Avoid Costly Procurement Mistakes with Proper Planning
Nick Sterling, MD of Osborne Communities give us his views;
“Much is uncertain in the housing sector at present. But, one ever-present element is that housing providers will increasingly need to find ways to do more with less, as rent reduction and welfare reform continue to hit business plans.
As budgets are squeezed, effective procurement can be one way to uncover opportunities to squeeze more from the same pot. New forms of contracting – like alliancing and framework arrangements – offer new levels of flexibility in the way works and services can be delivered.
Inside Housing and Procurement Hub have recently published the results of their survey of purchasing managers. Out of the 176 respondents, 93 per cent considered procurement to be important or very important for their organisation.
But to get the most out of any procurement (and avoid falling foul of procurement law) the process needs to be well-planned and executed.
The last thing housing providers want is to have carried out a lengthy and costly procurement process, only to find they would have been better off sticking with their original contractor. It sounds obvious, but it’s surprising how often that happens.
Perhaps less surprising when you discover that only 45 per cent of the survey respondents considered their procurement team had a strategic function in their business, with 39 per cent saying it was just operational.
These simple tips gleaned from our procurement experience are a good starting point for ensuring an effective process:
• At the start of any procurement process you should try to anticipate your potential future requirements (e.g. housebuilding or drainage works) and include them within the process. This will give flexibility and help avoid difficult decisions later on when it may be necessary to run a fresh procurement process to provide additional works or services
• Ensure the OJEU notice is sufficiently flexible to cover all potential workstreams (and stated contract values) taking account of the potential scope
• Ensure the project brief includes the potential scope and the price framework covers the pricing mechanism
• Ensure the contract covers the type of work
As I said, much of this is relatively straightforward and easily done. However, these are the stiches in time that are so often missed that could prove very valuable in the future.”
Nick Sterling is Managing Director of Osborne Communities. Nick is speaking on procurement at Housing 2017, 9.30am in Charter Two.