Who's for excellence?

The launch of Achieving Excellence by the Treasury in March 1999 marked the beginning of a sustained effort by the government to reform its own procurement practices. After all, it had agreed that it would be a best practice client. Achieving Excellence aimed to convert government procurers to the idea of delivering projects through the use of integrated project teams. The initiative was to last three years but has been extended for a further two. Now the key target is the achievement of zero defects on 70% (by volume) of construction projects.

As part of this drive, The Office of Government Commerce, which is responsible for public procurement policy, has updated its Achieving Excellence Procurement Guides. This column will concentrate on guide number four, which deals with risk and value management, and guide number six, which covers procurement and contract strategies.

A key message in four is: "It is important to work as an integrated project team from the earliest possible stages on an open-book basis to identify risks throughout the team's supply chains."

Furthermore, it is expected that the team will have had an opportunity to discuss and agree an appropriate allocation of risk. The guidance warns, however, that risk allocation will be affected by the chosen procurement route. Perhaps the guidance should also have urged caution in the choice of contract. In the case of standard contracts, risk allocation will have been predetermined by the contract conditions. Usually, all risks are passed downstream via "back-to-back" contracts. The government's subcontract (GW/S), for example, is simply a dustbin for the risks in the main contract. The team is required to agree a risk register that is reviewed and updated throughout the project.

Now comes the stick. Unless the project team has identified, assessed and allocated risks, finance for the project will not be forthcoming.

Guidance four advises that all those involved in the delivery of the project should, at the end, be encouraged to provide feedback on how well risks were managed and consider any improvement.

Unless the project team has assessed and allocated risks, finance for their project will not be forthcoming

Guidance six makes clear that the hierarchical structure of traditional contracting is a thing of the past. "The recommended procurement routes allow designers, constructors and specialist suppliers to work together in integrated teams."

I have one small criticism of the use of the word "designers" here. The OGC – no doubt like many others – believes that the only contribution made to the design process by the contracting side is in relation to issues such as "buildability". This does not reflect reality.

The advice in guidance six is that procurement and contracts must be directed towards ensuring the full integration of design, construction and operation functions. Whichever procurement route is chosen, the following are essential:

• Early supply team involvement

• Clear incentive payment mechanisms

• Continuous improvement processes

• Joint commitment to best whole-life value.

All procurement of government construction work must go through a gateway process. This facilitates effective management of the procurement process so that the business needs of the procurer are realised within the budgetary constraints.

It is interesting that the contract chosen must promote partnering between clients and suppliers. This severely limits the options; the GC/Works series of contracts is unlikely to satisfy this aim. Perhaps the OGC will be issuing further advice on this subject.