Kingsley Clarke, Operations Lead, Southern Construction Framework, discusses the five fundamentals of delivering public sector construction projects to budget.
‘Public sector project runs over budget’ is a narrative we see all too often in the mainstream media. Yet, the reality is often very different, and the situation far more complex than the rhetoric suggests.
Public sector by its design has to be open and transparent. So, at the beginning of a project, there is a need to put a marker in the ground in terms of cost before contractors are engaged and designs considered. There can be a temptation for fanfare when a new project is announced. If it is a once in a generation project, a new school, a hospital expansion transport, social housing, plans will have been years in the making.
But, by the time a project reaches construction phase, the numbers can look rather different, more realistic. It is here that the challenge begins to deliver the project on budget.
At Southern Construction Framework (SCF), we have helped to deliver in the region of £500m public sector building projects every year since 2006. On average, our projects are delivered within 1% of contract sum.
Here are some of the fundamentals that make this happen:
Early contractor involvement
I can’t say this often enough. Engage your contractors at the earliest possible stage. They have considerable experience and technical expertise. Early engagement will ensure they are fully invested in the project, that they play an active role from the start and that they also carry a level of risk.
Gateways and milestones
Any good framework provider will set a series of milestones (or ‘gateways’) at key points in the project to measure progress against. Key performance indicators are set at each stage helping to keep everyone on track and set expectations for the future.
Let the outcomes be your goal
At the outset of a project, consider what you want your outcome to be rather than your specification. Think about this in the context of a new school, providing education space to accommodate primary age children in a growing market town over the next 25 years. This frames things rather differently than in terms of a concrete framed building with six classrooms, a hall and outside space. This is a vast oversimplification, but it shows two very distinct ways of thinking. The first approach offers far more flexibility and lateral thinking. Whereas the second limits thinking to the construction process itself.
Once you know your desired outcome, let your framework, your consultant or your contractors advise on how you can best meet that need. Build your specification together before you put a spade in the ground.
Apply market intelligence
When it comes to materials selection, labour availability and the local market seek out market intelligence from reliable sources. This could be a report from your framework partner, advice from a consultant or a conversation with your contractor.
Your contractor can not only recommend what materials to use but likely has links with suppliers to help you exploit economies of scale. They understand demand and supply, fluctuating costs and lead times.
Be guided by market intelligence so you can make informed purchasing decisions.
Consider two stage open book
At SCF, we are real advocates of two stage open book procurement. In fact, we operate purely on this basis. It is a USP for us.
Single stage procurement works in principle. With this process, the client will outline their requirements and contractors will then compete for the project based on price. In practice, it means a separation of the design/specification and construction process. And this means risk exposure for all parties.
With two stage open book procurement, contractors compete for a preferred contractor status in response to the client’s initial brief. The second stage involves a far more collaborative and integrated approach to pricing and specifying a project – from design and development through to gathering critical information from the supply chain.
The second stage in particular gives both parties the chance to raise and resolve any issues. Get a better understanding of materials prices and supply, and the client gains the technical expertise of the contractor before the construction phase begins.
Ultimately, the result is a clearer picture of delivery costs and more realistic timescales.
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