RLB Procurement Report finds collaborative practices thriving and few contractors widening their supply chain in response to challenging market

A recent report issued today from North West based construction, property and management consultancy, Rider Levett Bucknall (RLB UK) has found that the industry has moved to more negotiated procurement activity as contractors grapple with supply side concerns, but are generally not widening their supply chain in response.

The report, based on RLB’s annual survey that asks key stakeholders their thoughts and concerns about the issues affecting procurement, found that:

–       the North West construction sector shows a significant sway to frameworks compared to the national average

–       And whilst NW construction contractors’ concerns are amongst the lowest of the UK regions on labour cost and availability, material costs & availability and supply chain capacity remain the greatest concern.

–       75% of respondents are seeing fixed price durations decreasing (this follows the trend from last year of 77%)

–       There is a noticeable fall in use of single stage routes with a 10% fall in single stage and 7% increase in frameworks and 4% increase in use of two stage, possibly resulting from the Construction Playbook guidance

–       Negotiated tenders, frameworks and two stage projects are more frequently taking longer in procurement now than 12 months ago (between 40% and 55% of projects taking longer). Only 16% or less than 1 in 5 contractors are widening their supply chain to mitigate risk of supply side risks

–       In the public sector, value-based contractor selection is now reported in 74% of projects and nearly 60% adopting the best practice of making explicit the project’s value selection criteria at tender stage

–       However, in the private sector only 54% of respondents are observing value-based selection criteria, and only 27% of projects making those criteria explicit

–       Health and infrastructure sectors are looking particularly heated in procurement activity

–       Commercial fit out projects with budgets between £5m-£7.5m are seeing more competitive procurement activity.

Paul Beeston, Partner at RLB UK comments, “In a heated procurement market, it comes as no real surprise that single stage routes to market are being dropped in favour of two stage and frameworks.  It is reassuring to see collaborative practices embraced both by clients making increased use of value-based selection criteria and by contractors’ responses to challenges in material availability.  Working collaboratively is the only way to achieve better procurement outcomes and more focus must be placed on the supply chain, in a challenging market such as this, to reduce the potential impacts on timing and cost.”