What the Construction Playbook Means for SMEs

Apr 15, 2021General

In December last year, the government published The Construction Playbook – Government guidance on sourcing and contracting public works projects and programs. It outlines key policies that will change the way that government agencies contract their construction programs. Those policies are designed to:

  • Improve building and workplace safety
  • Take strides towards the governments 2050 net-zero commitment and focus on the whole life carbon approach
  • Promote social value

As bid professionals, we stay abreast of the latest developments, and as SME Champions, we wanted to analyse this document and pull out the key points that are relevant for smaller businesses. The results of that are below.

Pipelines, Portfolios and Longer-Term Contracting

This key policy is to adopt a more manufacturing-led approach to public works projects and programmes, with the aim of improving productivity and delivering better value for money. This includes standardising design and using longer-term contracts to construction companies more certainty with the aim of supporting investment into new technologies.

SMEs get a specific mention in this section due to the ‘considerable contribution’ they make to the construction industry. It is noted that historically SMEs haven’t had the resources to take part in the initial phases of projects or programmes, giving larger firms a greater say in how programmes develop. This policy intends to make these initial phases more accessible to SMEs.

It also notes that they expect to see more joint ventures and consortium bids from SMEs who work together to deliver a complete package for the procuring organisation.  There’s also a nod to how important SMEs are to the supply chain and the expectation that prime contractors will follow the principles and policies of the playbook and the Supplier Code of Conduct and urge procurers to ensure this is measured.

Early Engagement and Clear Specifications

The aims of this policy are to engage early with the supply chain and develop clear appropriate outcome-based specifications to achieve timely and cost-effective delivery. They stress that good early market engagement is iterative, and should involve all tiers of the supply chain including product manufacturers, SMEs, VCSEs and operators.

This section also notes how Social Value contributes to a level playing field, acknowledging that SMEs are experts in their fields and can provide insight into Moden Methods of Construction (MMC), innovative technologies and ways to minimise the carbon footprint of the proposed solutions across their lifecycle.

Benchmarking and Should Cost Models

construction playbookIn order to drive consistency and overall robustness of cost estimates,  benchmarking data will be used gathered from past projects and programmes. We hope that this means there will be clearer guidance on the expected pricing for tenders, or at least a better understanding from clients as to what projects are likely to cost.

They are also looking at assessing the lifetime cost of a project, including the environmental impact. This will encourage innovative environmental solutions, looking at the long term benefits and whole lifecycle costs.

Lowering Bidding Costs

The government’s aim is to create a contracting environment that delivers a sustainable, resilient, and effective relationship between contracting authorities and the supply chain. Under this policy there is an aim to lower the cost of bidding, noting that it is a barrier to entry for SMEs and VCSEs. They stress the importance of proportional procurement, ensuring it is equal to the size and complexity of the contract opportunity.

Standardised Contracts and Terms

There will be a common approach to contracts and T&Cs across the public sector, ensuring a more consistent application of policies and practice.  This will include the use of standardised construction contracts such as:

  • NEC3 or 4 (Institution of Civil Engineers)
  • JCT2016 (Joint Contracts Tribunal)
  • PPC2000/TAC-1 and FAC-1 (Association of Consultant Architects)

Where contracts need to be altered for project-specific risks, procurers are urged to use boilerplate clauses produced by the IPA or CCS to ensure consistency.

Prompt and Digital Payment Processes

As part of the ‘Due Diligence During Selection’ policy, the playbook suggests that there is a need for greater visibility of public spending flowing down the supply chain which should support the inclusion of SMEs in the process. Contracts over £5m will include an assessment of the supplier’s payment system.

Value-based Procurement

A common theme throughout the playbook is the move towards value-based procurement; encouraging contracting authorities to look beyond the usual measures of speed, cost and quality to consider wider outcomes for the project – and this should be consistent through their whole portfolio of projects. Evaluation of bids will shift from cost to value.

This should have a positive impact on SMEs, particularly if they are local to the contract as that will support a circular economy. It will also put increased attention on the community benefit and social value side of bids. They reference the new social value model, which we discussed in a previous blog.

Procurers must also keep detailed records of their evaluation of bids and create a ‘robust evaluation report’ for each tender. This will then be used to give good feedback that can help unsuccessful bidders (another topic we’ve discussed previously).

Protecting Against Insolvency

In the current financial climate, it stands to reason that the government wants to protect itself against potential insolvency from suppliers. This will be reflected in the requirements for evidence of financial stability, but there will also be added attention given to additional steps to mitigate the impact of insolvency. They are looking at ideas such as bonds, guarantees, or ring-fenced project bank accounts that ensure supplier spend goes on securing the project itself.

There’s More to the Document

The entire construction playbook is 80 pages long, so of course, we can’t include everything that’s of interest to construction companies in one blog post, but we have done our best to go through it and pull out the key points that are relevant to SMEs. If there is enough interest in learning more, we will organise a webinar to go through it in more depth – sign up for webinar notifications here.

In the meantime, if you have any questions about construction tenders, we’re happy to answer them. You can find our peer support groups on Facebook and LinkedIn, or drop us an email and we’ll do our best to help you out.

Adrian Corcoran

Adrian Corcoran is Managing Director and Founder of Bid for Success. Passionate about working with great businesses to win them new work, she and the Bid for Success team are here to help you with your bidding and work winning needs.

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