First Kelly Market Proposals

Market Consultation Proposals

All major construction programmes should engage early with industry at the point of conception. This may take the form of a joint Public/Private Reference Group where a mechanism for early engagement is not already in place. This will facilitate supply side consultation before policy implementation strategies are set and could feature as an OGC Gateway™ 0 requirement. Composition might include public sector officials, industry and academics and reflect desired outcomes of the project. Implementation will be monitored by OGC.

Market Shaping Proposals

HM Treasury should continue to embed value for money guidance relating to the application of private finance initiative (PFI).

The HMT PFI: Value for Money Assessment guidance, following the publication of PFI: Meeting the Investment Challenge, states that small deals are no longer considered appropriate for PFI procurement. 

HM Treasury collaborates with the OGC on:

• whether flexibility given to departments to carry forward capital expenditure can be embedded further
• the benefits of allocating capital expenditure beyond the current three-year spending review period
• including capacity considerations as part of the Spending Review process.
• OGC should encourage departments to adopt longer term planning.
• OGC should undertake a more detailed evaluation of planned construction programmes in the North West and then London, as these have been identified as areas of capacity concern. The 2005-2015 Demand/Capacity Study report, commissioned by OGC from Deloitte, was completed in May 2006, in response to this recommendation. It focuses on the London area. This evaluation was presented to the Senior Stakeholder Group for market shaping decisions.    
• The correlation between a region, or city's population and its ability to deliver successful construction projects above a certain value should be investigated further.
• A Senior Stakeholder Group, including a market analysis function, should be established to receive and consider demand data and advise departments on the market implications of programme implementation. Composition to be confirmed but may include HM Treasury, Cabinet Office, major spending departments, wider public sector representatives, and industry representatives. Departments would still retain responsibility for delivery of their own procurements. OGC should act as secretariat for this group. 

Market Intelligence Proposals

• OGC FKM Demand Database should be used as a tool for storing, monitoring and analysing public sector forward looking construction programme plans. Public sector bodies should be required to provide real time data of current plans, with an emphasis on continual refresh, to inform Senior Stakeholder Group decisions.
• That OGC analyse data collected for 2004 (i.e. data which has a start on site date that has already passed) to identify whether the projects have started on site and if so how close to the original date.  This would involve analysis of 200 already identified projects.  This should include trend analysis and identification of the real reasons for project delay.
• Procurers of major public sector construction projects should fully understand the market constraints and impact of the chosen procurement route on competition before proceeding. OGC and OFT should produce guidance for procurers to support this.
• New definitions of market categories should be implemented by OGC for public and private construction data analysis.
• OGC should collaborate with CITB-ConstructionSkills on the development and use of a model for capacity utilisation, productivity and skills forecasting. The model would provide forecasts for regional capacity needs and scenario planning within the industry for different skilled trades. The FKM demand database should be its primary source of public sector data.
• OGC should investigate the wider use of the OGC Gateway process. 
• OGC should publish forward-looking plans for major public sector construction programmes to industry.
• OGC should disseminate demand data and wider market shaping proposals to a wider set of public sector stakeholders.
• Future demand data to move towards a greater level of detail with the emphasis on public sector bodies to release as much data as possible.