Scotland needs dedicated construction adviser, procurement review concludes

The "root and branch" review of the way in which Scottish public authorities procure construction contracts has concluded that greater leadership is needed to improve efficiency and taxpayer value for money. The review, led by KPMG's Robin Crawford and Ken Lewandowski, formerly of Clydesdale Bank Financial Solutions, was commissioned last year to examine how Scottish authorities' £4 billion annual spend on construction could be streamlined.

"Our vision is of an approach which achieves better collaboration in design-led procurement, which achieves value for money for the public sector but which also recognises that the construction sector is a vitally important part of the Scottish economy," said Crawford, addressing the National Procurement Conference.

"Much of the procurement undertaken by the public sector is conducted by capable people, but good practice is not uniform across the entire public sector, and we see many opportunities for others to learn from this best practice," he said.

Deputy First Minister Nicola Sturgeon welcomed the report ahead of a formal response on its recommendations for both the public sector and construction industry.

Publication of Crawford and Lewandowski's final report comes shortly after the Scottish Government proposed far-reaching reforms to public procurement as a whole with the publication of the Procurement Reform (Scotland) Bill.

The Bill is intended to establish a national legislative framework for the way in which the public sector in Scotland buys goods, works and services. As drafted, it would introduce a general duty for public bodies to conduct procurement in an effective and proportionate manner for the particular benefit of smaller and third sector businesses. The new laws would also create a 'sustainable procurement duty', aimed at delivering wider economic, social and environmental benefits through public procurement processes.

In their report, Crawford and Lewandowski recommended the appointment of a Scottish construction adviser by the start of financial year 2014-15. The main functions of the role would be to coordinate the reform programme and to act as a "conduit" for the industry to raise concerns with ministers, they said.

"We believe that there is a need for clearer leadership to ensure that construction is properly planned using a design-led, whole-of-life cost approach," the report said. "There is significant potential to make construction more efficient by maximising opportunities for contracting authorities to collaborate and share best practice."

"We recommend a strengthening of the construction procurement policy function within the Scottish Government. We also believe that there is a role for a chief construction adviser," the report said.

The report also recommends the introduction of building information modelling (BIM) technology in central government projects, with a view to encouraging its adoption across the entire public sector. It proposes that all construction projects across the public sector adopt a BIM level 2 approach by April 2017, where appropriate.

Crawford and Lewandowski also make a number of recommendations for the construction industry, which would be "challenged" to "modernise and innovate its processes, practices and relationships" by the new construction adviser. Firms should also consider how they can "collectively make late payment of suppliers an unacceptable practice" and take action to discourage 'suicide', or abnormally low, bids, it said.

"Responsibility for the reform agenda does not rest solely with the public sector," Lewandowski said. "The construction industry is characterised by contentious behaviours, and must itself end practices which can hurt small firms such as extended payment terms and retention abuse."

The Scottish Government has already announced its intention to trial the use of project bank accounts on public sector projects, following an early recommendation by the authors of the report. The system, which would involve contracting authorities making payments into a ring-fenced back account which all contractors and subcontractors would be able to draw payments from, is expected to be up and running later this year.