy for increasing growth in the UK economy and follows on from the review of the cost of civil engineering works, which highlighted the role that the client can play in driving value in construction.
The Strategy notes that construction output in the UK is worth in the region of £110 billion per year, of which around half is accounted for by refurbishment and improvement of existing building stock. The Strategy notes that poor procurement practice, a lack of investment, and the need to maintain a competitive market have all presented a case for fundamental change.
The Strategy intends that the public sector becomes a better client, understands construction costs more thoroughly, gives better visibility of construction activities, and facilitates the creation of more effective supply chains.
More effective coordination of public sector construction practice is a core aim of the Strategy. A Government Construction Board has been created, bringing together representation from across the public sector and including local government. The group will be chaired by Paul Morrell, chief construction adviser, and will direct a number of task forces and workgroups focused on reform. It will also drive the development of mandatory Government Construction Standards for all central and English local government construction.
ACE has noted the often disparate nature of public construction practice, and believes that this new grouping offers the opportunity to facilitate sharing of effective practice, particularly in local government.
The Strategy recognises that suppliers require sufficient visibility of planned projects in order to adequately invest in the people and resources needed to deliver. To this end, the government will establish a rolling two-year pipeline of works to which funding has been allocated. Once established, this horizon may be extended.
While this is a welcome commitment to increase visibility, ACE feels that two years may prove to be too short, particularly given that major programmes can extend beyond the lifetimes of parliaments.
The Strategy aims to drive the development of improved procurement models that reduce waste, encourage the development of integrated supply chains, incentivise cost and programme efficiency, encourage standardisation and attract private finance.
Within all of this, the development of a truly integrated delivery team is paramount. One of the chief criticisms levelled at the construction industry is its perceived fragmentation and disconnected.
As part of improving government understanding of value for money, the Strategy emphasises the need for benchmarking of construction costs, leading toward a more standardised understanding of value for money.
ACE has recognised that the lack of comprehensive understanding of the cost base of construction is a chief barrier to delivering better value. It is therefore pleasing to see this acknowledged as part of government strategy.
Contracts, prequalification, payment and insurance
ACE has consistently called for the greater use of recognised standard forms of contract with minimal variations. The Strategy recognises this.
Repetition and waste in prequalification processes – a long-standing concern of ACE members – is addressed by the adoption of PAS 91-standard prequalification forms in all central government procurement processes.
The Strategy reiterates previous government commitments to speed cash flow through the supply chain through fair payment provisions.
The Strategy also proposes the development of integrated project insurance, in collaboration with the construction industry. This should help to drive down project costs and improve the management of risk.
Aligning design, construction and operations
Under the Strategy, proposals will be developed in regards to how designers and constructors will be required to prove the operational performance of buildings in around three to five years post-handover. This reinforces proposals for a “new professionalism” made by the Usable Buildings Trust, and is aimed at realising greater energy efficiency and sustainability in new buildings.