The Construction Playbook – What’s the new strategy?
Those of you working in, or for, the public sector may have noted the Government’s latest guidance on sourcing and contracting for public works - “The Construction Playbook” - published on 8 December 2020. Arising out of the Prime Minister’s desire to kick-start the economy as the country comes out of the pandemic, and with up to £37billion of contracts across economic and social infrastructure expected to be brought to market during 2021, the Cabinet Office was tasked to come up with a set of principles for public sector clients to follow in order to deliver "better, faster, greener" construction projects. The result being The Construction Playbook, which has been developed with and endorsed by the Construction Leadership Council and the wider construction industry.
Who does the Playbook apply to?
The Playbook sets out how Government intends to work with the construction sector to meet its aim to build back better, faster and greener and as of December 2020 it is mandatory for central government and arm’s length bodies on a “comply or explain” basis. The Cabinet Office’s intention being to enforce this approach through spending controls, but recognising that there is no one-size-fits-all approach for public sector works.
The wider public sector is also expected to take the Playbook’s policies into account so all new public works projects and programmes seeking approval will be judged against the new Playbook standards. Where a project or programme is already underway or there are existing frameworks in place, it is expected that the parties involved will take all reasonable steps to embed the Playbook’s principles and policies at the appropriate stage.
Ultimately, whether you’re working within the public sector or bidding for public sector works, the Playbook is something which you will need to familiarise yourself with.
What are the aims of the Playbook?
The Playbook focuses on getting projects and programmes right from the start and on meeting three overriding objectives which cut cross the Playbook’s 14 key policies:
- Improving building and workplace safety – creating safe facilities and protecting the health and wellbeing of the workforce.
- Building back greener – taking strides towards the UK’s 2050 net zero commitment and driving better understanding of whole life / whole life carbon cost. The Government see the Playbook as a way in which it can obtain data in a standard way to inform future decision making and performance during the life cycle of projects / buildings.
- Promoting social value – helping local communities to recover from Covid-19, tackle economic inequality and promote equal opportunities.
In addition, the Government is seeking to focus on the health of construction sector generally - setting up sustainable relationships, healthy and diverse markets and recognising that neither razor-thin margins nor a “race to the bottom” approach on price are sustainable for the sector long-term.
What are the Key Policies?
The Playbook sets out a best practice framework structured around the main stages of a typical procurement and project lifecycle:
- Preparation and planning
- Evaluation and award
- Contract implementation
14 key policies flow through the Playbook, each of which fall within a particular section of this procurement and project lifecycle. Whilst 5 of these key policies are entirely new, the other 9 appear to have been carried over from the Government’s 2019 Outsourcing Playbook so may be somewhat familiar to you.
- Commercial pipelines
Helping suppliers understand and prepare for the Government’s long-term demand by publishing comprehensive pipelines looking three to five years ahead.
- Market health & capability assessments
Assessing the market to: identify potential opportunities and limitations; take advantage of new technology and innovations; and consider actions to increase competition and improve market health.
- Portfolios and longer term contracting
Giving the industry the certainty it needs to invest in new technology and Modern Methods of Construction by developing long-term plans and, where appropriate, bringing work together in portfolios. The aim being to deliver improved productivity and efficiency savings.
- Harmonise, digitise and rationalise demand
Seeking out opportunities to collaborate in order to develop and adopt shared standards and specifications to create a more resilient pipeline and drive efficiencies, innovation and productivity.
- Further embed digital technologies
Adopting the UK BIM Framework to support a common framework of standards and protocols that will enable secure, resilient data sharing across organisations and sectors and in turn, the adoption of the Information Management Framework and the creation of the National Digital Twin - realistic digital representations of assets, processes and systems.
- Early supply chain involvements (ESI)
Involving the supply chain early on in the procurement process to bring about more effective design, reducing the need for/risk of changes and cost increases downstream. Also aiming to bring about faster delivery of projects.
- Outcome-based approach
Setting clear, measurable outcomes focused on whole life value, performance and cost. Clients should help suppliers understand their ambitions for the project without being prescriptive about how to deliver outcomes, with a view to unlocking innovation and driving continuous improvement. A new Project Scorecard is being developed by the Infrastructure and Project Authority to support this policy.
- Benchmarking and ‘Should Cost Models’
Using benchmarking of key project deliverables and outcomes to drive consistency and robustness of cost estimates. The aim being to generate the inputs required for Should Cost Models, facilitating evaluation of whole life cost and risk.
- Delivery model assessments
Follow an analytical, outcome-based process early in the preparation/planning stages of a project to decide the most appropriate delivery model, enabling clients and industry to work together to deliver the best possible outcomes by determining the optimal split of roles and responsibilities.
- Effective contracting
Selecting an appropriate standard form construction contract with appropriate KPIs and boilerplate clauses to suit the type and complexity of works, intended outcomes, delivery model, procurement strategy and commercial approach. The aim being to support an exchange of data, drive collaboration, improve value and manage risk. The Playbook expects a fully integrated, consistent suite of documents. Frameworks will be reviewed with a view to consolidating, where appropriate, and adopting a new ‘gold standard’ for frameworks.
- Risk Allocation
Ensuring that risks are allocated to, and managed by, those best able to manage and bear them to deliver value for money and successful outcomes. The fundamental principle being that contracts are profitable and offer a fair return to ensure the market is sustainable.
- Payment mechanism and pricing approach
As a general principle, the approach should be to link payment to the delivery of outputs and/or of the work value and supplier performance to ensure it incentivises the desired behaviours or outcomes. Contracts should be designed to be profitable and offer a fair return for the market to be sustainable in the long term.
- Assessing the economic and financial standing of suppliers
During the selection process, clients should asses the economic and financial standing of suppliers against the minimum standard, in order to to safeguard the delivery of projects against a supplier going out of business during the life of the contract. The Government now expects these assessments to be carried out in all construction procurements, as for other services. The key being that they are tailored to individual projects, and are proportionate, fair and transparent.
- Resolution planning
All new critical public works contracts will now require resolution planning information to be provided by suppliers to help ensure the continuity of projects and their orderly transfer to a new supplier in the event of supplier insolvency.
A copy of The Construction Playbook can be found here.
If you have any queries or questions regarding this article or would like to discuss the impact of The Construction Playbook upon your contracts and/or frameworks, please contact Jo Morris or Alan Tate in Michelmores' Construction & Engineering team.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.