AA Roundtable 04: Procurement: Processes and outcomes, problems and opportunities

AA Roundtable 04 looked at how procurement processes affect design outcomes and how the profession might, collectively and individually, affect the way that our built environment is procured. This report from Architecture Australia Jan/Feb 2011.

How do procurement processes affect design outcomes? How might architects operate strategically and effectively in different procurement contexts? AA Roundtable 04 set out to productively consider how the profession might, collectively and individually, affect the way that our built environment is procured. To set the scene, each panellist began by outlining the procurement methods that have been most effective in their experience, and raising one issue around procurement that they think is particularly important.

Steve Ashton.

Steve Ashton.

Image: Peter Bennetts

Steve Ashton We shouldn’t get too confused tonight with the difference between procurement of projects and procurement of design services. It is possible to procure design services in a productive and high quality way in almost any form of project procurement, provided you make the right moves and the right things are in place. So, while the two are heavily interrelated I don’t think we should demonize any method of project procurement. We should rather look for what to do given a particular set of circumstances. There are so many different issues at so many different levels in this topic, from huge government projects all the way down to “How does your local council decide who the architect is for the additions to the local childcare centre?” It can be a bit daunting and I think government has a responsibility for leadership. It is possible to talk to government, to convince government to show leadership and that it means business in these areas, and my experience is that when it does, the private sector is perfectly happy to follow. We have a growing network of government architects in Australia, who are the people we can talk to, and they are learning fast. I think there’s a great opportunity for us there if we act in a positive way.

Nicholas Murcutt.

Nicholas Murcutt.

Image: Peter Bennetts

Nicholas Murcutt Rachel and I started our practice seven years ago, and I’d been in practice seven years before that. We started out typically, with victims that were our friends, our family’s friends. We got some work published and from that work started to come our way, but mainly residential work, which is generally a very simple contract. Four years ago we said, “Look, we want to do the best possible work for the most people enjoying it.” We didn’t want to just do bespoke houses, so we tried to work out where the opportunities lay. Mostly for the first two years we completely failed. Eventually we worked out that we had to find out about the system behind the tender. There had to be engaged people on the other side. Sydney City Council was the first one. They set up a short list and we went for the smallest projects – when the list was announced we realized there were ten very similar firms to us, who were happy to do work from $500,000 to $1.5 million. That was our starting point and we got three projects through that organization.

There’s a blind spot with local government work, we don’t know how to get involved. We don’t know how it’s given out. Tenders go out, but often the selection panel is a civil engineer, a social planner and an alderman, and in New South Wales, at least, it’s almost always fee-based. Local councils in Australia vary widely in scale – from dealing with populations of 40,000 to a million and a half. We need some idea about how big a local council could or should be to ideally finance someone like a local government architect. That person should be of high standing. Getting better procurement processes generally across Australia at that level of government is quite important.

The Australian Institute of Architects should also play a role in trying to work out how good design has happened. We should drill down and find out exactly what brought those buildings about, understand them and use that as a basis for a whole lot of discussions. Working with the systems that exist rather than trying to invent new systems would be really smart. There are good buildings that come out of Australia every year and we should understand those.

Geoffrey London, Steve Ashton and Timothy Horton.

Geoffrey London, Steve Ashton and Timothy Horton.

Image: Peter Bennetts

Timothy Horton I have worked in everything from full services and simple works contracts on a $150,000 bathroom through to a partial services D&C contract led by Leighton Contractors in Sydney’s CBD. From a delightful client – who, when the builder said, “Listen, I don’t know why you need a bath this big, you could fit five people in here” replied, “Well, how do your dinner parties end?” – to the Leighton experience, where they joked about training attack dogs. It’s easy to confuse the experience of a project with the conditions of the contracts that deliver it. In fact, it’s about the intent, the individuals and the preconditions.

I’m interested in the preconditions that establish the foundation for procurement. We know that happens at a business case level, it happens early, it happens at a ministerial level, it often happens without much research, certainly with very little design basis. You can look at design as a process of enquiry, planning as a process of defining, and development as a process of delivery or implementation. All three sit neatly together, but we seem to move straight to implementation and we don’t do much of the enquiry early on. I worry that a discussion about procurement without looking at this – the precursors, the preconditions to design and to the procurement process – means that we will only ever see part of that process.

So, it is very important to bring design to the fore and to educate our leaders on the value that design can deliver. This has to be done early on in establishing budgets, so the project is derisked from an individual perspective, Minister.

Susan Phillips.

Susan Phillips.

Image: Peter Bennetts

Susan Phillips My interest is in developing procurement methods that enable small and/or emerging practices to participate. Since we started our practice, back in 1992, it’s become a more difficult environment, in part because of procurement processes. We began as a result of a very unusual situation – a local council, with Arts SA, asked architects and artists to get together for a particular project. When we did the submission we had no built work, we had no portfolio, but we had a client who was not risk-averse.

Now there are fewer opportunities. Government, large projects, PPPs, design construct, design being bundled together with both construction and then ongoing building management, etc., all make it much harder to start a practice now in the way we did then. I would like to see at least a percentage of work aimed at enabling the smaller practices to get involved, and encouraging young architects to imagine there could be a career in starting their own practice. I’m heartened that in South Australia we now have a commissioner for integrated design and government architect. Nick’s point about the need to invest in research into appropriate processes to achieve that is important and would be a great step forward for the state.

Geoffrey London.

Geoffrey London.

Image: Peter Bennetts

Geoffrey London It’s nearly eight years since I took on the role of government architect, first in Western Australia and now in Victoria. I came from academia and it was an incredibly steep learning curve – I had to learn so many acronyms in the first few weeks, and I was too proud to ask what on earth they meant. PPP was I had to learn very quickly. My first job was to manage a PPP process that was halfway through. I had not been able to adequately feed into the design ambitions of that PPP, so we began on a bad footing. The process was determined quickly, a preferred proponent was selected and we moved to financial close very quickly, before we had any real capacity to negotiate better design outcomes. We were left with a process where every design improvement was in the form of a trade-off. That’s a really painful exercise, but I learned fast – that you’ve got to get in as early as possible.

Tim is right, the up-front work you do in establishing budget is absolutely critical. It’s not just a process of getting the numbers right, it’s an exercise in establishing quality benchmarks so that you can pitch at the right level. It’s a question of testing possibilities so that the quantity surveyor can pitch at the right ambition for the project. Words are important. If you get the right words into an expression of interest and then into an RFP, which set out clearly what you are aiming for in terms of design quality, half the battle is won because your bidders will understand what is key. That is the basis on which a selection will be made and if they don’t perform at that level they will not be selected.

Every process of procurement has its problems, but each can be managed if you understand the pitfalls. You can put in place processes that can overcome them. Many claim that “lump sum” is a fraudulent term these days, that the lump sum will change many times during the life of that contract. One argument is that when architects are forced to bid on the basis of fees, which I think is an appalling process, you get documentation cut short and you get problems emerging in the construction period and you get variations occurring inevitably. So people point to the lump sum and say, “It never happens that way, let’s go to another process. Let’s go to design and construct.” Okay, design and construct has its own problems; and if you novate too early you’ve got no capacity to control quality in the process. There are ways of dealing with that and design and construct can be made to work, even the dreaded PPP can be made to work. There is only one example in the world that I know of where the design was sought in the first instance, before the PPP was put out to the industry. That was the Smart PFI (as it’s called in the UK), the Manchester Law Courts by Denton Corker Marshall. Through a competitive process, the design was sought first, allowing a closer fit to the client agency’s needs and a clear focus on design quality. It saved the bidders a huge amount of money, it enabled them to come in on the basis of design quality, and of course the design was actually used. So the message I’d like to get out is you’ve got to establish design values really early if good design outcomes are to be sought from the procurement process. The issue of procuring architectural services is also critically important. Too often we procure architectural services on the basis of cost. The argument must be that architects’ skills do not lie in how low they can bid, they lie in their design services.

Justine Clark and Nicholas Murcutt.

Justine Clark and Nicholas Murcutt.

Image: Peter Bennetts

Justine Clark I’d like to begin the discussion by picking up on Nick’s and Sue’s concerns about making opportunities for new and/or small practices. Is there a role within the profession for mentoring? For example, the Victorian Government Architect’s Office, before Geoffrey’s time, added a number of “young” practices to the lists of those who could undertake government work, but if practices have no experience of dealing with government departments it can be very confusing and very hard work. Some practices have just given up, they can’t afford to do it anymore. Is there a role for mentoring, so firms like ARM, who seem to be able to extract the most marvellous buildings out of any kind of situation, can advise smaller practices? How do you operate nimbly and strategically within these very different environments?

SA There is definitely a role for mentoring. In Melbourne it happens informally. In fact, last night I spent ninety minutes on the phone to a colleague discussing how to negotiate a fee with a particular client we had in common. That sort of thing is really important. You need to support each other and be prepared to talk openly with each other about the issues of the day, because there’s a lot of knowledge out there – just think how much knowledge there is in this room. If it’s shared, it can be very, very powerful. However, these things are linked – the culture of competition on price, for example, directly inhibits that kind of mentoring. So if you can, through a policy initiation, remove the emphasis of competition on price, then there’s every reason to talk about these matters with each other. Nick gave the example of finding themselves on a list with ten other firms they recognized as pretty good quality firms. So you don’t have the angst about “Someone’s going to do it for two percent”.

JC It seems that some groups of architects are more fortunate in finding themselves in an environment where they are supported than others. Melbourne seems quite good at it. It’s a tough architectural culture, but somehow it nurtures …

SA It’s a question of building a culture that is focused on quality of design and where architects are happy to compete with each other on the quality of design, not on some other, frankly spurious, basis. We all obviously come from a perspective that says “design matters”, but it’s worth restating that. There are a number of really good pieces of research that demonstrate that it’s true – CABE has a lot online; the Property Council of Australia has the design dividend publication. So if you find yourself in that situation where someone’s right outside that frame of reference, there are publications to help get them into the tent, and they need to be in the tent before we can have the conversation.

JC The government architects have been remarkable at pushing that message from within government. Having people whose primary role is advocating within government the value of good design has been a significant improvement. What then interests me is what happens at the lower levels of government. How you filter that message through to the middle layer of bureaucrats who make so many decisions.

NM What drives me nuts is going down Parramatta Road and seeing a billboard for a major bus interchange with a perspective that’s completely banal and without love. You think to yourself, what process brought that about? In most other cultures it would be seen as a major project.

The only way architecture and the building industry can lift that is through example. Hopefully the new government architect in South Australia, Ben Hewett, will spend some time finding out where the opportunities lie and where the capacity exists. He might find some good people in a council and say, “Look, let’s work together for a while and try to do two good buildings. We will look at how you’ve done it and we will try and bring someone else in to help”. I think that’s what happened in Victoria, there were some key characters who were making things happen and those buildings were public, they could be seen on the streets, Storey Hall or whatever. They set up an ambition that was far greater than all the rhetoric and talk, it was demonstrated ambition. I do think that the ambition should be high but the trajectory of what you do should be quite modest.

Australia has a culture of great conservatism, which is a success but also a failing. We do things in small steps and they all work towards a bigger and better whole – that’s how our democracy works, which is great, but it also means that it’s easy to be lazy. What we are talking about is not that risky. Often architects spend too long treading water, particularly early in their careers, when they should be getting in and doing small, ambitious projects.

Audience What is the reality of actually enabling change or influencing change within departments like DTEI here in SA? Geoffrey, you will be able to remind me of which department it is in WA that looks after public projects. What have been the successes so far in other places? How likely are we to be successful here in SA?

GL In WA one key advantage was that there was a single department that delivered all projects, the Department of Housing and Works. It’s now changed its name and is linked with Treasury, which is an interesting pairing. That made it relatively easy to introduce change to processes. You introduced it once and it operated across the board. In Victoria, for example, every government department has its own procurement processes, which makes it almost impossible to introduce systemic changes. It takes much longer because you have to work across every department and convince them all of the need.

TH We’ve got one agency that handles procurement on the whole, the Department of Transport, Energy and Infrastructure (DTEI) and there is a section within it called Building Management. In defence of DTEI, on the whole processes are extremely robust. They have the closest thing to a two-envelope system that I know of in the country. There are some issues, but having a central agency managing things means there is also some sophistication. (In Sydney some local councils have procurement strategies that go for toilet paper as much as they go for buildings!) Possibly one of the weaknesses is that there’s not much flexibility on a project-by-project basis – if you are in a certain band, this is the pre-qualification list that you are allowed to work from.

I have a quick anecdote that goes to the question about effecting change. The Integrated Design Commission has to model best practice in everything we do, that’s the aspiration we hold for ourselves. For our fitout, we’ve had a great chat with the agency that will probably manage the procurement and we’ve redefined it as an “installation”. If we don’t touch the ceiling, and we do away with offices, then we won’t touch the mechanical. This means we’ve derisked the project so we can work flexibly around issues of pre-qualification. It’s a very, very small start, but it’s asking the question “how can you work flexibly between some of those bands?” So you start small – in fact, we’ve started talking to them about using Pecha Kucha as a process for engaging consultants …

NM The discussion has to extend to commercial work – probably 70 percent of the things you see outside are done commercially. It’s important to find good models and drill down to get to the bottom of how those good outcomes came about. Our public spaces are shaped by procurement of commercial buildings as well as public ones.

Audience I’m John Schenk from the University of South Australia. I’d be interested in the panel’s comments on the system of procuring the hospital in South Australia. I understand that we have two separate entities, each doing their own design to a brief, and each will put forward their design to some committee – as a member of the public I know very little about that. How is this likely to give us a better outcome than commissioning a good team of architects who can produce a great design and can consult with the eventual users? Could you comment? It just seems to me a duplication of resources.

GL Is it PPP?

JS It’s a PPP.

GL That’s why. I’m going through an identical process at the moment in Victoria with a major health care project. It does seem like an astonishing waste of resources when each bidding team has to spend all that money on the design process. Through his own experience with the Manchester Courts and then comprehensive consultation with both industry and government, John Denton, the previous Victorian Government Architect, argued that it was more sensible for the government agency to commission an architect in the first instance, and sort the design through a process that puts emphasis on meeting client needs and achieving design quality and then put that design out to the marketplace for a PPP-type delivery (essentially the Smart PFI that delivered the Manchester Courts in the UK). Particularly with a healthcare facility, which is so complex to plan out, and where you’ve got architects working with healthcare planners …

Speaker What’s a PFI?

GL Oh, private finance initiative – it’s essentially the UK version of the PPP. The RIBA spent considerable time working on the process, but, to the best of my knowledge, they only had the opportunity of seeing it work in one instance. Essentially I think governments say, “If we don’t put it out to the private sector from day one, we don’t draw on the innovative skills of the private sector to the full extent”, whereas with a smart PFI you are drawing very effectively on the innovative skills of the architectural profession. I agree with the RIBA and John Denton, that that should not limit the innovative skills of financiers and contractors to deliver the project subsequently with appropriate levels of innovation.

Audience My name’s Augusta Briggs from DTEI. I’ve got a question for the panel about where they see competition-style forums in lieu of procurement processes.

NM What is the role of the design competition?

AB Yes. Where do you see the design competition potentially as an option?

NM It’s a good model, but not the only model and there are four different types that come to mind. There’s not enough of them in Australia. You can have too many of them, but, for example, limited competitions, particularly if you get paid reasonably well, are a very good model at a certain scale. Practices that are smaller and are trying to get going would be prepared to compete on a $600,000 project and in a way, not having those in the mix is a risk. It’s a risk not to have those sorts of little happenings around. You can’t have competitions for everything but I think they are really important. In Sydney, the Opera House has created such problems for future competitions because a whole swag of bureaucracy will never want to go down that path again. They are just so freaked out, they had to set up a lottery to pay for it afterwards and there’s a terrible …

SA You wouldn’t want another one of them, would you?

NM Exactly, and that’s scared everybody off, for all the wrong reasons. There have been a number of competitions in New South Wales, but they just haven’t gone ahead or we were used as kite-flyers. Barangaroo is a complete mess, all based on a pseudo-competition. It’s almost like they tried to set up the equivalent of PPP in competitions. They are so badly written and they’ve got out clauses all over the place. So, if you are going to do them you have got to run them properly. The Institute should write a new competition policy, it should be much more open-ended than the current one, it shouldn’t all have to be endorsed by the Institute. They should be able to go into councils and say “Here’s how you run a competition in your community, and it will cost you $15,000, here are six architects who are prepared to be judges on it, let’s put them into the mix and away we go”.

JC It’s about airing good examples. The Seaford Life Saving Club, which Robert Simeoni won through a competition, is a very fine building. So, there are good examples at the smaller end of the scale and perhaps it’s about also documenting these examples and getting them out there.

TH Competitions are crucial because we are at a point in Australian cities where we are about to face incredible density, intensity and change. There are ways of delivering this which are really about outcomes that are seen as predetermined because only a single solution is offered. Competitions are a way of engaging the public in a series of alternatives – there’s a growing interest in how you reconnect a government who understands that you need to zoom ahead with these thirty-year targets and a community that is not really convinced that climate change is an issue. I believe design investigation, design alternatives, alternative urban futures are all ways to bridge that growing divide. It’s a communication tool for government to say, “We aren’t pushing one model or another, what we are doing is there’s a short one, there’s a tall one, there’s a fat one, there’s a whole lot of green on it”, and somehow the community comes together and engages in a discussion about what the urban future will be. I think that’s a really interesting discussion to pitch to government, because then it’s about risk management and that’s what they understand.

SA To echo what Nick said, there is a real role for competitions. They do have to be carefully structured and managed. If, for example, they are going to be used to speculate about the future and they are not actually about a real project, that needs to be clear to the people doing them. Those kind of competitions have to be properly funded because there’s nothing at the end of the rainbow. People just have to get paid to do them and you’d be happy with the suite of ideas you get. There’s also another category of competitions which are a terrific alternative way to nourish talent – you can target councils and other agencies to use competitions for smaller projects. Again, you have to keep a handle on how they are run, otherwise they can be very quickly discredited and the professional will turn off them, because they are a lot of effort. As for competitions that actually result in a commission, the profession will do those at a lesser cost than full cost recovery, provided they are properly maintained and properly structured and there aren’t fifteen people in it.

The odd major project can cope with a full-on competition, but there have to be a lot of clever strategic decisions being made about what competition for what project. I’d also say I’m not generally a fan of open competitions, because that is just an invitation to a whole lot of people to waste their time. I think they should be quarantined. If they are $10 million and below, you shouldn’t let large practices do them, they should be for smaller practices, so that they are serving the purpose that you actually intend them to serve. So I think they can play a really good role, but one of the hurdles is always getting them funded and managed properly.

TH Justine, I think I might have misunderstood the question. If the question was, was the Adelaide Convention Centre competition framed, consistent with the commission’s advice, the answer would be no.

SP Can I make a very quick observation about competitions also? I’d love to see DTEI operating a percentage of its jobs across each of the categories as competition and I agree with everything that’s been said. From my perspective, the danger of competitions is the expectation of the client that they have a scheme that’s ready to go. There have been a number of DTEI projects within the community, where there hasn’t been a direct engagement between the design team and the community. There needs to be a process post-competition to ensure that the great design ideas that have been developed in the competition actually work within whatever community they are going into. There has to be a process, a post-competition process as well as a good competition process.

GL My first comments were that all processes of procurement are fraught, and I think competitions are also fraught. They can have some fantastic outcomes and when they are well targeted, when they are controlled and limited, great, but they are fraught. We have losers. We are a profession that doesn’t like losing jobs and I’ve been involved in juries, advising on competitions, and the aftermath of a number of competitions I’ve observed have been quite bloody. We don’t lose well, but when a competition is well managed, it can provide wonderful outcomes.

The AA Roundtable series is presented in partnership with ISIS. AA Roundtable 04 was held at the ISIS office in Adelaide on 19 October 2010.

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Published online: 2 Jan 2011
Images: Peter Bennetts

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Architecture Australia, January 2011

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