1. Introduction
This report is submitted to the Assistant Director of Community Services, Department of Community Services, Oldcross Borough Council. The report explains the concept of Value for Money in the context of Public Sector Procurement with brief description of the opportunities for Value Management in the Strategic and Project briefing of a project to be procured as a Design and Build project. The report further indicates with the aid of a diagram the possible Value Management intervention points during the procurement process with consideration of those who are most likely to be involved in the strategic briefing workshop and the project briefing workshop. It also indicates the resources required including particularly the time to be invested by the workshop participants and the workshop facilitators.
2. Concept of Value for Money in the context of Public Sector Procurement
Value for Money (VfM) is acquiring resources in their rightful quantity and quality, delivery of quality services for minimum cost, and achieving the intended outcome of the purchase (McKevitt, 2015). Value for Money does not measure only cost of the products, goods, works or services but combination of factors like cost, quality, utilisation of resources and fitness for organisational opportunities, purposes and timeliness in achievements. The National Audit Office (2000) states that; Value for Money is not about realising the lowest initial price but achieving the optimum cost and quality of the products and services. It deals with achieving the same results at a lower cost or better results at the same financial cost. The concept of Value for Money in the context of Public Sector Procurement can be discussed as below:
2.1 Economy
Economy means the provision of goods, services or products at any time at minimum cost while taking into consideration any given policy (Glendinning, 1988). This involves cautious use of the available resources so that expenses and time are minimised with the required resources (KPMG, 2014). It’s assessed in terms of quantity and quality; after which the resources which are required to provide it are assessed in monetary terms. Standards of expenditure can easily be established through budgets and easily determined if these have been achieved; provided that the required quality of services has been provided.
In Public Sector Procurement, the Assistant Director of Community Services needs to monitor the entire procurement award process so that the final goal of Value for Money is achieved since he/she clearly understands Oldcross Borough Council needs and market knowledge of the library to be constructed.
2.2 Efficiency
Efficiency refers to attaining maximum output from the resources which are required to meet the requirements (Glendinning, 1988). It deals with the provision of better outcomes for a certain factor or minimisation of certain factors for provision of the same outcomes while maintaining the same quality of products, goods or services provided (KPMG, 2014). This means that objectives that have been set have to be achieved and it’s relatively difficult to achieve. According to Dimitri (2013), whether a negotiated or competitive procurement procedure is used in public sector procurement; the final outcome of the transaction greatly depends on the successful supplier’s cost structure and the preferences of the buyers. Efficiency is required in Public Sector procurement so that value for money is secured for the contracting authority thus, for efficiency in the management of the procurement contract, The Assistant Director of Community Services should ensure that the suppliers meet the datelines, requirements, specifications and does not exceed the budget therefore leading to achieving Value for Money in procurement of the library project.
Though Efficiency has some relationship with economy, it can be noted that economy can be achieved without efficiency and vice versa thus it’s imperative to state the accurate quantity and quality of services required against proposed expenditure to ensure that expenditure is not exceeded as well as objectives with regard to quantity and quality are realised.
2.3 Effectiveness
Effectiveness implies that the anticipated results are fully achieved from use of the resources (Glendinning, 1988). It deals with provision of better outcomes for the same level of effort, time and expenses (KPMG, 2014). Effectiveness relates to the extent to which the policy makers achieve their intended objectives. The problem associated with effectiveness is establishment of acceptable objectives since values recognised by individuals are not measurable and those by communities are more complex conceptual matters. Though, in economic terms, effectiveness is expressed as output divided by input, there are no criteria for its applicability.
From the discussions above, it can be noted that in Public Sector Procurement, Value for Money is not a perfect synonym for economy or effectiveness since cost of certain factors have to be reduced in order to achieve; but it’s more of having a sense of balance between economy, efficiency and quality of the products or services. Value for Money can be used to evaluate whether or not a firm has gained maximum benefits from the goods and services that it has acquired or provided through use of the available resources.
3. Opportunities for Value Management in the strategic and project briefing of a project to be procured as a design and build project
In a project, Value Management is the process of making explicit and consistent appraisal of the functional benefits of a project with a value system that has been determined by the client (Kelly et al, 2004). Value Management is concerned with maximising financial values and identifying future commercial opportunities since projects are anticipated to bring value to residents of the area of implementation (Martinsuo & Killen, 2014). Since achieving client’s needs and demands are highly important in the construction industry, Value Management can be applied to satisfy the client’s needs (Perera et al, 2011).
Strategic briefing is a detailed description of client’s requirements that is used for the appointment of consultants (Designing Buildings, 2015). Strategic briefing is a dynamic process in which all the parties are responsible for embracing, developing and transforming the operational goals into the most appropriate way for the project (Ryd & Fristedt, 2007). A strategic brief can be used to define the scope of work or services that is expected of the contractor since it is part of an ongoing process in determining the client’s requirements for the project. Project brief is document on which the design of the project shall be based; defining clearly the client’s requirements for the development of the library project.
Strategic and Project briefings are necessary for project strategic values to be communicated to the contractor so that anticipated value is achieved as Winter & Szczepanek (2008) proposed that projects should be considered as value-creating processes rather than product-creating practices thus need to take a more strategic approach so that roles in the project implementation are clearly understood during the strategic project briefings. According to The Joint Contracts Tribunal (2014), Design and Build procurement route is one in which a main contractor is given the responsibilities of designing and carrying out the project construction works. The opportunities for value management in a design and build project of the Oldcross Library include:
3.1 Statement of needs
The statement of needs provides a description of the possible requirements however it might not transform into the project needs. This should indicate what the library project needs to achieve therefore offering opportunity for value management of the project. The Assistant Director of Community Services should clearly describe requirements and constraints that the library project might have.
3.2 Preliminary business case
This will clearly justify the investments that would be required for the construction of the library. The requirements for the construction can be managed well in this stage so that value is achieved through early preparations before the client makes any decision to proceed with the development. The preliminary business case shall allow the Assistant Director of Community Services to explore all the available options for the project requirements set out in the statement of needs therefore an opportunity for value management since many options shall be explored and compared.
3.3 Scope of services
The scope of services describes precisely the services that the contractor or consultants are expected to perform in the library project. In case many consultants shall be appointed, there is need for clarity on the scope of services being provided by each consultant highlighting the aspects of the project, fees chargeable , services expected within the agreement and other services that might require extra fees. By clearly separating these, it provides an opportunity for value management in the Design and Build of the library project.
According to Perera et al (2011), Value Management is not frequently applied at all the stages of construction project as there is no formal way of carrying out the Value Management processes other than the loose and informal methods being used. However; it can be noted that Value Management could be more effective than it’s known currently if it’s used at all the phases of construction projects.
4. With the aid of a diagram the possible value management intervention points during the procurement process
Design and Build projects consist of two primary phases for delivery of a construction project; the Design phase and the Build phase (Lesniak et al, 2012). The phases with the different processes are indicated in the Figure 1.
Figure 1: Design and Build Processes (Source: Hotel Solutions, 2011)
4.1 Design Phase
In a Design and Build project, the client has initial control of the design features but once the design responsibilities have been passed to the contractor, the client shall have no direct control over the detailed design of the project (Tam et al, 2014). In the design phase, Value Management can be applied in the Briefing stage during the creation of the project through planning, drafting and after selection of the design team. Before the design responsibilities have been passed on the contractor during the Briefing Stage, the contractor should work closely with the client’s consultant to ensure that all the client’s design requirements are included hence providing an intervention point for Value Management of the library project.
4.2 Build Phase
According to The Joint Contracts Tribunal (2014), Design and Build projects always have reasonable certainty over the project costs as long as the client does not provide other changes during the construction. However; design or specification changes or alterations could be made by the Assistant Director of Community Services during the construction phase of the library. Value Management of the library project can be achieved in the Evaluation stage of the project. Design and Build project offers relatively lower risk procurement option for the clients in terms of time and cost of the project however this has to be evaluated.
From the different stages of the Design and Build Procurement Process, Value Management can be applied at the inception or creation of the project and during the Analysis or Evaluation of the Project.
5. Those likely to be involved in the Strategic briefing workshop and the Project briefing workshop
5.1 Strategic Briefing Workshop
The Strategic briefing Workshop is meant to define the requirements for the Oldcross Library. It’s always the initial development of the concepts for the statement of needs and the preliminary business case. The members who are expected to be involved: Director of Community Services; Assistant Director of Community Services; Chair of the Chamber of commerce; Chair of the Community Council; and Oldcross Librarian.
5.2 Project Briefing Workshop
The Project briefing workshop is intended to provide the final process of defining the requirements for the development of Oldcross Library. The Project brief is the documentation that shall be used for the design of the Library Project. The members who are expected to be involved in the Project Briefing Workshop include: Director of Community Services; Assistant Director of Community Services; Chair of the Chamber of commerce; Chair of Oldcross Community Council; Oldcross Community Council Business Learning Advisor; Oldcross Media and Communication Officer; Oldcross Estates Development Officer; Oldcross Librarian; Oldcross Community Leaders; Project Architect; Project Manager; Quantity Surveyor; Structural Engineer; and Mechanical and Electrical Engineers
Since the Strategic and Project Briefing Workshops gather people of different background and professions, the information to be presented should be in a format that everyone can easily understand.
6. Resources required including particularly the time to be invested by the workshop participants
Strategic and project briefing workshops for the Oldcross Library should take 1 and between 1-3 days respectively depending on the complexity of the project. If the project briefing workshop will take more than 2 days, the workshop should be residential though some people might view it as expensive in terms of time and resources (Kelly et al, 2014) but it will save time and difficulties in the project in future since there will be sufficient time for the briefs to be clearly understood. The resources required to be invested include:
6.1 Strategic Briefing Workshop
S/N Activity Unit Quantity Rate (£) Amount (£)
1 Travel expenses Persons 5 30 150
2 Communication Lumpsum 1 200 200
3 Catering (Tea, coffee, lunch) Persons 5 30 150
5 Photocopying and printing Lumpsum 1 100 100
6 Consumables (Workshop pens, booklets) Lumpsum 1 150 150
7 Venue and equipment Pc 1 0 0
Total 750
6.2 Project Briefing Workshop
S/N Activity Unit Quantity Rate (£) Amount (£)
1 Travel expenses Persons 20 30 600
2 Communication Lumpsum 1 300 300
3 Catering (Tea, coffee, lunch) Persons 20 50 1,000
4 Working/Inception dinner Persons 20 80 1,600
5 Photocopying and printing Lumpsum 1 100 100
6 Consumables (Workshop pens, booklets) Lumpsum 1 150 150
7 Venue and equipment Pc 1 1000 1,000
Total 4,750
The workshop participants shall be involved in Issues Analysis; Function Analysis; Function Space specifications, user flow and spatial adjustment; Analysis of procurement options, timeline and Budget; Options and Option Appraisal; and Action Planning during the Project Briefing Workshop.
The strategic and project briefing worshops help in improving the project, processes, services and organisational functions through incorporating the resources and contributions of the participants towards the implementation of the project.
7. Conclusion
Value for Money is concerned with achieving the same results at a lower cost or better results at the same financial cost of a product or service and in the context of Public Sector procurement, Value for Money can be discussed in terms of Economy, Efficiency and Effectives. Value Management deals with value, cost and quality of a product or services offered and the opportunities for Value Management in the Strategic and Project briefing of the Oldcross Library project are available in the statement of needs, preliminary business case and scope of services.
The possible Value Management points of intervention during the procurement are the Briefing stage in the Design Phase and Evaluation stage of the Build Phase. The strategic and project briefing workshops should have all the members present so that different views are achieved during the inception of the concept of the project. Resources that the workshop participants can contribute are discussed in terms of Issues Analysis; Function Analysis; Function space specification, user flow and spatial adjustment; Analysis of procurement options, timeline and budget; Options and options appraisal; and during Action planning for the project.