Submitted by Angela Walters on Thu, 26/03/2020 - 11:55
A new Construction Innovation Hub research programme explores procurement strategies to incentivise collaborative delivery and optimise whole-life outcomes. Lead author of the review, Professor David Mosey from King’s College London Centre of Construction Law, considers the current procurement landscape and the benefits of change.
‘Procurement Strategies for Incentivising Collaborative Delivery to Optimise Whole -life Outcomes’
(2020) by Professor David Mosey, Professor Cam Middleton, Darya Bahram, Dr. Roxana Vornicu and Dr. Paolo Ettore Giana
The 2017 McKinsey Global Institute found that poor construction sector productivity requires the industry to adopt modern technologies and to ‘rewire the contractual framework'.1 The same year, in the aftermath of the Grenfell Tower disaster in London, the Hackitt Report emphasised that current procurement systems need a complete overhaul and that, with the benefit of BIM, improved safety can be combined with ‘a significant increase in productivity’2.
Research by the King’s College London Centre of Construction Law and University of Cambridge Laing O’Rourke Centre for Construction Engineering and Technology, for CDBB as a partner in the Construction Innovation Hub, is exploring how collaborative procurement models, integrated contracts and BIM can incentivise efficient project delivery and optimise whole-life outcomes. The funding was provided through the Government’s modern industrial strategy by Innovate UK, part of UK Research and Innovation. Research team members have gained learning on a preliminary basis from high-performing clients and teams, and have undertaken a preliminary review of the current interactions between procurement, contracts and digital technology.
It has been a priority over the first three months of the research programme to identify and meet with high-performing collaborative clients and teams, and we have made good progress in a short period of time. We anticipate a valuable range of research data from research participants who are at different stages of progress in their projects, adopting different procurement models, using different contract forms and taking different approaches to the application of BIM.
Team members have created early working relationships with multiple clients and teams, combining the analysis of individual collaborative projects with the analysis of long-term strategic procurements. We have also built on the knowledge established through a series of collaborative project case studies that were mentored and written up by the King’s team as part of the UK Government’s Trial Projects programme.
An early research participant is Crown Commercial Service which is initiating integrated alliances for a wide range of public sector clients in the construction and engineering sectors. Each of these alliances establishes the contractual basis for early integrated engagement with consultants, contractors and other specialists, for collaborative procurement at all levels of the supply chain, for whole life asset management, and for the contractual machinery necessary to underpin BIM. More than 30 public sector clients are participating in these alliances.
Engagement with Crown Commercial Service has shown, for example, how it is driving standardisation and the extensive use of digital technologies through its modular alliances. In order to overcome the obstacles to innovation that arise from a culture of mistrust and defensiveness, Crown Commercial intends to use its alliances to create transparent, strategic commitments among its users and providers. For example, it is integrating modular programmes with equivalent alliances established in order to share improved working practices among design consultants, project managers and general contractors.
Research engagement with Crown Commercial is showing how strategic contracts can be compliant with public procurement regulations, while linking projects and clients together in order to build volume and create systems of supply chain collaboration. The organisation’s £1.2 billion modular framework alliance connects 24 suppliers across seven lots, four of which focus on the education and healthcare sectors and three of which cover housing, defence, commercial and retail.
Research participants also include Highways England which is delivering the collaborative A14 project and is planning an equivalent approach to the A303 project. Additional research dialogues are building on previous research outputs from Ministry of Justice and Surrey County Council, whose high-performing teams have delivered significant cost and time savings and extended warranties, combined with a range of social value such as improved local business opportunities, new apprenticeships and investment in sustainable design and construction solutions. Other reserach participants include include Oxfordshire County Council and Skanska, which propose a supply chain alliance as a means to improve value, to enable adoption of BIM and to aligning their zero carbon agendas
In order to support the operational potential of BIM, ISO19650-1:2018 proposes that ‘collaboration between the participants involved in the construction projects and in asset management is pivotal to the efficient delivery and operation of assets’. This approach is essential in order to diminish horizontal fragmentation across roles within the design, construction and operation processes. We are therefore examining the scope to realise the potential of BIM through multi-lateral contracts that act as umbrellas or integrators among team members. King’s College London Centre of Construction Law & Dispute Resolution has designed ‘FAC-1’ framework alliance and ‘TAC-1' term alliance models3 in order to establish and implement integrated processes of early engagement that alter perceptions, avert conflicts and improve outcomes. These alliance models reflect the ‘4 I’s’ below:
- Information – what information needs to be exchanged in order to help parties understand each other’s positions, reconcile differing interests and improve outcomes?
- Inclusion – which parties need to be included in order to maximise the value of these exchanges?
- Integration – how are relationships between the parties integrated so as to ensure agreed exchanges take place at the times when they will be of most value?
- Incentivisation – why should the parties honour their commitment to these exchanges?
Contracts can describe a process of knowledge-sharing among the parties involved in a project and can underpin agreed collaborative relationships, with interfaces and activities which can measurably improve environmental, economic and social value. King’s case studies demonstrate the improved value that can be achieved when contracts describe the processes governing collaborative working, early contractor involvement, supply chain collaboration and the use of BIM.
A change in mindset can build relationships that enable improved value. However, while the complex interlocking relationships and processes of a construction project are helped or hindered by behaviour, the adoption of ‘good faith’ obligations alone does not create collaborative behaviour, and merely categorising a contract as ‘no blame’ or ‘relational’ does not clarify the new commitments that are required. Instead, we are looking more closely at specific contractual processes and connections in order to test whether strategic, collaborative procurement models and multiparty alliance contracts can initiate and support integrated approaches to BIM. These processes and connections use the concept of ‘enterprise planning’ developed by the U.S. legal scholar Ian Macneil, and some research participants are taking this concept one stage further by creating what can be described as ‘enterprise contracts’.
For example, it is beneficial to involve all tier 1 and tier 2 (and possibly tier 3) supply chain members at the time when they can add most value through their specialist knowledge. Research participants are already showing how, by involving these supply chain members at an early stage, it is possible to take constructive decisions that define more accurate and reliable information to underpin the planning, design, construction and management of an asset.
Evidence gathered by King’s has shown how long-term collaborative relationships can encourage commitment to cost savings and also to improved quality. For example, the Surrey Highways alliance recorded 12% agreed savings over a five year period and also reported that ‘each scheme was designed with an expectation of longevity and appropriate whole life costing, but also with an agreed material warranty to back up the investment being made by Surrey and a bid to keep the roads “pot-hole free". This added a commitment from the Alliance team of contractors to add specific value based on the premium materials being utilised. This design commitment has resulted in just 28 remedial works to date since the start of the project in 2013, which is approximately 4% of the works carried out over 5 years’.4
The creation of an integrated team early in the preconstruction phase enables more productive design, construction and operation, involving end-users and increasing the opportunity to incorporate the whole team’s contributions to BIM. The Ministry of Justice Cookham Wood project combined BIM with a collaborative contract and reported 20 % cost savings together with ‘improved design coordination and change management at an early stage prior to construction, including liaison with the governor’.5
Due to the unique prototypical nature of construction, each project relies on the coordination of a diverse network of people, products, services and works. Digital technology can improve the integration among these participants and the data that they use and generate. For example, the FAC-1 and TAC-1 alliance forms enable:
- Data transparency and team integration through direct relationships under the multi-party structure and agreed objectives
- Agreed software and clarity as to reliance on data in the communication systems and template documents
- Mutual reliance on agreed BIM deadlines, gateways and interfaces in the timetable for agreed alliance activities
- Flexibility to agree any combination of BIM contributions through the multi-party structure
- Flexibility to bring in BIM contributions from specialist sub-contractors, suppliers, manufacturers and operators through supply chain collaboration
- Direct mutual licences of intellectual property rights
- Integration of BIM management with governance and clash resolution through core group decision-making, early warning provisions and the role of the alliance manager
- Learning and improvement from project to project and from task to task.
The future outlined in ‘Built Environment 2050: A Report on our Digital Future’ included the prediction that ‘design consultants and principal contractors will be appointed simultaneously, early in the lifecycle, to enable concurrent working at outline business case stage’. Digital Built Britain (2015) described incremental progression in the development of BIM whereby ‘collaborative models of working facilitated by data will permit greater engagement with lower tier suppliers’.6 In order to achieve these objectives, BIM can be more closely connected to integrated procurement models. For example, the Ministry of Justice Cookham Wood case study reported that:
- ‘The implementation of BIM has created improved value in the pre-commencement and construction phases of the project’
- ‘Virtual and actual prototypes have been produced to engineer out potential defects and clashes’
- ‘It is also envisaged that the data that BIM will capture will positively inform the future facilities management of the project.’7
BIM processes need to be structured and customised according to specific client information requirements, but preliminary engagement with high-performing clients and teams has indicated slow uptake in adoption against the benchmarks of the 2016 King’s report ‘Enabling BIM Through Procurement and Contracts’. Basic questions are still being asked as to ‘what is BIM level 2?’ and ‘what should I really expect in terms of requirements and level of output?’.
For BIM to develop, inform and communicate data more efficiently across the team and the whole project lifecycle, it arguably requires support from legal mechanisms that:
- Directly connect the team members, engaging them in collective decision-making,
- Provide clarity in terms of the timing and integration of team members’ deliverables,
- Encourage collaborative working and effective decision-making,
- Reduce the risk of misunderstandings and fragmented positions which lead to disputes.
So as to create and operate a collaborative working environment, ISO 19650-1:2018 stresses that ‘True collaboration working requires mutual understanding and trust and a deeper level of standardised process than has typically been experienced, if the information is to be produced and made available in a consistent timely manner.’
The ISO 19650 standard appears to require a formal enabler through which to create and sustain a collaborative delivery platform for project and programme delivery. Our research objectives therefore include exploration of the alternative ways in which a horizontal agreement can provide an enabler that integrates the team and that provides new ways for BIM to underpin agreed approaches to design, supply chain engagement, costing, risk management and programming.
[3] http://allianceforms.co.uk/
[4] Surrey County Council report quoted in ‘Collaborative Construction Procurement and Improved Value’, Mosey, D, Wiley (2019), 217.
[6] https://www.cdbb.cam.ac.uk/news/2015DBBStrategy0/Cookham_Wood_case_study__CE_format__130614.pdf