New models of construction procurement

This brings together guidance on new models of construction procurement, based on best practice in public sector construction.

The Government Construction Task Group report 2012 (pdf) highlighted very real challenges in construction procurement. Addressing these, the Government Construction Strategy set out a clear commitment to trialling new models of procurement that include principles of early supplier engagement, transparency of cost, integrated team working and collaborative working. The models are therefore fully consistent with the ambitions of the Industrial Strategy for Construction. Case studies of the trial projects show how these models have been used efficiently, and achieving other other benefits.

This guidance will help both central and local government bodies to work with industry in a consistent and collaborative way, building long term stable partnerships between client and suppliers. The models provide modern, innovative methods and tools, allowing clients to lead change and drive positive results.

See also the trial projects discussed in the guidance documents below.

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The introduction sets out the common principles underlying the models and the distinguishing features of each model, together with evidence from the trial projects and other sources that support their adoption.

Two Stage Open Book

Using Two Stage Open Book a client invites prospective integrated teams to bid for a project based on their ability to deliver an outline brief and cost benchmark. Following the first stage competition, the appointed team works alongside the client to build up a proposal, the construction contract being awarded at the second stage. This differs from Cost Led Procurement in reducing industry bidding costs, enabling faster mobilisation and in providing the opportunity for clients to work earlier with a single integrated team.

Cost Led Procurement

Applying the Cost Led Procurement process, a client can use their knowledge of costs to set a challenging cost ceiling and output specification against which the supply chain can bring experience and innovation to bear in a competitive framework environment. On frameworks with a series of similar capital projects, CLP provides the opportunity to continually improve on the unit costs of the programme working collaboratively with the supply chain.

Integrated Project Insurance

The Integrated Project Insurance (IPI) model offers clients the opportunity to create a holistic and integrated project team (an ‘Alliance Board’) to eliminate the “blame/claim” culture. The innovative “integrated project insurance” package limits the risk for the individual members of the team, fosters joint ownership of the project, and thereby reduces the likelihood of overrunning in terms of cost and time.

Published 29 January 2014
Last updated 11 July 2014 + show all updates
  1. Updated to reflect 2 July guidance on models of construction procurement.

  2. First published.