The report shows that in the North West, the market is seeing less use of two-stage routes than the national average (18% compared with 28% nationally), and concerns are greatest in the region over the robustness of supply chains.

In its sixth annual Procurement Trends report, ‘Creating a Value Chain’, RLB explores how industry volatility has shifted behaviours and working practices. At the same time, clients are asking more of their supply chains, which is leading beyond the traditional focus on cost to value selection and now on to outcome-based procurement, where clients procure an outcome, not the constituent parts of a building’s bricks and mortar.

The report’s data shows that 61% of tenders make it clear the value selection criteria to be used, and 35% of contractors believe that better outcomes will result from the recently implemented Procurement Act.

However, the report also reveals that while the industry is keen to embrace outcome-based procurement, it might not be ready for the transformation of procurement as it struggles to define the “how” and “why” of outcome-based procurement.

The market has changed and so have behaviours

More than 40% of contractors are seeing an uptick in collaborative procurement practices and 25% increased appetite for sharing risks. Whilst both are increasing, the rate of increase is slowing since last year, which is suggesting that the market is maturing and embedding these new found behaviours.

Asked to look ahead, contractors’ biggest procurement concerns for the next 12 months are the impacts of the spending review allocations and autumn budget, but with concerns over supply chain robustness greater amongst larger contractors. Large contracts are also shunning fixed price risk, whilst smaller projects have remained broadly static. Projects over £100m are now offering clients shorter fixed price durations (down 9 months since last year), with a reported 14% increase in the use of fluctuation clauses.

The report reveals positive signs of change. Early contractor involvement – a vital element for achieving better outcomes – is becoming mainstream. Two-stage tenders, now used on 28% of projects, are matching single-stage routes and that increases to 65% of larger projects (>£ 60m). Whilst design and build contracts remain popular at 65%, bespoke contracts have grown to 6%, the highest since RLB began to track trends.

Clients are demanding more of their supply chains, but failing in outcomes

The drive for greener, more sustainable construction is increasingly evident in tenders. Nearly a third (31%) now set clear sustainable targets, up from 23% last year. But translating targets into delivered results is patchy, with one in three projects that define targets missing them, and that proportion largely unchanged year on year.

Moving to measuring performance, when it comes to sustainability, 22% of contractors are now being asked to measure at the end of the defects period, but that leaves the majority of projects either not defining targets, not having coherent data to measure them or not involving the supply chain in measuring them.

Modern Methods of Construction (MMC) finally sees increased adoption rates after many years of inertia, with the average project realising 24%, a 2% rise from last year’s survey. Barriers to adoption have switched to be more economically focused rather than client or design team resistance.

And, if the increased ask is not from clients, then it is from legislation. Here, contractors are feeling unable to accept risk, with 63% of contractors shunning the risk of regulator timescales for Gateway 3 approvals for Higher Risk Buildings.

Data: the industry’s untapped asset

Delivering outcomes requires good data and yet the report’s findings suggest that procurement may actually be killing valuable data. Firstly, information requirements are not being captured adequately at the tender stage with 28% of tenders not defining any requirements and only 22% defining them well.

Zoe Rowan, Partner, RLB Liverpool comments,

“Whilst our region is seeing less use of two-stage routes to market than the national average, there is also a higher use of frameworks. Early contractor involvement may be leveraged using a framework to deliver better outcomes for clients.”

To read RLB’s full Creating a Value Chain Procurement Trends report, please visit here.