#BadProcurement

The way the public sector makes buying choices about everything from cleaners to carers to builders isn’t on the face of it a riveting topic, but it has far-reaching consequences as we have seen last week. I want to spotlight an example I have recently come across which shows how two local authorities are going to get bad housing, because they are asking all the wrong questions and then weighting the responses they get in a perverse way.

Councils are currently developing homes again, often on their – our – land. This is great news - and they are right to demand high quality housing on this shared asset. All good procurement starts with the end: what is it we want to end up with? And so how shall we go about seeking that from the market? I would suggest that what councils want from housing they develop is long-lasting, high quality and attractive homes which their residents love, which create community and which add positively to their neighbourhood. So how would a procurement exercise look which had those aims as the starting point? I am helping architects to bid for work to design a hundred homes for two local councils. It’s great that these authorities are asking architects to design homes in the first place. But the procurement processes they have chosen will sadly not result in homes which meet their own very important priorities.

The first mistake councils make is to weight ‘fee’ at 50% of the marks – I’ll return to this. The second is that their assessment of ‘quality’ is based on project management skills of various kinds (33%) and design skills (17%). So only one sixth of the marks awarded will be anything to do with an architect’s core business and skill set.  Councils: it honestly is not worth scoring architects on their BIM capability or their HR policy. If they are RIBA chartered practices you can probably expect a certain level of service and quality – so these ‘process’ questions are redundant. I think there is a way in which large and bureaucratic organisations ask the kind of questions which are more relevant to their own business, rather than to the mainly small and craft-based organisations which produce architecture. The third error is that they have only committed to use the architect as far as a planning consent. This means that all the details which make a building worthy of appearing in public will be left to the builder: that ‘long-lasting’ priority is unlikely to be met this way.

Let’s go back to the first point: the money. The fee bids will probably range from about 2.5-4% of the construction cost for a hundred homes, aka £500,000 - £800,000. So that represents between £5,000 and £8,000 per home, with each home costing £200,000 to build, and being valued on the market at say £600,000 each once built. The council stands to ‘lose’ £300,000 if they go with the highest bidder – not an insignificant sum. But looked at in the context of eventual value (say £50m total including private and affordable homes) this is nothing. Do good architects cost more? Yes – they probably do – but they pay for themselves. A really good architect should be able to create £3,000 more value for each home - or get more homes on the site* - through design ingenuity. And then not only will they will have paid for themselves (*only one more home would be needed here!), they will have added something to a neighbourhood which the council and its residents will be proud of and enjoy living in or walking past in perpetuity. The planning team will also jump for joy at a higher quality scheme, making the whole process quicker.

The fourth and final calamity of procurement is in the fee scoring. The fees are evaluated such that the lowest fee (say 2.5%) gets a maximum score of 50 points. All the other fee bids are then strung out below that, with that £300,000 difference I mentioned above meaning a zero score for the practice bidding 4%. So we have a zero to 50 score range for the fee, whereas the quality scores are more than likely to range in a far closer band – say from 25 to 40. What this means is that the fee bids will swing the result, no matter what the quality of the architecture (which isn’t actually being measured anyway as we have seen).

These #BadProcurement practices have to stop: not just because they aren’t fair, but more importantly because they will not result in the really great buildings which local councils and their citizens deserve. The only way to fight back is for the best suppliers to get together and decline to bid, with a polite and constructive note of explanation to the commissioning authority.

Let's do this differently.