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Procuring Social and Economic Value through Construction

Procuring Social and Economic Value through Construction

Professor Peter McDermott and Professor Peter Barrett have developed research focused on improving the sustainability and profitability of, and ensuring public benefit from, the UK construction sector:

  • Guiding progress towards sustainable construction practice, generating wider social and economic benefit, through better informed construction procurement;
  • Improving the performance of existing construction projects and businesses; 
  • Commercialising new products and support services to construction clients and suppliers;
  • Informing public policy through a range of impacts - most recently the Government Construction Strategy and Infrastructure Cost Review and Implementation.

Developing frameworks for better informed construction procurement

  • Peter Barrett developed Revaluing Construction (RC): The RC conceptual framework was used by the Government of the Netherlands in 2008 and the Malaysian Government in 2009 to assess progress in their national improvement schemes for construction.
  • Peter McDermott was a member of the development team for BS 8534, Construction procurement policies, strategies and procedures Code of practice, which responds to industry demand for consistency in the way construction work is procured and in the engagement of the supply chain in the project decision making process. "BSI strongly believes that the construction industry will benefit from the introduction of a high level best-practice framework in this area." British Standards Institute  
  • Peter McDermott worked in partnership with UK local authorities to establish frameworks arrangements; specifically embodying clients’ values of training, apprenticeships and local employment into the procurement and management processes.The integrated supply chain work and ERDF funding enabled Salford to work with over 70 clients, including 80% of Local Authorities in the North West, supporting £2,500m of construction and design work procured (to 2009): A Decade of Delivering Excellence in Construction Report.Peter McDermott was commissioned as an independent advisor in the development of the NW Construction Hub, led by Manchester City Council. The North West Construction Hub is a move away from lowest price tendering, replacing this with long-term, collaborative relationships between clients, professionals and contractors, formed around shared objectives and common values. 
  • The North West Construction Hub has delivered over 140 projects to 53 clients with a value of £800m. The Hub manager described the presence of Salford as a 'golden thread' throughout the journey, and that their knowledge, experience, mentoring and support “has been undoubtedly fundamental to our success."  The procurement work is supported by two related services. Firstly, the development of the Key Performance Indicator Engine, an on‐line tool developed with Constructing Excellence, and used by over 150 organisations, generating over £200K in related licence fees, consultancy and training, enabling the ongoing performance measurement of organisations within these frameworks. In addition the researchers have developed a local economic multiplier methodology which enables the wider economic and social value to be calculated for the projects procured through the NWCH, and other projects. 
  • The Government Construction Strategy (Cabinet Office, May 2011) called for a radical change in public sector construction procurement. Peter McDermott was the independent academic for the latter, and was invited to remain on the joint steering group when the Government merged the two strategies in January 2012. Objective 10(i) of the Government Construction Strategy requires the Cabinet Office to assess “the effectiveness of frameworks, in collaboration with Departments and the National Improvement and Efficiency Partnership (NIEP) for Construction”. The Strategy notes at section 2.38 that there is a plethora of construction frameworks in the public sector with varying degrees of quality: “Evidence and commentary from a spectrum of clients and contractors point to the highly effective use of some frameworks, but also to other frameworks which are less effective”.  The work to assess the Effectiveness of Frameworks, in discharging that Strategy objective, was directed by a Working Group drawn from Task Group 1 – Procurement and Lean Client, co-led by McDermott, with representatives from the Cabinet Office, Hampshire County Council, the National Efficiency and Improvement Partnership for the Built Environment (NIEP), the Civil Engineering Contractors Association (CECA), the Specialist Engineering Contractors Group (SEC Group), Kier, Partnerships for Schools, HM Treasury, the Department of Health, the Ministry of Defence, Environment Agency and the Ministry of Justice. The authorship was led by the University of Salford.  Public sector organisations in England are now required to take account of the report in their procurement decision making.  The Scottish Government is now also building it into their procurement decision making.   

Key documents

Treasury – Infrastructure Cost Report – Infrastructure UK – December 2010

Cabinet Office, Construction Strategy - Efficiency Reform Group,  the Effectiveness of Frameworks Treasury/ Office of Government Commerce - 2005-2015 Construction Demand/Capacity Study - Office of Government Commerce, National Improvement and Efficiency Partnership (NIEP) for Construction/ Government Construction Strategy