The Public Sector Construction Database and the Econometric Model

Background

Successful delivery of an ambitious programme of public sector reform depends on markets being able to respond effectively and innovatively, and at an affordable price.  This was the basic premise of what has become known as "The Kelly Report" (Increasing Competition and Improving Long-Term Capacity Planning in the Government Market Place) published in December 2003.   Construction was chosen as the first market to test the process of matching demand and supply. 

The construction market analysis function of the Public Sector Construction Clients' Forum (PSCCF) was established following the 2005-2015 Construction Demand / Capacity Study Report published by OGC in June 2006. A key deliverable from that study was an Econometric Model to undertake scenario modelling of the effect of construction demand on the industry's capacity to deliver. 

The Public Sector Construction Database (PSCD) was developed to collect data on future public sector construction programmes and projects for analysis and reporting, in a web-based and real-time format. The database aims to provide visibility of public sector demand and spending patterns in order for the demand side to take cognisance of the effect of public sector construction demands on their projects and programmes and the supply side with intelligence to inform their investment decisions.      

The database gives access to aggregated prospective construction demand information to Departments and suppliers up to 2016. The PSCD is available to Departments via the GSI. Non-GSI Departments can access aggregated reports from the PSCD reporting page on the OGC website. 

The PSCD also allows project performance information to be submitted directly by Departments to OGC.   Through the application of the Achieving Excellence in Construction (AEC) initiative's best practice principles, Departments are committed to maximise, via continuous improvement, the efficiency, effectiveness, and value for money of their procurement of new works, maintenance and refurbishment projects and programmes.  AEC Strategic Target project performance data is collected to enable individual organisations to benchmark their own performance against Government-wide performance and also so that construction procurers can monitor whether the progress already made in improving construction project performance is being maintained.  See OGC Information Note 2/2007. 

An econometric Model for supply/demand modelling has been developed, which is publicly accessible to both demand and supply sides. The Model was designed to be of benefit both centrally and at departmental level in making funding and investment decisions. The model informs the decision making process of PSCCF in its market analysis role by highlighting investment and resource implications in relation to future demand, priorities and capacity constraints and by providing a quantitative measure of construction output fluctuations.

The Model is not a predictive tool, but an illustrative tool to assist future decision-making and to enable potential investment or macroeconomic shift scenarios to be more fully understood for their demand/supply impacts via their inflationary dimension. For the scenario modelling, construction Output Price Inflation (OPI) was selected as the proxy measure for the effect on construction industry capacity.

The Model is linked to and fed with data from the PSCD and well as private sector data and macroeconomic forecasts from Experian, and data from other Government sources.  The Model is updated every 6 months and draft outputs are considered by the Market Analysis User Group (MAUG) before being presented to the PSCCF.