Publication - Factsheet

Public sector procurement in construction: review outputs

Published: 1 Nov 2018

Details of work to implement recommendations from the 2013 independent review of procurement in construction.

Published:
1 Nov 2018
Public sector procurement in construction: review outputs

We are working with the Scottish Futures Trust (SFT) to deliver recommendations from the independent review of procurement in construction carried out in 2013.

The review looked at how public bodies involved in construction-related procurement adopt practices that are streamlined and deliver value for money.

There were 67 recommendations in total.

Rec. number

Review paragraph reference

Description of the recommendation

Outputs

Status

1

4.2.3

The construction procurement policy function within the Scottish Government should be strengthened.

No published output.

The SG policy function has been increased.

Complete

2

4.3.5

As a matter of priority, the strengthened construction procurement policy function within the Scottish Government should, in collaboration with other bodies key to the implementation of our recommendations, determine lead responsibility for delivering each recommendation.

No published output.

A Scottish Government/SFT core team was created to deliver the recommendations.

Complete

3

4.4.3

A Chief Construction Adviser (CCA) should be appointed by the Scottish Government.

This recommendation was not adopted by the Scottish Ministers.

Not progressed

4

4.5.5

A mechanism should be established under the existing Public Procurement Reform Programme to bring together key stakeholders to drive the procurement reform agenda as it relates to construction.

No published output. Creation of CRDG (Construction Review Delivery Group)/CSPIG (Construction Scotland Procurement Implementation Group)

Complete

5

5.2.5

There should be a review of the methods of strategic prioritisation and co-ordination of construction spending across the public sector in Scotland - to identify best practice and to ensure that investment decisions are informed by the use of appropriate techniques.

Infrastructure Commission and Infrastructure Unit will review this.

Complete

6

5.3.8

Each public body should publish annually a rolling pipeline plan of anticipated spending on construction, setting out detailed relevant known information.  These pipeline plans should be collated and held centrally, and should initially contain all anticipated work above a value of £4 million over the next two years, with a clear plan put in place to extend this to cover at least work worth £2 million or more, and a timeframe of at least three years.

Public contracting authorities are required through the Procurement Reform (Scotland) Act 2014 to make public their procurement plans.

Complete

7

5.4.6

Public sector bodies involved in construction projects should be able to demonstrate that sufficient linkages are made between them.

Guidance will be included in the new manual and in CPN4/2017

Complete

8

5.5.3

Regional co-ordination of infastructure spend should be considered by councils.

This will be considered by the Infrastructure Committee.

Complete

9

5.6.2

Current Scottish Government Affordable Housing Supply programme arrangements provide for an enhanced role for local authorities in programme planning and prioritisation. Alongside Scottish Government, local authorities should therefore play a key role in helping to inform and influence procurement choices and delivery of local authority and Registered Social Landlord (RSL) affordable housing supply in their areas as well as looking more widely at potential synergies with neighbouring authorities.

Work being taken forward by SG.

Complete

10a

6.2.32

Design and whole life costing should be afforded appropriate priority in any construction procurement process. A comprehensive business case and procurement strategy focusing on desired outcomes and whole-life costs should be developed.

Whole Life Appraisal Toolkit (links to a pdf on the Scottish Futures Trust website) CPN6/2017

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

10b

6.2.32

Design should also be afforded appropriate priority in the construction procurement process.

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

11

6.3.12

Guidance on best practice in the use of framework agreements should always be followed, in particular in allowing opportunities for small and medium enterprises (SMEs) to participate.

Guidance was published in CPN3/2017

Complete

12

6.3.22

When used inappropriately, UK-wide frameworks and frameworks negotiated by regional purchasing bodies elsewhere in the UK can prevent SMEs from participating in public procurement. Guidance should be developed and implemented on the appropriate use of such frameworks.

Guidance was published in CPN3/2017

Complete

13

6.4.11

Further guidelines about certain aspects of the operation of the hubCo model should be developed

Hub guidance paper (links to a pdf on the Scottish Futures Trust website)

Complete

14

6.5.10

The potential for savings to be delivered from clients enforcing the 'self‑delivery' of contracts by main contractors should be investigated, with particular reference to the work being undertaken by Scottish Water.

A review was conducted by Scottish Futures Trust into the three models and found that much of this was already being undertaken in Scotland through Hub and by Scottish Water. The Construction Procurement Handbook will be updated later this year.

Complete

15

6.6.6

Developments in the UK Government's trials of its three 'new methods' of procurement should be monitored, and guidance developed for their use in Scotland, if appropriate.

A review was conducted by Scottish Futures Trust into three models and found that much of this was already being undertaken in Scotland through Hub and by Scottish Water. The Construction Procurement Handbook will be updated later this year.

Complete

16

6.7.5

Thorough consideration of options must be applied to contract selection as part of the pre-commercial stage.

Guidance on Selecting a Procurement Strategy and a Form of Contract (links to a pdf on the Scottish Futures Trust website)

Guidance was published in the Construction Procurement Handbook.

Complete

17

6.7.18

There must be an open, mature and reasonable discussion between parties when deciding on the allocation of risk.

Guidance on Selecting a Procurement Strategy and a Form of Contract (links to a pdf on the Scottish Futures Trust website)

Guidance was published in the Construction Procurement Handbook.

Complete

18

6.7.24

Any variations to standard forms of contract should be kept to a minimum and used only when absolutely necessary to take account of the particular circumstances of the project.  Any such amendments are recommended to be clearly highlighted within contract documentation.

Guidance on Selecting a Procurement Strategy and a Form of Contract (links to a pdf on the Scottish Futures Trust website)

Guidance was published in the Construction Procurement Handbook

Complete

19

6.7.28

Specific guidance should be developed to help contracting authorities to decide when and how to use painshare / gainshare arrangements.

Target cost guidance (links to a pdf on the Scottish Futures Trust website)

CPN5/2017 covers this recommendation

Guidance will be included in the new manual and in a CPN

Complete

20

6.8.4

All public bodies should adopt a maximum 30 day payment term to their suppliers and this should form the target against which performance in meeting payment terms is monitored as part of procurement capability assessments (unless shorter targets have already been adopted by the organisation in question).

Section 15(5)d of the Procurement Reform (Scotland) Act 2014 mandates this.

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

21

6.8.12

The use of Project Bank Accounts (PBAs) should be trialled in Scotland.

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

22

6.8.19

Public sector clients need to ensure that there is a clear understanding between those involved in pre-contract award stage and those involved in delivery on the public sector requirement for fair payment. Contractual terms between client and main contractor should consistently outline fair payment terms for supply chain participants. Clients should ensure that appropriate resources are allocated to contract management and enforcement of terms and conditions of contract.

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

23

6.9.13

Cash retentions should be used only after careful consideration by contracting authorities, and not as a default measure. Whilst contracting authorities have a duty to safeguard public funds, they should also be mindful of the potentially detrimental effects of cash retentions on their contractors

A review is currently being undertaken into contract assurance practice. This will inform future guidance and policy.

Ongoing

24

6.9.17

Lessons should be sought from the trial of project bank accounts in Scotland about how PBAs, or other, similar trust accounts might be used to administer cash retentions.

Guidance on Project Bank Accounts updated by CPN1/2019.

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

25

6.9.20

A consistent approach to project assurance should be used for all major construction projects. Gateway reviews should be the benchmark against which other models should be tested.

Guidance was published in the Project Initiation and Business Cases Handbook.

Complete

26

7.2.11

Public sector bodies involved in construction procurement must have access to the right mix of professional procurement and construction expertise to ensure that infrastructure is procured effectively.

Baseline skill set guidance (opens as a Word document from the Scottish Futures Trust website)

Guidance will be included in the Project Initiation Handbook of the Construction Manual.

Complete

27

7.2.19

The Procurement and Commercial Improvement Programme framework should be developed to ensure that it adequately assesses, reports on and helps to improve organisations’ ability to procure publicly funded construction. Those carrying out the assessments should be suitably qualified to do so and all organisations procuring construction projects with public funding should undergo procurement capability assessments.

A pilot Construction Capability Assessment question set has been published in CPN3/2019.

Complete

28

7.2.26

A current and required baseline of skills in construction procurement should be established. A strategy should be developed to ensure those are met, building on the Scottish procurement competency framework.

Baseline skill set guidance (opens as a Word document from the Scottish Futures Trust website)

Guidance will be included in the Project Initiation Handbook of the Construction Manual.

Complete

29

7.3.6

New standardised guidelines setting out best practice on the end‑to‑end construction procurement process should be developed and maintained. As far as possible, the guidelines should be written in plain English and should be in an accessible digitised form based on the example of the procurement "Journey" for goods and services. The guidelines should be capable of being used in a proportionate way for projects of different sizes and risk profiles as well as being adaptable for different sectors.

A new Construction Manual is being produced. This will consist of three handbooks.
Handbook 1 - Project Initiation and Business Cases: published via Construction Policy Note 4/2019.
Handbook 2 - Construction Procurement: published in December 2018 via Construction Policy Note 1/2018.
Handbook 3 - Construction Phase - published October 2019.
Handbooks are published here.

Complete

30

7.3.8a

Good practice guidance on those elements of bids which should and shouldn't be scored and on the focus to be given on quality and whole life costing in the scoring should be developed.

Guidance was published in the Construction Procurement Handbook.

Complete

31

7.3.8b

Public bodies should assure themselves of the competence and skills of bidders, through asking for appropriate experience rather than exact experience within a limited timeframe.

Guidance was published in the Construction Procurement Handbook.

Complete

32

7.3.8c

The ability of a company to deliver a contract should not solely be measured by the use of turnover thresholds.  Further guidance should be developed on other valid and proportionate methods for assessing financial strength and risk.

Covered by Scottish Procurement Policy Note 2/2012

Guidance was published in the Construction Procurement Handbook.

Complete

33

7.3.8d

To the extent possible within the full scope of the law, including as may be amended by the new EU Procurement Directive and Procurement Reform Bill (now Procurement Reform (Scotland) Act 2014), contracting authorities should take the prior performance and behaviour of bidders into account when awarding contracts.

Guidance was published in the Construction Procurement Handbook.

Complete

34

7.3.8e

The Scottish Government should reissue its existing guidance to the public sector on how to deal with abnormally low tenders.

Guidance was published in the Construction Procurement Handbook.

Complete

35

7.3.8f

Guidance should be developed which assists contracting authorities to carry out successful pre-market engagement as part of a construction project.

Guidance was published in the Construction Procurement Handbook.

Complete

36

7.3.8g

Contracting authorities should always make feedback available to both successful and unsuccessful bidders at selection and award stage.

Guidance was published in the Construction Procurement Handbook

Complete

37

7.3.8h

If not already established, public sector procuring authorities should work together to develop forums with locally-operating construction firms which would meet on a regular basis and include economic development teams and construction procurement staff to discuss the pipeline of work, issues and opportunities.

Collaboration is at the heart of Scottish Procurement and the way in which we procure. We have regular dialogue at a strategic level, for example, through the CS Leadership Group and the delivery level through active pre-market engagement.

Complete

38

7.3.8i

A formal support mechanism should be developed to help small and medium enterprises (SMEs) understand how to compete for public contracts.

Section 9 of the Procurement Reform (Scotland) Act 2014.

CPN7/2017 published a list of organisations and resources which are available to support SMEs.

Complete

39

7.3.14a

Practice should be standardised by making the use of Public Contracts Scotland (PCS) mandatory when advertising publicly-funded construction contracts.

Covered by SPPN6/2015
Guidance was also published in the Construction Procurement Handbook.

Complete

40

7.3.14b

Contractors on major projects should be encouraged to advertise sub-contracts on PCS where they have not already fully identified their supply chain.

Guidance was published in the Construction Procurement Handbook.

Complete

41

7.3.14c

The product categorisations used on PCS should be reviewed.

No published output - categories have been found to be boadly fit for purpose. The Scottish Government will continue to monitor in response to feedback from stakeholders.

Complete

42

7.3.14d

Scottish Procurement and Commercial Directorate (SPCD) should assess the performance of PCS through feedback.

No published output - This is an ongoing process that the Scottish Government will continue to monitor and act on as necessary.

Complete

43

7.3.26a

Additional guidance for the public sector should be developed to ensure that the standard PQQ is used in a way which is proportionate and relevant to the needs of construction procurement and monitor practices to ensure that this principle is achieved.

Guidance was published in the Construction Procurement Handbook.

Complete

44

7.3.26b

SPCD along with bodies such as the Royal Incorporation of Architects in Scotland (RIAS) and the Royal Institution of Chartered Surveyors (RICS) should work collaboratively to develop consultancy / specialist services suites of standard questions for the standard PQQ. Other requests for specialist suites of questions should also be considered and assessed by SPCD as they arise.

While the SPQQ no longer exists this recommendation has been followed through to the European Single Procurment Document (ESPD) and guidance on the use of this is contained in the Construction Procurement Handbook.

Complete

45

7.3.33a

The use of Quick Quote should become the norm for works contracts worth less than £500,000, and public bodies should consider using Quick Quote for awarding construction-related contracts worth less than the proposed thresholds in the Procurement Reform Bill, now Act, (£2 million for works and £50,000 for supplies and services).

Guidance was published in the Construction Procurement Handbook.

Complete

46

7.3.33b

When using Quick Quote, public bodies should be able to demonstrate a clear audit trail to contract award, to ensure transparency and accountability.

Guidance was published in the Construction Procurement Handbook.

Complete

47

7.3.37

Use of PCS-tender should be mandatory for creating invitations to tender (ITT), using standard question sets as the basis, and submitting tender returns.

Guidance was published in the Construction Procurement Handbook.

Complete

48

8.2.9a

Good, detailed, community benefits guidance exists currently on the Scottish Government website, but it is lengthy and should be reviewed and integrated within a wider construction procurement journey.

Community Benefits toolkit (links to a pdf on Scottish Futures Trust website).

Guidance was published included in the Project Initiation and Business Case Handbook.

 

Complete

49

8.2.9a

The requirement that contracting authorities should have a clear strategic understanding of what they want community benefits to deliver through their public procurement for the sustainability of the Scottish and local economy and the community within which the project is being delivered. The public body should set out its strategic objective and ask the contractor to set out in its tender how it will meet that objective.

Community Benefits toolkit (links to a pdf on Scottish Futures trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

50

8.2.9b

Guidance to contractors to help design and deliver community benefits

Community Benefits toolkit (links to a pdf on Scottish Futures trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

51

8.2.9c

Guidance to contracting authorities to assist an open consideration of community benefit proposals at ITT stage should be developed.

Community Benefits toolkit (links to a pdf on Scottish Futures trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

52

8.2.9d

The promotion of continuity and completion of apprenticeships. One means of doing this may be through encouraging the public sector and industry to work together to develop a shared apprenticeship model that refocuses the emphasis on the completion of apprenticeships and the practicability of such models should be investigated.

Community Benefits toolkit (links to a pdf on Scottish Futures trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

53

8.2.9e

Monitoring by public sector clients of performance in relation to community benefits delivery, and use of that performance monitoring information as part of overall performance assessment for future contracts whether through frameworks or open processes. This could be done as part of a suite of key performance indicators.

Community Benefits toolkit (links to a pdf on Scottish Futures trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

54

8.5.8a

The Scottish Government should build on some good work by Registered Social Landlords (RSLs) and others by better incentivising greener construction and promoting modern methods of construction and providing better advice and guidance on renewables technologies.

Environmental Sustainable Toolkit and Environment Performance Tracker

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

55

8.5.8b

Construction guidance should align to wider sustainable procurement agenda recognising the potential for construction to demonstrate the benefits of good procurement and should take account of the findings of the Sullivan panel when they are published.

Environmental Sustainable Toolkit and Environment Performance Tracker

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

56

8.5.8c

The Scottish Government should promote a more coherent joined up approach to sustainability for public sector construction.

Environmental Sustainable Toolkit and Environment Performance Tracker

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

57

8.6.13

Building Information Modeling (BIM) should be introduced in central government with a view to encouraging adoption across the public sector. The objective should be that, where appropriate, projects across the public sector adopt BIM level 2 by April 2017.

policy note (SPPN 1/2017) containing guidance on the provisions for adopting Building Information Modelling (BIM).

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

58

9.5.10

Action should be taken to ensure robust systems are in place to track all spending on construction by public authorities such that a complete analysis of annual public sector construction spend in Scotland can be easily available.

Wider activity is taking place to review and assure how we gather procurement information and spending data.

Ongoing

59

9.5.10

Sectorial records of project outturn costs, including what they were estimated to cost at business plan and contract award stages and actual cost on completion, should be developed and maintained so as to provide meaningful benchmark figures for the public sector in Scotland. These records should also record timescales and quality measures to enable a true assessment of performance delivery to be made.

Benchmark database and guidance (links to a pdf on the Scottish Futures Trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

60

9.5.10

Guidance should be developed on robust management information requirements and should cover baseline data, benchmarks, metrics and key performance indicators.

Benchmark database and guidance (links to a pdf on the Scottish Futures Trust website)

Guidance was published in the Project Initiation and Business Case Handbook.

Complete

61

9.5.10

Project evaluation should build on the Learning Lessons approach.

Part of the new construction assurance review process.

Guidance was published in the Project Initiation and Business Cases Handbook.

Complete

62

10.2.5

The Chief Construction Adviser should hold talks with the Industry Leadership Group and with other trade and professional bodies and representative institutions to agree on how the industry should co-ordinate its efforts.

Creation of Construction Scotland Procurement Implementation Group and development of BIM Supplier Group led by Construction Scotland Innovation Centre.

Regular conversations are held between senior SG officials and senior representatives of the construction industry through the Construction Scotland Leadership Group.

Complete

63

10.3.6

Construction Supply Chain Payment Charter should be the norm, industry should consider how to end late payment and adopt best practice, for example, in use of retentions

This will be taken forward by the construction industry

Industry

64

10.4.7

Industry should consider what prompts ‘suicide bids’ (abnormally low tenders) and how to arrest them

This will be taken forward by the construction industry

Industry

65

10.5.2

Industry should use existing sources of guidance and work with the public sector to develop best practice models for the delivery of community benefits, and a shared apprenticeship model.

Delivered through two pilot projects and consultation to Community Benefit Toolkit

Industry

66

10.5.2

The industry needs to be ready to embrace modern methods of construction, and new and emerging technologies such as Building Information Modelling.

This will be taken forward by the construction industry

Industry

67

10.5.2

The industry should consider what industry-led training programmes currently exist for those bidding for public sector work, and whether there is scope for these to be co‑ordinated and developed further.

This will be taken forward by the construction industry

Industry

More information

Contact

Email the core implementation team at: constructionprocurementreview@gov.scot