Following the introduction of the Value Toolkit in June 2022, the third episode of the NEC Spotlight podcast looks at how NEC Contracts and the government-funded Value Toolkit can be used to deliver greater value for public sector projects.
This podcast features Conor McCarthy, Associate Director, Infrastructure Procurement Advisory, WSP. Conor is also the author of the Value Toolkit paper, 'Outcome-based delivery: the Value Toolkit and NEC Contracts’, a guide for NEC users on how to use the toolkit. Conor has been seconded to the Association for Consulting Engineering to lead the development of the client-approach stream value toolkit for the UK Construction Innovation Hub.
In the episode Conor provided an overview of the toolkit and its purpose. Developed in partnership with over 200 industry partners, it is designed for public sector construction clients to define and measure the whole-life social, environmental, and economic outcomes of their projects. The toolkit is also aligned with the outcome-based approach advocated by the government in the Construction Playbook.
As Conor explained: ‘Typically we view value in monetary terms on the lowest cost rather than the value it provided… By redefining value and how it can be embedded within the project, programme and decision making, the value toolkit enables clients to use value-based decision making to select a preferred design solution, select an optimal delivery partner, measure, reward and incentivize performance in the contract against a set of desired outcomes’.
Conor said the toolkit sets out a series of integrated activities and processes. It outlines the number of steps a client goes through to develop their value outcome, strategic drivers, outcome drivers, their value scorecard, and how they can engage with their various key stakeholders and build that into the established framework. The toolkit is supported by a web app which will be released later this year.
Conor also gave a practical example showing how the Value Toolkit can be put into practice. He said, as an illustration, if a local authority wants to develop a new tram system, they will need to consider carbon reduction and a host of outcomes they need to achieve against national, regional and local policy-led objectives. The toolkit would be facilitated by a trained facilitator who would guide clients through implementation and application. Having defined the value outcomes of the project, and decided to procure using NEC4 ECC Contract, the client would need to follow the practical step-by-step guide.
Some of the steps include working with key stakeholders to develop the client’s key objectives and translating these into strategic drivers: ‘prioritise them collectively into what is most important and rationalise them into what delivers best in terms of value’. He also highlighted how the toolkit can be used to assess and evaluate a relative performance of multiple design options and look at the preferred delivery partner.
‘You can use the toolkit to guide the tender evaluation process and assess tender submission and this will allow for a selection of a preferred delivery partner under the basis of the value they offer against strategic outcome driver as opposed to solely the cost’.
Conor also went on to discuss in detail how NEC users can use the toolkit effectively to embed value decision making and outcome-based payment mechanism in their contracts, in particular with the use of secondary Options such as X12, X20 and the climate change Option, X29 . He also offered his perspective on Sellafield’s use of the value toolkit.
Conor said he has had positive feedbacks about the toolkit from his clients at WSP with many of his clients wanting to transition to and pilot this approach. He concluded that ‘We got this real strength in the UK, this really innovative tool to help client structure what they seek to achieve in terms of outcome and then using these great contracts like NEC to build those in the delivery phase and ensure all parties are aligned against the commercial objectives.’
Listen to the episode trailer for a preview here: https://www.youtube.com/watch?v=FKoQKMVwq4g
All the podcast episodes are available for listening on our desktop community platform: www.community.neccontract.com, or through our NEC Community App which is free to download onto mobile devices at the Apple and Google stores.