Tackling procurement challenges will take more than legislation

Emma Mottram is director of operations for social housing procurement consortium EN:Procure

Procurement is an expensive game. Going by the latest government figures, one pound of public money in every three is spent on public procurement – totalling some £300bn per year.

The Procurement Act 2023 comes into force later this year with the stated aim of injecting not just better value for that spend, but also more innovation and productivity into the sector.

While the finer details of what that looks like in practice will be ironed out in the secondary legislation currently being discussed in Westminster, it is apparent that the Act should take off some of the historical shackles that have restricted the procurement industry and introduce a more efficient way of working.

“Retrofit is going to be a massive contributor to reaching climate targets, so ensuring that procurement is fit for purpose will be mission-critical”

One area that will be affected by the Act is contract management and its role within the procurement process. Historically, contract management in the construction industry has been wildly inefficient and subsequently hasn’t always gone hand in hand with proper procurement, so progress on this front is widely welcomed.

However, there is a shared concern for procurement professionals that the Act doesn’t fully tackle some of the biggest challenges facing the industry at large. The ongoing impacts of Brexit, the long tail of the coronavirus pandemic and the war in Ukraine have caused significant damage to the construction supply chain, and the price inflation these external factors have caused has only been exacerbated by the economic factors currently at play in the UK.

While these issues affect everyone in the industry, they are particularly pertinent for the small and medium-sized enterprises that make up the vast majority of the supply chain, many of which don’t have the cash reserves to fall back on when times get tough.

Mapping and understanding the supply chain is now more important than ever before, with huge value being placed on reliability and relationships – especially given that the impacts of those aforementioned factors have led to a significant increase in insolvencies across the built environment.

While the improved contract-management approaches being mandated in the Procurement Act should improve awareness of the financial risks associated with any given project, it’s important to note that better understanding doesn’t always equate to increased security against said risks.

Attracting new talent

Although the past few years have been particularly challenging, the reality is that the construction industry is consistently vulnerable to external factors. Because of this, there is a cycle of boom and bust within the industry, and the lows can be particularly low.

There is a prevailing sense that despite its importance to the UK economy, the construction industry isn’t given the respect it deserves and retains a stigma that makes the recruitment of young people much harder. Pair that with an ageing workforce, and there is a serious problem on the horizon.

Strides have been made and improvements are slowly showing, but it is increasingly hard to not only encourage people into the industry, but to keep them there – be that for sitework or in areas such as procurement.

For those that do stay in the industry, the scale of digital transformation that is starting to take place for contractors and supply chain alike means that upskilling in areas such as data mapping is going to become even more crucial, especially given the emergence of artificial intelligence.

One thing that can help the construction industry become a more attractive option for those looking at their career path is the challenge of net-zero carbon emissions. The built environment isn’t going to reach climate targets by doing the same things as it has done historically, so new approaches that embrace creativity and innovation will become increasingly critical as the clock ticks down to zero.

While the lack of an industry-wide approach is a potential concern on this front – leading to individual contractors plotting their own routes to net zero – the fact that progress is being made is a positive, although much more still needs to be done.

From our experience in the social housing sector, retrofit is going to be a massive contributor to reaching the ambitious climate targets being set, so ensuring that procurement is fit for purpose will be mission-critical.

The changes put forward in the Procurement Act will no doubt bring additional flexibility and efficiency, but the procurement industry needs to tread carefully.

To lean on the concept of the old phrase “more haste, less speed”, we need to safeguard against the risk that the “speed” of more efficient procurement doesn’t come at the expense of transparency.