Field guide to the Construction Playbook: Four ways you can prepare for it

In December 2020 the government published “The Construction Playbook”, its new guide on procuring public works.

It’s more of a rule book than a playbook because it sets out how government contracting authorities – for ease, we’ll call them clients – must start behaving from now on.

We analysed it and identified four broad ways you should prepare for the changes it could bring.

In summary, you should:

1. Get ready to collaborate to compete for bigger, longer projects;
2. Watch out for MMC, but embrace digital now;
3. Switch the focus from price to “value”; and
4. Prepare for more serious relationships with government clients.

What government wants to achieve

Like previous reports, the playbook addresses the industry’s perennial shortcomings but, unlike previous ones, it puts the onus for change on government clients rather than urging the industry to change.

As a construction business leader you should take note because the new rules are about what clients will expect from you. Basically, the government will be trying to use its purchasing power to change the way you behave. 

The goal is familiar. It is to make you:

1. More productive, as in, able to build more and better, and to create more value, with ever declining cost and waste;
2. More innovative, specifically by embracing digital technology and modern methods of construction (MMC); and
3. Greener, as in, able to get things built well with an ever-shrinking carbon footprint.

Here are the four ways you could prepare.

1. Get ready to collaborate to compete for bigger, longer projects

The playbook tells clients to bundle projects into portfolios for bigger, longer contracts on the grounds that you’ll be more motivated to invest in developing the capabilities government wants if you can see a good return over the long run.

This would mean that you’re not bidding for the contract to build a new school in a village, instead you’re part of a joint venture bidding to build 10 new schools in a region.

Furthermore, your joint venture will be asked to demonstrate how, using the above desired capabilities, you will create ever-improving value for money throughout the portfolio contract, so that the 10^th school is delivered faster, cheaper, to higher quality standards and giving more “value” than the first. (We’ll take a look at “value” shortly.)

Construction business leaders should welcome this because it means greater security of work, but the playbook contains a warning, because it tells clients to take a hard look at “the market”, which means you and your competitors, to assess whether you’re all really up for the job.

If clients don’t like what they see, the playbook says they should consider going elsewhere by encouraging “new or potential market entrants”, which could mean anything, including courting overseas contractors whose turnovers dwarf those of our biggest domestic ones.

Take-away for you: Get ready to start collaborating because bundled project portfolios will require joint ventures, including with SMEs, whom the playbook seeks to protect and promote.

Is your business good at collaborating?

I mean real collaboration here, with hearts and heads engaged to achieve a precious, shared goal, as opposed to superficial, formalistic alliances where parties keep one eye on the contract, one on their bottom line, and a third on the exit – a mindset we might call “co-opetition”.

If the playbook sticks, you’re going to need to take your collaboration skills to a new level to tap into public sector work.

Furthermore, the call for greater collaboration comes up repeatedly in the playbook. Sections on early supply-chain engagement, how contracts should be designed, fairer risk allocation and effective contracting, among others, rest on clients upping their collaboration with you. Are you ready to reciprocate?

2. Innovation: Watch out for MMC, but embrace digital now

Government has talked about the need for MMC for years and the playbook continues and amplifies the call. MMC generally means offsite construction in its various forms.

But it also knows that construction companies can’t really lead on this because, when it comes to government buildings like schools, courts, healthcare facilities, social housing, and offices, MMC will not replace traditional construction without the wholesale standardisation of manufacturable building components that are interoperable with all the other bits they connect to in the building.

This would be an open-source catalogue of parts and sub-assemblies, expressed as digital objects, that any manufacturer can get into the business of making.

As we know from manufacturing and information technology, standardisation drives down cost and unleashes innovation as component makers and suppliers of complementary services pile in to augment the offering, safe in the knowledge that demand will grow.

Without it, MMC will be confined to pockets of proprietary systems, or to the limited and bespoke use of offsite techniques within traditionally-delivered projects – with accordingly limited benefits – and the goal of the step change in productivity long promised by MMC will not be achieved.

Such standardisation is a big task, akin to rewriting building codes and creating a new industry around it. Government would have to drive it, as the playbook acknowledges with its call for government clients to “harmonise, digitise and rationalise demand”.

There are moves in this direction. The Construction Innovation Hub’s Platform Design Programme is working on a “platform construction system” consisting of a standardised kit of parts for government buildings.

So for now, construction business leaders should watch the space.

However, this is not the case when it comes to digital innovation.

Here, the playbook expects clients and suppliers to meet in the middle by developing their capabilities in tandem.

It wants clients to embrace the standards set out in the UK Building Information Management (BIM) Framework, and to procure construction work accordingly.

That could mean your company will have to become conversant with the Framework if you want to be considered for public sector work.

See it as an emerging strategic imperative. Have you got that capability now? If not, how will you get it? It’s a matter of leadership, goal-setting, capacity-building and collaboration within your company.

3. Switch the focus from price to “value”

“Encouraging the market to compete on price alone,” the playbook says, “can create false economies and unhealthy markets, and should be avoided.”

This idea has been around for some time in government procurement discussions, but lowest-price tendering persists in practice because a) it’s what we’ve always done, and b) the price of bids is the easiest thing to compare.

Nevertheless, the playbook instructs clients to look beyond the initial capital cost of what they want built, and instead to practice “value-based procurement”, which tries to take into account costs and benefits over the whole life of the asset, including capital, maintenance, management, operation and exit.

This makes sense, but we’re getting into crystal ball territory because evaluating whole-life value involves making predictions about the future.

There’s more. Onto “value-based procurement”, the playbook bolts another value, called “social value”, which clients must now try and achieve with their projects, and evaluate bids for.

“Social value” includes everything from helping communities recover from the pandemic and supporting entrepreneurship, to fighting climate change and tackling inequality.

Government is serious about this. In September 2020, it published a policy note setting out what constitutes “social value”, and you can get it here.

You’d better familiarise yourself with it because, according to the playbook, from January 2021 social value will constitute at least 10% of a bid’s total score, and clients will have to show how social value was a differentiating factor in the winning bid.

This increases the sophistication and complexity of the economic case you’ll have to make in your bids. But think of it as an opportunity.

Clients will have to do a lot of new thinking to work out how to evaluate a bid’s whole-life value and social value. Such judgements are predictive, abstract and often subjective. It’s likely they’ll welcome your help with this new thinking.

Are you up for it, as a conversation partner? If not, what has to happen for you to be up for it? This is another emerging strategic imperative, requiring leadership, goal-setting, capacity-building and collaboration within your company.

4. Prepare for a serious relationship

Refreshingly, the playbook dedicates an entire chapter to my favourite topic: relationships.

As I’ve written about extensively elsewhere, relationships are the foundation of results, and yet our industry practically ignores them and hides behind the contract, assuming that good relationships, like acts of God, either happen or don’t.

The playbook tells clients to embrace a partnership model with “the principles of collaboration, openness, transparency and flexibility” because this drives successful outcomes and innovation. Yes it does.

It further advises clients that if they’ve awarded several important contracts to one supplier, they should consider designating that supplier “strategic”, which formally elevates the status of the relationship from what we might think of as a date to “going steady”.

What that means in practice includes:

• Creating value beyond what was originally contracted;

• Joint development of strategy, objectives and planning, with top executives meeting, too;

• Monitoring and measuring the relationship;

• Joint management of aggregated performance and risk.

It even calls for big projects to start with workshops that bring everyone together to set common expectations on standards, behaviours and ways of working; to align success measures and objectives; and to articulate how the project is supporting the organisations’ goals. These workshops should be held regularly throughout the delivery phase. (Great! Thats what I do!)

I was glad to read that because most guidance on relationships in the construction business relies on hard mechanisms – contracts, protocols, checklists and KPIs – to regulate relationships.

Such guidance misses the mark because hard mechanisms can be gamed, or met in letter but not in spirit.

The playbook, for the first time, acknowledges that behaviours you cultivate can evoke the emotional content good relationships need, things like trust, honesty, candour, respect and enthusiasm.

I would be very keen to help you discover and embed these behaviours in your teams, so that when clients “propose”, you’re ready to say “I do”.

Meanwhile, we know that reports urging reform in the industry have come and gone with limited lasting impact.

Will the playbook go the same way? That depends on whether the many government client organisations obey the playbook. The playbook states that it’s mandatory for all central government and arm’s length bodies, but on a “comply or explain” basis, which leaves some wriggle room.

Nevertheless, it seems to me that taking it seriously would prepare your company for changes that might come while setting a strategic course for increased capability that is worthwhile whatever happens.