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The complete guide to construction procurement

As of 2021, it’s estimated that the UK construction industry is worth over £122 billion according to Statista, and, following a period of post-Covid growth, these figures look set to rise further.

To help you navigate this growing industry, we’ve put together a guide covering the detail surrounding procurement in construction, as well as outlining why it’s so important to have a solid procurement process in place to ensure the smooth delivery of your project. So, let’s get started.

Chapter 1: What is procurement in construction?

Procurement is simply the process of obtaining goods or services, typically for business. This is no different in the world of construction, as the definition of procurement in construction is the process of securing all the goods and services needed to bring a construction project to completion. Across all industries, how this process is handled has major implications on the success of a project.

A team of professional consultants is involved in most construction projects, whether that be engineers, surveyors, architects, and suppliers. A clearly mapped out construction procurement strategy ensures all these parties can perform their work in a timely, cost-effective, and safe way – and the key to achieving this is through a procurement framework. Procurement frameworks support construction projects by helping buyers spend money wisely, and they also encourage long-term relationship building. We’ll explore the benefits of a procurement framework in construction in more detail shortly.

Chapter 2: What does procurement look like in construction?

New models of construction procurement were outlined by the Cabinet Office back in 2014, bringing together guidance on best practice in public sector construction. Although all construction projects will differ in their individual objectives, when it comes to procurement in construction, the methods used to procure goods and services typically fall into four categories:

  • Traditional contracts
  • Design and build contracts
  • Management contracts
  • Contractor-led contracts

Let’s look at what makes these procurement methods right for construction.

1

Traditional contracts

Traditional procurement is the most commonly used method in construction management procurement, and involves an arrangement between the client, consultants, and contractor. Following a tendering process, the client appoints the building contractor to construct the works in-line with the design, within an agreed timeframe and cost. This is a low-risk option due the time predictability and cost certainty.

2

Design and build contracts

This method of construction procurement involves the contractor taking responsibility for the design as well as construction. This gives the client a single point of contact throughout the project, and would be helpful for projects where the client is willing to spend a little more to have one-to-one communication throughout.

3

Management contracts

For management contracts, the client appoints designers and a contractor separately, paying the contractor a fee in exchange for managing the construction works. There is less price certainty with this method, as the construction can often begin ahead of the design stages, with adjustments made during the project. However, the overall process can be shorter than other construction procurement methods.

4

Contractor-led contracts

For this method, contractors provide a design team to create a concept design as proposals for the tendering process. This normally leads to two teams proceeding to the next stage of the project, before one construction team is appointed preferred bidder. This route can be more complex than others, but can also reduce costs in the long run.

Chapter 3: What is a framework agreement in construction?

We’ve already briefly touched on procurement frameworks, but now we’re going to explore in more detail what they are in the context of construction – and why they’re so important to the success of a project.

As mentioned, good procurement management in construction involves establishing a framework agreement to set the expectations of a project – covering the provision of goods, works, and services. Examples of this could include:

  • Goods, like the bricks and mortar required for a build
  • Services, including the consultancy and design phases
  • Works, referring to the physical the construction of a building

Using a framework agreement in construction has many benefits. Firstly, a framework agreement provides easy access to a larger pool of suppliers, which in many cases can include more local suppliers – as opposed to just the larger companies completing the entire project. Local procurement is contributing to a more sustainable procurement in construction, which is a key theme in the future of construction. Collaboration between SMEs and larger suppliers helps build experience across the industry, introducing new skillsets and degrees of experience.

Another benefit is that frameworks provide access to existing strong supplier relationships. Often, buyers and suppliers on framework agreements will become familiar with how the other party likes to work, which leads to improved communications and outcomes over time.

Finally, framework agreements can also help people save people time and money on their projects. There’s no need to issue repeated tenders for the same goods, works, or services, or to have to deal with the long process of re-advertising. That means buyers can save time, and the unecessary physical waste and costs associated with repeat bidding, which again contributes to a more sustainable procurement strategy – something that’s a hot topic across the industry at the moment.

Chapter 4: How to get started with the right framework.

There’s no one-size-fits all framework when it comes to construction projects. Instead, different frameworks are designed to cater to different project requirements – so it’s important to always find the right fit. Choosing the right framework involves several key steps:

Be clear on your objectives

Before you can begin looking for a construction procurement framework, you need to get all the key stakeholders involved to establish clear objectives, as well as assess the risks associated with the project and the ideal timescales. A construction management plan may be time-consuming, but it will save you time in the long run – and ensure you end up with a framework that meets your requirements.

Know your budget
Having a set budget is important for many reasons. Firstly, it manages yours and your contractors’ expectations, and will ensure you stay on track throughout. But when it comes to finding a framework, it also means you won’t be opening up a framework agreement to providers that are unable to deliver due to the size or scope of your project.

Use the experts
With something as important as choosing a framework agreement, it pays to trust the experts. Organisations like Pagabo are dedicated to helping you find EU-compliant framework agreements, putting suppliers through a rigorous tendering and application process for a place on our framework agreements. Plus, Pagabo is focused on building a better future for construction procurement, pushing forward with key wellbeing initiatives to make the industry safer for all.

Chapter 5: Getting started with the right construction framework from Pagabo

Now that you have all the background on construction frameworks, it’s time to discover how to find the framework most suited to your project. Selecting the most suitable framework could mean the difference between a project’s success or disappointment, so it’s not a decision that should be rushed into.

At Pagabo, we offer 11 national frameworks and a DPS for small works. Each one has been carefully put together with the shared needs of the public sector in mind, and all our suppliers have passed rigorous testing to deliver your project to the highest standards.

Finding your ideal Framework Agreement

Finding your ideal framework agreement is made simple with Pagabo. Use our framework page to browse our framework facts, project value guidelines, and find the framework that meets your individual project needs.

Or if you need further help determining the framework that’s right for you, our experts have decades of public and private sector procurement experience – and are always happy to help. Just call 01482 975883 or email info@pagabo.co.uk.

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