Could Changes in Procurement Policy Lead to More Money?

Tuesday, December 2nd, 2014
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Could changes in procurement policies and processes improve the way we deliver projects?

First, it is important to ask what private sector suppliers (constructors, designers, and other consultants) want from government procurement policies and processes.

The Productivity Commission in its draft Report on Infrastructure Costs had a crack at some suggested changes, arguing that “There is significant scope to improve public sector procurement practices and lower bid costs for tenderers, with potentially large benefits for project costs and timing.”

Here are two changes in procurement approach suggested by the Commission:

  • Reducing bidding costs by investing more in initial design, contributing to the bid costs of tenderers, and requiring only cost-relevant plans from all bidders, with the remaining ones required of the preferred tenderer.
  • Eliciting best value-for-money bids by improving the quality of information on possible costs by developing initial designs using BIM, and, working with industry to coordinate the establishment of common technical standards to ensure that the greatest benefits from the adoption of BIM are realised.

Both make sense, and could and should be applied to commercial building projects as well as infrastructure. There are other improvements that would make a difference. Here are two suggestions from ACIF’s policy on regulation.

Ensure procurement policy encourages collaborative working. Success in the future will involve greater attention being paid to collaborative working at all levels within a construction project. Procurement and tendering policies should support and encourage greater involvement of key stakeholders at the early stages of project development and should address the capacity of the industry to meet project objectives by allocating risk appropriately.

Government is a large customer, and it must encourage innovation by demanding innovative practices and sustainability on its projects. Done properly, demand-side innovation will not inhibit competition or transparency. It can lift standards that flow across the public sector and to the private sector. These innovations include requiring the use of integrated project teams and the use of BIM.

Encouraging public sector agencies to embrace change is a challenging task. It is not to be embarked on lightly, and patience is required. And yes, that is a partial lift from the Book of Common Prayer. The reasons are many and well known but it is worth reflecting on how the growing tide of support for BIM and its key driver, project team integration, is likely to generate sufficient momentum, and soon, to sweep away the perceived obstacles.

Clients approach adoption of BIM, and the option of encouraging greater project team integration, with caution. There is some reluctance to adopt BIM as a tool to design and construct assets, and to manage them after they are commissioned.

In the public sector, each jurisdiction and the agencies within them are moving at their own pace. Some agencies are more advanced than others – those that regularly commission projects to deliver new or refurbished assets and have significant asset portfolios to manage are more advanced in their thinking and development of internal policies and processes. Agencies at the forefront include those for defence, health and education.

Key issues for public sector agencies include:

  • Assessing whether the costs of requiring the delivery and use of BIM models are outweighed by the asset’s whole-of-life benefits
  • Identifying minimum threshold values of projects on which to require the use of BIM for designing, constructing or managing assets
  • Assessing whether local suppliers (designers and constructors and asset managers) have the skills and resources to build and use BIM models
  • Ensuring that smaller firms – whether designers or other consultants, or constructors – that are slower than others in using BIM are not disadvantaged
  • Determining whether existing legislation, policies, or procedures are flexible enough to allow the early appointment of constructors to project teams to be part of the design process
  • Determining the extent to which internal BIM or other project management capability is required when requiring the delivery and use of BIM models by suppliers
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