Housing procurement delays - key is the duration of the project governance process, not the procurement process!

There has been much talk recently about how long it is taking the Government and it's agencies to deliver housing ("Murphy says he can't shorten procurement process for social housing.", Irish Times Wednesday September 26th, 2018). The EU procurement requirements have been cited as a major road blocker to the quick delivery of housing stock in addition to adding significant cost on account of a number of factors. The reality is that the procurement itself is not the issue but rather the overall capital project management framework with it's staged approval gates - the duration of this project governance process adds a significant amount of risk to a prospective tenderer. This added risk, in the current inflationary construction environment and the backdrop of the Carillion collapse, is adding significant cost to contracting authorities as tenders look to target margin and not turnover.

The procedures themselves (when the evaluation and decision making times are minimised) take either 65 or 95 days depending on the process used.

However, the reality is that time taken to procure housing takes much longer - in most part due to the approvals and clarifications required under the capital works management framework. The following compares the public procurement process and the private sector process.

The extended duration of the public sector process pushes out the time to completion (approximately 18 months longer to get first phase of units completed) and increases costs all around - not lest cost inflation allowances given current market conditions.

The requirements for transparency and good stewardship of the public purse are important but what can be done to quicken things up and make the projects attractive to tenderers? The following is suggested:

1. KISS - KEEP IT ("the procurement") as SIMPLE and STANDARD as possible. Processes that are closest to give me a price to build x work best.
   
2. Reduce the size of the projects - this increases the available pool of delivery partners, reduces the funding ask for projects and balance sheet required.
   
3. Have clear project assessment process and documentation which allows self scoring in advance of submission of project papers.
4. De-Risk the projects as much as possible and consider taking out the planning risk for candidates i.e. get planning before contractor tender.
5. Use design and build contracts where possible when planning risk is held by contracting authority.
6. Standardise the procurement and internal governance process and documentation through providing templates etc. and clear windows for approval of projects.
7. Provide standard cost benefit analysis templates for residential projects with economic multipliers updates as required by central government.
8. Publish the public sector budget for projects - this works for schools with Tenderers knowing the cost target they have to get to in order to win work.

Use of a simple and standardised process as possible allows both the contracting authority and a prospective tenderer to minimise costs and maximise potential profits within an acceptable risk appetite and programme for all parties