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Last edited 08 Feb 2021
Procurement policy in the construction industry
Procurement is the process of purchasing goods or services. In construction, procuring a building project encompasses a whole range of activities – often via a competitive tendering process – that include establishing and agreeing prices, terms and contracts for acquiring goods, services, equipment and so on.
There are many routes by which the design and construction of a building can be procured. Procurement policy determines which of these routes is adopted on a particular project or is the client’s preferred option.
- Specific project constraints.
- Economic conditions.
- Other projects.
- Traditional contract 86%
- Single-stage design and build 41%
- Two-stage design and build 39%
- Management contract 18%
- PFI 10%
In the UK, value for money is a fundamental component of the procurement policies for public sector buyers. In 2010 for example, the government moved to a centralised procurement system where common goods and services were purchased once on behalf of the whole government and not by individual departments.
- Stripping out waste and reducing costs;
- A requirement to carry out significant levels of pre-procurement market engagement with diverse suppliers to understand the market and test and generate ideas for innovation as part of the development of outcome-based specifications;
- Contracts should be broken down into lots where appropriate; requirements below £100K should be rapidly sourced through the ‘government dynamic market’ place;
- All government procurements are strongly encouraged to use the ‘open procedure’ that uses standard operating procedures;
- A presumption against the use of the ‘competitive dialogue procedure’ which can slow the process down unnecessarily and typically incurs costs on both sides, and
- All but the most complex procurements are expected to be completed within 120 working days (publication of the advert to the contract award decision date).
- Bidders to be excluded where there is a conflict of interest or they have a criminal record;
- Assessing a bidder on the basis of how they pay their suppliers e.g whether they conform to the government’s standard requirement of prompt payment.
- Public projects or publicly-subsidised projects may be subject to OJEU procurement procedures for as long as the UK is part of the European Union.
 Related articles on Designing Buildings Wiki
- Corporate objectives for procurement.
- Design and build procurement route.
- Design build finance and operate.
- Design, build, manage contractor.
- Engineering procurement and construction contract.
- Framework contract.
- Lump sum contract.
- Managing the procurement process.
- OJEU procurement procedures.
- Partnering in construction.
- Public private partnerships PPP.
- Public procurement.
- Single-stage tender.
- Subcontract procurement.
- Tender processes for construction contracts.
- Traditional contract for construction.
- Two-stage tender.
- Typical tender process for construction projects.
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