Construction professionals have an opportunity to make a meaningful social and environmental impact through the way they purchase goods, services and works from their supply chain. In this article, Callum Sparks, Senior Procurement Consultant at AECOM, shares five simple changes that will make sustainable procurement a core part of any business strategy.
The construction industry is an important part of the UK economy, employing over two million workers. The way construction companies make purchasing decisions therefore has enormous potential to create a positive impact for the planet and people. We call this sustainable procurement.
What is sustainable procurement and what makes it different?
Procurement is the buying of goods, services and works that enable an organisation to operate their supply chains in a profitable and ethical manner. Traditionally, suppliers are appointed based on three criteria: cost, time and quality. Sustainable procurement, however, identifies value for money against social, economic, and environmental criteria.
Knowing and understanding this difference is crucial. Sustainable procurement factors in these indirect cost considerations to gain a holistic view on a supplier’s proposal, rather than focusing on the direct procurement costs alone.
What are the barriers to adoption? Are they easy to overcome?
As sustainable procurement specialists, we see a lot of untapped potential. There are several reasons for this.
The government’s Public Procurement Note 06/20, which came into force in 2021 for in-scope organisations, encourages greater action around social value within public sector contracts. Yet, guidance and parameters are limited.
We also see a lack of understanding around sustainable procurement, as well as fears around extra costs and lack of capacity.
But, with increasing emphasis from society and stakeholders on environment, social and governance (ESG) issues, pressure to act is only going to increase.
The good news is that the journey to integrate sustainable procurement within an organisation does not require significant change on day one. Here are five simple changes that construction professionals can make.
1/ Establish a baseline
Establishing a baseline position identifies the good work that supply chain members are already doing. It will also enable your organisation to demonstrate future progress both internally and as well as actual societal impact.
2/ Include a purposeful sustainable procurement question
Include a purposeful sustainable procurement question within tenders. This will initiate conversations with suppliers and lead to conscious decision-making when preparing bids.
3/ Set a pathway for success
Setting the pathway for success is an important factor not to be overlooked as it provides employees with direction and suppliers with a vision for them to tailor in their responses.
Develop sustainability policies and accompanying procedures to ensure consistency across projects and practises.
4/ Be clear at the outset
To get the maximum output from bidders, organisations and the project team need to communicate to each other the social value outcomes that they want to achieve through the procurement process.
These mechanisms can also be used to capture the good work already being done in the supply chain – another easy win.
5/ Manage through to completion
One of the most overlooked areas in sustainable procurement is the management of delivery. Project teams are often so focused on completing the job on time and to budget that it is easy to neglect suppliers’ tender commitments. But there are ways to ensure delivery without the need for additional resource.
For example, we developed an innovative clause that amended a client’s NEC contract to allow it to withhold payment if a successful bidder failed to deliver on their social value commitment.
The bidder was responsible for evidencing real and meaningful social impact to ensure swift payment, which they were happy to do.
This article is part of our 5 in 500 series, in which we cover five must-know things about project and programme management – in just 500 words! In the next installment, we explore how you can improve efficiency and add real value to your business programmes by implementing lean techniques.