Integrating social value and technology for tomorrow’s procurement processes
From cultural shifts towards tender evaluations and social value integration through to practical solutions in collaboration and attracting more skilled people, the industry must challenge how it does things now, developing the new and innovative methods needed to tackle the challenges of tomorrow.
Tomorrow’s procurement will rely on several things, with high-quality frameworks and highly skilled people providing the cornerstone.
Tomorrow’s procurement needs to be social value led. Meaning it places social value at the top of the decision tree, bringing it together with clients’ requirements to be firmly embedded at the heart of the procurement process.
Social value cannot be separate – it needs to form the first building block and needs to form a thread of the overall process.
Tomorrow’s procurement needs to be technology-led. We use data very poorly. Construction is the least digital sector in the UK second only to fishing and hunting.
For example, why is there not one database of those working in the sector or a single, centralised accident log? By sharing this type of insight from across the 2.7 million people and 600,000 companies and micro-companies across the sector, we could vastly improve all manner of processes and increase overall productivity.
Technology is about doing the heavy lifting and thinking to streamline processes and help solve problems. It’s a tool we need to embrace – not fear – and is something that should be embedded into the procurement function to maximise on the expertise and innovation happening across supply chains.
Tomorrow’s procurement needs a closely aligned supply chain. Teams work best when they train and play together, and the same goes in procurement. We can’t get the best out of supply chains if we are nervous about working closely with partners.
Quality suppliers hold a lot of knowledge from their learnings over time, and early engagement across projects teams will ensure that skills and expertise are shared downstream to make procurement and delivery fit-for-purpose. This ties in with data-sharing, and it’s up to us to show the real value of early engagement to clients.
A less MEAT-y approach
To understand the move towards ‘Most Advantageous Tender’ (MAT), we must consider how the approach to tenders have evolved over time.
Initially, ‘lowest cost’ ruled the roost. However, while in some settings the lowest price is appropriate, this is rarely the case for complex construction environments. To suit the construction environment, the assessment method evolved into the ‘Most Economically Advantageous Tender’ (MEAT), designed to allow the contracting party to award the contract based on aspects of the submission other than just price.
However, use of the word ‘economic’ within the MEAT method of assessment still places a focal point on the price, and in many cases sees the assessment of cost still coming before quality.
Enter ‘MAT’, which removes the term ‘economically’ and incorporates the broader interpretation of ‘value for money’ in the evaluation of tenders. This encapsulates the drive to move away from ‘the race to the bottom’ and seeing the lowest cost as ‘best value’, when there are so many other factors at play when it comes to value – which is why our framework tenders are weighted more heavily on quality than cost alone.
In turn, this brings the social value element into play. Whether it’s from the initial construction of a scheme through to its operation, the MAT approach allows for these social value considerations with a much better emphasis and conviction in the analysis.
Applying MAT to an evolving landscape
To effectively evaluate tender submissions based on the bigger ‘best value’ picture, we need to be aware of the ongoing change within and external pressures on the market. The past three years have seen the highest and most significant levels of change for the construction sector for a long time.
Brexit has driven both major changes and challenges for the industry. For example, it has created a new legal landscape outside of the European Union as core legislation has been developed and brought into force, such as the Construction Playbook, Constructing the Gold Standard and the forthcoming Procurement Bill – all of which is seeing accelerated policy decision under UK law.
Elsewhere, Brexit, the pandemic and war in Europe have created two of the biggest pressures on the built environment we are currently facing – cost inflation and materials provision.
The pandemic has changed both attitudes and approaches to work, taking a much more flexible approach and adapting practices accordingly – such as amendments to NEC contracts to reflect the challenges these new approaches have identified. This feeds the third major pressure for construction regarding people and skills.
Construction is one of the most interesting and varied sectors, but right now it simply does not have the attraction factor it needs to plug its own skills gap. A large portion of those working in the sector are within 10 years of retirement, so while we are already feeling the significant impact of the skills gap, it is only set to get much worse.
Understanding the purpose. This is more than just the physical output. Multiple benefits can hang around the finished product that create the all-important lasting legacy – and through optioneering we are able to make sure that the options are considered pre-procurement to really understand the purpose and meet the specific requirements of every project.
Understanding the cost. This is two-fold and, through a whole life approach, covers both project and post-occupancy costs. It also covers the environmental costs of both embedded and operational carbon, measuring the impact on a scheme on the planet as well as budgets.
Meeting the requirements. The most interesting but arguably hardest to get right without getting the procurement documentation right, with everything in there to clearly set out the processes to follow. This all links back to the purpose, with a clear and fair scoring metric designed to level the playing field for every bidder.
Tomorrow’s Procurement: Tying it all together
We know what we need to do to procure tomorrow’s solutions. The sector has great ideas, clients and diverse supply chains. Coupled with our collective desire to make things happen, we need to combine good planning, early collaboration, and a data-led approach to bring everything together.
This is our mission at Pagabo and The 55 Group, bringing the best practice and legislative knowledge together with the network and skills to evaluate, procure, manage and learn to push the future of the construction industry to deliver on its potential.
To find out more about our frameworks and procurement processes click the link below:
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