stakeholder engagement event workshop discussion 8 th september 2015

Stakeholder Engagement Event

Workshop Discussion

8th September 2015

Issues: Notified in advance

• BIM• The Procurement Journey.• Construction Procurement Capability Assessment (PCA).• Spending forecasts.• Tender process.• Cash retentions.• Community Benefits.• PBAs.• PQQs.• Construction skills.• Contracts & Risks.• Alternative methods of procurement.

Raised in Session 1

•

Implementing The Recommendations

Delivery Workstream

sSFT

Policy Workstream

sSG

Themes

Construction

Procurement Review

67 Recommendations

CollaborativeProcurement

1 4

EfficientProcurement

5 4

SustainableProcurement

3 2

Outcome FocussedProcurement

1 1

Theme – Collaborative ProcurementWorkstream - Structures

OverviewCreate a structure to provide leadership and a focal point for construction procurement policy guidance to ensure infrastructure is properly planned.

Issues

• McClelland Report did not deal with Construction

• Substantial capability exists, but…

• Limited co-ordination

Approach to Delivery

• Strengthen SG Policy Team• Develop Collaborative

relationships• Create structure for

implementation of Review

Theme – Collaborative ProcurementWorkstream - Skills & Capability

OverviewProcuring Authorities require the right mix of construction procurement skills and expertise. The recommendation is to create a strategy to measure, share, develop and allocate skills and expertise more effectively across the public sector.

Issues

• Limited collaboration.• Improve skills

development.• Limited resource.


• Baseline skill set developed.• Enhance learning opportunities.• Pooled expertise.• Explore barriers to

collaboration.• Establish support structures.

Theme – Collaborative ProcurementWorkstream - Linkages & Collaboration

OverviewPromote the benefits and opportunities of identifying linkages between projects and of adopting a collaborative approach between public sector bodies. Address how regional, sectorial and programming synergies across a pipeline of work can be co-ordinated.

Issues

• Limited strategic reviews.• Opportunities for

collaboration not fully exploited.

• Lack of pipeline transparency


• Best practice developed.• Promote co-ordination of

spend.• Consider appropriate regional

forums involving industry.

Theme – Collaborative ProcurementWorkstream - Benchmark Database

OverviewUsing robust and readily available data from historic projects will support the public sector in the development of future projects. Providing Procuring Authorities with accurate benchmark data on costs, design and performance will support better outcomes within infrastructure procurement.

Issues

• Limited knowledge sharing.• Challenges in obtaining

data. • Limited level of data

collated. • Variation in how/what data

is collected.


• Develop database• Promote consistency• Promote Transparency• Support budgeting & project

development. • Develop Hub pilot database


Central Library of Data

Sharing knowledge

Support demonstration of VfM

Monitor Programme Performance

Promoting Hub

Database Accessible

External Website


• Capital Costs

• FM & LCC Costs

• Design Solution (Nett:Gross, Design solution, BREAM)

• DBFM Specific Costs (SPV, Advisors, Insurance, Funding)

• Programme Performance (Cost, Programme Certainty)

• Community Benefits

• Participant Costs

Database Accessible External Website


DatahubCos

SFT

Procuring Authorities

Existing PA

Databases

BCIS

Accessible External Website Database

Theme – Collaborative ProcurementWorkstream - Building Information Modelling (BIM)

OverviewBIM offers the opportunity to adopt a new collaborative approach which has the potential to achieve more efficient and effective ways of working. The objective is to develop the implementation of BIM and encourage its adoption across the entire public sector. The review recommends the use of BIM level 2 by April 2017 on all construction projects.

Issues

• Limited use within industry• Limited understanding of

the client benefits.• Development of industry

expertise.


• Supported by Construction Scotland BIM group.

• Complete pilot project.• Develop strategy.• Develop guidelines.• Liaise with UK BIM task force.• Demonstrate benefits.


MODELLING

Or MANAGEMENT

Current Activity

• Appointment of David Philp to Chair the Scottish BIM Delivery Group

• Issue of capability survey to all procuring authorities

• Publication of the implementation plan.

• Continue launch forums with procuring authorities

• Identify Pathfinder Projects

• Conclude Horizon 1 by Oct ‘15



SFT Website for Updatehttp://www.scottishfuturestrust.org.uk/our-work/sft-build/construction-procurement-review/building-information-modelling-bim/

E-mail [email protected]

http://www.scottishfuturestrust.org.uk/our-work/sft-build/construction-procurement-review/building-information-modelling-bim/



mailto:[email protected]

Theme – Efficient ProcurementWorkstream - Procurement Journey

OverviewTo develop new standardised guidelines in a revamped construction procurement manual based on a newly defined construction procurement journey.

Issues

• Lack of awareness of guidance

• Current guidance difficult to access

• No common understanding of construction procurement journey


• Develop a construction procurement journey

• Link to journey for goods and services

• Review and re-draft construction procurement manual

• Digitise web based manual

Theme – Efficient ProcurementWorkstream - Assurance

OverviewCreate a consistent, comprehensive, proportionate and appropriate system for assurance and review of construction procurement capability and activity particularly.

Issues

• Project assurance is essential

• Need to ensure consistency

• Need to ensure appropriateness

• Collect best practice


• Review current Gateway Review Process

• Identify areas of need where Gateway reviews apply to construction

• Develop construction specific module for the Procurement Capability Assessment

Theme – Efficient ProcurementWorkstream - Spending Forecasts

OverviewTo develop an accurate means of tracking actual and planned pipeline expenditure by public bodies to allow more efficient planning by both buyers and suppliers of construction to take place. Issues

• Economic uncertainty• Inability of industry to plan

for future• Feast or Famine for

contractors and consultants

• Barriers to collaborative spend

• SG Infrastructure Investment Plan is not universal


• Review current practice• Work with public sector

bodies and industry to develop mutually acceptable model pipeline

• Review current reporting processes

• Develop guidance for Construction Procurement Manual

Theme – Efficient ProcurementWorkstream - Tender Process

OverviewTo review current procurement processes including SPQQ, PCS, PCS Tender, Quick Quote to ensure that they are appropriate for construction. And to ensure that the process identifies the right person/company for a job whilst only requiring the bidder and the tenderer to provide the information which is essential to allow a decision to be made.

Issues

• Lack of awareness of procurement processes

• Challenge culture• New legislation• Proportionality


• Review existing guidance and processes

• Consultation and buy in by industry

• Incorporate process into construction procurement journey

• Review existing guidance and re-issue as necessary

Theme – Efficient ProcurementWorkstream - Systems

OverviewTo ensure that all content on Public Contract Scotland and Public Contracts Scotland Tender is relevant for construction procurement where appropriate.

Issues

• Procurement Reform Act (Scotland) 2014 mandates use of online tender systems

• Likely to be commenced late this year


• Review existing PCS and PCST

• Develop construction specific modules and categories where appropriate

• New guidance for Construction Procurement Journey and Construction Procurement Manual

Theme – Efficient ProcurementWorkstream - Frameworks

OverviewGuidance on best practice in the use of framework agreements should always be followed, in particular in allowing opportunities for SMEs to participate.

Issues

• Barrier to SME’s.• Aggregation of small

contracts.


• Address the impact to local SME’s.

• Benefits of aggregated contracts.

• Review UK wide frameworks. • Procurement Strategy

considerations. • Develop guidance.

Theme – Efficient ProcurementWorkstream - Contracts & Risk

OverviewSupport and improve the approach to contract selection which considers appropriate risk allocation. Avoid amendments to standard forms. Consider painshare/gainshare arrangements. Alternatives to cash retentions.

Issues

• Heavily modified contracts.

• Disproportionate use of cash retentions.

• Lack of open discussions on risk allocation.


• Promote Standard T&C’s.• Improve guide on contract

selection focussed on risk. • Guide on pain/gain

arrangements.• Alternatives to retention.

Theme – Efficient ProcurementWorkstream - New Methods of Procurement

OverviewAssess and consider new procurement initiatives within the industry. These include the UK Government trials of its three new methods of procurement and the self-delivery of contracts promoted by Scottish Water.

Issues

• Integrated Project Insurance.

• Cost Led Procurement.• Two Stage Integrated Team.• Self – Delivery contracts.


• Liaise with UK Gov on progress of trials.

• Identify and consider benefits in their application within Scotland.

• New guidance if appropriate.

Theme – Efficient ProcurementWorkstream - Hub Programme

OverviewDevelop guidelines in relation to the Hub programme which support improved payment terms, the monitoring of hubco performance and the exchange of project data. Consideration of a minimum contract threshold.

Issues

• Limited knowledge sharing within the public sector.

• Extended periods between milestone payments.


• Guidance on payment terms issued May 14.

• Develop Hub Manual.• Develop Hub database.• Assess benefits of minimum

contract value.

Theme – Efficient ProcurementWorkstream - Hub Programme

Reponse

• New Designer Payment Guidancehttp://www.scottishfuturestrust.org.uk/publications/hub-pdo-guidance-note-april-2014/

• Hub Project Managerhttp://www.scottishfuturestrust.org.uk/files/publications/hub_North_Territory_project_managers_handbook.pdf

• Hub Database

• Recommendaiton Paper on minimum contract thresholds

http://www.scottishfuturestrust.org.uk/publications/hub-pdo-guidance-note-april-2014/



http://www.scottishfuturestrust.org.uk/files/publications/hub_North_Territory_project_managers_handbook.pdf

http://www.scottishfuturestrust.org.uk/files/publications/hub_North_Territory_project_managers_handbook.pdf

Theme – Sustainable ProcurementWorkstream - Fair Payment

OverviewWork collaboratively to ensure that all contractors and sub-contractors to public contracts receive all monies due on time and to a fair payment schedule.

Issues

• Industry reliance on supply chain credit

• Late payment of supply chain


• Work with industry to develop industry agreement to a fair payment charter

• Continue to pilot project bank accounts

• Develop contractual fair payment terms for public contracts

• Update Construction Procurement Manual

What is a Project Bank Account?

• Ring-fenced, electronic bank account, from which payments are made directly and simultaneously by a client to members of the supply chain.

• Accelerates payment due to tiers 1 – 3, usually within 3 to 5 working days of the Client paying the certified value of the monthly assessment into the PBA.

• Has Trust Status which secures the funds in it and can only be paid to the beneficiaries – the supply chain members are named in the account

What is a Project Bank Account?

• Similar to an escrow account

• PBAs aren’t that different to other bank products, it is the context in which it is used that makes it different

• Medium through which interim payments are made

• Provides clients visibility & auditability over timing/amounts of payments

• Simple and cost effective to set up and operate

What a Project Bank Account doesn’t do

• It does not involve client prefunding but can be used as receptacle for project funds if a client wishes

• It does not cut across any contractual provisions including:

• those dealing with the preparation and submission of interim applications

• valuation, authorisation or certification of interim payments

• It does not take away the lead contractor’s responsibility for managing the supply chain so that the work is performed in accordance with the contract

• It does not negate any rights of abatement and/or set-off

Project Bank Accounts

Which PBA model

• Joint client & contractor account

Key requirements

• Two parties to Trust Deed• Both client and contractor authorise payments

Dual agreement is required before payment is made,

i.e., the main contractor / client can only act when both parties have agreed to the payment and one party can not alter the payment without the agreement of the other party

PROJECT BANK ACCOUNTS

Client Payment

Main Contractor

SubContractor

SubContractor

SubContractor

Client Payment

PBA

MainContractor

SubContractor

SubContractor

Traditional Project Bank Account

Typically 60 days Typically 3-5 days

Bank Mandate/ Certified payment

Theme – Sustainable ProcurementWorkstream - Small and Medium Sized Enterprises

OverviewTo maximise the opportunities for SMEs to compete for public contracts

Issues

• Difficult for SMEs to get on national frameworks

• Lack of construction procurement knowledge of SMEs


• Ensure appropriate frameworks are used

• Develop support mechanisms for SMEs

• Work with industry • Review framework guidance• Incorporate into Construction

Procurement Manual

Theme – Sustainable ProcurementWorkstream - Housing

OverviewEncourage and enhance active collaboration in procuring affordable housing across Scotland

Issues

• Large Sector: 40 – 50 HAs and 23 LAs building houses.

• Budget pressures• Inconsistent co-ordination

and co-operation


• Review of previous collaborative pilots.

• Review will inform next steps• May include further pilot

collaborative projects• Further guidance to be

developed.

Theme – Sustainable ProcurementWorkstream - Environmental Sustainability

OverviewDevelop and promote guidance in supporting the Public Sector to deliver to the sustainable procurement agenda. Specifically in relation to environmental wellbeing. This will support a coherent and joined up approach in obtaining best environmental outcomes from procurement within infrastructure.

Issues

• Inconsistent approach. • Limited knowledge sharing.• Large variety of

measurement tools.


• Identify all current guidance.• Identify coherent themes.• Align guidance to policy

strategy. • Align guidance to construction

specific elements.

Theme – Sustainable ProcurementWorkstream - Community Benefits

OverviewRequirement to review and update the Scottish Government 2008 community benefits guidance for construction. This revision to the guidance should support Contractors and the Public Sector to procure, implement, measure and deliver effective community benefits within contracts.

48 – Update 2008 Community Benefits Guidance 49 - PS

have strategic

objective for CB's and outline in

tender

50 - Guide to

Contractor to design,

deliver CB's

51 - Guide to PS to

assess CB at ITT stage

52 - Promote

and investigate

share apprenticshi

ps

53 - Guide to monitor

performance (KPI's)

65 - Industry support PS deliver CB's


Issues• Inconsistent requirements within tenders. • Limited knowledge sharing in adopting community benefits strategies. • Challenges in evaluating tender price and benefits.

Approach to DeliveryNew Community BenefitsConstruction Guidance

Promote CITB Client Base Approach

Guidance on procurement & tendering Community Benefits

Identify and Share all funding sources

Shared apprenticeship pilot and develop model

Included in Scottish

Government Community

Benefits Guidance

Note


COMMUNITY BENEFIT TOOLKIT FOR CONSTRUCTION

Publish – Aug 2015

Toolkit to support the embedding of community benefits within procurement.

Focus on Community Benefits which are deliverable, proportionate and specific to the contract.

A toolkit for both buyers and suppliers.

Benefits which are Proportionate &

Deliverable

Community Benefits

Pre-Procurement

Procurement of

Community Benefits

Monitoring of Community

Benefits

Reporting of Community

Benefits

Lesson Learned



Type Of BenefitConsideration When Defining The Benefit

Employment New Entrants

Specify the Job Type (M&E/Joiner/Operative) Specify duration of unemployment prior to employment on project. Level of experience prior to employment. (ie no skills & experience) Duration of new employment before benefit deemed to be achieved. CITB

advise 12 weeks. Unit for measurement (Usually nr of new entrants) Specify evidence/information required to demonstrate delivery of the

benefit.


• Link to key organisation

• Appendix A contains detailed list of initiatives and source for funding and support.

• Current list contains 190 different support initiatives.

• Included for both public & private sector

http://www.sdpscotland.co.uk/

https://www.skillsdevelopmentscotland.co.uk/

http://www.citb.co.uk/

http://readyforbusiness.org/

https://www.ourskillsforce.co.uk/


• Community Benefits Policy & Objectives

• Effective Procurement

• Monitoring & Reporting

• Partnership & Community Engagement

http://www.citb.co.uk/

Theme – Outcome Focussed ProcurementWorkstream - Whole Life Cost/Design Led Procurement

OverviewIn the development of a business case and procurement strategy, Procuring Authorities should ensure a focus is made on service outcomes. To facilitate this approach, further guidance should be developed to embed design and whole life costing early within the development process.

Issues

• Greater focus on the capital costs than the operational cost.

• Spend to save not afforded priority.

• Perceived barriers to the early procurement of designers.


• Promote best practice.• Design- Led research and

guidance. • Tools to support early

application, reporting and consideration.

• Develop reporting templates. • Support the procurement of

the correct expertise.


Definition


Input• Consistent data• Whole Life Cost

Assessment• Consistent data

parameter (Yrs etc)

Output• WLC Scorecard• Consistent reporting• Promote assessment

on WLC. • Support approval

process.• Support VFM over

lifetime not just capital cost.

WLC Scorecard

Theme – Outcome Focussed ProcurementWorkstream - Best Practice

OverviewDevelop best practice resource including learning lessons for all aspects of investment and construction procurement

Issues

• Inconsistent methods of prioritisation of investment

• Inconsistent availability of lessons and consequently best practice


• Infrastructure Investment Board reviewing current investment decision practice

• Project currently underway to develop learning lessons

• Guidance to be included in Construction Procurement Manual and aligned to Gateway Reviews

stakeholder engagement event workshop discussion 8 th september 2015

Documents