Highways Agency

Safe roads, Reliable journeys, Informed travellers

Procurement Strategy Review 2005

Contents

• Foreword - Steve Rowsell, HA Procurement Director
• Introduction

Part One - The Review - How Are We Doing?

• 1.1 Progress against the 10 Principles for Best Value
• 1.2 Progress in applying the Principles to Specific Categories of Work
• 1.3 Conclusions

Part Two - The Way Forward - Putting Customers First

• 2.1 Best Value
• 2.2 Strengthening the Supply Chain
• 2.3 Developing our Working Methods
• 2.4 Collaboration
• 2.5 Protecting the Environment
• Application of Priorities to Specific Categories of Work
• Conclusions

Foreword - Steve Rowsell, HA Procurement Director

In 2001 the Highways Agency committed itself to continuous improvement in its procurement. The Agency's Procurement Strategy Delivering Best Value Solutions and Services set out 10 principles for delivering better value. Those principles, restated within this review, have been applied across the full range of highways-related purchasing.

These principles have enabled innovative developments such as our new best value supplier selection process utilising our Capability Assessment Toolkit. We have also made significant progress in creating integrated delivery teams through new forms of contract such as the Managing Agent Contractor contract for maintenance and Early Contractor Involvement contract for major projects. We have developed strategic, non-adversarial partnerships and established supplier communities to share best practice and drive improvement in service delivery.

The first part of this review of the Procurement Strategy recognises the success of our supply chain together with the Agency's teams who have been instrumental in achieving our 2001 vision "to be recognised as being a client at the forefront of best procurement practice by working in partnership with a sustainable supply chain to deliver best value solutions and services." I congratulate all those involved. There is, however, more to be done.

The second part of this document sets out a new challenge of putting Customers First. Procurement plays a fundamental role in delivering high quality services to customers. We will be setting increasingly high standards for levels of performance and demanding high quality services from our suppliers.

Alongside this challenge we will be working with suppliers and local authorities to improve highways procurement across England's roads to meet the Government's efficiency targets.

In order to deliver best value we need to learn more about the extended supply chain and ensure integration into the planning and design process. The industry has shown great commitment to achieving the cultural change needed to deliver the recent initiatives. I look forward to continuing to work with the whole supply chain to provide continual improvement in the services delivered to our customers.

HA Procurement Director

Introduction

The Highways Agency's aim is to achieve Safe Roads, Reliable Journeys and Informed Travellers. Since our Procurement Strategy Delivering Best Value Solutions & Services was published in 2001 the Agency has been focusing on being a network operator, actively managing the traffic on our roads. This means we need to consider good customer service and think about putting customers first.

At the core is the Agency's new Corporate Plan and vision for the next five years. Published in February 2005, Customers First sets out where we want to be and what we need to change to get there. It is about putting customers at the heart of our business.

The roles of our suppliers and the HA Traffic Officers are critical to this vision. These are our front-line service providers. In order to continually provide effective and improved service delivery, the Agency will need to retain and incentivise its highest quality providers; setting targets for providing continuous improvement in the services delivered to our customers.

These changes together with the successes of the last four years means our procurement vision has developed. We want:

"To build on our good reputation and become a world-class procurement organisation by continuing to work with other procurement organisations and a sustainable supply chain to deliver best value solutions and services to customers."

It is very important that, as a major client in the construction industry, we continue to show leadership and make it clear to our suppliers what is expected of them at corporate and project level. The Construction Clients' Charter sets out the minimum standards expected in construction procurement. In order to improve our position as an intelligent construction client, we will maintain our Client Charter Status and measure our improvement against our approved action plan.

The first part of this document reviews the progress made against the HA's Procurement Strategy. The second part looks forward to 2008, updating the procurement framework for delivering the Government's spending plans for the strategic road network and sets the challenge for the next three years.

1.1 Progress against the 10 Principles for Best Value

Ten Principles for delivery of Best Value

The Agency's Procurement Strategy set out 10 overlying principles to be applied to all categories of Highways Agency procurement to help deliver best value. The principles were embraced by both HA teams and our suppliers and have been crucial to our success. They will remain central to our work during the next three years. As we have worked with the principles and developed them we have identified the need to add Collaboration. And this addition illustrates our commitment to partnerships for successful delivery. Collaboration - clients working together to achieve more effective delivery of services to customers - will be discussed further in part two of this document.

• Early creation of delivery team - early contractor involvement for more scope in innovation, better risk management, and forward planning of work programmes and resources
• Integrated and incentivised supply chain - integrating the supply chain with its specialist knowledge, incentives for innovative ideas to give best value solutions
• Maintaining a competitive and sustainable supply chain - maintaining a good quality supplier base motivated and incentivised to work with the Agency
• Clear points of responsibility, no unnecessary layers of supervision - clarifying roles and responsibilities to reduce contractual interface problems, eliminating resource wastage from unnecessary layers of supervision
• E-procurement - to make tender processes, communications and performance measurement more efficient
• Selection of suppliers on the basis of best value - identifying the aspects of quality which add real, affordable value, using reality checks to confirm quality submissions and promises
• Fair allocation of risks - risks will be allocated to the party best able to manage them and the Agency will accept risks where suppliers are prepared to work in partnership to manage them and control the consequences
• High quality design - design solutions will be based on whole life value, assessed by reviews integrated with Office of Government Commerce gateway review processes. We are committed to achieving the principles of good design set out by the Government Strategy for Better Public Buildings
• Partnership approach based on long-term relationships - moving from short-term project partnering arrangements to long-term relationships for retention of skills and better resource and work programming
• Performance measurement with continual improvement targets - establishing a five-year programme of improvement under the Clients' Charter scheme to confirm benefits in the form of cost and time-savings, reduced defects and accidents, and improved whole life value and satisfaction with the product.

1.1 Progress against the Ten Principles

Both the Agency and the industry have risen to the challenges of delivering best value solutions and services and much has been achieved since 2001. At the core has been the continuing development of an integrated, incentivised, competitive and sustainable supply base in an environment supporting longterm partnerships. This has helped us learn more about the capability and performance of our suppliers, as we also make internal changes to support our procurement principles.

Early creation of delivery team

The Agency has designed and implemented new forms of contract, enabling the early involvement of the supply chain in the planning and designing of projects and service requirements. This means greater innovation, better risk management, forward investment in staff and plant, and affordable, safer solutions. The contracts include:

• The Managing Agent Contractor (MAC) contract for highways maintenance and the pilot Enhanced MAC (or EMAC)
• The TechMAC - A specific managing agent contractor contract to support the delivery of technology-based projects such as Active Traffic Management in the West Midlands
• The Early Contractor Involvement (ECI) contract for major new-build projects and packages of projects
• Frameworks for various consultancy and small works requirements
• Construction Management involving the direct employment of smaller suppliers to deliver specialist services.

Integrated and incentivised supply chain

The flexibility of these contracts enables greater integration at an earlier opportunity and when the supply chain can add most value. The principal incentives are:

• Our customised new forms of contracts are based on the ECC Target-Cost Option with reimbursement of actual cost and payment of bonuses
• Supply chain management is taken into account in our selection process and the most capable and best-performing suppliers are rewarded with further opportunities to tender
• The Agency requires prompt payment throughout the supply chain
• Good progress in removing retention money clauses from our contracts
• The Agency practises alternative forms of dispute resolution.

Maintaining a competitive and sustainable supply chain

Understanding and utilising the capability, capacity, culture, skills and competences of key suppliers is fundamental to the successful, long-term delivery of the Agency's requirements and achievement of best value. Effective supply chain management, including gathering market intelligence, helps to minimise the risks of over-dominance or over-reliance in specialist supply areas. To gain better understanding we have:

• Established our internal Supply Chain Management Team
• Consulted widely with the industry on initiatives prior to implementation
• Designed and implemented new selection and performance reporting processes, which reward those suppliers who deliver best value
• Enabled new suppliers to compete in our markets by making it clear what we require of them.

Clear points of responsibility, no unnecessary layers of supervision

Clear roles and responsibilities are essential to effective contract management and operation of partnering arrangements. The Agency has developed and implemented:

• MAC contracts with single-point responsibility for delivering front-line services to customers in nine out of 14 maintenance areas
• Early Contractor Involvement contracts with single-point responsibility for delivery of planning, design, and construction services for major new-build projects
• Contract forms and contract management which encourage a culture of trust and a right-first-time approach through quality management and continuous improvement in delivery reducing the need for supervision.

E-procurement

• We have established an electronic supplier database to support our selection process. Its link to ConstructionLine means suppliers do not have to resubmit certain information when expressing an interest to tender
• All notices required for publication under the European Procurement Directives are published electronically and most tender correspondence is conducted by secure e-mail reducing transaction costs for the Agency and our suppliers
• Key supplier systems are electronically integrated with the Agency's 'System for Managing' helping prompt payment of invoices.

Selection of suppliers on the basis of best value

Best value is unlikely to be delivered unless the most capable and best performing suppliers are selected on the basis of evidence:

• The Capability Assessment Toolkit (CAT) helps us identify those suppliers most likely to deliver best value solutions and services. Using a framework of capability indicators based on business excellence models, the CAT measures the approach and potential effectiveness of individual companies
• CAT scores are validated and combined with past performance data to determine which suppliers are invited to tender
• Specialist teams with project management and procurement expertise validate supplier capability and tender submissions, including past performance data
• We have introduced our new best value approach to tendering. Tenderers are required to submit their bids in two parts. In the first they set out their approach including how they will manage the risks to delivery of a safe, affordable, defect-free project or service. In the second they must provide evidence of when and where the proposed approach has been successful.

Fair allocation of risks

• Risk Registers feature in all contract documents for high value, high risk projects. The register is reviewed with the tenderers as part of the tender process to ensure risk allocation is fair and placed with the party best able to manage it.

High quality design

Design quality is assured and enhanced in several ways:

• Early involvement of constructors, service-providers and key specialist suppliers in development of project designs and specifications
• Contractual requirements for ISO 9000 accreditation and the use of quality plans to give assurance in the delivery of key services
• Formal review of projects at key stages in development of solutions

Partnership approach based on long-term relationships

To build and improve our long-term partnerships we have developed:

• Area Maintenance contracts lasting up to seven years subject to good performance
• Early Contractor Involvement contracts covering the project planning, design and construction period for major projects, including packaging them together where possible
• Frameworks for delivering a range of services covering consultancy, technology, surveys and small projects
• The Cultural Assessment Framework (CAF) to measure behaviours and the success of project partnering to support long-term relationships
• Communities between suppliers of similar services - (maintenance, major projects, construction management, and some frameworks) with Agency programme and project sponsors to enable forward planning, retention of key personnel, sharing of best practice and knowledge transfer
• Project Partnering Charters and embedded them.

Performance measurement with continual improvement targets

To improve service delivery to customers we need to ensure continuous improvement is achieved throughout the supply chain. A greater understanding of our performance and that of our suppliers has been achieved through:

• Development of the PRIDe (performance, review, improvement, delivery) team to support Agency and supplier teams in development of robust quality systems and measurement regimes which support continual improvement
• The introduction of standardised Area Performance Indicators in maintenance contracts to support service improvement
• Our accreditation under the Construction Clients' Charter. The Agency's Five Year Action Plan for self-improvement against charter indicators was approved in 2001. Charter Client Status was reaffirmed by the Construction Minister in March 2005
• A comprehensive measurement and reporting regime within the Construction Management Community of specialist suppliers
• Introduction of the Toolkit for Performance Measurement which is based on the Key Performance Indicators developed by the Construction Best Practice Programme
• Annual performance reviews of our key suppliers.

1.2 Progress in applying the Principles to Specific Categories of Work

Maintenance

• The Managing Agent Contractor (MAC) contract is now in use in nine out of 14 maintenance areas, achieving single-point responsibility for delivering front-line services to road users. The MAC contract is based on a strong partnership approach between an integrated and incentivised client-supplier team focussed on delivering a safe and reliable network
• A new pilot maintenance contract, the Enhanced MAC or EMAC, was awarded in December 2004 in Area two around Bristol
• Service delivery performance indicators have been agreed and implemented with suppliers covering key functions such as response times to incidents on the network and repair of defects. Results are now being collated and analysed to drive performance improvements and influence investment decisions.

Regional Road and Bridge Works, Technology Projects, and Consultancy Services - the Use of Frameworks

Frameworks are now in place for delivery of virtually all small works, technology and consultancy requirements. Frameworks:

• Allow planners, designers, front-line suppliers and their supply chain to be involved in the design and programming of works
• Add value to the product or service by enabling suppliers to influence specifications and have a greater understanding of the risks to delivery
• Allow more time to develop health and safety plans.

Construction Management (CM)

CM is a framework arrangement allowing us to directly appoint specialist trade contractors and suppliers. Early pilots led to:

• Establishment of longer term, flexible arrangements in maintenance areas nine and 10
• An insight into cost components and the build-up of prices
• The development of a strong community approach amongst the suppliers, focussed on measuring performance, driving out wastage and achieving continual improvement.

Major Projects

• The Agency has successfully introduced its Early Contractor Involvement (ECI) initiative to major projects
• The ECI concept has now been extended to packages of work and the first contract comprising six junction improvements was awarded in 2003
• An Agency Model Contract Document was launched in August 2004
• The Model Contract contains several financial incentives to complete within the contract budget and contractual performance indicators
• Delivery of projects has been accelerated and transaction costs reduced.

Private Finance

We have consulted with the industry and financial institutions on an improved DBFO contract, which would be cheaper and quicker to tender, more flexible to change and includes the Early Contractor Involvement principles. Development work has started on the new contract and the associated procedures.

Other Areas of Procurement

Significant progress has also been made in procuring works, goods and services, which support front-line delivery. These include:

• The rationalisation of Research and Development requirements under a framework arrangement and proposals for a Research and Development Community
• Procurement options for property facilities, estate management and information technology are being rationalised to make maximum use of existing Government contracts
• Extensive use of existing Government contracts for the speedy delivery of vehicles, uniforms and ancillary services in support of establishing Regional Traffic Control Centres and Traffic Officers on our network.

Health and Safety

The Agency has worked closely with the Health and Safety Executive to focus on priorities for improving the safety of the workforce operating on our network. Since 2001, we have introduced several initiatives:

• Closer scrutiny of suppliers' corporate commitment to health and safety at the pre-qualification stage
• Proposals for managing safety on site are scrutinised at tender stage and safety plans are a pre-requisite for Award of Contract
• Data is collected and collated to inform our supplier selection process and monitor our Business Plan target to reduce the number of road workers killed on our network
• Further monitoring and measuring of health and safety performance. Suppliers involved in serious incidents may have their opportunities to tender restricted until we are satisfied that they have appropriate plans in place to prevent re-occurrence.

1.3 Conclusions

1.3 Conclusions on progress to date

The output from the 2001 national debate Rethinking the Construction Client proposed six key guidelines for clients in the public sector. These provide an independent benchmark for measuring our progress. The guidelines set out in 2001 were:

• Traditional processes of selection should be radically changed because they do not lead to best value
• An integrated team which includes the client should be formed before design and maintained throughout delivery
• Contracts should lead to mutual benefit for all parties and be based on a target and whole life cost approach
• Suppliers should be selected by best value and not by lowest price; this can be achieved within EC and Government procurement guidelines
• Performance measurement should be used to underpin continuous improvement within a collaborative working process
• Culture and processes should be changed so that collaborative rather than confrontational working is achieved

The Agency as a result of its strategy, has made significant progress against all of these, but major challenges remain to support culture change in delivery teams; implement new policies and procedures in a consistent manner; measure and understand value; improve the safety record of operatives on our network; and improve our service to customers.

2.1 Best Value

Putting Customers First

Our Procurement Strategy Principles have proved an effective framework within which we have developed our new selection process, new forms of contract, performance measurement toolkit and ways of working in long-term partnerships.

Our Procurement Strategy has supported our new role in moving away from an asset manager to a deliverer of services to our customers.

We welcome the National Audit Office's consideration of the bigger picture of construction procurement across the public sector. The NAO's 2005 report 'Improving public services through better construction' identified actions which Government departments and agencies should take to improve their construction delivery performance further. In particular the NAO recognised the problems caused to the supply chain by volatility in forward programmes. With greater commitment to longer-term forward plans it would be possible to achieve better value through improved methods of procurement.

This review of the Strategy sits alongside the Highways Agency corporate vision Customers First and also covers the six main actions recommended in the NAO report. During the next five years the Agency will be working to put customers at the heart of our business. Our Corporate Plan and vision - Customers First- sets out our aims, what the Agency needs to achieve to become a customer-focused organisation. Our suppliers are crucial to this vision. We need suppliers who can deliver high quality services, which improve year on year. We will not tolerate performance that does not meet the high expectations of our customers.

As we move into this exciting new chapter for the Agency, HA procurement has identified a new principle:

• Collaboration - Clients working together to achieve better value and more effective delivery of services to customers.

Taking forward the Customers First ethos we will be working in collaborative partnerships to:

• Achieve greater understanding of, and responsiveness to, the needs of customers and stakeholders by engaging with local communities
• Achieve continuous improvement in the delivery of front line services
• Involve the supply chain in identifying opportunities for improved collaboration and more efficient delivery of best value solutions and services
• Drive down cost and speed up delivery.

The following section sets out where we want to be in the light of Customers First and how the HA's Procurement Principles will be applied to get there.

Our Priorities for Future Successful Delivery

2.1 Best Value

- an improved understanding of how to achieve and demonstrate best value

We define best value as the delivery of business objectives at the lowest affordable cost while achieving continuous improvement.

The four key components of best value are effectiveness, efficiency, and economy underpinned by the demonstration of continual improvement. To achieve best value in the procurement of services and solutions it is necessary to apply the HA Procurement Principles intelligently to all our purchases. Successful delivery demands a strong Customers First culture with performance measures aligned with HA corporate objectives. It is also a fundamental requirement that forward programmes are robust, reliable and transparent to the supply chain.

Selecting the Supplier Delivery Team

We are already using capability and performance data to influence decisions, selection of suppliers and development of new forms of contract:

• The CAT principles will be rolled out in other procurement areas to help identify those suppliers most capable of delivering the best value solution for the Agency's requirements
• For major projects and maintenance contracts the ratio of CAT score and past performance data will move towards 50:50 as we gain more reliable data of performance
• CAT scores and past performance data will be analysed to confirm the link between capability and delivery of best value services.

The Tendering Process

• Best value tendering will be extended to other suitable areas of procurement
• We will retain Quality and Price tendering where we are best able to define our requirements enabling tenderers to assess risk and price realistically at the outset
• We will establish a panel of trained and experienced staff to undertake the majority of tender assessments to improve consistency and obtain maximum value from the process.

Measuring Performance and using results

We will continue to measure delivery and improvement over time by our suppliers across all our service requirements using our Toolkit for Performance Measurement. This draws on contractual indicators from the Construction Best Practice Programme:

1. satisfaction with the product
2. satisfaction with the service
3. predictability of cost
4. predictability of time
5. safety
6. defects

Together with this:

• We will establish new targets to support improved delivery of service to customers, building on Performance Indicators already in place for Area Maintenance contracts
• We will define a consistent standard for cost measurement and establish tools for benchmarking our suppliers' services
• We will build on the work undertaken within the Maintenance Community to develop indicators for other business areas, such as Major Projects, which is ongoing. These are in line with the Agency's core objectives for delivering Safe Roads, Reliable Journeys and Informed Travellers.

Performance Review and Improvement in Delivery (PRIDe)

The PRIDe concept, including audit, is well-established in the Area Maintenance Community as a means of identifying process improvements and compliance failures and, by taking remedial measures, driving performance improvement. But we want to achieve greater ownership of audit findings and implementation of best value remedial actions by our suppliers and project teams through:

• Establishing best practice and procedures for monitoring continuous improvement which will be owned and implemented by respective operational areas within the Agency and our suppliers
• Utilising Communities as a forum for identifying best practice and innovation as well as the practicalities of implementation
• Auditing the core processes at the heart of delivering best value services with the objective of driving out waste from all parts of the procurement cycle including service delivery
• Encouraging suppliers and Agency project teams to identify and implement continuous improvement in service delivery including cost savings.

2.2 Strengthening the Supply Chain

- greater focus on safety, training and diversity with further integration of the extended supply chain

We have been working with our key suppliers to ensure everyone knows what is required in the development and application of our new selection processes, forms of contract, and the Toolkit for Performance Measurement.

We will extend our Early Contractor Involvement principles further into the supply chain to encourage our key suppliers to work as integrated teams with their suppliers. We want to see back-to-back incentives, rewards and effective and fair payment throughout the supply chain. To support this we will consider the development of project accounts and project-wide insurance arrangements.

Communication

To ensure the message gets across and that we create the best supply chain possible for all concerned we will:

• Consult with our key specialist and smaller suppliers in developing a 'Best Practice Charter' - those key suppliers practising the principles established under the Charter would receive special recognition under the CAT assessment process. Together with key suppliers we will then promote the Charter principles throughout the extended supply chain
• Continue to monitor and improve the procurement pages of our website to maximise its benefit to suppliers
• Continue to consult with and test our proposals for change with representative industry bodies such as the Major Contractor Group, Civil Engineering Contractors Association and the Association for Consultancy and Engineering.
• Build on these strategic relationships to ensure our processes are operated transparently and deliver best value through a highly skilled, diverse and high performing supply base
• Continue to develop the Community concept extending it to other procurement areas aiding the exchange and implementation of best practice and measurement of continual improvement.

Health and Safety

We need to do more to address health and safety on our construction and maintenance sites. One accident is one too many. Although we are pleased at the progress made by our suppliers, the Agency's focus has been on improving our selection procedures and practices for contractors and sub-contractors. The latter has highlighted the need for improved design standards and designs. Designers have a statutory duty through the Construction Design and Management (CDM) Regulations 1994, as amended, to reduce health, safety, and welfare risk for operatives implementing the projects or services which they design.

To reflect the importance we attach to the design, construction, operation and maintenance of the network we will:

 

• Create fully integrated delivery teams at an early stage to ensure construction and maintenance risks are considered in the development of schemes including solutions that involve less site processing and more pre-assembly and prefabrication
• Develop further the selection process to define thresholds for health and safety capability and performance
• Use contracts which encourage designers to exploit their knowledge, skills, and competences to the maximum at the earliest opportunity
• Recognise best practice by suppliers who consult the workforce on occupational health and safety issues
• Ensure the policing of Construction Skills Certification Schemes (CSCS) takes place and that schemes are effective.

Diversity

Successive reports into the industry have identified a significant lack of diversity. While the Agency has maintained our Investor in People status, and the CAT gives some assurance suppliers adopt and practice IiP principles, we want to do more.

The Strategic Forum for Construction report 'Accelerating Change' recommended widespread use of the Movement for Innovation Respect for People toolkits to help enable the UK construction industry to realise maximum value for clients and customers. Together with the industry we will:

• Work towards establishing a diverse workforce where individuals feel valued as part of an integrated team, aiding improved productivity
• Make progress in establishing a workforce that reflects the profile of the general public leading to better understanding of our customer needs
• Consult with the industry to assess the feasibility of introducing the Respect for People Toolkit, or similar, into our selection and performance reporting processes to incentivise widespread adoption
• Introduce appropriate measures or check lists to ascertain adoption levels and monitor improvement
• Ensure our supplier selection processes, forms of contract and measures of performance deliver full compliance with Equal Opportunity and Race Equality legislation throughout the supply chain
• Recognise good practice.

Client Capability

The Agency wants to build on its good reputation as a client at the forefront of best practice. We will continue to improve our levels of knowledge and competence by:

• Continuing our close association with the Office of Government Commerce to ensure we learn best practice from the widest spectrum of Government clients
• Maintaining existing contacts with overseas procurement organisations and establishing new ones
• Building on the strengths of our existing procurement staff and increasing the proportion of those attaining professional qualifications from the Chartered Institute of Purchasing and Supply
• Maintaining our Chartered Client Status and developing the benchmarking of our performance against other successful clients
• Extending our programme and project management initiative into all delivery areas.

2.3 Developing our Working Methods

- making our procurement policies and processes stronger

To achieve greater consistency and help ensure the delivery of best value, we will:

• Publish and review all our procurement processes as part of the rollout of the Agency's Way We Work Project
• Monitor progress against our strategy and assure compliance with policies and procedures, ensuring those procedures deliver best value
• Implement changes to policies and procedures where better value might be obtained
• Ensure regional procurement teams have the necessary tools and guidance to implement the strategy and procure Agency requirements in a consistent manner including giving feedback to suppliers on key activities such as performance in tendering and service delivery
• Implement a programme of review to ensure that propriety and regularity are maintained.

2.4 Collaboration

- clients working together to achieve more effective delivery of services to customers and better value

The Agency has been working in collaborative partnerships with its key suppliers for several years. The next step is to explore how we might work with other public bodies and their suppliers to improve efficiency in procurement and delivery of services to customers. We will:

• Develop the findings of our consultation exercise with local authorities and representative bodies such as the County Surveyors' Society and Local Government Centres of Excellence
• Consult with, offer advice to, and learn best practice from local authorities
• Seek opportunities to combine requirements and deliver them through flexible contractual arrangements. Highway maintenance will be the priority area most likely to deliver significant efficiency gains
• Work with other Government Departments and a range of interested organisations to develop efficiency measures for demonstrating the success of collaboration
• Assess the practicality and value of introducing project accounts and projectbased insurance.

Teamwork

Working together requires openness, trust and a right-first-time attitude. When mistakes occur, the Agency expects its staff and suppliers to identify them and work together to put them right. Used to its maximum potential, collaborative team-working will increase efficiency for clients and suppliers, and deliver better services to customers.

However, it does carry a specific risk of a lack of clarity for liability and decisionmaking. It is therefore essential that contractual roles and responsibilities are clear and understood at the outset. We will ensure clarity by:

• Continuing to support at a senior level and give leadership to integrated teams
• Providing training and development in the operation of our model contracts
• Holding tender clinics as part of the procurement process to ensure our requirements and roles and responsibilities for delivery are clear
• Maintaining project risk registers and holding risk workshops as part of the procurement process for all major investments
• Monitoring project-partnering arrangements using the Agency's Cultural Assessment Framework or similar tools to ensure cultural aspects such as leadership and team working are successfully embedded
• Undertaking and learning from post-project evaluations.

2.5 Protecting the Environment

- ensuring our processes consider scheme impact on the world around us

Sustainable development means supporting a better quality of life through the efficient use of available resources to realise social progress and to maintain stable economic growth, while caring for the environment. Our planning and design processes include economic assessment and mitigation of environmental and social impacts, but every link of the supply chain has a contribution to make. A poorly specified brief or specification at any point in the supply chain can introduce or perpetuate waste and increase cost. Appropriately qualified people must therefore be working at all key planning points within a truly integrated delivery team.

The 'Accelerating Change' report (by the Strategic Forum for Construction) stated the industry must take responsibility for the sustainability of its products as well as its processes. These, together with design quality are only achievable if integrated from the very beginning of the planning, design, and construction process.

We will continue to monitor our processes and specifications to ensure we are working with a supply chain that enables all those in the integrated team to maximise the value their expertise can add to a sustainable service to our customers. We will encourage our suppliers to:

• Design for minimum waste
• Monitor and improve lean construction processes
• Minimise energy in construction
• Avoid pollution
• Preserve and enhance biodiversity
• Conserve water resources
• Respect people and the local environment
• Set targets for improvement, and monitor and report progress.

Major Projects

The Agency has launched its Model Contract Document for Early Contractor Involvement with initial briefing to our staff and key suppliers. This will continue to be the main method for delivering major projects.

Accurate, reliable estimates of costs and firm budgetary control are essential if we are to maximise the benefits of Early Contractor Involvement. There is significant room for improvement among our supply chain partners and we will be setting targets and demanding improved performance.

Opportunities for collaboration with local authorities will be examined, for example extension of the packaging initiative to include local authority projects.

We will continue to support the development of the Major Projects Community to help achieve the objectives of speeding up delivery, sharing best practice, reducing uncertainty in workflow and funding, and improving performance.

Network Operator including Maintenance of the Asset

We will continue to review the new forms of maintenance contract including the EMAC pilot in Area two as we work to successfully combine our network operator and asset manager roles. We will review maintenance areas to align their boundaries with those of Regional Control Centres. We will continue to maintain a competitive and sustainable supply base, which means retaining at last six to eight key suppliers.

Following the challenges of rolling out our new Traffic Officer service in the West Midlands we are reviewing procurement arrangements to ensure that the best value possible is delivered when the service goes nationwide.

 

Private Finance

Private Finance will be an important aspect of our Procurement Strategy as we take forward major motorway widening schemes. New DBFO contracts will need to reflect the Agency's new role as network operator. Those contracts will need to be flexible and include incentives for delivering excellent network management services.

Our consultation document 'Improving DBFOs' was well received by the industry and sparked much debate. We are now developing a new tendering and contract management process to:

• Maintain a competitive and sustainable market
• Reduce transaction costs
• Incorporate Early Contractor Involvement principles
• Improve contract flexibility to deliver future traffic operations requirements.

Research and Development

Innovation is central to the Agency's work. We will continue to invest in Research and Development projects that will improve products and service delivery, while enhancing competitiveness and productivity among the supply chain.

We will look for collaborative research opportunities with our suppliers, universities, and local authorities as part of a knowledge improvement and sharing programme. Ideas for Research and Development will continue to be fed through our Safety, Standards, and Research Directorate who manage the overall programme.

The Agency will continue to develop and expand its monitoring of international developments in procurement.

Our proposals for a Community of Research and Development service providers will be established during 2005.

Technology

Technology is at the forefront of the Agency's new role. It is a rapidly changing and high-risk area for development of new and expensive equipment. Making the wrong purchase has significant short and long-term implications.

World-wide competition drives rapid, significant continuous improvement in products and product availability but there is a relatively small supply base in the UK.

We will review our technology requirements and develop a strategy for new procurement processes and forms of contract, which will improve delivery on the network, including application of Early Contractor Involvement principles.

Application of Priorities to Specific Categories of Work

Major Projects

The Agency has launched its Model Contract Document for Early Contractor Involvement with initial briefing to our staff and key suppliers. This will continue to be the main method for delivering major projects.

Accurate, reliable estimates of costs and firm budgetary control are essential if we are to maximise the benefits of Early Contractor Involvement. There is significant room for improvement among our supply chain partners and we will be setting targets and demanding improved performance.

Opportunities for collaboration with local authorities will be examined, for example extension of the packaging initiative to include local authority projects.

We will continue to support the development of the Major Projects Community to help achieve the objectives of speeding up delivery, sharing best practice, reducing uncertainty in workflow and funding, and improving performance.

Network Operator including Maintenance of the Asset

We will continue to review the new forms of maintenance contract including the EMAC pilot in Area two as we work to successfully combine our network operator and asset manager roles. We will review maintenance areas to align their boundaries with those of Regional Control Centres. We will continue to maintain a competitive and sustainable supply base, which means retaining at last six to eight key suppliers.

Following the challenges of rolling out our new Traffic Officer service in the West Midlands we are reviewing procurement arrangements to ensure that the best value possible is delivered when the service goes nationwide.

Private Finance

Private Finance will be an important aspect of our Procurement Strategy as we take forward major motorway widening schemes. New DBFO contracts will need to reflect the Agency's new role as network operator. Those contracts will need to be flexible and include incentives for delivering excellent network management services.

Our consultation document 'Improving DBFOs' was well received by the industry and sparked much debate. We are now developing a new tendering and contract management process to:

• Maintain a competitive and sustainable market
• Reduce transaction costs
• Incorporate Early Contractor Involvement principles
• Improve contract flexibility to deliver future traffic operations requirements.

Research and Development

Innovation is central to the Agency's work. We will continue to invest in Research and Development projects that will improve products and service delivery, while enhancing competitiveness and productivity among the supply chain.

We will look for collaborative research opportunities with our suppliers, universities, and local authorities as part of a knowledge improvement and sharing programme. Ideas for Research and Development will continue to be fed through our Safety, Standards, and Research Directorate who manage the overall programme.

The Agency will continue to develop and expand its monitoring of international developments in procurement.

Our proposals for a Community of Research and Development service providers will be established during 2005.

Technology

Technology is at the forefront of the Agency's new role. It is a rapidly changing and high-risk area for development of new and expensive equipment. Making the wrong purchase has significant short and long-term implications.

World-wide competition drives rapid, significant continuous improvement in products and product availability but there is a relatively small supply base in the UK.

We will review our technology requirements and develop a strategy for new procurement processes and forms of contract, which will improve delivery on the network, including application of Early Contractor Involvement principles.

Conclusions

Good procurement practice is central to the Customers First vision. By being a good client we can encourage and incentivise our supply chains, helping to ensure our customers receive the quality, best value services they deserve. Success in delivering the Procurement Strategy will mean our customers recognise a real and continuous improvement in the service they experience.