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Programme Procurement in Construction. Learning from London 2012. Edition No. 1

  • ID: 2488532
  • Book
  • April 2013
  • 238 Pages
  • John Wiley and Sons Ltd

"This book ... adds to the impressive 'legacy' of learning which is still emerging from the successful delivery of the London 2012 construction programme. The authors combine the reforming zeal of a champion for change, who was there every step of the way, with academic rigour, and the result is delivered with impressive passion and commitment to the topic … All spenders and suppliers need to read this, to understand how conventional understandings of procurement fall so dramatically short when applied to high value-high risk acquisitions, which invariably is what large construction projects represent."
- Don Ward, Chief Executive, Constructing Excellence, UK

Successful construction is often attributed to one or more aspects of the delivery process from good planning, design and clever engineering to efficient project management and quality construction. Before any of these disciplines can begin, they all require some form of procurement to select the team or supply chain to meet a client’s or a project’s specific requirements. The concept of PSE - Purchase and Supplier Engineering - originated in the procurement of the construction and infrastructure required to stage the 30th Olympiad in London during 2012.  At the time of writing PSE has successfully delivered almost £25bn of public procurement meeting client and project requirements and without legal challenge.

The construction of the venues and infrastructure needed to stage London 2012 was such a resounding success that it boosted not only the reputation of the UK construction industry but also the confidence of the UK population in the country’s ability to organise, build and run a major international event. Its success has been lauded as something from which clients and industry could learn. The ODA has established a comprehensive and informative body of evidence as part of a Learning Legacy. While the ODA is well aware of the many elements of the procurement and supply chain management, the complete end to end concept of how the Olympic supply chain procurements were managed has until now not been captured.

For example, how does one buy the stage for an Olympic Games? How does one manage the details of thousands of contracts and the many firms of contractors, subcontractors and material suppliers and ensure that no one organisation adversely affects any other to the detriment of the programme?  How are a client’s requirements beyond those of the capital asset realised as part of the investment? How does one measure programme exposure, or manage performance?  How does one measure capacity and the ability of firms to cope with the work and manage the risks involved?

Programme Procurement in Construction: Learning from London 2012 covers the planning and preparation of a programme’s procurement processes from understanding and developing the client’s requirements, to monitoring performance based on the benchmarks contractors set out in their own tender submissions. The emphasis is on a close attention to detail to avoid surprises, while keeping a focus on the total programme.  Purchase and Supplier Engineering provides an overview of managing the interest of firms in participating and the resulting capacity and workloads of all suppliers, including the main contractors and the critical subcontractors and material suppliers.

Offering techniques, tips and lessons learnt from the implementation of PSE on London 2012 and Crossrail, this book is aimed at public and private sector clients, developers, senior management and those businesses and professionals involved in undertaking the procurement, supply chain management and delivery of multiple construction projects or complex major construction programmes.

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About the authors xi

List of figures and tables xiii

Forewords from Sir John Armitt CBE, Howard Shiplee CBE, Martin Rowark and Professor Geoffrey E. Petts xv

Preface xix

List of acronyms xxvii

1. Purchase and Supplier Engineering and the London 2012 Olympics 1

Introduction 3

The concept of Purchase and Supplier Engineering 4

Programme organisation – an Olympic case study 8

Procurement organisation structure – the Olympic Delivery Authority 11

Roles and responsibilities 11

Projects and programmes 13

Concluding remarks 14

Reference 15

2. A framework for understanding markets in construction 17

Introduction 18

Managing the supply market 19

The client and construction 23

Projects, programmes and construction dynamics 25

The client and the supply chain 27

Defining the supply chain 28

Outsourcing and subcontracting 31

Understanding and managing conflict in construction 34

Concluding remarks 39

References 40

3. The client’s values and the balanced scorecard 43

Introduction 44

Developing a framework for measuring performance 46

All from a project vision 47

Performance measurement 50

Using balanced scorecards to communicate values and measure performance 53

Developing a balanced scorecard 56

Measures including key performance indicators 58

Construction KPI measures of economic sustainability 58

Social sustainability: Respect for people KPI measures 59

Environmental sustainability: Environmental KPI measures 59

Creating appropriate KPIs from a project vision and scorecard 62

Concluding remarks 63

References 64

4. Packaging and contracting strategies 65

Introduction 66

What, why and how to buy 68

Packaging strategy 70

Gestalt theory 73

Programme clusters 75

Programme application 78

Contracting strategy 79

Forms of contract used in the 2012 Olympics procurement 79

Classifi cation of contracts 82

Concluding remarks 85

References 88

5. Common component and commodity strategies 89

Introduction 90

The benefits of a common component strategy 91

Factors infl uencing the procurement of common components 93

Market leverage 93

Supply chain security 95

Future maintenance and operations 95

Design efficiencies 96

Developing a common component strategy 96

Stage 1: Performance criteria 97

Stage 2: Assessment of benefits of implementing a common component strategy 98

Stage 3: The benefi ts of a common component purchasing strategy 99

The common component procurement strategy 100

Concluding remarks 102

References 102

6. Engaging with suppliers: How to attract suppliers and increase interest and awareness 103

Introduction 105

Gathering market intelligence 107

Supplier dialogue 109

One-way supplier dialogue – Supply chain events 110

One-way supplier dialogue – Industry days 110

One way supplier dialogue – One-to-one meetings 111

One-way supplier dialogue – Meet the buyer events 112

One-way supplier dialogue – Meet the contractor events 113

One-way supplier dialogue – Supplier guide 114

One-way supplier dialogue – Business opportunities website 115

One-way supplier dialogue – Opportunity slides 117

Two-way supplier dialogue – Supplier registration and pre-assessment questionnaires 117

Two-way supplier dialogue – Market soundings 120

Concluding remarks 125

Reference 126

7. eSourcing and process codifi cation: Standardising programme procurements 127

Introduction 128

The guiding principles of a robust procurement process 129

Standardising procurement documentation 130

Security of the procurement system 131

Evaluation of tenders 132

The application of electronic tools in the procurement process 133

eSourcing 134

eEvaluation 139

Aspects of managing systematic procurement processes 141

Standard processes 141

Schools of excellence 142

Governance 143

Assurance 144

Training 145

The milestones of procurement reporting 146

Standardisation and codification of the procurement process 147

Stage gate 1 – Agreeing the procurement strategy 148

Stage gate 2 – Tender documentation completion 148

Stage gate 3 – Tender list agreement 149

Stage gate 4 – The tender report 149

Procurement reporting 151

Concluding remarks 151

References 154

8. Managing supply chain involvement across a programme 155

Introduction 156

Supplier relationship management 157

Remaining in contact with all firms who tender for work 159

Supply chain mapping 162

Concluding remarks 167

Reference 168

9. Due diligence and the management of capacity 169

Introduction 170

Modelling supplier utilisation 170

Monitoring the fi nancial strength of suppliers 180

Sub-tier supplier engineering 182

Identifying critical suppliers 185

Concluding remarks 189

References 191

10. Performance management 193

Introduction 195

The Purchase and Supplier Engineering model and programme management 195

Purchase and Supplier Engineering and the programme management office 197

Performance management within Purchase and Supplier Engineering 197

Analysis 198

Control 199

Performance improvement through Purchase and Supplier Engineering 200

Benchmarking 201

Concluding remarks 201

Index 205

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John Mead Director, Programme Management - Davis Langdon, an AECOM Company.

Stephen Gruneberg Reader - The University of Westminster.
Note: Product cover images may vary from those shown