A new survey of stakeholders involved in the UK’s road building sector has revealed significant concerns about current procurement practices.
The survey was conducted by a leading industry source Highways Magazine and the research company, Fitzpatrick Advisory. It polled 81 respondents from every level of the roads sector, including Central, Regional and Local Government clients, Tier One contractors, supply chain partners and consultant designers and advisers. It was revealed that employees at almost every level believe that existing procurement practices are driving wrong behaviours and leading to key failings.
These failings are in vital areas such as shouldering and sharing risk, encouraging innovation, bringing in new, smaller entrants and supporting SMEs. Instead of this, an unimaginative supply relationship management pervades, with lucrative contracts handed to the same big players by repeatedly using the same frameworks that favour repetition over innovation. An example of this is shown in the answers to the statement “procurement in the highways sector is fair for non-Tier One suppliers and for new entrants.” Zero respondents selected “strongly agree” and a majority (54%) either “strongly disagreed” or “disagreed” with this statement.
While cost reduction will always remain a core component of the procurement professional’s role, it becomes counterproductive when it becomes a rigid, overarching principal. This has implications for another core procurement function: supply relationship management, which again many respondents believe is dysfunctional in the roads sector.
The reforms needed to rectify the current malaise include increasing the range of pre-qualification exercises for SMEs (and making them less onerous), emphasising service value over cost reduction, restricting the number of contracts to large corporate suppliers, and using frameworks less frequently in favour of alternative procurement models to diversify the supply chain.
Other recommendations include punishing rather than rewarding companies that deliberately bid low and then fail to keep their promises, encouraging procurement professionals to switch emphasis from managing tenders to working collaboratively with technical management colleagues, and including data on the outcome of previous tenders in the next set of documents.
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.