Procurement update: The importance of navigating frameworks

01 / Introduction

With annual public sector capital investment set to grow by over 15% between now and the end of the decade, the government faces a challenge in attracting supply chain capacity to deliver much-needed infrastructure. The recently published national infrastructure strategy highlights an embedded pattern of erratic capital spending as a key reason for the UK’s underperformance in infrastructure investment delivery.

In the comprehensive spending review (CSR), backed by a commitment to invest £725bn annually over 10 years, the government has emphasised the importance of long-term, investible programmes. These will be a foundation stone for the creation of new skills and innovation in the supply chain. 

The announcement of large multi-year allocations to departments including defence, health – which will see investment rise by 20% – and education, given £2.4bn a year to deliver 500 schools, shows that increased spending will be focused on a relatively small number of critical programmes. Capital maintenance is also set to benefit from a longer-term focus on the performance and resilience of the existing estate, with spending at the end of a 10-year period in 2034/35 set to reach £10bn per annum. 

These and many other programmes are tasked with delivering a step change, as they will not deliver the desired results without improvements in performance, productivity and certainty of outcome. Procurement innovation, focused on long-term strategic frameworks, holds the key to unlocking the benefits of this investment commitment. Gold Standard frameworks, codified in 2022 in David Mosey’s report Constructing the Gold Standard, set out a series of priorities by which framework performance can be optimised.

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Government is raising its investment game just as other long-term programmes are launched into the market by utility firms, nuclear developers, and investors in hot markets such as life sciences and data centres. All clients are competing for the same finite skilled construction resource, and all are looking to be the client of choice. 

Being the client of choice involves having a visible, dependable pipeline of future work, having an engaged relationship with the supply chain and having the ability to contribute to improved performance, through process optimisation for example. Frameworks can facilitate this active relationship.

Frameworks have been in place for many years. The Construction Playbook recognises them as a powerful tool for developing integrated teams that deliver more efficient outcomes. However, their application and effectiveness have been patchy. There is plenty of experience of what works and what doesn’t, and in particular how effective post-award management contributes to long-term outcomes.

As new generations of frameworks come in, and as new bodies including combined authorities manage larger programmes of work, what lessons can be learnt from previous frameworks to ensure that the public sector positions itself well to deliver future opportunity? This article sets out to highlight some key lessons.

02 / The power of frameworks 

Traditional, transactional procurement models based on competitive tendering or negotiation are deeply entrenched in the UK construction industry. Many clients appreciate the ability to select the contractors most suitable for the project, as well as the evidence of best value (or lowest price) that a competitive process brings. Even as clients develop collaborative relationships through the early engagement of main contractors through a pre‑contract services agreement (PCSA), specialist contractors are often still appointed in competition.

The limitations of one-off contracting have been argued over endlessly, but many clients still opt for this familiar and well-understood approach. However, in the current market, fundamental weaknesses are being exposed. Clients have limited capital to invest and, with an equally constrained supply chain, construction work is increasingly too complex and too expensive for it to be optimised on a single-project basis.

Work-winning itself is also becoming a constraint on growth. Extended PCSA processes and delays caused by planning, funding and viability mean that pre-contract teams often spend far more time on projects before starting on site than in previous cycles. This means that contractors have less capacity to bid for projects and will prioritise opportunities with the greatest chance of conversion. Frameworks create opportunities to allocate work based on performance as well as a fast-forward through process delay – significantly reducing at-risk bidding costs and, again, potentially reinforcing the attraction of the client. 

Viability is a problem for the public sector as well as the private. Use of a framework will not directly address the affordability problem, but it has the potential to deliver better outcomes and better value. Typically, this relies on collaborative working by client and supply chain across repeated projects, involving the progressive refinement of designs and components, the sharing of lessons learnt, and the optimisation of processes. On particularly high-performing frameworks, the improvements are shared across all framework members, creating a virtuous circle. The shared product platform solution developed by the Prisons Alliance is a good example of this, featuring common designs and a shared supply chain. The shared product platform has eliminated wasteful repeat work and has de-risked innovation associated with an MMC-based solution, even as planning issues remain outstanding.

Public sector clients of course also need to deliver a wide range of outcomes through their investment programmes. These often extend beyond environmental outcomes and product innovation, to cover aspects of social value, including investment in local economies and supply chains. Again, the framework methodology facilitates outcome-focused working by creating the pre-conditions for an alignment of values and strategic planning. 

Frameworks can deliver significant benefits, but the benefits are not assured. Frameworks are hard work to set up for success. The opportunity for additional value can be undermined by an uncertain workload. Third parties – including end users, planners and funders – are a common cause of hold-ups, but the visible, credible pipeline needs to be in place from the outset. An immature framework culture – evidenced, for example, by KPIs that do not reward great performance – erodes the benefits.

Factors that promote and detract from the effectiveness of frameworks and the attraction of clients are summarised in the table. As organisations with access to a forward pipeline become more adept in managing their portfolio, they will become easier to distinguish as a client of choice. 

03 / Critical success factors  

As highlighted in the previous section, many of the factors that contribute to an effective framework are behavioural or procedural, concerned with converting the promise of a framework into reality once procurement is complete and project opportunities start to flow. 

The following are insights derived from the supply-chain side, including from technical advisers and contractors working across a range of large single-client and multi-client arrangements. 

These insights flesh out some of the performance promoters listed in the table above, highlighting specific actions to be taken by clients and their advisers.

Strategic purpose 

Frameworks should be adopted with a clear purpose. This requires a strategic plan for the framework, with steps from initial vision to final delivery of operational assets. 

The plan will include priorities for the work to be undertaken, a stress-tested innovation and performance improvement plan, a plan for procurement, and finally an understanding of the delivery mechanisms that will follow. 

A good example of strategic purpose is the use of stock condition and survey data to focus investment on priority problems. 

Aligning client stakeholders to the value drivers of the framework

These value drivers might be innovation driven by harmonisation of standards or increased social value facilitated by targeted KPIs. Value drivers create disciplines such as the need for common reporting formats and governance requirements, which can be harder to achieve in a multi-organisation context. 

Common design standards are harder still but have far greater potential to facilitate innovation. The framework action plan (FAP) should include plans for levels of harmonisation agreed with client stakeholders. 

Quality of supply chain engagement

Pre-bid engagement is a vital shop window, setting the tone for the framework culture as well as communicating the opportunity and the process. 

Early evidence of absorption and action in response to supply chain feedback is one way of demonstrating the likely culture of the framework, bringing to life the principle of shared lessons learnt. 

Direct involvement of senior members of the client capital investment team, as opposed to commercial and procurement specialists, plays an important role in establishing the long-term relationships that over time will support effective feedback loops. Everyone involved in supply chain engagement should be confident in their role while also being humble enough to take feedback and adopt ideas. 

Adopting framework of choice behaviours

Clients, framework managers and supply chain can all proactively adopt positive behaviours to enable high performance. Three areas to focus on are:

• Consistency – procuring similar projects with consistent processes helps to enable more productive, harmonised work. This applies to process as well as product, such as a standardised project RACI (which identifies who is responsible, accountable, consulted and informed) and the reliable application of KPIs.
• Certainty and decisiveness – this involves a combination of the confidence in workload needed to invest in product development and fast decision-making to maintain progress. Decisiveness includes the ability to accept and implement change quickly when schemes face challenges.
• Pragmatism – this means investing in early development work to manage downstream optimism bias associated with supply chain capacity or budget certainty.

Getting the basics right

Hygiene issues can potentially undermine the performance and attraction of a framework if they are not managed well. Meanwhile practical matters such as the speed of processing purchase orders, as well as the pace of decision-making, have an impact on the continuity of workload and the productivity of the project team. This can be exacerbated when early supply chain integration is adopted, where development work must continue in parallel with slow governance and approval processes. 

Keep active, competitive and interesting

Increasingly frameworks cover longer durations, such as the six-year and two-year extension periods planned for the forthcoming CF25 Schools Framework. 

Against the background of rising workload, they must be competitive in order to support the client’s aim to be client of choice. 

Success factors are often practical rather than aspirational, including the speed of pre-construction processes that determine how much work is undertaken pre‑contract. Practical de-risking requires a focus on detail – navigating the minutiae of planning, for example.

De-risking the pipeline

Early development work undertaken by technical adviser teams, including outline planning, plays a key role in the de-risking of early supply chain integration stages. 

Extensive surveys covering issues such as biodiversity as well as ground and building condition support a fair transfer of risk. The should-cost budget should represent good value but must realistically reflect the scope, avoiding delays at later stages in the project when contract costs are finalised.

Managed innovation

Innovation and shared lessons are a productivity engine enabled by long-term, collaborative relationships. Three key considerations are:

• Repeat workload – enabling suppliers to invest in product improvement and profitably hitting cost and programme targets across a portfolio rather than single projects. This is facilitated by effective use of KPI incentives linked to repeat work.
• Proportional standardisation – where designs cannot be harmonised, frameworks can focus on the development of framework standards associated with governance, process, contracts and KPIs.
• Controlled innovation – aligning innovation to best industry practice and avoiding bespoke solutions. 

The findings highlight the importance of the active management of frameworks towards delivery, the need for attention to detail, and the value of understanding the impact of change and delay on other framework partners. The resilience of a framework is another aspect of being client of choice.

Acknowledgments

The authors would like to thank Professor David Mosey of King’s College London, Steve Beechey of Wates, and Amir Baharlou, Steve Dixon, Andrew Dutton, Dave Jobling, Umar Khan, Liz Mendelsohn, Hershil Patel, Richard Proctor and Will Waller for their insights and contributions to this feature.