Government Construction Strategy

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Government Construction Change Programme

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Client focused

initiatives

Industry focused

initiatives

Government

Construction Strategy

Industrial Strategy for

Construction

Joint vision to 2025

setting out aspirations

Infrastructure Cost

Review

Green Construction

Board

Government Construction Strategy: Objective

Overarching target:

• Achieve a sustainable 15-20% reduction in the

cost of construction by the end of this parliament

(“Sustainable”: without adversely impacting either whole life value or

the long term financial health of the construction industry)

Already delivering:

• FY 2011/12: £72m; FY 2012/13: £447m

• First Half of FY 2013/14: £293m

• Some already achieving 15-20% vs FY 2009/10

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Government Construction Strategy: Overview

• Publication Construction Pipeline & Cost Benchmarks

• Trial New Procurement Models

• Building Information Modelling (BIM) / Gov Soft Landings

• Fair Payment: Project Bank Accounts / SMEs

• Effectiveness of Frameworks

• Pre-Qualification: PAS 91

• Performance Management / Six Monthly Government

Supplier Conference

• Government Construction Summit (2 July)

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Public Construction Initiatives Landscape

Evidence

Government Construction• Annual savings• Trial project case studies

Guidance

Government Construction• Effectiveness of frameworks report• Achieving Excellence in Construction (OGC)• Benchmarking methodology

IUK • Procurement routemap

(relaunch Jan 2014)

IUK • Routemap case studies

Peer support

HMEP• Tools and standards• Business improvement

toolkit

BIM • Mobile phone app• Guidance and tools• Videos / newsletters

MPLA • Leadership Academy

procurement module

MPLA • Project leaders network

CCS• CS Learning• Standard documents

IUK• Client working group

Event/ training / update

Online Hard copy document

Advocacy

Key

BIM • Case studies• Lessons learned

BIM • Mentors• Regional hubs• Early adopters (e.g., GSL)• Departmental engagement

Events

BIM• Events (tbc)

• Eco Build (Spring)

• GSL Conf (Jan 2014)

HMEP• Case studies

Government Construction• GCS Wrap up event (Feb 2014)

• Trial projects Winter event (March 2014)

• Construction Summit (July 2014)

SOPO• Procurement network

CCS –Crown Commercial Services

HMEP – Highways Maintenance Efficiency ProgrammeBIM – Business Information Modelling

RCUK• Industry / Supplier Events

(Spring / Summer 2014)

LGA• Regional hubs (will be

established in Spring 2014)

IUK • Routemap Re-launch

Roadshows (Q1 2014 /15)

LGA• National Conf (Jan 2014)

Government Construction• Trial project mentors

Professional bodies and Academia• To be explored in latter

part of 2014

Technology Strategy Board • Collaboration toolkit

Industrial Strategy• Details of activities of the

Procurement workstream tbc

To achieve 15-20% savings….

…leading public & private practitioners do the following:

• Leverage data – identify opportunities / inform decisions

• Standardise requirement

• Aggregate demand

• Engage with lower tiers

• Commit spend – promote supply chain investment in efficient delivery

• Create integrated client and supplier teams – minimise process

waste

remove waste / maximise

buying power }

UNCLASSIFIED

Outcomes vary depending on the “menu” adopted

1. Public Regional

Framework

2. Public Housing

Framework

3. Private Retail

Framework

Leverage data

Standardise requirement (constr.

process + product) X

Multiple clients /

products

Single client /

product

Single client /

product

Aggregate demand X

Multiple clients /

products

Single client /

product

Single client /

product

Engage with lower tiers

Commit spend Multiple projects

£200m p.a.

Single programme

£75m p.a.

Raised £400m to

£800m p.a.

Create integrated client and

supplier teams X

Savings achieved on construction

(excl. £50k+ saving from avoiding

single procurements)

1-2% 10% 20%+

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Cost led

procurement

Integrated Project Insurance Cost Led Procurement

Client goes to market with:

functional requirement

affordable quality benchmark

challenging cost ceiling (“should cost” capability)

IPI: integrated team backed by assurance and insurance product

Two Stage Open Book IPI without the insurance product

Lean Procurement Reducing procurement timescales

Driving changed behaviours and practices / exchanging experiences through client delivery group

Monitoring these changes, publishing outcomes and mentoring clients through industry support group

£

£ £

Trialling of New Models of Procurement

New Models: Common Characteristics

• “Intelligent client”: knows what they want, what it

should cost, how best to go to market

• Transparent pipelines of work

• Client standardises requirement and specifies output

for £x/m2 (set against downward cost curve)

• Early contractor involvement

• Client works with fully integrated supply chain to

create design and construction solution

• Open book

• Independent validation

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Trial Projects Programme: Case Study Reports

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Trial Project Case Studies and the “Menu”

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How the reported 17% savings were achieved

Strategic context Client Collaborative Supply chain

Aggregation of demand Yes MoJ Alliance

Agreement

Significant committed spend Yes Alliance Work

Progamme

Standardised procurement /

streamlined approval processes

Yes MoJ systems and

PPC2000

Lean programming Yes MoJ system and team

proposals

Client cost data base Yes Published benchmarks

Performance management Yes Framework

performance initiatives

Common new delivery model

characteristics deployed

Client Collaborative Supply chain

Challenging cost target / open book Yes 10% with open book

measurement

Affordable standardised output /

outcome requirement

Early contractor involvement Yes Tier 1 contractor and

Tier 2 subcontractors

Lower tier engagement: fully

integrated supply chain

Yes Tier 2 early

appointments

Lower tier engagement: innovation

encouraged / achieved

Yes EMCOR and SCC

innovations

Standard form of contract with

minimum amendments

Yes PPC2000 SPC2000

Effectively led change in team

behaviours and practices

Yes Commitment of key

individuals

Two Stage Open Book characteristics deployed

Client Collaborative Supply chain

First stage selection of integrated

team on open book basis and ability to

deliver savings / project objectives

Yes Open-book MoJ

Alliance Agreement

and PPC2000

• Embed new models as business as usual

• Common construction procurement narrative

• Outline governance / support arrangements for roll out

• New group to oversee roll out programme (Winter 13/14)

– Central government department representative / end user

– Local government representative / end user

– Cabinet Office, trial project mentors, industry representative

– Non Execs: HMEP, BIM / GSL, BIS Industrial Strategy etc

• Publication of draft guidance (early 2014)

• Launch of guidance, support arrangements (July 2014)

UNCLASSIFIED

Roll Out of New Models of Procurement

Benchmarking Document: BSF Schools

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£-

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

0 5,000 10,000 15,000 20,000 25,000

Cost

per

m2

GIFA (m2)

BSF 2009-10 Baseline Costs

Benchmarking Document: LA Schools

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Project Type: Secondary Schools Project

Subtypes Benchmarks Units 2012/13

(Baseline) Single point

average Range

20th-80th

Percentile

GIFA 0 - 2500 m2

Type 1: Total

construction

cost [1]

£/m2 2297 2132 2486

GIFA 2500-

5000 m2 £/m2 2107 Insuff.

data GIFA 5000-

7500 m2 £/m2 2284 Insuff.

data GIFA 7500-

10000 m2 £/m2 2402 Insuff.

data GIFA 10000-

12500 m2 £/m2 2345 2092

2565 GIFA 12500-

15000 m2 £/m2 2255 2154

2360

Project Type: Primary Schools

Project

Subtypes Benchmarks Units 2012/13

(Baseline) Single

point

average

Range 20th-80th

Percentile

GIFA 0 - 750 m2

Type 1: Total

construction

cost [1]

£/m2 2636 2555 2720

GIFA 750 -

1500 m2 £/m2 2746 2635

2886 GIFA 1500 -

2250 m2 £/m2 2586 2338

2897 GIFA 2250 -

3000 m2 £/m2 2714 2507

2955 GIFA 3000 -

3750 m2 £/m2 2570 2419

2721

Note [1]: Includes: External works, professional fees, fixed FF+E (fittings, furnishings and equipment); Excludes: Loose FF+E (fittings, furnishings and

equipment).

Other notes:

All prices have been brought to a common price base of Q3 2012.

All projects have been procured through local authority / regional frameworks and therefore represent a different set of projects to those presented in

Table 11 above which were procured through Local Education Partnerships (LEPs) and EFA’s Academies Framework.

Table 17: National Delivery Cost Benchmarking (prepared by Hampshire CC and Manchester City Council): New Build Schools

Benchmarking Document: Trend for DoH/P21

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Benchmarking Document: Trend for MoD (SLA)

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Benchmarking Document: Trend for HCA

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Q&A

Questions / Discussions

andrew.butt@cabinet-office.gsi.gov.uk

https://www.gov.uk/government/collections/government-

construction

UNCLASSIFIED