Key procurement recommendations for wood construction

Wood construction has its own peculiarities that people need to be aware of before they launch a project. The Ministry of the Environment’s construction programme has published a procurement guide for municipalities that seek to build with wood. The guide provides advice for those in the public sector on wood construction procurement and project execution. It also helps people to understand the market, to issue calls for tenders, and to compare bids. The publication explains what to include in cost calculations and what kind of life cycle you can expect from wooden buildings. This work is the result of close collaboration between those issuing calls for tenders and those who submit bids. Experts in the wood product industry, designers, construction company representatives, municipal decision-makers, and others all contributed their experiences. The intention has been to create a package that serves all parties equally.

Text: Anu Turunen, Puuinfo

Read the article in Finnish here.

1. Understand the wood construction value chain

Wood construction has a lengthy value chain that extends across multiple phases. Developers should understand what factors affect how providers and markets can operate at peak efficiency.

Engineered wood products derived from sawn timber are typically created on a project- by-project basis, which means that all designs need to be ready very early in a project. The process of creating prefabricated elements from engineered wood products plays a key role in making the entire construction process efficient. This means prefabrication needs special attention when planning a project. Prefabrication pays off at the site by speeding up the construction phase and reducing the size of the required crew.

Because of the long value chain, the industry can only evolve if clients communicate their needs and future projects. When providers have key information about future projects in advance, they are more likely to invest and improve production.

2. Know the market

In practice, no one can issue a successful call for tenders without having a general feel of the market and its current developments. By interacting with the market, a client can gain an understanding of what is available right now on the market and what the boundary conditions for an eventual project will be. This interaction clarifies what kind of project is most realistic, what clients should require from their suppliers, and which requirements they can relax. This leads to more competitive bids as providers have less risk and there is more room for new innovations and evolution. It makes sense to start this market dialogue when you are still assessing your needs or in the planning phase as this is a cost-effective way of improving procurement from the start. This interaction is particularly necessary in developing markets because the number of potential providers and the solutions they offer are constantly changing.

3. Choose the right contracting model

Selecting the correct procurement procedure and contracting model is one of the most important choices you’ll make in procurement. This choice must be made holistically as it needs to suit not only the technical solutions, but also the market conditions, and the goals and resources of the public developer.

If you issue a call for tenders with completed designs, the bids you receive might not be competitive or they might not comply with the call. If clients handle the design work themselves, this interaction with the market is even more important as it ensures clients get the boundary conditions for their designs and those designs can get more realistic bids.

When selecting a model for a call for tenders, you should anticipate how much it will cost suppliers to participate in the planned call for tenders and assess whether this will affect the quality or quantity of bids received.

4. Define the appropriate requirements for participating parties

Consider the whole when drawing up requirements for suppliers. Suppliers must be credibly able to finish the project, and the risks to the client need to be under control. However, traditional formulas that require supplier companies to have a specific turnover and references can exclude potential providers and new innovative construction models from the bidding process. When it comes to references, for example, you need to assess what skills and capabilities the developer wants and needs from its suppliers, and let the bidders themselves demonstrate how they measure up. The standard requirement of a high turnover has often ruled out small providers in developing markets, resulting in perfectly good projects failing to launch.

More information for developers see (in Finnish) puuinfo.fi/rakennuttaminen