Opinion

Highways prequalification: bespoke isn’t always best for cost and efficiency

Paul Fleetham, Lafarge Tarmac

Embracing standardised prequalification can create real opportunities for innovation, efficiencies and high-quality delivery across construction, says Lafarge Tarmac's Paul Fleetham.

In many industries, standardisation is not always a popular term. It has the potential to been seen as stifling of innovation and creativity, and can imply that the end results will not be tailored to meet a customer’s needs. However, when it comes to prequalification in highways procurement, bespoke is very often a more costly and lengthy option. There are significant financial and time savings which can be gained by both clients and service providers if more standardised approaches are embraced.

Specifically, there is great scope for clients to homogenise the prequalification and reference requirements which, for many tenders, remain complex and can vary significantly from one council to the next. A consistent standard template would considerably reduce the time and cost of creating, submitting and reviewing bids for clients and contractors; freeing up resource to focus on engagement and collaboration and driving broader efficiencies.

"As Government spending cuts to local authority budgets bite even deeper over the next five years, managing the cost of procurement is essential."

Standardised prequalification certainly in the early stages would be an important step forward. The Highways Maintenance Efficiency Programme’s work to produce just such a standard contract is one potential option that the industry needs to consider. 

The Government also has a role to play in driving change. Critically, it must deliver on its promise of publishing a local government construction strategy that provides clear guidance on procurement. This is highlighted inConstruction 2025 as an action and it is vitally important to setting out what best practice should look like.

Collaborative procurement models - whereby highways departments work with neighbouring authorities to procure products and services - should also become more common practice.  I anticipate that greater devolution of power to UK cities and the rise of more combined authorities are likely to be catalysts for this. Nevertheless, officers should not wait for their authority to agree to work as a combined authority. There are already lots of good examples where local authority highways officers are successfully collaborating with colleagues in other councils to drive efficiency savings and innovation.

The success of the Midlands Highways Alliance, which has a combined membership of 20 local authorities is testament to this philosophy. This group has successfully generated on average £4m per annum in efficiency savings through collaboration and collective procurement.  Embracing this approach is not just about driving efficiency savings. It can also drive collaboration and best practice helping councils to take a holistic approach when considering the impact of their schemes on local transport networks and in programming the works.

"In my experience, councils who engage with a final shortlist of bidders can effectively interrogate competing bids and tackle any elements where some contractors may have strategically priced parts of a tender."

Another opportunity to standardise best practice is the use of competitive dialogue in the final stages of the procurement process. In my experience, councils who engage with a final shortlist of bidders can effectively interrogate competing bids and tackle any elements where some contractors may have strategically priced parts of a tender. This remains a critical issue for our industry, where some clients have fallen victim to strategic pricing of bids, which has done little to encourage innovation or deliver durable, high-quality highways. 

Over the last few years, this practice of strategic pricing has also been seen on the principal road network. However, with the launch of Highways England there are real positive signs of greater supply chain engagement, which should help deliver the £15 billion roads programme in the most effective way. The creation of the organisation’s Engagement Council - which provides a forum to engage and drive early collaboration with 70 or so companies, including tier two and three providers - is a major step in the right direction.

As Government spending cuts to local authority budgets bite even deeper over the next five years, managing the cost of procurement is essential. Collaborating with neighbouring authorities and driving greater (and earlier) engagement with supply chain bidders must become standard practice. There are also real opportunities to use simplified and standardised prequalification processes to create an environment that can foster genuine innovation, efficiencies and high-quality delivery. 

 

Paul Fleetham is managing director contracting at Lafarge Tarmac