Government unveils new procurement models for public construction projects

The government's chief construction adviser Peter Hansford has issued guidance on the use of three new procurement models for construction contracts.

He said the cost led procurement, integrated project insurance and two-stage open book models all, “encompass principles of early supplier engagement, transparency of cost, integrated team working and collaborative working”.

“Their adoption will contribute considerably to the reductions in the cost of construction that both Government and industry are seeking,” he added.

Mr Hansford said the aim of all three models was to “provide cost certainty, which is an essential element of providing better long-term value from the delivery of construction projects.

“It is vital that clients enter the procurement process knowing what their projects should cost and that the procurement vehicle adopted provides them with confidence of what their projects will cost.”

The guidance sets out the use and expected advantages of each model.

Cost led procurement sees the client select one or more integrated supply chain teams from a framework.

Two-stage open book involves the client inviting prospective team members to bid for a project based on an outline brief and cost benchmark.

They compete for the contract in a first stage and at a second stage, the successful contractor and consultant team are appointed to work up a proposal on the basis of an open book cost that meets the client’s stated outcomes and cost benchmark.

Integrated project insurance involves elements of the other two methods together with insurance for costs.

It is being tried for the first time by the Ministry of Defence on its Royal Marines Lympstone project.

A copy of the guidance can be downloaded from the following link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/325011/New_Models_of_Construction_Procurement_-_Introduction_to_the_Guidance_-_2_July_2014.pdf