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Architects call for major building procurement reform

The RIBA procurement report: Building Ladders of Opportunity; How reforming construction procurement can drive growth in the UK economy, launched today (24 May) at the RIBA, makes a number of recommendations to Government under three interlocking headings:

1. Further examining the best ways to drive efficiencies and savings, to ensure the public procurement system functions in the best interests of all those it serves.
A new RIBA survey of architectural practices has shown that at the moment, on average, OJEU bidding costs for architectural practices represent 29% of the total earnings derived from this work. For larger practices (with over 30 employees) this rises to 40%. Overall, the annual bidding cost for all architectural practices is estimated to be £40 million. Amongst the RIBA’s recommendations for driving efficiency and savings are:

– Reducing the number of organisations caught up in the bureaucracy of procurement rules by clarifying the definition and interpretation of bodies governed by public law .
– Providing better guidance for public clients on how to value and better manage design and project delivery at all stages of a project .
– Shortening, standardising and simplifying PQQs .

2. Embed processes that ensure buildings are sustainable, by focusing on design outcomes.
The new RIBA Procurement Survey has revealed that financial criteria are perceived by architects to be the most important factor in winning a bid, with design quality and technical skills perceived to be the least important. Assessment criteria need to be rebalanced, and procurement focused on achieving the best outcomes. The RIBA believe this can be achieved in part by:

– Ensuring that the awarding of a construction contracts is always made to the ‘most economically advantageous tender’, instead of the lowest priced bid, which fails to take into account a building’s whole life costs .

3. Create a competitive market by increasing access and allowing the public sector to take full advantage of UK design talent.
At present the estimated success rate for architects bidding for OJEU work is just 15 per cent. The RIBA believe one of the ways that barriers to market access can be tackled:

– Introducing ‘value banding’ so criteria demanded by public clients can be matched proportionally to the value of a project. This will enable access for mico businesses and SMEs, and ensure greater proportionality in their treatment for criteria such as annual turnover. .

RIBA President, Angela Brady said:

‘The current public procurement system is frustrating and wasteful, too often resulting in buildings of a poor quality that cost too much money to build and run. We need an improved and streamlined procurement process that strives for better outcomes.

The UK Government has the opportunity to aid architects economic recovery and industry growth by seeking reforms of the procurement system both at home and in Europe. At the moment turnover requirements typically applied to much public sector work above the OJEU thresholds mean that 85 per cent of UK architectural practices are considered to be too small to be able to tender. This does not encourage a competitive market for design which means clients do not get the quality and innovation that they deserve. The RIBA recommendations set out in this report will assist Government to ensure that construction procurement reforms can produce a more efficient, more sustainable and more equitable system for all, which will produce better buildings and environment.’

David Orr, chief executive of the National Housing Federation said:

‘The EU procurement directive is unacceptably wasteful for the UK economy. It adds extra costs to those tendering, and those bidding. Britain’s procurement is at least 20% more expensive than in comparable EU countries, and the whole process takes an average 50% longer here.

‘The costs to the housing sector alone is over £30m a year; money that could be spent building potential 13,600 much needed new homes over four years. This is made worse because housing associations have to go through the OJEU process simply because they have been wrongly classified public bodies by the Commission.

‘We want MEPs and the UK government to use the legislative process of the draft revised Directive to change this. By making housing associations’ contracts accessible to SMEs, housing associations can ensure their contracts benefit the local communities through the creation of apprenticeships, and local employment.’

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