Stakeholder Engagement Event

October 2013 Publication of report prepared by Robin Crawford and Ken Lewandowski. May 2014 All bar 1 of the 67 Recommendations are accepted by the then Deputy First Minister Nicola Sturgeon. Exception –No Chief Construction Advisor September 2014 Scottish Government & Scottish Futures Trust establish Core Team to implement the Recommendations November 2014 Governance structure agreed. June 2015 First Outputs Published. Timeline to date

Collaborative; Efficient; Sustainable; Outcome Focussed; Core Recurring Themes

Governance Core Team (SG and SFT) Recommendation Delivery Activity – 66 Recommendations Public Procurement Reform Board PPRB Construction Review Delivery Group CRDG Construction Review Secretariat Scottish Government Delivery Team Construction Scotland Industry Leadership Group Scottish Future Trust Delivery Team Strategic Governance Operational Delivery Co-ordination & Management Implementation of Recommendations

Communication Periodic Information Update Days; Web page refresh; Stakeholder Workshops; Draft publication of Implementation measures; Creation of specific Construction Procurement Journey Map; Creation of new web based interactive; Construction Procurement Manual; Feedback from consultation;

Implementation Programme

Implementing The Recommendations Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Collaborative Procurement Workstream - Structures Overview Create a structure to provide leadership and a focal point for construction procurement policy guidance to ensure infrastructure is properly planned. Issues McClelland Report did not deal with Construction Substantial capability exists, but… Limited co-ordination Approach to Delivery Strengthen SG Policy Team Develop Collaborative relationships Create structure for implementation of Review

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Collaborative Procurement Workstream - Skills & Capability Overview Procuring Authorities require the right mix of construction procurement skills and expertise. The recommendation is to create a strategy to measure, share, develop and allocate skills and expertise more effectively across the public sector. Issues Limited collaboration. Improve skills development. Limited resource. Approach to Delivery Baseline skill set developed. Enhance learning opportunities. Pooled expertise. Explore barriers to collaboration. Establish support structures.

Theme – Collaborative Procurement Workstream - Linkages & Collaboration Overview Promote the benefits and opportunities of identifying linkages between projects and of adopting a collaborative approach between public sector bodies. Address how regional, sectorial and programming synergies across a pipeline of work can be co-ordinated. Issues Limited strategic reviews. Opportunities for collaboration not fully exploited. Lack of pipeline transparency Approach to Delivery Best practice developed. Promote co-ordination of spend. Consider appropriate regional forums involving industry.

Theme – Collaborative Procurement Workstream - Benchmark Database Overview Using robust and readily available data from historic projects will support the public sector in the development of future projects. Providing Procuring Authorities with accurate benchmark data on costs, design and performance will support better outcomes within infrastructure procurement. Issues Limited knowledge sharing. Challenges in obtaining data. Limited level of data collated. Variation in how/what data is collected. Approach to Delivery Develop database Promote consistency Promote Transparency Support budgeting & project development. Develop Hub pilot database

Theme – Collaborative Procurement Workstream - Building Information Modelling (BIM) Overview BIM offers the opportunity to adopt a new collaborative approach which has the potential to achieve more efficient and effective ways of working. The objective is to develop the implementation of BIM and encourage its adoption across the entire public sector. The review recommends the use of BIM level 2 by April 2017 on all construction projects. Issues Limited use within industry Limited understanding of the client benefits. Development of industry expertise. Approach to Delivery Supported by Construction Scotland BIM group. Complete pilot project. Develop strategy. Develop guidelines. Liaise with UK BIM task force. Demonstrate benefits.

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Efficient Procurement Workstream - Procurement Journey Overview To develop new standardised guidelines in a revamped construction procurement manual based on a newly defined construction procurement journey. Issues Lack of awareness of guidance Current guidance difficult to access No common understanding of construction procurement journey Approach to Delivery Develop a construction procurement journey Link to journey for goods and services Review and re-draft construction procurement manual Digitise web based manual

Theme – Efficient Procurement Workstream - Assurance Overview Create a consistent, comprehensive, proportionate and appropriate system for assurance and review of construction procurement capability and activity particularly. Issues Project assurance is essential Need to ensure consistency Need to ensure appropriateness Collect best practice Approach to Delivery Review current Gateway Review Process Identify areas of need where Gateway reviews apply to construction Develop construction specific module for the Procurement Capability Assessment

Theme – Efficient Procurement Workstream - Spending Forecasts Overview To develop an accurate means of tracking actual and planned pipeline expenditure by public bodies to allow more efficient planning by both buyers and suppliers of construction to take place. Issues Economic uncertainty Inability of industry to plan for future Feast or Famine for contractors and consultants Barriers to collaborative spend SG Infrastructure Investment Plan is not universal Approach to Delivery Review current practice Work with public sector bodies and industry to develop mutually acceptable model pipeline Review current reporting processes Develop guidance for Construction Procurement Manual

Theme – Efficient Procurement Workstream - Tender Process Overview To review current procurement processes including SPQQ, PCS, PCS Tender, Quick Quote to ensure that they are appropriate for construction. And to ensure that the process identifies the right person/company for a job whilst only requiring the bidder and the tenderer to provide the information which is essential to allow a decision to be made. Issues Lack of awareness of procurement processes Challenge culture New legislation Proportionality Approach to Delivery Review existing guidance and processes Consultation and buy in by industry Incorporate process into construction procurement journey Review existing guidance and re-issue as necessary

Theme – Efficient Procurement Workstream - Systems Overview To ensure that all content on Public Contract Scotland and Public Contracts Scotland Tender is relevant for construction procurement where appropriate. Issues Procurement Reform Act (Scotland) 2014 mandates use of online tender systems Likely to be commenced late this year Approach to Delivery Review existing PCS and PCST Develop construction specific modules and categories where appropriate New guidance for Construction Procurement Journey and Construction Procurement Manual

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Efficient Procurement Workstream - Frameworks Overview Guidance on best practice in the use of framework agreements should always be followed, in particular in allowing opportunities for SMEs to participate. Issues Barrier to SME’s. Aggregation of small contracts. Approach to Delivery Address the impact to local SME’s. Benefits of aggregated contracts. Review UK wide frameworks. Procurement Strategy considerations. Develop guidance.

Theme – Efficient Procurement Workstream - Contracts & Risk Overview Support and improve the approach to contract selection which considers appropriate risk allocation. Avoid amendments to standard forms. Consider painshare/gainshare arrangements. Alternatives to cash retentions. Issues Heavily modified contracts. Disproportionate use of cash retentions. Lack of open discussions on risk allocation. Approach to Delivery Promote Standard T&C’s. Improve guide on contract selection focussed on risk. Guide on pain/gain arrangements. Alternatives to retention.

Theme – Efficient Procurement Workstream - New Methods of Procurement Overview Assess and consider new procurement initiatives within the industry. These include the UK Government trials of its three new methods of procurement and the self-delivery of contracts promoted by Scottish Water. Issues Integrated Project Insurance. Cost Led Procurement. Two Stage Integrated Team. Self – Delivery contracts. Approach to Delivery Liaise with UK Gov on progress of trials. Identify and consider benefits in their application within Scotland. New guidance if appropriate.

Theme – Efficient Procurement Workstream - Hub Programme Overview Develop guidelines in relation to the Hub programme which support improved payment terms, the monitoring of hubco performance and the exchange of project data. Consideration of a minimum contract threshold. Issues Limited knowledge sharing within the public sector. Extended periods between milestone payments. Approach to Delivery Guidance on payment terms issued May 14. Develop Hub Manual. Develop Hub database. Assess benefits of minimum contract value.

Coffee Break

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Sustainable Procurement Workstream - Fair Payment Overview Work collaboratively to ensure that all contractors and sub-contractors to public contracts receive all monies due on time and to a fair payment schedule. Issues Industry reliance on supply chain credit Late payment of supply chain Approach to Delivery Work with industry to develop industry agreement to a fair payment charter Continue to pilot project bank accounts Develop contractual fair payment terms for public contracts Update Construction Procurement Manual

Theme – Sustainable Procurement Workstream - Small and Medium Sized Enterprises Overview To maximise the opportunities for SMEs to compete for public contracts Issues Difficult for SMEs to get on national frameworks Lack of construction procurement knowledge of SMEs Approach to Delivery Ensure appropriate frameworks are used Develop support mechanisms for SMEs Work with industry Review framework guidance Incorporate into Construction Procurement Manual

Theme – Sustainable Procurement Workstream - Housing Overview Encourage and enhance active collaboration in procuring affordable housing across Scotland Issues Large Sector: 40 – 50 HAs and 23 LAs building houses. Budget pressures Inconsistent co-ordination and co-operation Approach to Delivery Review of previous collaborative pilots. Review will inform next steps May include further pilot collaborative projects Further guidance to be developed.

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Sustainable Procurement Workstream - Environmental Sustainability Overview Develop and promote guidance in supporting the Public Sector to deliver to the sustainable procurement agenda. Specifically in relation to environmental wellbeing. This will support a coherent and joined up approach in obtaining best environmental outcomes from procurement within infrastructure. Issues Inconsistent approach. Limited knowledge sharing. Large variety of measurement tools. Approach to Delivery Identify all current guidance. Identify coherent themes. Align guidance to policy strategy. Align guidance to construction specific elements.

Theme – Sustainable Procurement Workstream - Community Benefits Overview Requirement to review and update the Scottish Government 2008 community benefits guidance for construction. This revision to the guidance should support Contractors and the Public Sector to procure, implement, measure and deliver effective community benefits within contracts. 48 – Update 2008 Community Benefits Guidance 49 - PS have strategic objective for CB's and outline in tender 50 - Guide to Contractor to design, deliver CB's 51 - Guide to PS to assess CB at ITT stage 52 - Promote and investigate share apprenticships 53 - Guide to monitor performance (KPI's) 65 - Industry support PS deliver CB's

Theme – Sustainable Procurement Workstream - Community Benefits Issues Inconsistent requirements within tenders. Limited knowledge sharing in adopting community benefits strategies. Challenges in evaluating tender price and benefits. Approach to Delivery New Community Benefits Construction Guidance Promote CITB Client Base Approach Guidance on procurement & tendering Community Benefits Identify and Share all funding sources Shared apprenticeship pilot and develop model Included in Scottish Government Community Benefits Guidance Note

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Outcome Focussed Procurement Workstream - Whole Life Cost/Design Led Procurement Overview In the development of a business case and procurement strategy, Procuring Authorities should ensure a focus is made on service outcomes. To facilitate this approach, further guidance should be developed to embed design and whole life costing early within the development process. Issues Greater focus on the capital costs than the operational cost. Spend to save not afforded priority. Perceived barriers to the early procurement of designers. Approach to Delivery Promote best practice. Design- Led research and guidance. Tools to support early application, reporting and consideration. Develop reporting templates. Support the procurement of the correct expertise.

Delivery Workstreams SFT Policy Workstreams SG Themes Construction Procurement Review 67 Recommendations Collaborative Procurement 14 Efficient Procurement 54 Sustainable Procurement 32 Outcome Focussed Procurement 11

Theme – Outcome Focussed Procurement Workstream - Best Practice Overview Develop best practice resource including learning lessons for all aspects of investment and construction procurement Issues Inconsistent methods of prioritisation of investment Inconsistent availability of lessons and consequently best practice Approach to Delivery Infrastructure Investment Board reviewing current investment decision practice Project currently underway to develop learning lessons Guidance to be included in Construction Procurement Manual and aligned to Gateway Reviews