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Public sector procurement needs to be more strategic says new research

Association for Consultancy and Engineering

Government ambitions to cut public sector construction costs by 33% and halve the time it takes to build projects will only happen if those doing the buying have the skills to enable them to understand the value not just of each transaction but the final outcome for the economy, according to new research by ACE.

The association says a fundamental rethink of where procurement sits in the whole process along with the language used is urgently needed.

“Too often parties involved in procurement are trying to enact change as part of the transactional process of buying and not as part of the strategic investment decision making process which sets many of the high level demands and complex conditions for how projects will be procured" - ACE

In the report ‘Procurement Landscape: wider, challenging and in need of reform’ launched today it points out that there are 40,000 procuring bodies across the public sector providing “a significant challenge in ensuring that public sector investment achieves the best social and economic outcomes”.

“It is vital that the investment process is always considered in light of the social and economic outcomes they can generate as part of a long term and efficient investment process,” the report says. “To think of such actions as purely a transactional affair will only limit the social and economic benefits the public sector could ascertain.”

The report goes on: “It is important that procurement in the construction sector starts to evolve beyond the idea of a simple transaction and buying process to one of a strategic governance of investment.”

As the public sector seeks efficiencies the ACE is concerned that there is too much focus on doing the best deal and not enough on deciding whether the project in question is the right one to achieve the desired outcome.

“Too often parties involved in procurement are trying to enact change as part of the transactional process of buying and not as part of the strategic investment decision making process which sets many of the high level demands and complex conditions for how projects will be procured.”

The association says that skills within the public sector need to be improved to enable procurers to act with the mindset of a strategic client.

“Just having improved skills at the project level will not solve a skills mismatch. If an investment strategy is flawed from the start an efficient outcome is not possible.”

Skills within the client body need to include “those with a macro view of not only singular project outcomes but also of an investment process as a whole,” ACE says.

“The default ability to deliver a project is dependent on the client’s skills or lack thereof,” the report says. “That is to say that the clients skills are a definitive constraint; a client is not able to deliver above its skill level.”

Industry can help bolster the client’s abilities, ACE suggests. “This does, however, rely on the client identifying this higher skill level and allowing activity and innovation to occur in a way which ensures the project outperforms its own skill level.

“Whereas, if a client does not fully understand the working practices and improvements industry can offer and continues to procure and develop a project to the best of its ability and not industry’s, it is therefore constraining the outcome.

Other key findings in the report include: 

  • The diverse range of procurement skills and practices of public sector clients creates inconsistent results in securing supply chain innovation and value for money; 
  • The lack of knowledge could be costing £billions through inefficient management; 
  • Interactions are often over-complex and under-estimated by both sides as internal processes are not understood or communicated effectively.

“With increased devolution on the way and over 40,000 public sector bodies with procurement responsibilities, many at the local level, this ground-breaking report could not be timelier," said ACE chief executive Nelson Ogunshakin. 

"It is the first step on the road to reforming procurement, evolving it into a strategic governance process that will facilitate delivery of the infrastructure we need.

"ACE will now be working in partnership with local, devolved, and national governments to begin changing and shaping the language around procurement. This will create wider market opportunities and efficiencies through better collaboration across the various authorities, which will ultimately support local economies, including SMEs, training, and employment.”

Read the full report here

Comments

A very timely report. I am reminded of the words of Len Porter when he was CEO of the RSSB: "Every client gets the suppliers it deserves".