Government Construction Strategy
GovernmentConstructionStrategyOne Year On Report and Action Plan UpdateJuly 2012
CONTENTSOverview .03One Year On Report. .04Action Plan Update . . 302
Government Construction Strategy Implementation Report July 2012OverviewOne year on from the launch of the Government Construction Strategy (the Strategy), thispublication takes stock of progress to date against the targets it set for reducing the costsof construction to Government, for the reform of the industry and for fostering innovationand growth.The overarching aim is to reduce the cost of Government construction projects by 15-20%by the end of the Parliament; cost reductions which can then be reinvested in furtherGovernment projects, supporting economic growth. This year, we have made a start indelivering those cost reductions. Cost reductions of 72m have been achieved in-year.And whole project life1 cost reductions of 279m have been identified on new contractsawarded and projects registered during 2011-122. This has been achieved throughapplying the principles of the Strategy to around 2.6bn of spend in the main procuringdepartments3. Forward trajectories by departments have been published to show theexpected pattern of growth in cost reductions for future years.We will continue to work closely with industry to achieve improvements and cost savingsthrough a range of activities, focusing on our key priorities:unlocking innovation and growth by using the Government‟s purchasing power todrive industry change (eg through the Government‟s commitment to BuildingInformation Modelling) and by providing transparency about the forward pipeline ofcontract opportunities which helps suppliers to respond to market opportunities;procurement reform and supporting SMEs – trialling of new models of procurement,streamlining the procurement process so it is easier for business to deal withGovernment, and strengthening supply chains so that SMEs can play their part indelivering better construction; andeffective use of data and management information about what projects should costto drive out waste and efficiency and to equip Government to function as an“intelligent client”.1Typically those cost reductions relating to the total project value corresponding to the construction phaseand which are therefore realised over a number of years.2The figure of 279m includes the 72m.3A full explanation of these cost reductions can be found within the Introduction and Table 1 in theGovernment Construction publication of July 2012: Construction Cost Benchmarks, Cost ReductionTrajectories & Indicative Cost Reductions April 2011 to March 2012: Addendum July 2012.3
There has been excellent progress against major milestones in the Action Plan for theStrategy. In particular:industry has engaged energetically with the reform programme, with around 120private sector representatives playing an active role in its development andgovernance;cost benchmarking data has been published by the seven main purchasingdepartments, providing a clear baseline for targeted reductions;cost reduction trajectories have been published by the seven departments,demonstrating that the proposed 15-20% cost reductions are achievable;three iterations of the construction and infrastructure pipeline have been published,providing industry with visibility over the forward work programme;the 2011/12 target for the value of contracts making use of Project Bank Accountshas been exceeded by 100%, providing improved payment speed and security toSMEs and others in the supply chain, and delivering expected savings of around1% of project costs;the commitment to embrace Building Information Modelling (BIM) in Governmentprojects over a 5-year time frame is positioning the UK to become a world leader inthe take-up of BIM and has encouraged investment in the industry to support therevolutionary change that the use of BIM represents; andtrial projects have been established to explore how Government can improve itsperformance as a client of the construction industry.IntroductionThe Strategy and accompanying Action Plan, launched in July 2011, set out a range ofactivities Government would undertake to reform industry practice, reduce waste and drivebetter value from its procurement of construction. The overall aim is to reduce costs ofGovernment construction projects by 15-20% by the end of the Parliament; savings whichcan be reinvested in other Government projects.This document and the appended update to the Action Plan together aim to provide anaccount of progress in the first year of implementation against each of the 13 themes ofthe original Strategy, and to set out next steps.The Strategy is complementary to the three-year Infrastructure Cost Review programmeled by Infrastructure UK; a number of the themes are common to both programmes andare progressed jointly by Cabinet Office and IUK. The Cost Review programme is ontrack, with the first annual report having identified projected savings for the period to theend of this Parliament and beyond of up to 1.5bn through changed behaviours andpractice, consistent with the Cost Review principles. The Strategy also supports theGrowth Review and the work led by the Department for Business, Innovation and Skills onskills development.4
The Strategy was always known to be ambitious. When the original Action Plan waspublished, we expected the programme would evolve as we engaged with Governmentclients and industry. There are some elements of the original plan which have shifted inthe proposed timetable or which are now being dealt with in a different way; details areprovided below.The focus of the Strategy has been on central Government and the actions it can take toimprove construction. But we have continued to maintain links with comparable measuresbeing taken in local Government through the National Improvement and EfficiencyPartnership (NIEP). As the cost reductions and other benefits flowing from implementationof the Strategy are realised, we believe that we will have established models of bestpractice in construction that will be widely adopted across the wider public sector.1. Co-ordination and leadershipThe Strategy outlined the scale of the challenge in driving through this significant changeprogramme, and the need for active involvement and leadership from both Governmentand industry.The Government Construction Board (GCB) was established to have oversight over theStrategy. Membership comprises senior representatives from all the main departmentsthat regularly procure construction services, ensuring that all Government clients arealigned with the Strategy. The Chair of the GCB, the Government‟s Chief ConstructionAdviser, reports directly to the Minister for the Cabinet Office.A comprehensive governance structure has been put in place below the GCB, with a GCSSteering Committee (chaired by Andrew Wolstenholme of Crossrail) drawing together sixTask Groups. Peter Hansford‟s Infrastructure Steering Committee, which oversees theInfrastructure Cost Review programme, draws together three further industry groups andalso feeds into the GCB. A graphical representation of the structure and details of thegroups‟ membership are published on the Cabinet Office website nt-construction.The Task Groups were set up to capture and exploit expertise from those best placed toadvise; bringing together people from industry (contractors, consultants, representativebodies and industry groups); academia; private and regulated infrastructure organisations;local government; the main procuring departments and agencies; and policy departments.Around 120 industry representatives have been actively involved. There has been anactive programme of work across a range of workstreams, and some have producedreports with recommendations for Government to consider. Government is grateful to allTask Group members for their generosity with their time and expertise and for engaging soproactively, in an excellent example of public/private co-operation.5
I‟ve been delighted in the manner Cabinet Office, Treasury and all thedepartments – Ministry of Defence, Ministry of Justice, Highways Agency,Education, local authorities – have engaged with industry in developing abetter approach to procurement of construction. Everyone has recognisedthat change can‟t be "done to" industry, but that there is a step that, whentaken together between industry and government clients, can create adramatic shift in the value for money that industry delivers for governmentclients and the taxpayer. A 15% reduction in cost with lower risks would betransformational.The Procurement/Lean Client Task Group has brought together greatexperience from across industry, local authorities and central Government tomake a comprehensive set of recommendations - to which Government andindustry are already responding very positively. The trick will be to keep thatmomentum up, and deliver a lasting step change in the value that constructiondelivers for our nation and for the taxpayer, in facilities, infrastructure,economic growth and jobs.Nick Pollard, Navigant, Chair of Procurement/Lean Client Task GroupThe final reports of two Task Groups are published alongside this implementation report:the Procurement/Lean Client Task Group final report, covering new procurementmodels and lean procurement, the „Intelligent Client‟, the effectiveness offrameworks; cross-Government collaboration in procurement and trial projectsevaluation criteria; andthe Standards and Lean Supply Chain Task Group final report on delivering value,fair payment and health, safety and occupational health.Their work having been completed and their reports published, these two Task Groups willdisband.A programme of trial projects has been established to test a range of new approaches andmodels proposed by the Strategy, including new models of procurement; BuildingInformation Modelling (BIM), Government Soft Landings, Project Bank Accounts and leanprocurement. Details of trial projects announced to date including new trials added in Julyare available at rial-projects.Going forward, the governance structure underpinning implementation of the Strategy willchange to better support the implementation of the trials: a new Trial Projects DeliveryGroup (TPDG) and corresponding Support Group will be established to drive action andthe measurement and dissemination of outcomes in key areas. The TPDG will:steward (oversee, challenge and influence) the implementation, baselining andmeasurement of the trial projects developed in response to the requirements of theStrategy and the Infrastructure Cost Review;6
facilitate the development of operational experience in implementing existingStrategy and Cost Review recommendations and toolkits, and disseminate theacquired knowledge to promote the roll-out of successful approaches and practices;andwhere necessary, on the basis of trial project outcomes, refine approaches to makethem more practicable.In addition to establishing effective governance for the Strategy and establishing trialprojects, a number of specific actions were planned in order to direct and support theprogramme of reform:the Government Construction Standards (incorporating the “Common MinimumStandards”) were refreshed in Autumn 2011 and will be reviewed again in Autumn2012 and every two years thereafter. This does not (as originally envisaged)currently include links to Achieving Excellence in Construction, as that guidance isitself in need of reworking and updating to reflect developments in best practicesince its publication in 2007. Achieving Excellence in Construction has accordinglybeen archived for the time being, while we concentrate on more immediate prioritiesof implementing the Strategy;the redesigned Better Public Buildings Award has been launched; an event todisseminate learning and good practice from nominees is planned for the Autumn,to follow the awards ceremony;the Green Construction Board has been launched by BIS to explore how to reducecarbon across the construction industry as a whole. This has led us to propose adifferent approach to the intention set out in the Strategy last year to review andupdate advice on the consideration of whole life value, by April 2012. Existingguidance (eg British Standard ISO 15686-5 Buildings and constructed assets –Service life planning – Part 5: Life cycle costing and the BCIS BSI relatedpublication, Standardized Method of Life Cycle Costing for ConstructionProcurement) already covers much of the ground. We now propose to engagefurther with stakeholders from industry and the Green Construction Board and drawon experience from trial projects to ensure that current advice is comprehensiveand non-duplicative. We expect to publish a statement on this in Spring 2013.In addition to these actions, we will work with departments to better understand theirprogress in aligning with the Strategy and so develop a comprehensive picture forGovernment as a whole.7
2. Forward programme and dataThe Strategy includes a commitment to provide visibility of the forward programme ofconstruction projects (“the pipeline”). Pipeline data is intended to give businesses greaterawareness of the Government‟s forward programme of construction so they can makemore informed decisions over where they should invest and plan to compete. The dataalso allows Government and industry to work together to identify any skills and investmentgaps so they can act to safeguard UK competitiveness and the potential for growth.Alongside the April 2012 pipeline, the Government published an initial analysis of strategiccapability, using construction and tunnelling as an example and identifying some of theskills and changes required to meet future demand. The Government plans to build ont
Government Construction Strategy Implementation Report July 2012 Overview One year on from the launch of the Government Construction Strategy (the Strategy), this publication takes stock of progress to date against the targets it set for reducing the costs of construction to Government, for the reform of the industry and for fostering innovation and growth. The overarching aim is to reduce the .
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Government Construction Strategy 2016-20 3 Context 5. The construction industry is a major part of the UK economy. In 2014 construction output was 103 billion, 6.5% of GDP, and comprised 2.1 million jobs, 6.3% of the UK jobs total.1 6. Construction is a highly fragmented industry and over 99% of businesses are comprised of
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Good Strategy Good Strategy Execution Good Management 17 Illustration Capsules 1.1. Starbucks' Strategy in the Specialty Coffee Industry 8 1.2. Microsoft and Red Hat: Two Contrasting Business Models 16 2. Leading the Process of Crafting and Executing Strategy 22 What Does the Strategy-Making, Strategy-Executing Process Entail? 24
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