Construction - HMG Construction Playbook and Client Guide to Construction Projects: comparison

Annex 3 Comparison of Specific Policy Areas and Requirements

Background

Mandated for central government departments and arm’s length bodies (ALBs) on a ‘comply or explain’ basis recognising that there is not a one-size-fits-all approach for all public works.

The Construction Playbook

For central government, compliance to the Construction Playbook is being driven through departments’ governance processes, central Cabinet Office controls (projects over £10 million per transaction) and the Treasury Approvals Process.

The Client Guide to Construction Projects

The wider public sector is encouraged to take account of the Construction Playbook. It applies to all new projects and programmes from December 2020.

The Client Guide to Construction Projects and Construction Policy Notes are mandatory for all organisations that fall within the scope of the SPFM.

The Client Guide to Construction Projects consists of three Handbooks:

• Handbook 1: project initiation and business case handbook
• Handbook 2: construction procurement handbook
• Handbook 3: construction phase handbook

Comparison of Playbook key policy areas

1. Commercial pipelines

The Construction Playbook

Contracting authorities’ commercial pipelines will be supported with a new central government procurement pipeline for public works projects.

Pipelines will help suppliers to better understand the governments’ long-term demand and prepare themselves to respond to contract opportunities.

Published commercial pipelines should look ahead three to five years to be truly effective.

Contracting authorities should publish an 18-month procurement pipeline with a pathway to three to five years and provide information to the Infrastructure and Projects Authority.

(Playbook, Chapter 1)

The Client Guide to Construction Projects

Commercial pipelines not referred to in Client guide, however a civil works pipeline is being collated to support the planned Scottish Government Civils Framework. There is also separate work being carried out on a steel pipeline.

There is now in place (as a result of work promoted via the CLF) a Pipeline forecast tool as developed and run by SFT.

See Infrastructure Investment Pipeline | Scottish Futures Trust

2. Market health and capability assessments

The Construction Playbook

Projects and programmes will conduct an assessment of the health and capability of the market early on during the preparation and planning stage.

This includes consideration of taking advantage of innovative approaches, encouraging new or potential market entrants, and taking action to address any concerns

(Playbook, Chapter 1)

The Client Guide to Construction Projects

This is covered in Handbook 2 – Ch4 - 6.2 and 6.5 under preliminary consultation to be undertaken.

Also reference under assembling the team and gauging the capacity of the market to support the client on the project. (Handbook 1 - Ch 1 - 4.4)

Included as an example of pre-market consultation, rather than a required step to consider for all projects. (Handbook 2 - Ch 1 - 8.1)

3. Portfolios and longer term contracting

The Construction Playbook

Commitment to a policy to develop long-term plans for key asset types and programmes to drive greater value through public spending. Longer term contracting across portfolios, where appropriate, will give industry the certainty required to invest in new technologies to deliver improved productivity and efficiency savings. Contracting authorities should demonstrate that this does not come at the expense of an innovative and competitive market.

Contracting authorities should review future projects and programmes regularly (at least quarterly) to identify opportunities to bring appropriate work together into portfolios and leverage economies of scale to drive investment into new technologies and Modern Methods of Construction (MMC). (Playbook, Chapter 1)

The Client Guide to Construction Projects

Not included in Client Guide. This could be an area to addressed in future iterations of the Client Guide, although the best solution would be for the contracting authority to determine, so the appropriate inclusion may be limited to an encouragement to explore as portfolios an option.

We have long been alert to the benefits of portfolio’s and longer term programmes hence the idea of having a framework – but the short term budget security is a major obstacle in this regard.

4. Harmonise, digitise and rationalise demand

The Construction Playbook

Demand across individual projects and programmes will be harmonised, digitised and rationalised by contracting authorities. This will accelerate the development and use of platform approaches, standard products and components. Combined with longer term contracts, this will transform the market’s ability to plan, invest and deliver digital and offsite manufacturing technologies.

Contracting authorities should:

• develop an organisational strategy to aggregating and standardising demand, and driving the adoption of MMC
• engage the supply chain to set realistic targets for the use of MMC, and ensure that they possess the capability to report on the required metrics.

(Playbook, Chapter 2)

The Client Guide to Construction Projects

Not addressed in Client Guide.

5. Further embed digital technologies

The Construction Playbook

Contracting authorities should use the UK BIM Framework to standardise the approach to generating and classifying data, data security and data exchange, and to support the adoption of the Information Management Framework and the creation of the National Digital Twin.

Contracting authorities should:

• Meet and contract for the standards set out by the UK Building Information Management (BIM) Framework.
• Consider the use of product platforms comprising standardised and interoperable components and assemblies

(Playbook, Chapter 2)

The Client Guide to Construction Projects

Client guide includes reference to Scottish Procurement Policy Note 1/2017 and SFT BIM Grading Tool and Portal.

(Handbook 1 - Chapter 12)

6. Early supply chain involvement

The Construction Playbook

Early supply chain involvement should now be use in developing the business case for projects and programmes.

Involving the supply chain early in the project lifecycle will reduce downstream issues and help to develop clear, outcome-focused designs and specifications.

(Playbook, Chapter 3)

The Client Guide to Construction Projects

Handbook 1 does not refer to use of supply chain involvement at business case but does detail the need to identify stakeholders and the impact of their involvement on the success of a project. (H1 – Ch6)

It is also covered in Handbook 2 where one of the objectives of the preliminary market consultation is to properly refine the business case.

Pre-market consultation (Handbook 2 - Chapter 1 - 8.1)

Preliminary Market Consultation (Handbook 2 - Chapter 4)

The benefits of early involvement of contractors and integrated supply teams is also covered (eg see H2-S5)

7. Outcome-based approach

The Construction Playbook

Contracting authorities should focus on outcomes, rather than scope, in their specifications.

Contracting Authorities should set clear and appropriate outcome-based specifications, and use a Project Scorecard to support projects and programmes in setting clear outcomes that align with government’s strategic priorities.

(Playbook, Chapter 3)

The Client Guide to Construction Projects

The Client Guide has been prepared with a significant focus and references to intended project outcomes, although doesn’t include a policy of using ‘project scorecards’ to manage them.

8. Benchmarking and Should Cost Models

The Construction Playbook

Projects and programmes should undertake benchmarking to analyse information from past projects and programmes. This provides decision makers with key insights and data to make more informed and intelligent investment decisions.

Projects and programmes should produce a Should Cost Model to better understand whole life costs and value.

(Playbook, Chapter 5)

The Client Guide to Construction Projects

The Client Guide only refers to benchmarking within the project.

9. Delivery model assessments

The Construction Playbook

Contracting authorities should follow an evidence-based process to decide the most appropriate delivery model and structure for a specific project or programme. The right delivery model enables clients and industry to work together to deliver the best possible outcomes.

(Playbook, Chapter 5)

The Client Guide to Construction Projects

Advice given on aspects of project delivery in Handbook 1 and Handbook 2.

10. Effective contracting

The Construction Playbook

The Playbook covers a number of areas under the policy of Effective Contracting.

Effective, sustainable contracts should support project and programme outcomes, be designed to implement alignment with the selected delivery model, be consistent with the best practices and policies set out in the Playbook, drive continuous improvement, be structured to enable an exchange of data and contractualise the use of the UK BIM Framework.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

The Client Guide supports effective contracting through the many of the aspects featured in the Playbook. Further information on specific aspects of contracting are listed in the second half of this table.

11. Risk allocation

The Construction Playbook

Risk allocation not prescribed.

Proposals for risk allocation will be subject to consideration and scrutiny to ensure that they have been informed by genuine and meaningful market engagement.

Inappropriate risk allocation has been a perennial concern of suppliers looking to do business with government and a more considered approach will make us a more attractive client, deliver better value or money and incentivise suppliers to focus on delivering agreed contractual outcomes.

Include the sharing of appropriate risk registers and transparent communication on risk allocation with prospective suppliers and the supply chain. This should lead to a joint register with contracted suppliers which is aligned to project and wider outcomes

(Playbook, Chapter 7)

The Client Guide to Construction Projects

Risk is mentioned many times throughout the guide.

Several of the case studies provided, outline the various approaches to be considered when determining risk transfer.

Handbook 2 – Ch 5 – Item 20 in particular covers in some detail the allocation of risk.

The Scottish Government Risk Management Guide provides guidance on managing risk generically across any situation, whether in the project setting or in core operations.

For contracting authorities that would benefit from an introduction to the range of considerations which apply in risk management, the HM Treasury Orange Book Management of Risk - Principles and Concepts may be a useful source of guidance. (Handbook 1, chapter 7)

12. Payment mechanism and pricing approach

The Construction Playbook

The payment mechanism and pricing approach goes hand in hand with risk allocation and will similarly be subject to greater consideration and scrutiny to ensure it incentivises the desired behaviours or outcomes.

This change is fundamental to making the construction sector a thriving and dynamic market that is sustainable in the long term and achieves the wider vision of the Playbook.

Contracts should be designed to be profitable and offer a fair return for the market to be sustainable. It is good practice to test profitability under different circumstances and make use of the Should Cost Model in developing payment mechanisms.

The payment mechanism and pricing approach including limits of liability should reflect the level of risk and uncertainty in the scope of requirement and will be subject to greater scrutiny.

When a contract is publicly designated as onerous, it should prompt a root cause analysis and conversation with the supplier. (Playbook, Chapter 7)

Guidance on fair payment is included in Handbook 1, chapter 9.

The Client Guide to Construction Projects

Project Bank Accounts are covered in Handbook 1.

The handbook also contains details of the pricing approach.

The handbook will need updated to cover the introduction of the graduated pricing mechanism (gmp) as trialled some 5 years ago and now being used on the civil engineering framework. The basic aim of the gmp being to remove the incentive to submit very low bids.

13. Assessing the economic and financial standing of suppliers

The Construction Playbook

As part of the selection process, public works projects will comply with a minimum standard when assessing the risk of a supplier going out of business during the life of a contract.

Consistently applying a minimum standard of testing will provide a better understanding of financial risk and leave us better able to safeguard the delivery of public works projects.

(Playbook, Chapter 8)

The Client Guide to Construction Projects

Guidance on assessing economic and financial standing of suppliers is included within the Client Guide (Handbook 2), making reference to the Public Contract (Scotland) Regulations 2015.

14. Resolution planning

The Construction Playbook

There will now be a requirement for suppliers of critical public works contracts to provide resolution planning information, including emergency exit plans arising from supplier insolvency.

Clients should have their own contingency plans for critical contracts and financial monitoring to enable early identification of possible problems.

Contracting Authorities should put in place ongoing financial monitoring and contingency plans for critical suppliers, and engage with the Cabinet Office on resolution planning.

(Playbook, Chapter 10)

The Client Guide to Construction Projects

Consideration given to reducing risk of supplier insolvencies through fair payment, and clear risk understanding and allocation.

The Client Guide does not address resolution planning as a means to help ensure continuity of critical projects and transfer to a new supplier in the event of supplier insolvency.

Other aspects of procurement and construction

Abnormally low tenders / Low-cost bid referrals

The Construction Playbook

Departments should refer any abnormally low bid that is more than 10% lower than the average of all bids or the Should Cost Model to the Cabinet Office prior to accepting it. This is to be done in accordance with the relevant regulations. (Playbook, Chapter 9)

The Client Guide to Construction Projects

The Client Guide provides detailed guidance on identifying Abnormally Low Tenders and advises that, with “Any tender price that:

• is more than 15% lower than the median price; and
• exceeds the proximity margin, that is, is more than 1% lower than the lowest qualifying price.

will be deemed to be potentially abnormally low, and will be excluded from this competition unless the tenderer satisfactorily explains the aspects that appear abnormally low. “

A spreadsheet tool to support this guidance is also provided. (Handbook 2 - Chapter 8)

Boilerplate clauses

The Construction Playbook

Contracting authorities should use the standard ‘boilerplate clauses’ (also known as model clauses) produced by IPA and CCS to drive consistent, standard contract variations covering non-contentious amendments commonly included in public procurement. Any clauses that do not apply to a specific contract should not be included. Changes should not be made to individual boilerplate clauses.

(Playbook, Chapter 7)

The Client Guide to Construction Projects

Model clauses are not included within the Client Guide.

Work is being carried out to implement model clauses into SG Construction Framework Contracts.

The Client Guide does provide guidance covering the issues pertaining to any amendment to standard terms – Handbook 2 – Ch 5 - 23

Business case development

The Construction Playbook

Refers to following the Green Book using the best practice 5-case model and applying the principles of the Orange Book to result in better, faster and greener delivery of public works projects and programmes.

(Playbook, Chapters 4/ 5)

The Client Guide to Construction Projects

All programmes and projects should be appraised following The Green Book, Appraisal and Evaluation in Central Government published by HM Treasury. The process should follow the 'Five Case Model' set out in the Green Book. (Handbook 1 - Chapter 4 - paragraph 2.1)

Conflict avoidance pledge

The Construction Playbook

The conflict avoidance pledge (CAP) has been developed by a coalition of professional and industry bodies, and demonstrates commitment to conflict avoidance and the use of amicable resolution procedures to deal with emerging disputes at an early stage.

Contracting authorities should adopt the appropriate provisions as a standard clause in all public works contracts, and use this mechanism to resolve problems before these escalate into disputes.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

Policy of early intervention and conflict avoidance briefly referenced in The Client Guide (Handbook 1 - Chapter 1 - paragraph 4.7).

The Scottish Government supports the principle of avoiding conflict in construction contracts and confirms this through the construction policy note ‘Conflict avoidance - early intervention to avoid disputes: CPN 2/2021’.

Construction Phase

The Construction Playbook

Two chapters focus on Contract Implementation (Successful Relationships and Transition to Operation)

Government’s most important contracts should be managed by an expert or practitioner accredited contract manager as set out in the Contract Management Professional Standards framework

(Playbook, Chapters 11/12)

The Client Guide to Construction Projects

Some general guidance on the construction phase is included within Chapter 2 of Handbook 3 (Construction Phase Handbook)

Frameworks

The Construction Playbook

Standard frameworks and construction contracts with appropriate options selected should be used with standard boilerplate clauses (also known as model clauses).

The Playbook also includes an intention to complete a review of the current landscape of frameworks with a view to consolidate, where appropriate, and adopt a new ‘gold standard’ for frameworks. This will enable contracting authorities to easily identify frameworks that meet best practices and embody the policies set out in this Playbook. There will be a number of framework options to ensure competition and flexibility across government.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

The framework landscape is not addressed in the Client Guide, however this is an area which the Scottish Government is proactively looking for ways to develop framework opportunities available, for both contracting bodies and suppliers.

Health and Safety

The Construction Playbook

All contracting authorities should embed the following priorities in their project and programme planning as part of a comprehensive approach to managing and improving occupational health and safety:

• complying with legal requirements by embedding the principles of the Construction (Design and Management) Regulations 2015 (CDM) in all projects and programmes;
• reducing the cases of occupational lung disease, musculoskeletal disorders and work-related mental ill health including stress;
• supporting small businesses to achieve improved risk management and control.

(Playbook, Cross-cutting priorities)

The Client Guide to Construction Projects

H&S legislation and CDM regulations are covered within Chapter 2 of Handbook 3 (Construction Phase Handbook)

Intellectual property rights

The Construction Playbook

Developing a clear strategy for intellectual property (IP) rights will drive better value for money, support a competitive market and encourage innovative solutions.

IP should be managed through the life of the contract with clear responsibilities set out in the contract.

(Playbook, Chapter 3)

The Client Guide to Construction Projects

Not addressed specifically as part of the Client Guide but IPR is a standard clause in the Scottish Government standard clauses guidance IPR requirements should be well understood by any competent officer running projects.

KPIs

The Construction Playbook

The top three KPIs from government’s most important contracts should be made publicly available.

These should be the three most relevant to demonstrating whether the contract is delivering its objectives. They should be measured regularly, and performance against them should be published quarterly.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

The benefits of KPIs, key performance measurements and continuous improvement are noted in the Client Guide.

It leaves the choice suitable KPI’s to the reader and does not dictate.

MEAT

The Construction Playbook

Evaluation should focus on value rather than simply cost. Contracting authorities should evaluate bids for public works projects and programmes by determining the most economically advantageous tender (MEAT) based on their published award criteria.

No further guidance on setting criteria to determine MEAT given in the Playbook.

(Playbook, Chapter 9)

The Client Guide to Construction Projects

Requirement to award based on MEAT and guidance on application included in Handbook 2.

The Handbook provides guidance on the use of the appropriate quality / price ratio which facilitates our focusing on identifying the most economically advantageous tender

Modern slavery

The Construction Playbook

We must ensure that regular monitoring is carried out throughout the commercial lifecycle to manage and mitigate against Modern Slavery risks. Further information can be found in PPN 05/19 and the associated Tackling Modern Slavery in Government Supply Chains guidance.

(Playbook, Chapter 3)

The Client Guide to Construction Projects

Included as mandatory grounds for exclusion of tenders.

The Client Guide does not cover or refer to regular monitoring.

Procurement Strategy

The Construction Playbook

Light reference to selecting procurement strategy, with reference given to Cabinet Office policy on the choice of procurement procedure in PPN 12/15.

Procurement processes should be of proportionate duration and effort to the size and complexity of the contract opportunity so as not to create barriers to entry for SMEs and VCSEs. The business case should justify the chosen procedure.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

The Construction Procurement Handbook (Handbook 2) provides detailed guidance on the procurement process.

Project bank accounts

The Construction Playbook

Should be used unless there are compelling reasons not to. (Playbook, Chapter 10)

The Client Guide to Construction Projects

Following the introduction of CPN 1/2019 relevant public bodies must include a PBA in tender documents for public works contracts commencing procurement procedures from 19 March 2019 with an estimated value more than or equal to:

• £2,000,000 for building projects
• £5,000,000 for civil engineering projects

Other bodies that can award public contracts, and other organisations providing procurement routes for the construction of public buildings and infrastructure, are asked to:

• implement PBAs
• integrate the associated guidance into their procedures

Prompt payment

The Construction Playbook

For contracts valued above £5 million per annum, departments and ALBs must include an assessment of a supplier’s payment systems processes and performance as part of the selection process, to demonstrate it has a reliable supply chain, and determine when it would be appropriate to exclude suppliers that cannot demonstrate this. Further guidance can be found in PPN 04/19 and PPN07/20.

(Playbook, Chapter 8)

The Client Guide to Construction Projects

The importance of cash flow and payment within 30 days is referred to in the guide. There is also cross reference to the SPFM requirements which itself covers prompt payment.

Also. Tenderers that are deemed to have submitted a potentially low bid, which is subsequently included in the competition, are required to submit a declaration to the effect that they understand that their arrangements for the appointment and payment of sub-contractors may be subject to scrutiny by the employer.

Quality

The Construction Playbook

Some consideration of quality planning included as part of modern methods of construction and evaluating bids, but not much focus on ensuring it is obtained through construction.

Includes the intention to embed a requirement for suppliers to identify and use a quality planning process in the delivery of capital projects and programmes, and familiarise contract management teams with quality processes. (Playbook, Chapter 3)

The Client Guide to Construction Projects

The Client Guide includes guidance on Quality Assurance (Handbook 1, Chapter 14) and obtaining quality during the construction phase (Handbook 3, Chapter 2)

Project Scorecards

The Construction Playbook

A new Project Scorecard is currently being trialled ahead of a planned launch in 2021, with the principle of clearly setting out outcomes at the start, understanding their contribution to government’s strategic priorities and referring to these throughout the project or programme lifecycle.

They will be referred to throughout the approval and assurance processes in relation to the business case, used to inform contractual processes and form the baseline for robust post-completion evaluation.

The outcomes agreed through the Project Scorecard should also be used to design the set of key performance indicators (KPIs) for the project or programme.

(Playbook, Chapter 6)

The Client Guide to Construction Projects

In developing the tender evaluation model, contracting authorities should draw on the outcomes set out in the Project Scorecard, among other aspects, as part of the ‘quality’ criteria.

(Playbook, Chapter 9)

This is not something included within the Client Guide.

Social value

The Construction Playbook

From January 2021, a minimum weighting of 10% of the total score for social value should be applied in the procurement to ensure that it will be a differentiating factor in bid evaluation and a higher weighting can be applied if justified.

(Playbook, Chapter 9)

The Client Guide to Construction Projects

Under the Procurement Reform (Scotland) Act 2014 all public sector contracting authorities are required to consider including community benefit requirements for all regulated procurements where the estimated value of the contract is at least £4 million.

The Scottish Government community benefits in procurement webpage provides general guidance and a number of tools to assist contracting authorities. The Scottish Futures Trust developed a Community Benefits Toolkit to assist contracting authorities in delivering community benefits through construction contracts and projects. (Handbook 1, Chapter 8)

Standardised contracts and terms

The Construction Playbook

Standard contracts should be chosen from the following suites:

• NEC 3 or NEC 4, as published by the Institution of Civil Engineers
• JCT 2016, as published by the Joint Contracts Tribunal
• PPC2000/TAC-1 and FAC-1 as published by the Association of Consultant Architects

(Playbook, Chapter 6)

The Client Guide to Construction Projects

Contracting authorities are encouraged to consider all available forms, not relying solely on familiarity or previous use, and to take advice from their professional advisers in arriving at the most appropriate selection.

Some introductory information is provided on commonly used contracts.

The Client Guide does provide guidance covering the issues pertaining to any amendment to standard terms – Handbook 2 – Ch 5 - 23

Supplier Code of Conduct

The Construction Playbook

Projects and programmes should be run in accordance with the Supplier Code of Conduct. The Contract Notice and tender documentation should carry a statement to indicate that the procurement will be run in the spirit of the Supplier Code of Conduct.

(Playbook, Chapter 7)

The Client Guide to Construction Projects

Not included in Client Guide.

A Scottish Construction Accord is currently being discussed between the public sector and industry to create shared vision of a new way of working together.

Whole life costs

The Construction Playbook

All projects and programmes should produce a Should Cost Model (SCM) as part of the planning and preparation stage to inform the delivery model assessment.

(Playbook, Chapter 5)

To help enable contracting authorities and suppliers to make informed decision throughout the lifecycle, there is an intention to work together with industry to develop a consistent definition of whole life value for use in the built environment in 2021.

(Playbook, Chapter 3)

The Client Guide to Construction Projects

The Client Guide (Handbook 1 chapter 11) directs users to Scotland Futures Trust’s Whole Life Appraisal Tool which has been developed to assist contracting authorities make informed decisions to optimise a built asset’s whole life performance.

Version Control

Issue 1.0

Prepared by Clare Paterson - 17 June 2021

Reviewed by Graham Porteous - 28 January 2022