At the end of last year, the UK Government set out ambitious plans to ensure the construction sector plays a key role in its twin objective of securing the UK’s recovery from the Coronavirus pandemic and delivering the Net Zero agenda.  Its “Construction Playbook”, sets out commercial best practice and specific sector reforms including the Government’s expectations for public sector contracting authority and supply chain engagement. When the Playbook was published in early December, the ‘up to the wire’ negotiation of the UK-EU post-Brexit trade deal continued apace.  So there was no certainty for the construction sector as to whether it would be going into 2021 on a ‘no deal’ basis or with a trade deal in place. With the deal finally secured on Christmas Eve and as we start 2021 with hope for a brighter future ahead, it is worth picking up the Playbook again.  With its key focus on improving productivity and promoting innovation to help the UK build back better, faster and greener, it has a particular resonance as we look to a post-Brexit world.

So what does this mean for public sector bodies and contractors in practice?

At a high level, the Playbook sets out 14 key policies for how the public sector should assess, procure and deliver public works projects and programmes.  All central government departments and their arm's length bodies (ALBs) are expected to follow on a “comply or explain” basis, enforced through spending controls.

The Playbook is aimed at Commercial, Finance, Project Delivery, Policy departments and any professionals across public sector who are responsible for the planning and delivery of public work projects and programmes. The Playbook will be supported through further guidance and engagement materials in 2021 as part of the implementation programme.

While the Playbook is mandatory for central government departments and their ALBs, sub-central contracting authorities under the Public Contracts Regulations 2015 are also encouraged to comply. Indeed, the Playbook is considered to be good practice for all professionals involved in works projects and programmes across the public sector.

Read the full Construction Playbook here

Summary of key policies

The key policies set out the steps which contracting authorities should take in collaborating with the construction industry in order to achieve best practice. In summary this involves:

Commercial pipelines

• Publishing pipelines of current and future government contracts to help suppliers understand future demands and prepare themselves to respond to contract opportunities

Regular market health and capability assessments

• Carrying out a regular assessment of the health and capability of the market, particularly at an early stage during the preparation and planning stage
• In doing so, considering how to take advantage of innovative approaches, encourage new or potential market entrants, and take action to address any concerns

Longer-term contracting

• Developing longer-term plans for key programmes, using longer-term contracting across a range of portfolios while demonstrating that this does not come at the expense of an innovative and competitive market

Harmonise, digitalise and rationalise demand

• Using standardised and interoperable components from a variety of suppliers through industry collaboration
• Aggregating and standardising demand to deliver positive impacts throughout the project lifecycle, allowing the market to plan, invest and deliver digital and offsite manufacturing technologies

Embedding digital technologies further

• Using the UK Building Information Management (BIM) framework to standardise the approach to generating and classifying data, data security and data exchange

Early supply chain involvement

• Involving the supply chain at an early stage of business case development to aid the development of clear outcomes-based designs or specifications and to avoid downstream issues

An outcomes based approach

• Focussing specifications on outcomes rather than scope, to allow the industry to innovate rather than being 'micromanaged' (a new Project Scorecard is being developed to help in in setting clear outcomes that align with government strategic priorities)

Benchmarking

• Undertaking benchmarking to analyse information from past projects and programmes to support data driven decision making
• Producing “Should Cost Models” so that the whole life cost and value of a project is understood

An evidence based approach

• Following an evidence based process to decide the most appropriate delivery structure

Effective contract management

• Structuring contracts to support the exchange of data, collaboration, value improvement, as well as risk management.  Contracts should set clear expectations for continuous improvements which are consistent with the Playbook

Risk allocation

• Using meaningful and genuine market engagement to inform risk allocation to make Government a more attractive client

Payment mechanisms and pricing approach

• Ensuring an optimum balance between risk and return in the contract through the payment mechanism, incentivising the correct outcomes.  As a general principle, payment should be linked to the delivery of outputs and/or work value and supplier performance. Pricing should also reflect the certainty of risk

Assessing the economic and financial standing of suppliers

• As part of the selection process, complying with a minimum standard when assessing the risk of a supplier going out of business during the life of a contract

Resolution planning

• For critical works contracts, ensuring the public sector prepares for the threat of potential supplier insolvency through requirements to provide “resolution planning information”

What if our procurement is already underway?

Where the planning or preparation of projects and programmes is already underway or there are existing frameworks in place, contracting authorities should take “all reasonable steps” to embed the principles and policies set out in the Playbook by taking a pragmatic approach.  There is no expectation to restart in-train projects and programmes or re-let existing frameworks.

As the construction industry looks ahead in a post-Brexit world, hoping for better times in 2021, these bold new plans to modernise the UK Government’s engagement with the industry provide a helpful framework to support a future that sees more efficient, modern and sustainable working practices across the sector.

For more information, please contact a member of our team.