Portfolios and longer term contracting

Adopting a more manufacturing-led approach to public works projects and programmes will improve productivity and deliver better value for money.

We will standardise elements of design and, where appropriate, use longer term contracts across portfolios. This will give industry the certainty required and make it commercially viable for suppliers to invest in innovative new technologies and MMC - increasing the speed of delivery.

The length and size of individual contracts should be designed for specific markets with suitable break points and clear contractual obligations to drive continuous improvement in safety, time, cost and quality. For example, eight years of relatively certain work provided by a 4+4 contract (with an extension based on good performance) could deliver faster, better and greener delivery and improved outcomes when used appropriately.

Contracting authorities should review their pipelines to identify opportunities to bring work together into portfolios, rather than as a series of individual projects. For those that already do this, contracting authorities should look across the public sector to identify further opportunities to create portfolios at a product-level. This goes hand in hand with increasing the use of platform approaches, and standard products and components (see chapter 2).

This approach is likely to be appropriate where any or all of the following is true:

•  The programme has repeatable assets and/or strong MMC potential.

•  There is a long-term pipeline of work (e.g. schools, hospitals, public sector decarbonisation programmes).

•  There is an opportunity for innovation to drive better value (e.g. public sector decarbonisation).

Contracting authorities should demonstrate that this does not come at the expense of an innovative and competitive market, and ensure that demand is aggregated in a way that allows SMEs to play a central role in the sector. The performance regime needs to contractualise continuous improvement to deliver ongoing value for money.

The Cabinet Office Sourcing Programme can provide advice in identifying whether a group of projects may be appropriate to bring together. Projects and programmes should engage early and extensively with the market when developing their approach.