During the recent Roundtable (March 29th, Realising Social and Economic Value) and the subsequent half-day seminar (April 1st, Procuring for Broader Social and Economic Value) we’ve been exploring how organizations might reframe the way they see major project procurement in order to deliver better value. Here are some thoughts on the how, what and who of that process.
How: From paramedics to a full-blown health system
Delivering social value, giving momentum to sustainability or rebalancing the world in the terms of equality, diversity and inclusion is a challenge to which organizations are being called. The trouble is, simply addressing these things at project level will never work. Think of it this way, project managers are the paramedics of public health; focused on the next ten minutes of the patient’s life and doing whatever it takes to keep them alive. You wouldn’t ask a paramedic to help educate a patient on a healthier lifestyle or to worry about the next thirty years of the patient’s life or their quality of life in their old age; that’s the role of the whole health system.
In just the same way, the fundamentals of value, sustainability, diversity cannot be left to a project to define and deliver. These are things that need to be built into your project culture at the programme and portfolio level or even at the level of the organizational strategy and objectives.
The Portsmouth City Council Lennox Point development is described as “a once-in-a-generation opportunity; an ambitious, innovative and sustainable neighbourhood built for the future” and to that end, the project is underpinned by the Council’s balanced project delivery scorecard which includes the following critical success factors, which are relevant to everyone involved:
- being a good neighbour,
- employment and skills,
- supporting the circular economy
- and delivering environmental net gain
Q. How does your organization frame social value – at the level of the organization or at the level of the project?
What: From Assets to Outcomes
Portsmouth City Council have established five design principles for the The Lennox Point development:
- Car-free for a carefree environment
- Strong and healthy communities
- Closer to nature and water
- Beacon of innovative Portsmouth
- Climate responsive
Each of these principles is one that speaks to the outcomes of the project rather than the asset or the outputs and they have some imaginative requirements built into the scope to support them. For example: Maximum 10% of roads designated for everyday car usage; Proportional percentage mix across age groups (%student %professionals %families %retirees); Minimum biodiversity gain of 10%; All homes are smart homes; and Embrace Circular Economy principles to minimise waste and maximise material the long-term value of the materials we’ve used.
Q. How would you articulate these requirements in the approach you would take to procuring for this project?
Who: From Lowest Cost Contractor to Highest Value Contributors
TfL’s Bank Station redevelopment project is an example of innovative, contractor engagement. Typically, the competitive tendering system discourages contractors from pitching innovations to the client (a) because the increased cost of being innovative may well cost them the contract and (b) for fear lest their ideas are simply appropriated by the client who then passes them onto the chosen contractor.
For the redevelopment of Bank Tube station, one of the busiest and most complicated on the network, TfL took a radically different approach in order to secure the most innovative solutions from not just one contractor but four. Working with four pre-qualified companies, TfL created an early contractor engagement plan as part of the tendering process that included a number of very imaginative guarantees, including:
- Pre-qualification based on contractors’ ability to deliver and specifically their ability to innovate;
- A post qualification period of “Ideas Development” against a Requirements Schedule;
- The protection of contractors’ intellectual capital for innovation;
- Establishment of a non-disclosure agreement between the parties;
- Establishment of fees to be paid to the contractor for this development;
- Redrafting of the Requirements Statement to allow for constraint removal where conflicts are established
This allowed them to benefit from the ideas and the expertise of not just one-contractor, selected on the basis of their ability to deliver the lowest cost solution but rather four contractors, each one incentivized to bring their most creative ideas to the problem of how to redesign the station to enable the easiest, fastest and smoothest flow for the maximum number of passengers.
Q. How might you reengineer your procurement and tendering process so that the competition becomes win-win rather than the usual zero sum game?