National eProcurement Project eProcurement in Local Authority Construction

National e-Procurement Project e-Procurement in Local Authority Construction Martin Scarfe London Borough of Newham Ne. PP Board member

e-Procurement in Local Authority Construction Objectives – Identify good practice, develop & publish guidelines and exemplars Approach 1. Bring together stakeholders in Local Authority Highways and Property Construction and Maintenance to review the role of eprocurement, establish progress, and identify best practice exemplars 2. Run joint workshop with OGC on frameworks 3. Develop report with best practice case exemplars, solutions, sources of further information, implementation plan etc

Stakeholders meeting 30 th November 2006 Stakeholders: – Local authorities Ø E Midlands Centre of Excellence (lead on Construction) Ø LB Bromley, Camden, Newham Ø Highways Agency Ø Olympic Delivery Authority – Construction industry Ø Geoffrey Osborne Ø ISG Jackson Ø Kier Group – Supply chain Ø 2010 Rotherham Ltd (ALMO) – E-procurement solution providers Ø Constructionline Ø EGS Ø COINS

Q 1: Where are the examples of good practice? • Birmingham City council – e-auction for commodities for home builds and Rotherham ALMO - homes building e-auction planned Jan 07 • Leeds City council – e-tendering for building contracts • Sheffield/Islington (with Kier group) – integrated e-systems: – Equipped operatives with PDAs as part of efficiency drive to increase efficiency, can now send work list for whole week through; – Appointment booking system for tenants through cable TV. – Both sides benefit eg Gershon targets were achieved jointly • London Borough of Bromley: Developing sharing/integration of back office systems

Q 1: Where are the examples of good practice? cont… • Edinburgh City Council and Manchester websites open to suppliers • Lincolnshire have launched P-cards for use in construction • ODA are planning to e-tender for the Olympic contracts • London boroughs have e-tendered collaboratively through the London Centre of Excellence for shared contracts eg road salt • Camden is using modules in its ERP to manage reactive housing maintenance (with contractors having direct access to the system) • Camden are also planning to use SMS alert when supplier portal is in place

Q 2: Where are the opportunities? • Standardisation – Suppliers suffer from the multiplicity of tendering and prequalification processes and requirements from local authorities – this adds significantly to their costs – Standardising and/or collaborative tendering would allow these costs to come down and the savings to be passed on – Constructionline has mission from DTI to reduce duplication and is establishing models with EGS and Supply 2 gov to facilitate searching for pre-qualification suppliers and creating standard prequalification criteria

Q 2: Where are the opportunities? Making data more visible: – 75% of authorities (including 17 of the 33 London boroughs) are using Constructionline’s web-based service to some degree – 75% are also using Spikes Cavell Observatory – Opportunity to identify common approved suppliers and reduce duplication of process – Tier 1 suppliers can also access Constructionline to find subcontractors - including local companies where this is a requirement - they are not taking advantage of this facility – Moving to e-tendering and contract management systems would mean that eg capital spend data could be shared and used to plan forward capacity and skill requirements with suppliers

Q 2: Where are the opportunities? cont… • Highways Agency is rolling out its online Capability Assessment Toolkit to all their tier 1 suppliers. This allows buyers and suppliers to review each other’s capability. Is this being used by any local authorities? • Local authorities could be identifying good e-practice in their suppliers and then driving this across their supply base. Is this happening? • Design in business – use of intelligent CAD models to share designs, change, generate and share information. Are there any good examples? • Open Book accounting: in future this could be via online access to councils’ finance systems

Q 2: Where are the opportunities? cont… Is industry leading the way? • e-Procurement is being adopted within the construction industry, but not linked to councils’ systems: – The large contractors are transacting electronically with sub-contractors, eg via COINS hub, introducing e-invoicing processes and paying via corporate Visa cards – This is reducing back-office costs, improving accuracy, enabling speedier payment and giving more time for client and contract management • This kind of innovation requires significant investment and only arises where there is long-term partnering • But it may, in the end, not be local authorities that lead the way in adopting e-technology to improve efficiency and drive down costs…

Q 3: What are the barriers? 1. The complexity and number of tiers in the local authority construction sector supply chain 2. The number of people involved in decision-making in councils 3. The lack of a compliance culture, leading to poor up-take of eprocurement solutions and framework contracts, duplication of effort in managing tendering, supplier approval etc. 4. Local authorities are perceived as risk-averse and slow to adopt new ways of working 5. The larger metropolitan councils (especially London boroughs) are seen as insular and not working together very effectively 6. The focus is predominantly on procuring services, which don’t lend themselves to simple one-size-fits-all solutions

Q 3: What are the barriers? Other barriers: • IT departments! • Skills and technological capacity of the suppliers • Range of supplier skills and size • Secure information transfer – eg the government’s secure gateway prevents interaction with suppliers on Highway Agency’s website • Lack of compatibility/integration between systems • Lack of standardisation • CIS tax

What do you think? • Where are the examples of good practice of eprocurement enabling collaboration, efficiency and savings in the local authority construction sector? • Where are the main opportunities for increasing the adoption of e-procurement in this sector? • What are the barriers and what should we be doing to overcome them?