The Government's best value regime, under which local government tenders are assessed on quality instead of price, is nearly a year old. But is it working? This week we ask:
Are some clients still failing to recognise best value?
Obtaining best value in procurement of capital plants is achieved by securing optimum technical solutions at least whole life cost, in the most economical time frame compatible with just-in-time delivery.
While this philosophy is simple to understand many obstacles remain to be overcome, some of which need to be addressed by some clients.
Although many are changing, the hierarchical decision making processes of some client organisations generate time constraints that directly affect the ability to deliver best value.
Lack of decisions at appropriate times lead to compressed activity later, thereby imposing pressures that limit the ability to achieve best value.
Design and build contracting is increasingly chosen as the delivery vehicle, but the full value that this can bring is often diluted by unnecessary involvement of the client's consultant, or even his own engineering group, in design phases that are then duplicated by contractors.
Designs developed by the consultant, and then superseded by the contractor's alternatives, are wasted and have essentially reduced value. Strict imposition of the client's own design parameters, when the functional performance could be achieved with less stringent parameters, militates against best value.
Specifications are another area where some clients could contribute further to achieving value. Their specifications, developed over many years, still embody requirements in excess of the 'fit for purpose' criteria, such as standby equipment and redundant process units that greatly diminish potential value.
There is room to challenge these requirements further against an appropriate risk analysis, but some clients are still loth to consider such an approach. Instead the opportunity to use suppliers' standard products is lost, losing the added value that standardisation can bring.
Overall it seems some clients still overlook the specific value issues of schemes under consideration, while much pressure is brought to lower unit rates and management fees quoted.
Low price rather than greatest value may still be the driver for some clients.
However, others have made considerable moves towards recognising best value and the things likely to deliver it.
Clients must take best value seriously. Without their committed support, initiatives such as the Government's best value programme and Rethinking Construction will never deliver their full potential.
The role of the client is an integral part of best value and Rethinking Construction, the principles of which should be of enormous interest to clients who can expect only to benefit from better quality work, healthy and long term working relationships and better value from contractors who apply these principles.
While some client organisations have been committed to Rethinking Construction principles from the start, I believe clients are increasingly recognising the real business benefits of partnering with like-minded contractors. This has been clearly illustrated by the number of companies that have joined the Construction Client's Charter since its launch on 7 December last year.
Already 246 companies have committed themselves to the Charter and agreed to measure their progress against improvement programmes with increasingly demanding targets. This is extremely encouraging because, for the first time, we have a rigorous way of showing that clients are actually doing what they say they are doing.
Best value is a term most often used in connection with local government. A number of local authorities have responded vigorously, by changing their procurement methods for example, but many have yet to fully embrace best value.
Part of the problem is that there has been no really clear definition of what client best value is, although more recently this has been clarified to show the clear connection between it and the application of Rethinking Construction, including performance measurement using key performance indicators.
We have been heartened by the policy of the public sector including the National Audit Office, Construction Clients Panel and Public Accounts Commission to adopt best value as accepted practice.
Decisive actions by clients to set targets and measure improvements will, for the first time, ensure that the agenda for continuous improvement set out in Rethinking Construction is supported by consistent action from across the entire industry.
The Government's best value set of quality and price based indicators replaced compulsary competitive tendering (CCT) on 1 April 2000.
Movement for Innovation (M4i) is one Government initiative to increase best value within the construction industry. It encourages efficiencies by using innovative techniques and uses demonstration projects to illustrate best practice, 41 having been used to date.
A recent National Audit Office report, Modernising Construction, criticised government departments for letting tenders based on cheapest price and ignoring partnering. The report said their approach was actually wasting £2bn per year.