Modern methods of construction and the Government Construction Playbook
In December 2020, the Government Construction Playbook was published to give public bodies ("In-Scope Organisations") the tools to embed best practice in their construction procurements actioned by the PPN 09/20. This follows the Outsourcing Playbook published earlier in the year.
The Playbook sets out commercial best practices in the form of 14 key policies for how the government should assess, procure and deliver public works projects and programmes. The 14 key policies are as follows and we have reviewed how these apply to the use of modern methods of construction.
Commercial pipelines – In-Scope Organisations should publish their proposed pipelines so that the market is aware of upcoming opportunities.
Market health and capability assessments – Public works projects should carry out an assessment of the market to effectively design commercial strategies which promote healthy markets.
Portfolio and longer term contracting – The appropriate use of longer-term contracts and standardising portfolios are critical in the pursuit of increasing productivity and delivering value for money.
Harmonise, digitise and rationalise demand – Seeking opportunities to collaborate will allow contracting authorities to develop and adopt common standards across a range of public works.
Further embedded digital technologies – In order to improve the quality and consistency of data available, In-Scope Organisations should apply the UK Building Information Management (BIM) Framework to their projects.
Early supply chain involvement (ESI) – Public works projects which contract for ESI can benefit from more effective designs, faster delivery and increased value for money.
Outcome-based approach – Focussing on the whole life-value, performance and cost of a project will enable In-Scope Organisations to access continuous innovation and improvements.
Benchmarking and Should Cost Models – Analysing data from past projects to create a benchmark will provide In-Scope Organisations with the foundations to carry out a whole life cost evaluation.
Delivery model assessments (DMA) – In applying a DMA, organisations will be able to better define roles and responsibilities that deliver value and desired outcomes.
Effective contracting – Sustainable, resilient and effective relationships across the supply chain with a focus on desired outcomes can be achieved through appropriate and standardised commercial terms.
Risk allocation – In-Scope Organisations should appropriately designate risks to the parties who are best equipped to manage and bear them to deliver successful projects with sustainable outcomes.
Payment mechanism and pricing approach – In-Scope Organisations should link payment to the delivery of outputs and/or performance objectives to achieve an equilibrium between price risk and return in a contract.
Assessing the economic and financial standing of suppliers – In carrying out due diligence of suppliers, consideration of their financial positions will enable contracting authorities to better safeguard the delivery of public sector projects.
Resolution planning – Organisations should apply effective planning, monitoring and risk mitigation strategies in order to reduce the impact of insolvency.
The In-Scope Organisations to which the PPN applies to are Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies. These organisations are expected to follow the policies mentioned in the Construction Playbook on a 'comply or explain' basis, underlining the core importance of value-led procurement moving forward but recognising the fact that there is not a one-size-fits-all approach for all public works.
The Playbook and its accompanying guidance are intended to form the basis of what is considered 'good practice' for the wider public sector and its impact is therefore expected to apply well beyond the narrow scope of central government bodies.
The PPN sets out that In-Scope Organisations should take action to meet principles set out in the Construction Playbook, such as:
- Setting clear and appropriate outcome-based specifications to drive continuous improvement and innovation;
- Favouring longer term contracting across portfolios where appropriate; and
- Standardising designs, components and interfaces.
Drilling into the detail on the guidance of use of Modern Methods of Construction (MMC), the Playbook dedicates an entire section to MMC and encouraging greater use of MMC is a theme running through the Playbook.
Aggregation of demand is recognised as essential to driving change. The Playbook recommends that Contracting Authorities should develop a comprehensive strategy at an organisational level. This should run through their portfolios and down to individual projects and programmes. MMC is not an end in itself and Contracting Authorities should consider whether, how and to what extent the use of MMC can drive wider value and achieve the project or programme outcomes.
The Playbook recommends that they should seek opportunities to collaborate in order to develop and adopt shared MMC requirements and common standards. This should be done to enable standardised and interoperable components from a variety of suppliers to be used across a range of public works. This will create a more resilient pipeline and drive efficiencies, innovation and productivity in the sector.
Contracting authorities are being encouraged to digitalise their requirements and ensure that manufacturers can provide a quality management system as part of their procurement offering.
The Playbook re-affirms the need for Contracting Authorities to engage with the market but also to drive the improved performance standards that the public sector need to demonstrate in order for MMC to be embraced more widely.
The limitation of the Playbook's recommendations and application to MMC is that they need substance to be delivered. For example industry approved standardisation of modular housing components does not yet exist nor is the use of BIM widespread to make this a mandatory requirement.
It’s a step in the right direction.