Tim Young 30 September 2020

The pressure of procurement

The pressure of procurement image

We, like many other consultancies, have seen a huge rise in the number of tenders that have been issued by local authorities during the COVID lockdown period. With this also comes an increasing tendency for local authorities to procure consultant teams for new-build housing under a consortium led by the project manager.

However, this approach is restricting competition and has led to many small and medium-sized consultants missing out on contracts due to the way the tender process is being conducted. For the local authorities, it reduces the likelihood that they’ll get access to the best experience and advice across all aspects of their building project.

It’s understandable, of course, that local authorities are looking to simplify their procurement processes, but requiring a consultant to provide a fixed fee on an estate regeneration, particularly when the extent of the works is unknown, is unlikely to provide positive results.

The current market is tightening so that only a limited number of the very large global PM consultancies are able to take on a full design team as sub-contractors to deliver new build housing, and I feel it’s unlikely they’ll truly have all the depth of expertise that’s needed to give the local authorities best value and quality.

What’s the solution?

We believe there is a better model, which sees a single project manager lead, picking up cost manager, principle designer and site inspector roles, but with a separate design team, usually led by an architect, and bringing in other design consultants as sub-contractors. This has the added benefit of providing a continuous separate, independent review of the evolving design process. The client is then getting better value for money and a surer chance of success.

Go back to the shortlist

Typically, local authorities will look to their procurement framework agreements and issue tender invitations accordingly. But lately the current default position seems to be not only to want just one company to deliver everything, but to ask all companies on the frameworks to bid, regardless of whether they really have all the expertise that’s needed.

This is very costly for companies to respond to tenders, and frankly unrealistic to ask twenty companies to bid. It would be better – as advised in the OJEU rules – to have a filtering process in place so you can screen out the outliers and focus on say three or four companies.

Utilise expertise

We believe that it makes good business sense for local authorities to make sure that they have SME’s on their frameworks, or on approved supplier lists. This means they can drill down and look at what their project needs, and identify the specialist companies on their databases who are best placed to ensure success.

For example, we recently worked on a local authority housing project where the anticipated number of homes was 70. As the scheme evolved, the specialist SMEs involved were able to work together to identify hidden opportunities and expand this project to 180 units.

If the project had been delivered under the local authority large consultancy approach, it is unlikely the same incentive would have existed to encourage such a radical scheme design change. By drawing on multiple SMEs each with their individual areas of expertise, the local authority was able to remain flexible and deliver quite a different scheme to that which was originally envisaged. This was a great result for the local authority and more importantly this approach has helped to provide much needed additional homes for the local community.

Tim Young is equity partner and head of innovation at John Rowan and Partners

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