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Improving efficiencies through procurement standardisation: Philip Prince

Procuring services in the construction industry can require clients, major contractors and their suppliers to set aside a significant amount of time to create, assess and complete tender documents.

The many different approaches used across the industry have led to duplication and significant additional costs for the sector.

According to Professor Rudi Klein at the Specialist Contractors Group, the failure by the industry to standardise procurement has cost it an estimated £20bn since 1994.

Completing a single submission for a project bid can cost contractors £650, and the ongoing task of updating and verifying this can cost clients up to around £300 per subcontractor. It wouldn’t be unusual for a client to have a supply chain of 1,000 firms, and building and assessing this could quite easily cost millions.

Standardisation means ensuring all clients and all contractors procure and bid using the same approach, helping to mitigate these costs in a sector which has traditionally always operated with tight margins.

The development of the PAS 91 question sets for pre-qualification aimed to do this. It is a standard pre-qualification questionnaire (PPQ) created by the government and industry in partnership and was specifically referenced in the CDM regulations 2015 as a best practice means of assessing contractors. It has also been mandated for central government procurement in England and Northern Ireland and has the support of the Local Government Association.

In addition, a growing number of major contractors are using PAS 91 as a means of promoting best practice, including Vinci, Kier, Bouygues UK, Lend Lease, McLaughlin & Harvey and many more all committing to use the standard.

By using PAS 91 clients are guided to core competency questions for subcontractors to answer and it means there is no need for clients to create their own question set for general subcontractor information. The time they save then allows them to focus on the project specific section of their tender documents.

In addition, its wholesale use would also benefit subcontractors, as they would only need to share a set of standard information for the pre-qualification stage of every tender they bid for. This means that SME firms could then more easily bid for a higher frequency of work opportunities at the same time, since it’s these businesses that the admin burdens often have the largest effect on.

Where PAS 91 goes further is when both sides of the industry use web-based systems, such as Constructionline, as a supply chain management service. Subcontractors need only fill in the PAS 91-aligned questions on the system once and can share their membership number with clients, who also use Constructionline, whenever bidding for work.

This also benefits both end clients and major contractors operating supply chains as the system monitors and validates subcontractor information in real time. This means they don’t have to continually chase new general contractor information, reducing day-to-day management costs.

At the very minimum, PAS 91 should be considered best practice and its use needs to be more prevalent at a time when public sector clients are bound by austerity, major contractors by tight margins, and subcontractors by busy workloads. We need the entire sector to come together and adopt a single system and cut unnecessary costs to ensure that the cash-strapped industry can release itself from the burden procurement can cause.

Philip Prince is director at Constructionline

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