Standardization of procurement: national or international?

Professor Will Hughes and me have been serving on a Procurement Committee of the British Standards Institute (BSI) that is developing a standard for construction procurement in the UK. In the course of our work on the committee, we thought it would be helpful if we developed a paper on the ongoing process to develop a procurement standard, in order to highlight and disseminate the work. Here's an executive summary of the paper:


STANDARDIZATION OF PROCUREMENT: NATIONAL OR INTERNATIONAL?

Will Hughes, University of Reading, UK (w.p.hughes@reading.ac.uk)
Samuel Laryea, University of Reading, UK (s.laryea@reading.ac.uk)

ABSTRACT: The ISO has issued a Draft International Standard on construction procurement and the British Standards Institute is drafting a standard based upon this for use in the UK. What kind of consultation processes would be adequate to ensure that such a standard meets the requirements of an industry as diverse as construction? Why would an international standard be inappropriate for use in a country like UK? What sort of issues should such a standard seek to cover? There are strong precedents for process standards, so the idea of a standard on procurement is not unusual. Moreover, many differences in tendering and procurement practice are wasteful and even collusive or illegal. These issues are explored with a view to offering insights and suggestions for guidance based on the experiences in UK. The research method is observation of the drafting committee who are dealing with the British Standard. As an example to test and inform the standardization concept, six different standard guidance documents on tendering procedures are compared. This reveals a significant degree of diversity and, based on this, nine stages for implementing a tendering procedure are derived.

KEYWORDS: procurement, procurement standard, tendering procedures, UK.

INTRODUCTION
The International Organization for Standardization (ISO) has initiated a draft International Standard on construction procurement (Draft ISO 10845-1 Construction Procurement). In the UK this development has prompted the establishment of a Procurement Committee by the British Standards Institute (BSI) to draft a national standard for construction procurement for use in the UK. Is such a generic standard suitable for the UK?

STANDARDIZING APPROACHES TO THE PROCUREMENT PROCESS
Procurement is a method of buying goods and services (Hughes et al., 2006). A standard establishes uniform engineering or technical specifications, criteria, methods, processes, or practices (http://www.iso.org/). Therefore, the idea of an international standard for construction procurement is to prescribe a set of procedures for approaching the procurement of construction work across different countries so that there is consistency of practice. However, procurement is complex. There are many advantages to standardization, but not everything that might be standardized can be.
The danger of standardization is that it may discourage participants from discussing key strategic project issues (Hughes and Greenwood, 1996). However, complexity is perhaps more dangerous because it may negate any attempts to communicate meaningfully in an organization (Galbraith, 1967). Hughes et al. (2006) concluded that there was a need to standardize the processes of tendering, especially pre-qualification, in order to remove waste from the process.

ISO CONSTRUCTION PROCUREMENT
ISO has accepted a proposal from the South African Bureau of Standards, to develop a series of international standards for construction procurement. The objective of the standards was to provide a generic and standard set of processes, procedures and methods for a procurement system that is fair, equitable, transparent, competitive and cost effective and which may be used to promote objectives additional to those associated with the immediate objective of the procurement itself.

BSI CONSTRUCTION PROCUREMENT
BSI is drafting a national standard for construction procurement in the UK based on ISO 10845. It is expected to be a client driven document. The BSI Committee are considering the spate of “best practice” guidance on procurement that has emerged in recent years. Is this something that can or should be codified? Indeed is it targeted at the same issues as the ISO on procurement? This indicates that perhaps there are two different things going on. First, the ISO and similar guidance provides systematic steps to be followed in all instances. Second, much of the rhetoric of best practice is more about behaviours and attitudes. This is equally important but different.
The BSI Committee should to take into account one of the considerations made in drafting the South African Standard: construction procurement involves not only engineering and construction works contracts, but also supply contracts that involve the purchase of construction materials and equipment, services relating to any aspect of construction including professional services, disposals of surplus materials and equipment and disposals in the form of demolitions. The SA standards as such cover the full range of commonly encountered procurements in both the public and private sectors in most industrial sectors.

EXAMPLE: TENDERING PROCEDURES
In examining the concept of standardizing procurement, we examined the consistency of a single subset of procurement, tendering procedures. This gives an indication of the diversity in approaches and practices within the UK context. Six different standard guidance documents on tendering procedures in the UK were compared: NJCC (National Joint Consultative Committee 1996); RIBA (Royal Institute of British Architects2007); Aqua Group (Hackett, et al. 2007); a typical UK local authority (LA) procedure, providing an example of a procedure compliant with EU public procurement legislation (Law and Administration Department 2003); CIB (Construction Industry Board 1997); and JCT (Joint Contracts Tribunal 2006). This showed a significant degree of diversity. From this analysis, stages for implementing a tendering procedure were derived: (1) prepare a timetable and identify basis of contractor selection; (2) prepare tender documents; (3) preliminary enquiry to potential tenderers; (4) design a specification and draft price and payment clauses; (5) develop list of tenderers; (6) invite selected contractors; (7) obtain and evaluate tenders; (8) award the contract; and (9) execute the contract – agree terms and sign them. Our main finding is that there is no general agreement in the industry on how tendering processes should be approached.
The most recent research on tendering produced a series of recommendations about how to organize the procurement process (see Hughes et al. 2006: 98-101). The study called on practitioners to:
· Pursue early involvement of contractors;
· Reimburse costs of cancelled projects;
· Select on value rather than price;
· Do not strike off contractors who can’t bid;
· Tender only 2-3 for collaborative projects;
· Standardize prequalification processes;
· Tell bidders who they are competing with;
· Produce timely informative documents.

Our research shows that most of these recommendations are not dealt with in guidance on tendering processes. These issues should be addressed if wasteful practices in are to be avoided.

CONCLUSIONS
Nine stages for implementing a tendering procedure have been derived. But importantly, no general agreement was found between the tendering process guidance published by six major stakeholders in the UK construction sector. This might not be a strange situation in itself considering that tendering processes are different and the fact that different people draft prescriptions from their own point of view and interest. But what it does indicate is the significant diversity in approaches and prescriptions which makes the idea of a standardized approach to the procurement of construction work difficult and even elusive. It also renders comprehensive consultation difficult. The analysis of guidance documents and previous research reveals that the nine steps outlined in the previous section should be a minimum process for any construction tendering episode.

REFERENCES
Construction Industry Board (1997) Code of practice for the selection of main contractors London: Construction Industry Board (CIB).
Galbraith, J (1967) Designing complex organizations, London : Addison-Wesley.
Hackett, M, Robinson, I and Statham, G (2007) The Aqua Group guide to procurement, tendering and contract administration. London: Blackwell.
Hughes, W.P. and Greenwood, D.G. (1996) The standardization of contracts for construction. International Construction Law Review, 13(2), 196-206.
Hughes, W. P., Hillebrandt, P., Greenwood, D. G. and Kwawu, W. E. K. (2006) Procurement in the construction industry: the impact and cost of alternative market and supply processes, London: Taylor and Francis.
Joint Contracts Tribunal (2006) Practice Note 6 Main Contract Tendering, London: JCT.
Law and Administration Department (2003) EU public procurement guidance. Forfar: Angus Council.
National Joint Consultative Committee for Building (1996) Code of Procedure for Single/Two Stage Selective Tendering, London: NJCC.
Royal Institute of British Architects (2007) RIBA Outline Plan of Work, London: RIBA.