Public sector clients must do far more to change procurement practices if the industry is to deliver the £2bn to £3bn annual savings demanded by the Treasury.
The first annual report of Treasury body Infrastructure UK’s (IUK’s) three year cost review programme, published this week, reveals that construction bosses doubt that public sector procurement practices are changing.
It reveals the findings of a survey of 33 industry chief executives carried out by the ICE, and other industry bodies in February 2012.
This indicates that procurement practices have failed to improve significantly.
A surprising 80% of chief executives said the government continues to favour lowest cost above best value in procurement.
“The changes [required] are not yet sufficiently widespread to represent a step change across the sector and the next 12 months will be crucial to implementing positive behaviours more widely among clients and industry participants,” says the report.
“This is a priority for this year,” admitted a senior Treasury
Matching procurement options
“We are not trying to push a one size fits all approach, but trying to match clients with different procurement options.”
The report claims that in the last year IUK has identified procurement changes that could produce savings of between 12% and 25%.
IUK has been working to incorporate these findings into a “route map” to help public and private clients choose the most appropriate procurement strategy for their projects.
Different approaches cited include London Underground’s hybrid form of Early Contractor Involvement dubbed Incentivised Contractor Engagement (ICE) now being trialled on its £500M upgrade of Bank station.
The report says a priority for 2012/13 is to publish the route map by July.
The report adds up to £1.5bn of savings have been identified from projects including the Highways Agency’s managed motorways programme, Crossrail and the Mersey Gateway crossing.