By Dave Ayer, CIPFA Property Networks Manager
Public procurement of property and infrastructure projects currently face two major threats: the legacy of pre-Brexit rules, and the public perception of unfair procurement in response to the pandemic. These issues could reinforce an already risk averse culture that has developed over the last few years.
Over half of the responses to the government's procurement green paper consultation favoured simplification of the current rules. However, a significant minority appeared to prefer a rigid set of rules, rather than greater freedoms to design procurements which meet local outcomes. Instead of "building back better and greener," we risk building the way we have always done!
If this happens, it will be a missed opportunity not just for public procurement, but for communities and for wider society — those who should benefit from levelling up and other national and local government initiatives.
This institutionalised view of public sector procurement, reinforced further by notable failures during the pandemic, risk stifling much-needed change. Much of the current writing on procurement and audit reports restrict themselves to breaches in process, failures to follow the rules and procedural guidance. Very few reports criticise organisations for missed opportunities and poor outcomes, so long as the procedures are followed.
This leads us to ask: what is the fundamental purpose of public procurement, and what are the outcomes we are seeking to achieve?
Procurement is a way to deliver public service outcomes that our communities and wider society deserve, whether that's a modern transport infrastructure, positive learning environment, or state-of-the-art clinical facility. This should be our primary focus. The attendant processes should therefore be designed to facilitate these outcomes, rather than being an end in themselves.
The 2021 Social Value Act actually requires that the wider concept of social value be a consideration in public sector procurement and, in June 2018, the government announced a requirement for Central Government to evaluate social value outcomes of procurements. Changes to the Treasury Green Book following the levelling up agenda, meanwhile, push away from the traditional "lowest price selection" criteria, focussing instead on the delivery of public policy outcomes.
Updated public procurement legislation is due to be published, and new arrangements to be put into place — there has never been a better time to innovate. While we wait, public services still need to be provided, and projects that have successfully drawn down external funding still need to be delivered.
Understand the fundamentals
Individual projects will have emerged from the corporate priorities of public sector organisations, bids to government for infrastructure funding under levelling up and other departmental government initiatives governing schools, highways and other local priorities. Many may have local political and community significance for the organisation. Capital and infrastructure projects will go through a series of stages.
Inception
Perhaps the first stage in project development is where the organisation identifies the broad outcomes they are seeking to achieve, as well as an examination of alternative approaches that might best deliver them. This can be done by assembling a team to carry out an options appraisal, and through use of the outline business case or any other bespoke template that the organisation may have designed for bids for capital funding or the guidance in the Treasury Green Book and its supplements.
The outcomes should be, wherever possible, measurable, including the timescale of the various alternatives.
Project management process
Organisations should have a project management process to deliver its major capital and infrastructure projects. Some use established approaches such as PRINCE2®, while others will use alternatives, or have developed their own specific approach to construction projects. CIPFA provides PRINCE2® training at both foundation and practitioner levels in the form of interactive video sessions.
Regardless of approach, there are several guiding principles to project management:
- The process should be proportionate to the scale and complexity of the project. This is particularly important for small projects, where the costs of planning and design can quickly overtake the actual costs of carrying out the work. In these cases consideration should be given to simple instructions to a constructor partner, in-house workforce or for simple projects a request to the handyman service to carry out the work. Another expedient approach to delivering minor works projects is to adopt a "walk, talk build" approach with the constructors or maintenance partner. PRINCE2® or equivalent are appropriate for large, complex capital projects.
- Clarity of role for the key decision makers involved in the project. A project sponsor should be identified to represent the client service or department, while a project manager should be appointed to assemble and coordinate the project team.
To buy or not to buy
The organisation should explore alternative service delivery options available, and decide whether some or all of the works associated with the project should be delivered in house or outsourced in part or in full.
Most organisations are unlikely to have the capacity to be able to deliver major capital building or infrastructure projects unless they have in place a pre-procured arrangement with a private sector partner to work alongside their in-house workforce. Organisations may wish to develop the skills and capacity to manage, design and supervise the project in-house, or else collaborate with other public sector partners who do have these skills.
Procurement route
A suitable procurement route should be proportionate and appropriate to the project or service being delivered. For simple and straightforward projects, designers and/or constructors can be invited to submit a proposal to deliver the desired output. Depending on the value of the work and the organisation's standing orders and contract procedure rules — as outlined in their constitution — one or more quotations or tenders can be invited. This is where opportunities to innovate can be identified.
The organisation should establish whether it can access any procurement frameworks it may have participated in with other public agencies, or may be generally available to the public sector through agencies such as Crown Commercial Services.
Focus on outcomes
The introduction of the new, flexible competitive procedure is an opportunity for public sector organisations to design procurement process that are best able to deliver outcomes in an effective, proportionate way. They should:
- seek to understand their constructors and suppliers' capabilities and know when to integrate them into teams to get the best results
- invest time visiting suppliers' offices and factories, and in exploring their products and services as part of the procurement process
When the successful constructors and supply chains have been appointed, organisations frequently rely on the chosen contract as a basis to manage relationships and deliver the overall outcome. Yet when appointing a new member of staff, or taking over a new function or team, managers carry out team-building and integration exercises to develop a high performing team.
Procurement results not just in the appointment of a single member of staff, but a whole network of teams. The same team-building approaches should be applied here, to encourage open exchange of knowledge and capabilities, as well as to drive improvement and innovation.
Organisations should therefore commit management time to integrating people from different partners, professions and backgrounds into single high-performing teams with shared culture, processes and practices. Being able to design coalitions of suppliers to deliver work programmes will provide far better outcomes than simply allowing supply chains to be the consequences of a series of traditional procurement decisions.
Knowing and understanding some of these principles will help organisations to design the most appropriate procurement route and contractual arrangement for the project or programme to maximise the delivery of the desired outcomes for their communities.
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