Driving innovative procurement

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.

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.