The review conducted by a top construction legal expert reveals contractors on average are spending nearly £250,000, and some as much as £1m, on individual framework bids.
It concluded that significant cost and time is being wasted bidding for multiple, speculative construction frameworks, often not connected to specific pipelines of work.
Professor David Mosey from the Centre of Construction Law, King’s College London also sets out terms for a new ‘Gold Standard’ for frameworks and framework contracts.
His report published by the Government said this would drive the strategic actions needed to improve value and safety, manage risks, meet Net Zero Carbon targets and support a profitable construction industry.
Mosey scrutinised public sector construction frameworks with a combined value of £180bn and considered more than 120 written submissions and 50 interviews.
His analysis found evidence of waste, confusion and duplication in processes as well as too strong a focus on achieving the lowest price, rather than best value.
He said: “Review participants report average bid costs for each major framework of over £247,000 for contractors and over £130,000 for consultants, with a maximum of up to £1m in each case.”
On average one in four bids by contractors were successful in securing work, meaning that up to £4m would have be recovered before a supplier delivered any value at all.
“These costs, and the procurement costs incurred by clients, will be substantially reduced if government and industry clarify the scope of each framework and if they adopt a new Gold Standard for selection questionnaires, evaluation criteria, framework contracts, outcome-based performance measures and incentives,” he said.
The new ‘Gold Standard’ for frameworks and framework contracts drives the strategic actions that will improve value and safety, manage risks, meet Net Zero Carbon targets and support a profitable construction industry.
Mosey said that employing the Gold Standard principals offered a dynamic and strategic medium for implementing Construction Playbook policies in ways that break the cycle of lost learning and deliver faster, better, greener construction.
To tackle these issues, the Gold Standard puts in place 24 recommendations, which must be met by both developers and the public sector.
Cabinet Office Minister, Lord Agnew, said: “The new Gold Standard will make sure that vital public sector developments have rigorous measures in place to make sure public money is spent well and that projects are delivered successfully.
“This will be welcomed across the public sector, the construction industry and by the public, who have a right to expect the best possible public sector projects.”
Director of Operations for the Civil Engineering Contractors Association Marie-Claude Hemming said: “We are delighted that Professor Mosey has taken on many of our members’ recommendations in his review, which will enable future frameworks to be established that will deliver improved value for money, efficiency, safety, and social value.
“Moreover, he recommends that future frameworks must focus on net zero carbon and whole life value, delivering both better environmental outcomes and value for money for our members’ clients.
The review is a result of the Construction Playbook, which was launched by the Cabinet Office in 2020 with the aim of making sure the public sector and construction industry work together better to deliver key infrastructure projects.
Click here for the ‘Constructing the Gold Standard report’.
