Categories: Industry News, Thought Leadership
Rising costs and budget constraints mean that public sector organisations should not stall when planning their construction projects. Instead, they need to act quickly to get their projects in motion – and that means a speedier and more streamlined procurement process is required. Gerard Toplass, our group CEO for Pagabo, explains ‘the need for speed.’
We are facing an uncertain world – war, the rising cost of living, and a complex geopolitical climate. And it’s all impacting on the UK construction market – in terms of sourcing materials for projects, the inevitable increase in project cost, and general uncertainty.
The cost of funding is creeping up and the materials uncertainty – both in cost and availability – is putting pressure on both the project and long-term viability, which in turn places great pressure on public sector budgets.
As experts in procurement and frameworks and being well tuned in to the supply chain and the issues it faces, we have the professional experience. The situation must be tackled in a fresh way. Public sector organisations should be making early decisions about their construction projects in order to fix pricing and funding before market conditions become prohibitive.
At Pagabo we are uniquely placed to offer effective procurement solutions that align to the gold standard in procurement laid out by Professor David Mosey and the Construction Playbook. Furthermore, all our activity in this space is firmly rooted in social value and backed up by our highly qualified team, which includes our technical director and in-house NEC expert Dr Stuart Kings. Pagabo is also leading the way in building a digital first approach for the construction sector and working on ways to make the sector data driven.
The typical route of clients using cost advisors to deliver a cost plan isn’t the best approach. With the way the market is currently rapidly changing, by the time the plan is done, it will be out of date, so it’s far better to have early contractor involvement to keep on top of the issues before they become critical.
With time being of the essence, growing uncertainty and rising prices, the direct award approach provides the best value for money statement. How this is achieved is by obtaining transparency of build costs which you cannot get through the traditional form of procurment (ie single stage).
Pagabo ensures the contractor transparency of cost by providing three quotations for all sub-contract packages.
Right now, the public sector needs to act fast to deliver projects – and engage earlier with their contractors, using the direct award process to provide more certainty throughout the supply chain. There is a need for advance purchased materials, advance commitment to labour and consideration of alternative materials and processes. As the contractor is engaged on the project then they could potentially purchase materials early to secure supply and also the right price. Organisations should even consider bringing contracts forward to fix funding and achieve overall assurance.
We mustn’t forget the levelling up agenda. As Lord Kerslake, our chairman, says: "Levelling up is a long term programme but there needs also to be strong delivery by the public sector in the short term to give confidence about the future. This puts a premium on those who have those who have the capacity, expertise to design, procure and deliver their projects well".
From the market information we have already gathered, it is clear that when it comes to building projects, public sector clients should not – and cannot - procrastinate. Even just a few weeks could have a huge impact on costs and materials supply. The simple advice to them is “don’t wait.” Think about projects sooner – and even bring projects forward if they possibly can. The sooner a project is fixed, the more likely they are to keep costs down – not just in materials but in funding, as interest rates are almost inevitably going to rise.
We also advise getting as close to setting the costs as early as possible, coordinated with early contractor involvement. The more an organisation liaises with its contractor and suppliers, the more transparency there is, which breeds a better chance to have advance notice of the project progress – and any bumps in the road ahead.
The best way to run projects is with professional framework providers – and use the direct award functionality built into them for speed combined with compliance. Facilitating early contractor engagement (ECI) allows us to bring together contactors and potentially consultant teams that have a track record in any given space.
Now is the time to get added value from Pagabo. We are uniquely placed to be able to offer better value and direct award than OJEU in the marketplace. Organisations can access all our market information and all the huge support from a robust internal team with lots of experience and expertise.
We are procurement specialists and contract management specialists. Our unique position and experience and our robust eco-system of suppliers provides the best advice and support for clients. We have great market intelligence and are the only framework provider that integrates social value into our offering to provide clients with a unique forecasting tool.
Right now, there is a need for speed. As an industry, we need to keep our construction projects moving, keep costs as low as possible, and manage the materials issue – and as the ‘intermediary’ between public sector client and supply chain, we know that at Pagabo we have to deliver support, market intelligence and responsiveness.