Long-term frameworks are meant to be all about collaborative working, so it’s about time clients and suppliers worked together to promote their value
The value of long-term frameworks to suppliers and the commitment of the clients promoting them has been the subject of much comment in the pages of Building recently. NHS Estates’ Procure21 has come under particular fire, particularly after Bristol-based contractor Pearce left the NHS framework having failed to win a single contract in more than two years.
What is occurring is a major failure in communication, on both sides, and as a result each is failing to understand the needs and expectations of the other.
In November, the annual conference of construction reform group Be saw the launch of Equal Partners II, a report from Be’s Collaborative Working Centre. The report looks at the health, education, defence and local authority sectors, where customers have all adopted framework agreements with fewer suppliers. It then assesses how suppliers have come to grips with the extent of change required, and looks at how current obstacles and frustrations can be overcome. As the main author of the report, I’m delighted that the current debate in the press has made its publication so timely.
It’s clear that the problem is an age-old one.
At the top, the big-spending central government departments are committed to change, written strategies that are excellent in their intent, and heads of procurement have secured senior management buy-in and put in place good frameworks. But delivery is patchy, due to the familiar problems of information transfer or “knowledge management” and lack of buy-in lower down.
Partly because of this, and because of the public sector “them and us” culture of fearing “contamination” from the private sector, customers are not yet communicating clearly enough, either internally or with their suppliers.
As a result, suppliers don’t yet perceive the significant benefits that long-term frameworks bring, and so are not implementing radical changes in delivery.
There are obviously some exceptions, but in general the actions required to close the gap are common to both customers and suppliers. Three factors in particular seem to be lacking: stakeholder management; a working knowledge of the other’s key drivers, processes and guidance; and, quite simply, communication of all kinds.
So where does this leave Procure21? With its core requirements including supply chain integration, early involvement and innovation, it is the leading example of collaborative working in the UK construction industry, and as such its lessons are vital for the future reform of the industry. It is already delivering significant savings in the time taken to build hospitals, typically an impressive 49 weeks. We will also start to see further benefits through lower capital costs, higher quality hospitals and, eventually, the factor that really matters – better outcomes for patients.
The parties need to take responsibility for a concerted campaign, first of all to collate the evidence of superior performance (the “business case”) and then to communicate this collectively to wavering trusts
However, if the perception exists that the current workload is patchy and dominated by Laing O’Rourke, and a majority of trusts appear still to need convincing to use Procure21 at all, how is this to be addressed?
There is a mutual dependency here, and hence a responsibility for all involved to work together to prove that the framework is better for the end customers, the autonomous health trusts.
The trusts currently outside Procure21 feel that they have yet to see convincing evidence of value for money and better facilities. For their part, construction suppliers have yet to obtain convincing evidence of workload, let alone satisfied repeat customers and achieving higher and more predictable profitability. Until this evidence is available to both sides, NHS Estates and suppliers alike are at risk of opinion turning against them, not only among government policy makers and wider stakeholder groups, but also within their own organisations.
The parties need to take responsibility for a concerted campaign, first of all to collate the evidence of superior performance (the “business case”) and then to communicate this collectively to wavering trusts.
As some of the contractors have said in the past months, Procure21 will improve once the (now) 11 contractors improve their customer and stakeholder communication skills, understand what value means for their customers – the trusts – and align their business strategies and internal processes to deliver effectively.
I could not agree more. As in any industry, the emphasis must be on the “supplier” driving forward relationships with the “customer”. It’s a fundamental rule of good business.
Don Ward is the chief executive of Be, the independent construction reform group, and operations director of CWC. He can be contacted on 0870 922 0034 or email@example.com.