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Construction strategy to embrace SMEs

Government construction strategy due in July.


Hansford: Told the summit that the construction industry is critical to the country’s economic growth

Government chief construction advisor Peter Hansford last week promised to promote closer links between small firms and public sector clients when his construction strategy is published in July.

In his keynote speech at the NCE Prime Minister’s Better Public Building Award summit in London last week, Hansford underlined the importance of SMEs in the new strategy.

“Our construction industry is critical to this country’s growth - both in sustaining thousands of SMEs and in providing the crucial infrastructure this country needs to compete globally,” he told the conference.

He explained his plans for a package of measures to improve SME engagement with public construction projects.

“We are planning to give more specific information of work packages in projects - which will be of particular interest to supply chain members, who in the majority are SMEs,” he said.

Changes will also be made to public procurement practice to ensure that SMEs are engaged. These changes come in response to views voiced by the industry.

“We are trialling three new models of procurement which call for the early involvement of the supply chain, and more integration around the design, the construction and the manufacture of products,” said Hansford.

“They are cost-led procurement, integrated project insurance and two stage open book, which were all proposals from the industry.”

Cost-led procurement is when a client sets a cost ceiling and then engages supply teams in a framework agreement.

The integrated project insurance method involves clients holding competitions to put together teams based on their track records and competence. This team then works to agreed benchmarks overseen by an appointed third party. The team can then be covered by a single, project-based, all risks insurance policy.

Under two stage open book procurement suppliers are invited to tender for a project on the basis of an outline brief and costs benchmark. The winning supply team then comes up with a proposal for the project.

The work is then reviewed by an independent expert to ensure costs and risks are managed effectively.

In addition, Hansford also signalled an intention to use project based bank accounts to ensure speedy payment.

“We are working with key central government departments to roll out project bank accounts across government construction projects. This will improve the speed and security of payment to members of construction supply chains down to tier three within a matter of days,” he told the summit.

Hansford is aiming for projects worth a total of £2bn to use project bank accounts this year, up from £1.1bn last year.

He said the roll out of building information modelling (BIM) across government projects would also continue.

“The government is now requiring the use of BIM on all centrally procured projects, irrespective of value, by 2016,” he said.

Hansford said the construction strategy would bring together a series of initiatives.

“The construction strategy is a mechanism for integrating initiatives - not changing direction on low carbon or anything like that, just to bring existing initiatives into a single context,” he said.

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