Francis Maude, Minister for the Cabinet Office, signalled his intention to reform the existing system in the Government Construction Strategy published today.

The report states: “This strategy means that the public sector will become a better client – more informed and better co-ordinated when its requirements are specified, designed and procured.

“The strategy also challenges industry business models and practices. It will replace adversarial cultures with collaborative ones.

“It will demand cost reduction and innovation within the supply chain to maintain market position – rather than innovation that is focussed on the bidding process, with a view to establishing a bargaining position for the future.”

As part of a package of rolling measures the Government aims to phase out lump sum lowest price tendering in favour of procurement methods designed to integrate the supply chain.

This will include using contractor frameworks, where firms will bid against a strict project cost benchmark, and the use of Building Information Modelling. There will also be a strict cost benchmarking across all government projects to seek out savings and best practice.

The new Government Construction Board will be chaired by Paul Morrell, the present construction adviser.

The new board was described as an evolution of the existing Construction Clients Board, but will have a wider membership through Government departments and utility regulators.

It will also oversee the implementation of the Infrastructure Cost Implementation Plan and the government’s responses to the James Review and McNulty Review.

Francis Maude, minister for the Cabinet Office, said: “These savings are not only significant but long overdue. The commitment to reduce the cost of construction by 20% is no small thing, but it will help the Government and the construction industry.

“This strategy will stimulate growth by enabling more to be constructed within the funds available.”

The industry has welcomed the new strategy.

Civil Engineering Contractors Association director of external affairs Alasdair Reisner said: “For many years contractors have asked for greater clarity from government over its relationship with the industry.

“The Government Construction Strategy is an important document as it attempts provide a clear steer on the future direction of policy in this area, particularly in relation to procurement.

Simon Rubinsohn, RICS Chief Economist, said: “Recognising the public procurement system needs reform is the first step and it is now up to all those involved in the process to ensure value for money for taxpayers, efficient delivery of projects and a system that encourages effective collaboration.”

“The new Construction Strategy represents an excellent opportunity for the Government and the industry to work together to ensure value for money across public construction and infrastructure projects.

“Taking into account new developments such as Building Information Modelling (BIM) will help this process along with the move to a more collaborative approach to relationships between the public and private sector.

He added: “The rolling two year forward programme of projects will demonstrate the Government’s ongoing commitment to this process and will provide the certainty needed by the industry to take long term business planning and investment decisions.”