Introduction to Procurement #3

Selecting the Appropriate Route to Market for Construction Projects

The Public Contracts Regulations (2015) (PCR) stipulate several procedures available to Grant Recipients when evaluating procurement route to market options. Understanding the various procedures available is crucial to deliver value within the procurement process. Consideration should be made across all the available options when determining the most appropriate procurement solution for project requirements.

Route to market consideration involves determining the most effective way for the project in question to be run. Each route presents different advantages and challenges, tailored to suit distinct project requirements, objectives, and desired outcomes. A wrong choice at this stage can result in an unsuitable supplier pool, or an insufficiently flexible procurement process, limiting choice and potentially reducing value for money.

When embarking on a construction project of high value and high complexity, the familiar routes of open, restricted, or framework call-off procedures may not afford Grant Recipients the required flexibility or opportunity for innovation that the desired project requires.

Additional routes permitted by PCR that may be more suitable in such circumstances and are as follows:

Competitive Procedure with Negotiation (CPN)

CPN combines elements of competitive tendering, with negotiation. It begins with the selection phase to identify and qualify suitable bidders, followed by a negotiation phase with selected suppliers to refine proposals and achieve the best value for money.

Most Suitable For:

Projects with complex requirements or where specifications may evolve during the procurement process.
Situations where innovative solutions or approaches are sought, but the exact solution is not fully defined upfront.
Projects requiring a balance between competition and flexibility to negotiate terms and conditions.
Services or supplies that require adaptation or design inputs.

The CPN procedure would be appropriate to use in construction projects involving innovative construction techniques or materials where the needs of the client/Local Authority (see above comment) cannot be met without adaptations of existing solutions and therefore a refreshed approach is required to reflect evolving conditions.

Competitive Dialogue (CD)

CD is a structured process that allows for discussions between the client and selected suppliers to explore potential solutions, clarify requirements, and refine proposals before the submission of final tenders.

Most Suitable For:

Projects with high complexity or uncertainty where there is a need for early engagement with suppliers to develop optimal solutions.
Innovative projects requiring collaboration between the client and suppliers to explore new technologies or methodologies.
Projects where the client cannot accurately define the technical specifications in advance so seeks the specialist expertise of the market who then have a major role in defining the solution or assessing feasibility.

The CD procedure should be considered for large-scale infrastructure projects with multiple stakeholders and technical challenges.

Innovation Partnership (IP)

IP is a procurement process designed to foster collaboration between clients and suppliers for the development of innovative products, services, or works. It allows for the co-creation of solutions, sharing of risks and rewards, and long-term partnerships between the parties. An IP also allows for the award of a phased contract covering all stages from R&D through to the procurement of large quantities of finished products or services, with the involvement of one or more supplier in each phase.

Most Suitable For:

Projects requiring breakthrough innovations or solutions that do not currently exist in the market.
Long-term projects where ongoing collaboration and innovation are essential for success.
Projects with high-risk profiles where traditional procurement methods may not incentivise suppliers to invest in innovation.

IP should be considered for projects with integral research and development initiatives or initiatives involving the integration of emerging technologies.

In summary, each discussed procurement process—CPN, CD, and IP—offers distinct advantages for projects with varying levels of complexity, innovation, and risk. By understanding the characteristics of each process and aligning them with project requirements and objectives, clients can effectively leverage procurement strategies to drive innovation, achieve value for money, and deliver successful outcomes.

Fran Butterworth is a Senior Procurement Consultant at Arup, experienced in delivering expert procurement and commercial advice, especially in relation to public procurement.

If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com