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Driving innovative procurement

Our research improved the procurement of infrastructure projects in the UK, the organisational practices of major engineering organisations, and the drafting of contract forms.

Logistics and import export theme

Public spending on major infrastructure projects consumes vast amounts of taxpayers’ money.

The complex network of stakeholders involved in such projects means unforeseen problems are common and can lead to them running over time and over budget.

Research on the effectiveness of construction supply chains, by a team of Logistics and Operations Management experts from Cardiff Business School, aimed to address these issues by improving:

  • the procurement of infrastructure projects in the UK
  • the organisational practices of major engineering organisations
  • the drafting of contract forms

In doing so, the team helped transform Highways England’s procurement practices, enhance supplier relationships at the Mace Group, reduce transaction costs for Costain, and shape contracting models for the New Engineering Contract.

Rethinking procurement and supply chain approaches in construction

Between 2004 and 2007, the researchers uniquely applied an operations and supply chain management lens to a project on mass customised collaborative logistics for sustainable manufacture.

This challenged previous assumptions that lessons from environments like manufacturing, automotive and retail could simply be transposed into complex construction environments.

Instead, the team showed that the industrial approach needs to be adapted and contextualised if it is to work for the construction sector. Complementing these findings, the researchers developed guidance for designing supply chains operating in ‘engineer-to-order’ situations.

Building on their earlier research, the team worked on a range of applied projects between 2013 and 2017 and created accessible industry guides with partner organisations. These gave specific guidance on appropriate contracts and procurement recommendations in major projects.

A review of the Mace group’s supply practices followed in which the team analysed two large supplier performance datasets. They categorised suppliers according to relationship types and supplier development initiatives.

Resulting research outlined evidence-based practices for strategic partnerships with insights on development, performance, improvement and investment. Cumulatively, their work with industry partners provided the team with the evidence needed to underpin and drive improvements across the UK’s infrastructure supply chain.

Subsequently, regulators, government clients, contract bodies and law firms, as well as major engineering contractors and their supply chains all benefitted from the Cardiff University team’s research.

Drafting contracts

For example, Cardiff’s principles for good procurement practice helped to shape the upgraded version of New Engineering Contract group’s suite of standard contract forms – NEC4.

The forms have been widely adopted across construction and engineering sectors.

Organisations like Sydney Water expect 5-10% annual programme savings after adopting NEC4 as its standard contracts model for delivering up to AU$4billion of construction works and services between 2020 and 2030.

Public procurement of infrastructure projects

Similarly, the series guides produced by the researchers have informed better procurement of major projects.

When Highways England (HE, formerly the Highways Agency, now National Highways) became a Government-owned company in 2015, it benefitted from research support when introducing its new operating model for procurement and supply chain management.

The industry guides informed the key areas of change in this transformation.

Cardiff University's research also:

  • increased use of NEC contract forms
  • reduced non-conformance outcomes
  • lessened rework
  • created fewer disputes in the supply chain
  • informed HE’s sector-guiding Supply Chain Strategy 2015 and Procurement Plan 2019

In 2017, the team worked with the Office of Road and Rail (ORR), the statutory body that oversees and regulates transport infrastructure in the UK, to shape its road investment strategy.

They carried out a capability review, with prominent industry figures Steve Rowsell and David Orr, offering specific analysis and recommendations for ORR and Highways England procurement.

An independent report published by Highways England and referencing the ORR review, evaluated the reforms and changes undertaken across Highways England over the period 2014-2018.

It concluded that there had been an “improved procurement process”; “a more collaborative and less bureaucratic approach to procurement”; and “relationships with its suppliers had improved”, leading to efficiencies and innovation.

Influencing practice in major engineering organisations and their supply chains

Through long-standing collaboration with Mace’s Centre of Supply Chain Excellence (known as Mace Business School), the Cardiff University team informed Mace’s approach to supply chain relationships and supplier development initiatives.

In providing an evidence base for the value of long-term strategic partners, the research changed company practices.

Costain and its supply chain partners are also benefitting from the research on long-term strategic partners.

The team’s work on supply chains and governance provided reliable evidence agencies and groups needed to improve procurement of major infrastructure projects, transform practices, and shape contracting models.

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