Columnist

Building a better procurement system

A key part of Construction Alliance Northeast’s work is our lobbying of the Government, MPs, local authorities and other procurement organisations to remind them of the economic benefits brought by working with local firms. 

One of our main pillars is around intelligent procurement.

Put simply, we would like to see local money spent locally. 

This reinvestment not only promotes local growth but aids social mobility, with more local people employed in the construction industry creating a better standard of living for many.

We are working alongside procuring bodies and clients to raise the profile of regional contractors and are helping raise the visibility of workstreams and pipelines for contractors.

One of the biggest challenges is simplifying the procurement process, which is generally a very costly and time-consuming task for many companies, certainly at SME level.

We have several types of procurement, from single stage negotiation, single and two-stage tendering, selective and open tendering and full negotiation.

And then there is the elephant in the room from a client perspective – money.

Clients will nearly always set budgets and early cost projections based on early-stage information produced by the design team. 

This all sounds good, but how good is that advice and, by the time we come to the tendering stage, how much information has changed and how accurate are those budgets?

This situation often starts a race to the bottom. 

Once tender costs are received, the client team asks how they can procure the same project for less money. 

With margins already unsustainably tight in the industry, this can be where projects come unstuck, with contractors working on unreasonable margins.

The client and end users can also suffer from poor quality, poor materials, poor project management and disputes, which leads to a project they neither wanted or the construction experience they desired.

At Construction Alliance Northeast, we are talking to clients and procurement bodies to help remedy the situation. 

If we can encourage a quality-over-cost agenda, use of the best regional supply chains and ensure prompt payments, we might start sowing seeds of change and create something more sustainable. 

Tim Barrett is chair of Construction Alliance North East

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