Author: Warren Beardall
HM Government Construction Playbook
What role does it play? What impact is intended? Analysed using visibility | behaviour | trust
This blog has been prepared as another test using my experimental method of evaluation through the concept of visibility | behaviour | trust. According to the Construction News the CBI want implementation by public sector to begin quicker. I am trying to find evidence of project procurement having everyone’s welfare at heart, and not just that of the project initiator. So how does the Construction Playbook stand up under this lens?
Context of what follows
My research and attention is asking whether we set our projects up in ways that offer greatest likelihood of success, but necessarily having all project actors welfare within the definition success therein means. My premise being that projects of cooperation only become projects of collaboration when all those invited are intended to be actively within the sentiments of no harm. My assertion that it is better for all our projects if intended to be assessed in this way. Thereby having long-term benefit of this project, but also that of the next as central to the collective business case we should all have in mind.
Does this Construction Playbook therefore have your welfare, the jobs of your employees, your future training and planning needs in mind? Does it have the long-term health of our country and our future project needs in mind. Is it immune to the political vagaries and short-term passing of government terms of office. Is the infrastructure of our administrators of state better guided by this Construction Playbook. Are we?
Or is this just a public sector bringing its own house in order. With less strategic intent and more short-term shoring up. Is the path being set in this guidance one of better collaborations? Or is it leading us all toward new ways of doing old self-serving things under new labels and old deferrals of blame?
This assessment was written between January and March 2021. A number of discussions have been shared since with both academic and industry friends and colleagues. All opinions herein are mine alone. But they are sentiments shared.
Examination of the text
The Construction Playbook : Government Guidance on sourcing and contracting public works project and programmes. Version 1.0 December 2020.
The Construction Playbook has a wide industry sponsorship. It presents significant progress in seeking more consistent approaches to government procurement. It attempts to remove the singular cost focus of procurement; reinforces a wider sentiment by central government to adopt more strategic and long-term procurement practice; and demands greater upfront preparation and earlier market engagement.
It further introduces an expectation on government departments to apply this overall approach, and to be judged against its requirements. It advocates more focus upon modern methods of construction (MMC). More focus on supporting manufacturing ethos within construction. It states that supply chains should expect to be able to make fair profit. It advocates cross-departmental buying practices. Standardisation of delivery requirements. More component and design standardisation across projects, regions, and sectors. And more consistency and more clarity on key outcome expectations and roles.
Examination with v | b | t
The majority of my analysis here is presented as addressing the behaviours of projects actors. As does the Playbook, itself. This is observed as being principally focused upon the behaviours of the public sector parties, with much of the playbook a reflection upon the controls therein applied separating public sector engagement with private sector, rather than contemplating the controls to govern both. Notwithstanding the collaborative sentiments therefore, I conclude a them and us relationship is being developed from the start. My examination of all that follows highlights and thereafter reflects upon what behaviours this is inviting, intentional or otherwise.
Visibility | b | t
Sharing this Construction Playbook gives a visibility to all parties intending to engage with government procurement in the coming years. Much of the literature being generated through industry interactions is now busily being directed by this clarity, and the stated intended universal application of the Construction Playbook across all of government and public sector.
Within the examination that follows are recurring themes. There is a lack of clarity on the how. Or how to prioritise the what. Some what necessarily contradictory or conflicting with others. The visibility of such prioritisation is therefore assumed to only exist at more localised level. How such priority is to be translated and assessed between local and central expectations remains unclear as a result.
With this reduced visibility, the interpretative space may be opportunity for some. From a risk perspective however, this suggests future scope for split motivations, localised confusion, and possibility of agenda manipulation by those best placed to influence and conflate. These are precisely the interface risks I deem to be the source of much of the risk we introduce into projects, simply because of goal creep, goal division, and the grey space it encourages.
v | behaviour | t
The majority of my analysis sits within these behavioural intentions or implications. Ordering of this more detailed examination follows the ordering of the Construction Playbook itself.
Behavioural changes by Public Sector are offered from the outset
Introduction – “Right at the start” (pp2-3) prepared by Gareth Rhys Williams – Government Chief Commercial Officer; and Nick Smallwood – Chief Executive, Infrastructure and Projects Authority. I have reordered these key sentiments into what I believe to be three main categories of interest:
Thinking in new ways: thinking of risk, sustainability, and programmes systemically; sector health; productivity and addressing skills shortages in the long term. Advocating front loading of effort, longer lead times for quicker finishes.
Key benefits desired: Outcome based; long-term partners; standardising designs, components, and interfaces; innovation and MMC; win-win contracting for better outcomes; better financial awareness and preparations; better end to end delivery.
Reform via buying actions; safety, cost, speed, and quality; data sharing; investment in training. All parts of the playbook to be passed down into the supply chain. Meeting everyday needs of users and VfM for taxpayer.
Beginning from page 14, the five phases are examined in order:
- Preparation and planning;
- Evaluation and Award;
- Contract Implementation.
Stage one: Preparation and planning
Stage 1 : Preparation and planning
Pipelines, portfolios and longer term contracts
pp16 – the conflicting desire for longer term contracts but more involvement of the acknowledge higher likelihood of innovative SMEs is left with contracting authorities to reconcile. Indicating that contractual performance metrics should include this on a VfM basis. Early market engagement deemed an essential means to do this. As is feedback being sought directly from the supply chain.
Playbook indicates the solution to SME capacity constraints is using JVs and consortia with SME involvements. This is not consistent with aims of platform solutions or the procurement options posed on pp34
This also conflicts with the cross-referenced GovS008 Commercial Functional Standard and National Infrastructure and Construction Procurement Pipeline 2020/21
Stage 1 : Preparation and planning
Modern methods of construction
pp18 – contracting authorities are left to determine how to assess MMC wider value to project and programme outcomes.
Harmonise, digitise, and rationalise demand.
pp18 Collaboration between contracting authorities is encouraged. Aiming at standardised interoperable components across a spectrum of suppliers. pp19 – achieved by “standardising and digitising specifications; shared design content and approaches across portfolios” supporting wider government priorities.
Quality Planning | Platform approaches | Targets for MMC
Product platforms are encouraged to standardised assemblies, and cross-sector collaborations of standardised purchasing. Procurement encouraged to steer markets and suppliers toward these platform approaches.
pp20 Offsite construction to be treated as favourable. This is now an expectation of departments.
Targets for MMC . IPA and Department for Business Energy and Industrial Strategy (BEIS) are developing a common set of metrics to better understand and support performance, which will include metrics to demonstrate supply chain engagement.
Further embed digital technologies
Seeking to collate and improve quality of data using the UK BIM Framework. Standardised information requirements, exchange, and security. A common framework of standards and protocols. Digital twin goals also associated with future performance and asset management.
Stage 1 : Preparation and planning
Early Engagement and clear specifications
Early engagement – earlier identification of delivery and risk challenge; options; relationship building across the whole supply chain. pp22-23 tested at first business case stage but note the complications anticipated in fair marketplace and transparency. [This seems to conflict with drive for innovation. How can innovation and open market discussion be accommodated together?]
Innovation – pp23 – open to new ways of thinking; revisiting processes and continuous improvement. [This seems to conflict with standardisation (and collaborations across sectors and platforms).]
Social value and SMEs – pp23 – early engagement suggested to engage with SMEs and to wider social value initiatives. [this is however left with the supply chain to manage amongst itself – see next]
Early supply-chain involvement (ESI)
Deemed to offer more effective design solutions and overall VfM. Includes formal engagement of Tier 1 alongside Tier 2 and 3.
pp24 – ESI deemed to need good leadership, governance, commercial management, and wider strength in capability. Above all, building trust with open and collaborative process “in sharing ideas and innovative solutions”. [it remains unclear how commercial sensitivity can sit alongside incentive to share innovation. In this early stage any optioneering opportunity and early evaluation of risk alongside a public sector is lost. Instead reliant upon the supply chain to organise itself across competitive boundaries away from public sector stewardship or prioritisation.]
Outcome based approach
pp24 – Outcomes focused on whole life value, performance, and cost; to include social value model in informing procurement route. Outcomes, not scope, to unlock innovation and continuous improvement. Outcomes defined at outset. Clear and measurable. Definition of “whole life value” being developed with industry in 2021. [the key question will be how is short-term VfM and long-term asset value to be reconciled against short-termism politics and similarly short-term media and public attention – government and politics are the only influence able to redirect these messages by long-term planning of their own.]
pp25 – Design underpinned by stakeholder informed objectives which meet requirements and specifications. Specification that are not too prescriptive to allow for innovative solutions. [These goals seem contradictory. How is it possible to define all stakeholder needs; develop design against clear specifications; allow for innovative solutions; support standardising solutions and cross-sector platforms across long-term strategic partnerships; and present all necessary information to promote fairness to bidder decision making. This is a wish list – not clear delineation of how to prioritise and why]
It is also envisaged that there will be several design and specification stages but no means to envisage how this will be supported by the necessary upfront stakeholder management, control, and clarity of priority that will not suit all.
See also: Infrastructure Procurement RoadMap 2013; Collaborative models of construction procurement 2014
Stage 1 : Preparation and planning
People and Governance
Approvals follow Green Book and Orange Book requirements.
Contracting authorities are required to have streamlined approval processes geared toward outcome success; consider strategic approach and by extension to focus upon additional means to identify portfolio potential; account for complexity, cost, and risk determining rigour of process; use “Should cost” benchmarking; involve accountable Senior Role Owners (SROs) who own the business case and cross-functional teams.
See page 73 matrix. OKUA. Owner (Joint-Owner); Knowledge experts; Understanding; Awareness. [this seems to create difficulty when separating accountability and responsibility]
Stage 1 : Preparation and planning
Deliver Model Assessments (DMA)
Part of First Business Case stage. Objectives and outcomes defined from the outset. See pp33 for DMA and pp34 for five potential approaches. Five potential approaches namely: Transactional – traditional standard competitive service delivery
Hands-on Leadership – complex and in need of close supervision and active stakeholder management more than cost focus.
Product Mindset – lessons learnt focused for optimisation via repeatable manufacturing type approach.
Hands-off design – outcome focused without specifications that influence solution.
Trusted Helper – client is focused upon core business and seeks a supplier who can work within the operating procedures or technical challenges better than the client.
[in the absents of early engagement and proactive public sector input – contractors are likely to develop assumed risk profiles based upon these five approaches – particularly if public sector simply return to contract only interest as the hands off means of project control]
Stage 1 : Preparation and planning
Project scorecards are being tested through 2021. There are intended to be integrated into business case baseline post completion. Reference is also made to them being part of the project contract and KPIs. [Note: no specific reference to them forming part of project controls beyond contract]
Key performance indicators are deemed part of a good contract – includes appropriate specifications and performance indicators; incentivising the priority outcomes; proportionate to project size and complexity; quantifiable and measurable metrics; and inline with wider government metrics; and top three metrics available to public scrutiny.
Commercialise the delivery model means being specific about intended benefit and value and chosen with these at the core of the decisions made. “One of the most effective ways to deliver outcomes is to create contracting environments that promote collaboration and reduce waste. Contracts should create positive relationships and processes designed to integrate and align multiple parties’ commercial objectives and incentives” pp40. [Why focus on contract for positive relationships? This is cooperation. To collaborate a closer relationship is necessary. Building a shared control environment seems much more collaborative if sharing is a key desire.]
Commercial approach “how much delivery responsibility are we willing, able, or need to take on?” pp41
Procurement strategy consider award method; design responsibility; coordination and integration responsibility. [this is where the lack of clear accountability statements in page 73 “OKUA” invites delegated ownership risk].
Contracting strategy pp42 this seeks early risk allocation; roles / responsibilities and rights / obligations being allocated directly into contract. Contract deemed the place where key elements of project including specifications. [Compare this to other guidance on acceptable contract forms and boilerplate clauses on pp43 and 44, which is prescriptive to three forms. By this early commitment to contract form, this falls into the ‘risk transfer in preference to risk management and control’ trap].
Keeping bid costs down and use of frameworks. [this will be good news for long-term relationships but it is inevitably going to stifle competition. The relationships with SME supply chain within JVs not with Government is inevitable. Whilst this page acknowledges the SME barrier to entry of bid cost, all wider sentiment of engaging via JVs of tier one contractors’ conflicts with any means to accommodate SME directly and more efficiently.]
Stage two : Publication
Stage 2 : Publication
Going to tender
Setting the tone encourages upfront preparations prior to going to tender. It also cross-references the Supplier Code of Conduct v.2 dated February 2019 which whilst not legally binding does offer direct access to the Central Commercial Teams in the Cabinet Office (and in extreme circumstances Gareth Rhys Williams as Government Chief Commercial Officer via pp5 of this CoC). This code states, “risk is allocated to the party best able to manage it…share intelligence on supply chain risk…we will endeavour to create and maintain a culture that facilitates collaboration between all suppliers and government…” (pp7 ibid). “we expect suppliers to avoid passing down unreasonable levels of risk to subcontractors who cannot reasonably be expected to manage or carry these risks” pp10 ibid). https://assets.publishing.service.gov.uk
Procurement timelines are to be supported with early market engagement and avoidance of inadequate timescales being set.
Risk Management is required to be collaborative but also across portfolios [does this mean government is best able to manage more risk?]. Internal control, and proactive approach is referenced pp47 [but this is in the context of contracts and commercial lifecycle]. Risk appetite is referenced in context of innovation but also references optimal outcomes [rigid contract forms do not support this sentiment]
Stage 2 : publication
pp48 Risks owned or jointly owned by parties best able to manage them and supported by good risk management and be subjected to extensive scrutiny prior to going to market. [it is not clear what this scrutiny would entail but reference to National Audit Office suggests the VfM trap.]
Risk allocation is to be considered against practical and financial means to absorb it. A good approach is deemed to focus upon market testing and balance of risk; risk focus against objectives; use of a risk allocation matrix based upon means to manage; joint risk registers. [there is no reference to early identification of critical controls best suited to manage risk identified]
Fair return is intent upon avoiding cost driven impacts upon project success, with a profitable outcome to supply chain deemed a sustainability objective.
Stage 2 : Publication
Payment mechanism and pricing approach
Output drivers should be central to payment and the level of risk around the scope and requirements. pp50 Fixed pricing or scale based upon scope uncertainty are deemed appropriate [this indicates risk is to be treated as a tradeable commodity, not a threat to outcome]. Do’s focus on early warning and joint-decisions, outcomes focus, indexation, and data sharing. Don’ts list lack of clarity in scope and evaluation; liability limits; avoiding risk pricing due to time constraints; and avoiding the transfer of information gap risk to supply chain. [there is no consideration given to the control environment beyond contract and price]
Onerous contracts pp51 is a term used to trigger discussion with supplier on cause and options.
Further reading: Green Book; Orange Book; Outsourcing Playbook; Cabinet Office Two Stage Open Book; Construction Hub Value Toolkit.
Section three : Selection
Section 3 : Selection
Due diligence during selection
SQ Standard Selection Questionnaire to be used. Payment systems to be assessed for all contracts over £5m p.a.
Section 3 : Selection
Assessing economic and financial standing of suppliers.
Key principles financial standing to perform work; be fair and transparent to not prejudice competition; use Contract Tiering Tool.
Stage four : Evaluation and award
Stage 4 : evaluation and award
Evaluating bids and contract award
Value over cost pp56, and social value pp57, low-cost bidding is defined as anything more than ten percent below average or the Should Cost estimates – and are referred to Cabinet Office pp58
Stage 4 : evaluation and award
Resolution Planning and ongoing financial monitoring
Assessment of impact of supplier failure, and upfront resolution planning. Note it is the supplier who is required to provide Service Continuity Plans and exit plans; separate from contracting party’s contingent plans [no reference to shared project plans]. Financial mitigations include bonds, PCGs. Project bank accounts to be used as standard.
Supplier Failure Contingency Planning template concludes with a resourcing and funding strategy; stakeholder and supply chain details; risk register.
Stage five : contract implementation
Stage 5 : contract implementation
pp64 successful relationships deemed to be means for better VfM and advocates standard forms of contract. Early engagement to include delivery teams and designers. Management of contract deemed key early strategic decision. pp66 principles of collaboration, openness, transparency, and flexibility referenced based upon contractual delivery; role allocations; and upfront agreement to dispute resolution. [no reference to decisions of critical controls only contract management].
Reference to one team “win together, fail together”, [but no expansion on what this approach means.]
Early workshops suggested to set expectations of standards, behaviours, and ways of working, success criteria, impact on wider goals [seems a little late to be considering behaviours as these are generally set into a project by the way it was set-up. Perhaps this would be better as a KPI of the governing party…]
Stage 5 : contract implementation
Transition to Operation
pp68 Prepare from set-up. Soft landings deemed to be smooth transition from construction to operations.
Exchanging data is included as a critical success factor, and referenced “golden thread” of intended purpose of building or infrastructure.
Pre-handover is focused upon pre-sign off and references as-builts; transfer of information to operator; end user orientation; CDM files; and aftercare plans. Additional control is envisaged via contract and wrap up contracts in timely manner. [the lack of ongoing project governance and shared controls makes this process highly contractual in nature and inherently less collaborative as a result.]
Lessons Learnt stated as ongoing process during a project and feedback presented via Cabinet Office email address [no project sharing beyond the public sector entity appears to be considered].
v | b | trust
The remainder of this article will focus upon relationships, cooperation or collaboration, and the sentiments of trust that result.
The distant observer further highlighted
This distant buyer sentiment that public sector becomes in construction is not a new phenomena. It is characteristic of public sector. My MSc dissertation revisit of PFI concluded the buying attitude of the authority party was hands-off in the extreme. Reliance on others to do the checking and the terms of contracts to offload the risk if all else failed. The distant public sector interest inevitably offering space for the ebb and flow of very different powers and influence to take hold over time. This Construction Playbook offers little to suggest anything beyond fire and forget contract control will remain.
There is no focus on critical project controls per se. Internal control, and proactive approach to risk management is referenced pp47 but this is in the context of contracts and commercial lifecycle. KPIs and pay mechs geared towards outcomes; risk allocation; control; and reporting; is all driven through contract management. Frameworks, standardised contracts, boilerplate clauses, are all advocated. This seems completely at odds with efforts to develop collaborative one project ideas. Contracts should create positive relationships and processes designed to integrate and align multiple parties’ commercial objectives and incentives” pp40. Key performance indicators are deemed part of a good contract.
Deliver Model Assessments (DMA) offers five potential types but there is no guidance on how this will change control environment or wider governance. See pp33 for DMA and pp34 for five potential approaches.
Flexible or fixed? pp42 contract is required to allocate agreed risk allocations and specifications into contracts. Managing relationships (pp66 referenced one team “win together, fail together” but no expansion on what this approach means. Both these sentiments are at odds with the wider sentiment to commit to specific contract forms. Compare this to other guidance on acceptable contract forms and boilerplate clauses on pp43-44, which is prescriptive to three forms.
Role allocation is based upon the internal owner, adviser, and awareness needs. No consideration is given to project roles therein, and no accountability vs responsibility considerations (cf. pp 73 matrix). Contracting parties are encouraged to consider award method; design responsibility; coordination and integration responsibility. However, this is where the lack of clear accountability statements in page 73 “OKUA” invites delegated ownership risk.
Pre-handover is focused upon pre-sign off and references as-builts; transfer of information to operator; end user orientation; CDM files; and aftercare plans. Additional control is envisaged via contract and wrap up contracts in timely manner. The lack of ongoing project governance and shared controls makes this process highly contractual in nature and inherently less collaborative as a result.
Lessons Learnt – No project sharing beyond the public sector entity appears to be considered.
There is reason to be nervous that deep pockets syndrome will continue. Party best able to manage doctrine is maintained. Risks owned or jointly owned by parties best able to manage them pp48, “a good approach is deemed to focus upon market testing and balance of risk; risk focus against objectives; use of a risk allocation matrix based upon means to manage; joint risk registers”. However, later statement clarifies that risk allocation is to be considered against practical and financial means to absorb it.
This document also cross-references the Supplier Code of Conduct. This code states, “we expect suppliers to avoid passing down unreasonable levels of risk to subcontractors who cannot reasonably be expected to manage or carry these risks” pp10 Supplier Code of Conduct).
Risk allocation appears to be a tradeable commodity not a threat to success. Outputs and the level of risk around the scope and requirements should be key to payment mechanisms. Fixed pricing or scale based upon scope uncertainty are deemed appropriate (pp50). Risk should be subjected to extensive scrutiny prior to going to market (pp48). It is not clear what this scrutiny would entail but reference to National Audit Office suggests the VfM trap that plagued PFI.
Bigger picture required. Risk Management is required to be collaborative but also across portfolios. How does this work between contracting parties? Procurement timelines are to be supported with early market engagement and avoidance of inadequate timescales being set. Supplier Failure Contingency Planning template concludes with a resourcing and funding strategy; stakeholder and supply chain details; risk register.
Conclusion : a step closer but not a bridge
There is reason to applaud this new engagement and initiative to present greater clarity of how construction is to be procured across the public sector. My concern remains that this guidance continues a long tradition of them and us contracting with the private sector. A buyer attempting to present a united front but not a uniting goal. As this country looks to build its way through the 21st Century I hope this is just the first step toward closer ties and smarter buys. But to collaborate is to take account of all sides. To lead is to be presenting clarity of vision, interest in control, and steps that build trust between parties, not better contracts for when one falls.
A step in the right direction. But plenty more to go…
In psychology we are required to look beneath the mask. This blog series is attempting to unmask some hidden parts of projects to engender a more collaborative way.