Review of Scottish public sector procurement in construction

Foreword

We are pleased to present our report on the findings of our review of Scottish public sector construction procurement.

A cornerstone of our report is our belief that as a nation we must make sure that we harness the power of public spending to benefit the sustainability of the Scottish economy to create and support jobs, as well as to provide the infrastructure which will keep Scotland working for generations to come. Our report contains a number of recommendations. Some of these are strategic in nature; others are very specific operational issues.

Annual Scottish public sector construction expenditure is around £4 billion. This is a vast sum, and the construction sector is a vitally important part of the Scottish economy. According to Construction Scotland, the 31,000 businesses that make up the industry in Scotland employ some 170,000 people ^[1] . Construction Scotland also says that for every £1 spent on construction output, a further £2.94 is generated in the economy.

Promoting the sustainability and development of the construction sector includes ensuring that small and medium sized enterprises ( SMEs) are given the economic oxygen to allow them to thrive, and if desired, to grow and develop and become the larger companies of tomorrow, as well as having regard to the significance of the construction industry in all parts of the Scottish economy, including its remote and rural parts where SMEs are particularly important.

Of course, whilst two-thirds of employment in construction in Scotland is in small firms which employ fewer than 50 people, we fully recognise that the current economic conditions are creating problems for companies of all sizes. And of course, times are tough for the public sector, which has to maximise value for money, in order that limited funds can deliver as much as possible.

The two principles of achieving value for money and promoting the sustainability of the construction sector are not mutually exclusive, but current practices do need to be re‑considered.

Some practices in public sector construction procurement, such as pre‑qualification, are frequently over-elaborate and increase costs for both the public sector client and the private sector contractor. The public sector is rightly concerned to guard against the risk of challenge to the procurement process, but over lengthy documentation and processes can reduce transparency and have the opposite effect of what is intended by increasing costs for both parties, as well as the possibility of challenge. In the implementation of our recommendations, a guiding principle should be to seek to reduce costs by removing unnecessary procedures and simplifying the procurement process.

However, much of the construction procurement undertaken by the public sector is carried out by capable people well versed in how to procure good outcomes in an efficient and effective manner. In these cases we hope that our recommendations may encourage and enable the sharing of best practice.

Responsibility for the reform agenda does not rest solely with the public sector, and so some of our recommendations are addressed to the many companies and firms working for public authorities. The construction industry is characterised by contentious behaviours, and more collaboration with clients and within the supply chain is needed.

Our vision is of an approach which achieves better collaboration in design-led, efficient and effective public sector construction procurement and which has regard to sustainability in all senses of the word.

We record our grateful thanks to our excellent support team from the Scottish Government.

Robin Crawford
Chair

Ken Lewandowski
Deputy Chair