How do construction clients drive value from supply chains?

Ursula Bryan: Today’s conversation brings together a diverse and experienced group of client-side professionals from across the built environment, to discuss a topic that is central to both the IAM and CIOB: how we drive value.

Strengthening alignment across the value chain is vital to achieving better societal outcomes, such as sustainability and resilience, and taking advantage of major opportunities like digital transformation.

By sharing experiences, insights, examples and lessons learned, we can explore what really works and identify where we can do better to drive performance and long-term value. We can learn from each other and move the conversation forward.

Will Mann: What is the most important benchmark for your organisation when working with contractors and suppliers, and how do you measure their performance?

Terry Gray: Historically, cost and compliance – health and safety, environment, quality – have dominated. But in the past 10-15 years, expectations have widened to include innovation, sustainability, social value and community impact. As a supply chain partner, adding value in these areas is essential in a tough market.

We assess suppliers against our core values – respect, excellence, integrity, collaboration and innovation – both at the start and end of engagements.

Julie Blight: As we’re a public-sector organisation, value for money is crucial. Collaborative working is essential because the hospital must stay operational throughout any construction. Whether extensions or refurbishments, we need contractors who can work with us and innovate so we maintain operations. We have strict deadlines, such as winter pressures, and we can’t afford overruns in time or budget.

Jason Glasson: It’s difficult to pick just one measure, but for National Highways the key thread is safety. We are absolutely focused on safety for customers, our staff and our supply chain. Supplier performance is measured through accident frequency rates and RIDDOR-reportable incidents. We scrutinise and challenge suppliers to continually reduce incident rates and aim for zero harm.

Derek Cuthbertson: Quality control is our most important benchmark. While health and safety is rightly seen as a fundamental priority across the industry, we view quality control as the most impactful measure of success. It encompasses not only safe working practices, but also the standard of workmanship, compliance with specifications, programme delivery, and ultimately, end user satisfaction.

We operate within frameworks with rigorous pre-vetting and are supported by consultants. We measure performance through design governance, project delivery processes, site inspections, adherence to scope and stakeholder feedback, and track KPIs monthly with quarterly reviews to ensure accountability and lessons learned.

Dan Hollas: After the Grenfell Tower fire and our investigations into external wall systems, quality and our ability to determine it has become a big focus. It is clear many buildings were delivered on time and on cost but not at the right quality. As part of that quality focus, we also have to look at competence – of ourselves as a client, our professional services consultants, and contractors.

Will Mann: What innovations do you look for from contractors and suppliers and how are these encouraged?

Leigh Renshaw: We’ve set extremely ambitious sustainability targets for our supply chain. We’re working with retrofit approaches, MMC and modularisation to reduce environmental impact. Our campus hosts 5,000 people and is now 98% decarbonised – achievable only with support from SMEs, environmental specialists, and engineering and construction partners.

We’ve removed four to five hundred tonnes of CO₂ equivalent by installing ammonia chillers rather than F-gas systems. We’re also backing a green gas initiative, sponsoring development of a biomethane plant in the UK that pumps green gas into the grid for our use.

To encourage innovation, we build these requirements directly into contracts and our RFP (request for proposal) processes, prioritising suppliers who share our sustainability values.

Julie Blight: Being part of the NHS, we are committed to the 2030 Net Zero target for suppliers. But with budgets extremely tight, most of what we deliver is refurbishment and small extensions, so recycling materials becomes essential. We rely on local supply chains and labour to reduce carbon from transport.

In new builds, we try to incorporate the ability to connect to future district heating networks, although NHS requirements don’t always align well with district heating infrastructure.

We are exploring MMC – prefabricated toilets and bathrooms that minimise dust, noise and disruption, and provide quicker turnaround. But it does rely on contractors being able to bring forward innovation, which is difficult under current financial constraints.

Dan Hollas: Our own information management is essential; the better the data we provide to consultants and contractors, the more innovative their solutions can be.

When we’re managing combustible wall system remediation projects, we make sure sustainability is embedded into the solution. We require the use of software so we can track all materials removed from the building, measure recycling rates and set targets for the next project.

It’s an evolving process as the regulatory framework changes. Awaab’s Law has just come into effect so we’re also looking to our suppliers for innovations that will help us achieve compliance.

Simon Edwards: My organisation wants to minimise environmental and community impact while maximising returns. But we’re also tied to very traditional, prescriptive standards, which limits innovation.

Prescriptive standards specify how something must be done, which blocks technological progress. That might have worked when technology moved slowly, but now solutions become outdated almost before they’re installed. The challenge is shifting from a cautious, traditional construction mindset to one more like IT, where fast iteration is normal.

Derek Cuthbertson: At Royal Mail, data analytics is a major focus; we use estate data to improve asset management and understand life cycles better, which helps us prioritise investment and maintenance with limited budgets.

We expect consultants and supply chain partners to bring low-carbon options for all projects. But one of the biggest internal blockers is the attitude of “that’s not in the specification”. We tackle this by presenting clear and evidence-based summaries of the benefits of new methods, helping people become comfortable with alternatives.

John Green: We’ve achieved major cuts to embodied carbon in our newly built assets over the years, but it is getting harder to find those savings.

I want to emphasise a broader idea of value, using the six capitals framework: environmental, social, manufactured, people, intellectual and financial. When partners think through those lenses, new opportunities arise.

Examples include placing electrical panels on the north wall of kiosks to reduce overheating risk, positioning standby generators away from neighbours to reduce noise, and restoring ground to improve biodiversity after works. Small changes, but significant positive impacts.

Jason Glasson: Internally, we run R&D programmes, but we also have an extensive supplier engagement council and run innovation competitions. These give SMEs visibility and allow them to showcase solutions. Winning ideas can receive National Highways sponsorship to become market-ready.

A recent example is an AI tool that analyses customer reactions to roadworks – identifying patterns of frustration from social media and other channels. By spotting pain points early, we can resolve them and reduce customer concerns.

Terry Gray: Clients increasingly emphasise reductions in embedded carbon, renewable energy, and cutting diesel use by shifting to grid power or solar. On the supply chain side, we’re seeing advances like the use of drones for surveys and confined-space inspections.

On our contract delivering National Grid’s Grain to Tilbury project, part of The Great Grid Upgrade, we have introduced a major innovation in the form of Herrenknecht’s Vertical Shaft-Sinking Machine. It excavates to 40m-60m without requiring anyone to enter the excavation area. Traditionally, people had to work at the bottom of the shaft, so this is a major safety advancement.

Will Mann: What are the most common frustrations you have with contractors and suppliers?

Dan Hollas: Lack of collaboration. When I think about our least successful project – a small under-£200k suppression-system installation – the breakdown in the relationship between us and the contractor was severe. Once trust is broken, it’s very hard to recover. It didn’t help that the contractor installed the system to the wrong British Standard, meaning it had to be ripped out and done again. The process took years and became contractual.

In contrast, our most successful project involved a difficult 1960s tower block with unforeseen framing issues. Because we had trust, competence and a shared understanding from the start, we solved the problems collaboratively and arrived at a really positive solution.

Derek Cuthbertson: Lack of adequate progress updates. As a client, you’re not always on site, and in live operational environments, poor communication has major impacts. When communication is infrequent or vague, it then becomes difficult to manage expectations, mitigate risks, or make informed decisions.

Late change requests are another issue, especially when they lead to extra cost that could have been avoided with better planning.

Pricing transparency is a recurring problem: variations often come with insufficient breakdowns and vague terms like ‘cost included’, which hides detail and makes it hard to assess value or challenge assumptions. We also see challenges around the experience and capability of site management teams. Strong leadership on site is essential to maintain programme, manage the supply chain, and uphold quality standards. Unfortunately, industry-wide skills gaps are apparent

Leigh Renshaw: In one word: inconsistency. As a pharmaceutical business, we rely heavily on our supply partners. Yet the same contractor can deliver project A well and project B poorly. We see inconsistent adherence to standards and processes, often due to variable skills and experience.

Because getting products to patients is critical, sometimes we have to bring in extra suppliers or internal resources to supplement underperforming contractors.

Julie Blight: It’s a long list, unfortunately. With live hospitals – particularly older sites – car parking is always a challenge. Site compounds often compete with patient and staff parking. At inner-city or small community hospitals in deprived areas, contractors sometimes arrive in very expensive cars and assume they can take over large parts of the site, including disabled bays. Better communication would avoid this.

Hospital grounds also include mental health units and vulnerable patients. Visitors may have received bad news, or patients may still be recovering from anaesthesia for several hours. Their behaviour and needs can be unpredictable, and contractors don’t always appreciate the sensitivities of the environment.

Simple actions – like not running a concrete mixer or angle-grinder outside theatre windows – make a huge difference to surgeons and clinical teams. Often we can solve issues easily, such as by arranging alternative parking through the wider public estate, but we can only do that when communication happens at the right time.

Jason Glasson: I’d highlight the importance of seeing the bigger picture. The end goal is not simply creating an asset; it’s the service the asset provides. At project close, good asset information is essential. Historically, drawings would be boxed up and forgotten. Today it’s digital, but it still requires rigour at the end of the project – a time when teams are often moving on. Poor handover data affects how well we can manage assets in the long term.

Will Mann: What one thing would you change to improve collaboration between clients, contractors and the wider supply chain?

John Green: When clients and delivery partners genuinely share a common purpose, collaboration flows from the top and permeates downwards.

One of the most collaborative projects I worked on was the relocation of Cambridge’s sewage works, funded by government because of the development potential of the existing site. We were working with several contractors to design an entirely new sewage treatment works – something we rarely build from scratch now. The team embraced innovative technologies, new site-organisation methods and our six-capitals approach. It was incredibly collaborative, with everyone aligned and “rowing in the same direction”. Commercial models that incentivise that mindset are worth exploring.

Jason Glasson: National Highways has created a Supplier Development System – an online tool open to any supplier interested in working with us. It sets out our behaviours, values and expectations, effectively explaining what a good supplier looks like.

When we finish a successful contract, we reflect on why it worked: what made that contractor a partner we enjoyed working with? That learning is now shared openly.

Collaboration is central to how we invest time with our supply chain partners. Clear expectations help build long-term relationships and ensure that when a supplier wins a tender, we look forward to working with them.

Leigh Renshaw: Money runs through everything. I would like to see a broader assessment of value – moving away from siloed thinking and lowest-price wins.

Alliance frameworks with gain/pain share have been among the most successful projects I’ve seen because everyone shares both the risks and the rewards. We should give suppliers space to bring their skills and innovation without being constrained by overly conservative commercial pressures.

Julie Blight: Successful projects are those where contractor and client truly embrace partnership working. Shared desks in the site office means we operate as one team. We can manage expectations on both sides, coordinate disruptions and advise the best timing for activities.

Joint onboarding is also beneficial – adding information about how the hospital operates, the clinical sensitivities and site-specific risks strengthen health and safety understanding and prevents a “them and us” culture. When done well, partnership working delivers better value for money for the NHS.

Derek Cuthbertson: One thing I would change is increasing face-to-face engagement. Since Covid, we haven’t found the right balance; digital tools help, but nothing replaces boots on the ground. We risk losing personal connection, trust and shared understanding.

I set key milestones to ensure site presence at the right times. Frameworks also help bring contractors on the journey through negotiated tenders and collaborative working. But we must rebalance digital and in-person engagement – it is essential for progress, quality and relationships.

Simon Edwards: I believe there’s a bigger question about how we bring together the worlds of construction delivery, project management and asset management into one cohesive model. Once we develop common line-of-sight and a shared mission, we’ll start to move forward. The more difficult part will be how we incentivise, motivate and reward people within that model.