The public sector construction market is quite literally building up - never before has it offered so many opportunities for suppliers.
The UK Government plans to release up to £31 billion worth of public works contracts for economic and social infrastructure within the next year alone.
At the heart of this burgeoning sector is the UK Government's Construction Playbook - a best practice procurement guidebook produced for contracting authorities. It covers everything from policy creation to project operation and offers a framework for achieving better project outcomes.
In doing so, the Playbook offers suppliers an insight into what contracting authorities are looking for when awarding contracts.
If you want to sell more to government in this market, it is critical that you understand the Playbook and implement its guidance when preparing bids and planning out your pipelines.
To help us understand the Playbook, we've been talking to our resident construction expert, Dan Bomken, to get his take on what this all means for suppliers.
Skip ahead to read about:
- What does this mean for suppliers?
- What does the Playbook mean for SMEs?
- What does this mean for the future?
Dan is an Account Executive at Tussell. Dan has extensive consulting experience in the Real Estate and Construction Sectors, having worked at Gardiner & Theobald LLP and Mulitplex. He has overseen projects including the Earl's Court Redevelopment and Vauxhall Square.
🎯 Summary & Key Aims
The Construction Playbook outlines the Government's expectations for how contracting authorities - namely, Central Government buyers and their arms-length bodies - should best procure construction-related services.
The Construction Playbook has been written with 3 key objectives in mind:
1️⃣ Improving building and workplace safety
2️⃣ Progressing toward the UK's 2050 net zero commitment by adopting whole-life carbon approaches
3️⃣ Promoting social value and levelling up
The Playbook expects that contracting authorities demand several actions from prospective suppliers, including earlier collaboration, fair-margin bids, effective risk management, adoption of 'Gold Standard' contracts, and adherence to Playbook policies throughout contract execution.
In addition, buyers are looking for safe, sustainable, and innovative solutions from suppliers that use Modern Methods of Construction, alongside investments in digital systems and prompt payment. Quality management processes, skills development, and proper team resourcing are desirable qualities for suppliers to have.
The Construction Playbook sets out 14 key policies that are "mandated for central government departments and arm’s length bodies (ALBs) on a ‘comply or explain’ basis".
These policies come into play at varying points of the procurement timeline.
💡 What does this mean for suppliers?
For suppliers working in the public sector construction market, each of these 14 key policies will have a direct impact.
It's important for you to understand each in turn, and incorporate these expectations into your bids and public sector business practices.
Let's break them down:
Preparation & Planning
🔮 Comprehensive Pipelines:
Commerical pipelines for the next 3-5 years should be published by the contracting authorities thus enabling suppliers to anticipate and prepare for future contract opportunities.
Suppliers must keep an eye on these comprehensive pipelines in order to anticipate opportunities, and build relationships with target accounts before the tender drops.
📊 Market Health & Capability Assessments:
Contracting authorities are encouraged to consistently evaluate the market to identify new opportunities technology trends, and enhance competition.
Stay informed about market trends, emerging technologies, and areas where innovation could enhance their competitiveness within the market to ensure you meet contracting authorities' evaluations.
🗃️ Portfolios and Longer-Term Contracts:
Contracting authorities should adopt longer-term plans and portfolios to improve investment certainty and embrace Modern Methods of Construction.
You need to future-proof your plans and consider how you can achieve Modern Method of Construction principles.
📍 Harmonise, Digitise, and Rationalise Demand:
Contracting authorities are looking to simplify coordination across projects, promote digital adoption and innovate improved efficiency.
Consider digitalisation initiatives that streamline project delivery processes and align with Modern Methods of Construction to improve efficiency and productivity.
🌐 Further Embed Digital Technologies:
The UK BIM Framework should be used by contracting authorities to adopt standardised data practices, and support the Information Management Framework and National Digital Twin Programme.
You need to understand and adopt the UK BIM Framework to standardise your data practices and support the transition to digital technologies.
🏗️. Early Supply Chain Involvement (ESI):
Contracting authorities are encouraged to engage early with their supply chain, in order to inform designs, mitigate risks, and ensure planned outcomes and cost-effectiveness.
Engage proactively throughout the project lifecycle, offering insights during the early stages to contribute to better business cases, risk reduction, and successful outcomes. Contracting authorities are looking to mitigate risk and ensure cost-effectiveness - ensure that you are demonstrating these capabilities.
✅ Outcome-Based Approach:
Contracting authorities should define measurable outcomes emphasising value, performance and cost from the project's start.
Focus on achieving clear, measurable objectives that encompass whole-life value, performance and cost, aligned with the priorities outlined in the Project/Programme Outcome Profile. Make sure you are communicating this with your buyer.
📈 Benchmarking and Should Cost Models:
Contracting authorities should compare project aspects for cost consistency.
Align your cost estimates with industry benchmarks and develop Should Cost Models (SCMs) to better understand the overall costs, value, and risks associated with your projects.
📝 Delivery Model Assessments:
Contracting authorities should adopt early analysis of delivery models for desired outcomes and value-based approaches.
Be prepared to participate in early discussions about the most appropriate delivery models to achieve the desired outcomes as contracting authorities will be looking to adopt early analysis of this. In addition, be sure to demonstrate your alignment with value-based approaches.
🤝 Effective Contracting:
Standardised contracts with KPIs and clauses for collaboration, value, and risk management - following the "Constructing the Gold Standard" - should be adopted by contracting authorities.
Be well-versed in standardised construction contracts and be able to adapt to specific requirements such as KPIs, collaboration, value delivery, and risk management.
💷 Payment Mechanism and Pricing:
Supplier payments should be linked to outputs and supplier performance, to help foster a sustainable construction market.
Structure pricing models to tie payment to the delivery of outputs and demonstrate your performance, promoting the desired behaviours within the construction process.
⚖️ Risk Allocation:
Contracting authorities should assign and manage risks for value and success. Contracts should be profitable and sustainable.
Understand how risks are allocated within the contracts they participate in. Being able to manage and bear specific risks efficiently is crucial for ensuring project success and value for money.
🏦 Supplier Financial Standing:
Contracting authorities should evaluate suppliers' financial status during selection to avoid disruptions due to insolvency.
Demonstrate that you have economic and financial stability during the selection processes to assure the public sector that they can fulfil your commitments without facing financial issues.
Evaluation & Award
❗️ Resolution Planning for Critical Contracts:
Contracting authorities should demand resolution plans from critical contract suppliers to ensure continuity in case of insolvency.
Suppliers of critical contracts should be ready to provide resolution planning information, indicating your preparedness to ensure project continuity in case of supplier insolvency.
Overall, you need to align your standards, behaviours, and ways of working with the expectations set by the government, complying with the policies in the Construction Playbook to ensure contracts are successfully delivered.
🌱 What does the Playbook mean for SMEs in the public sector?
Throughout the Playbook, one clear message stands out for SMEs: contracting authorities want to foster more diverse construction supply chains that include more SMEs and VCSEs.
As Dan argues: "SMEs are essential to the construction industry's innovation and development, even though they might lack the capacity of larger suppliers. The Playbook appears to acknowledge this, suggesting that projects should adjust their expectations during the initial phase." Namely, the Playbook emphasises the importance of incorporating SMEs via joint ventures and consortia, fostering a thriving environment for smaller and innovative businesses.
The Playbook suggests that contracting authorities should tailor contract lengths and sizes for specific markets, incorporating clear obligations to improve various aspects like safety, efficiency, and sustainability. It is hoped that this will increase opportunities for SMEs.
Dan picked up that "[the Playbook] emphasises that SME involvement and competitiveness should be maintained, while contracts should foster continuous improvement for sustained value."
Dan added that "the Playbook's push for greater SME involvement is a step in the right direction, but for it to work, the government must provide guidance on appropriately scoping opportunities so SMEs can lend their specialised expertise without being overwhelmed."
The Playbook acknowledges the expertise that SMEs can offer, particularly in modern methods of construction and innovative technologies. As Dan said, "early supplier involvement is proven to prevent downstream issues, provided all parties collaborate openly and contracting authorities don't exploit suppliers’ expertise." Therefore, SMEs must be alert to upcoming opportunities and have a proactive, not reactive, strategy.
You can read more on "how to build a pipeline of public sector procurement opportunities" in our how-to guide.
🔮 What does this mean for the future?
In the ever-evolving landscape of UK construction, several pivotal trends have emerged and can be seen within the Playbook.
These include the adoption of modern construction methods, a burgeoning skills shortage compounded by the ramifications of Brexit, and a growing emphasis on sustainability and achieving net-zero carbon emissions. These transformative forces are reshaping the industry, setting the stage for a dynamic future.
The Playbook will be a big contributor to the continued shaping of these trends.
Dan pointed out that "a phased, ‘comply or explain’ implementation risks inconsistent adoption. Mandating the 14 key policies for all central government projects, while allowing proportional application of other principles, would drive better change. Continued industry engagement is essential."
He added that "the Playbook's focus on improving government-industry relationships through fair returns, conflict avoidance and balanced risk management is commendable and should make working with government more attractive if implemented properly."
Dan argues, however, that parts of the Playbook remain vague and ambiguous, and could leave too much open to interpretation. "I'd have liked to see more on skills development and workforce training to build capacity for innovations like MMC. Guidance on appropriate contract lengths and breakpoints would also have been helpful."
To read more about Dan's thoughts on what the future of the public sector construction market might look like, check out our In conversation with Dan Bomken: the public sector construction market blog.
The UK's public sector market is expanding significantly, offering ever more opportunities - understanding the Construction Playbook is crucial for success within this market.
This blog outlines key policies to enhance safety, achieve carbon neutrality, and promote social value. Suppliers must collaborate early, embrace innovation, and adhere to standardised contracts.
The Playbook strives to create a sustainable industry with skilled workers. SMEs are encouraged to participate, fostering diversity and innovation.
Keep on top of the key principles of the Construction Playbook and start to incorporate them in your day-to-day work in order to do more business in this public sector market.
Tussell's market intelligence platform is already being used by consultancy suppliers to track new opportunities, dig into their target accounts, see who their competitors are working with, and understand which frameworks they should get onto to win more work.
Book a personalised demo with our team to see how Tussell can unlock public sector insights and opportunities for your business.