Projects will be thrown outside frameworks if those inside the agreements do not meet strict price benchmarks under a system to be trialled as part of a far reaching government construction strategy, CN can reveal.
The strategy - to be published in the coming weeks - will advocate two new procurement models as part of the government’s plan to find 20 per cent savings on the cost of public construction projects.
The first model will invite framework contractors to bid for work against strict cost benchmarks set out by government.
If no contractor on the framework can beat that benchmark then the project will go to tender and framework contractors will be banned from bidding.
The other model being considered will offer a guaranteed maximum price underwritten by insurance that extends to protection against defects.
A newly created Government Construction Board, chaired by chief construction adviser Paul Morrell, will develop these models, trailing them on existing projects before looking to implement them across government.
Constructing Excellence chief executive Don Ward said: “The government will roll out at least these two trial approaches and Constructing Excellence is likely to be monitoring the success of them. We hope they are successful.”
An industry source called the moves “potentially revolutionary”.
He said: “Frameworks are great if you are on them and this would incentivise those on them to deliver affordable cost but would not encourage them to cut their own throats. It would encourage enlightened contracting.”
The source said the insurance model would bring certainty to the client while allowing a degree of protection for contractors.
The plans are due to be put out as part of a wide-ranging construction strategy, as promised in the government’s Plan for Growth earlier this year.
The strategy will cover areas including leadership, client skills, cost benchmarking, building information modelling, supplier relationship management, efficiency and aligning design and construction with operation and asset management.
It will also set out the remit of the Government Construction Board, which will be responsible for overseeing all reforms set out by the likes of Infrastructure UK, the James Review (page 7), the McNulty review (page 6) and the Efficiency and Reform Group in the Cabinet Office.
Mr Morrell will be joined on the board by representatives from every government department and agency with a significant construction budget.
These figureheads will take overall responsibility for the £40 billion of public sector work carried out each year, CN has learned.
Members will include:
Department for Business, Innovation and Skills construction unit deputy director Denis Walker;
- Partnerships for Schools chief executive Tim Byles;
- Procure 21+ head Peter Sellars;
- Government Property Unit managing director John McCready;
- Homes and Communities Agency deputy chief executive Richard Hill;
- Highways Agency major projects director Nirmal Kotecha;
- Defence Infrastructure Organisation and crown commercial representative Bill Yardley.
It will report to Cabinet Office minister Francis Maude.
The strategy will set out further detail regarding government plans to publish a two-year rolling programme of public sector work.
Mr Byles told CN that he was looking forward to helping “find ways to strengthen the public sector’s delivery of construction projects”.