We at MPL took a long, hard look at our role within the supply chain and, by examining key projects over the past two years, we have identified some real, tangible ways of reducing costs to our customers, whilst increasing their service levels.
To illustrate our findings we’ll use a project valued at £1,000,000.
It is at inception stage, when budgets are set and project plans are defined, that the feasibility definition is most important. This is produced prior to any application for funding, but the production of outline designs and detailed cost plans are vital – many projects suffer from false economy at this stage. The MPL detailed cost plan production service provides significant benefits:
The MPL detailed cost plan production service:
On our £1M project, accurate costing saved the supply chain 0.15% as well as the subsidiary benefits of reduced project administration and financial substantiation.
Once fund authorisation has been granted, cost certainty is essential for accurate budget management and mitigation of risk.
MPL uses RIPAC, the live, interactive cost database, which interrogates an exhaustive list of current, comparable projects, to provide accurate benchmarking and forecasting for even the most complex projects. The cost plan resides within RIPAC throughout the life of the project and is constantly monitored so that it is always up to date. The level of detail enables structured value management to be undertaken at any time with the ability to comprehensively review options and defined products. Our experience in market pricing has been gained through completing measurement and pricing for medium and large contractors who rely upon our skills to tender more effectively.
The detailed cost plans MPL produces at feasibility stage become the central tool of the project. As the design changes and adapts, so does the cost plan. RIPAC reacts to changes in the cost plans making it easy to produce a measured schedule of quantities for a contractor to price at tender stage. Typically we reduce the time required to go to tender from 2–3 weeks to 3-6 days.
Using MPL’s method, contractors obtain realistic prices and return tenders more quickly and confidently as they do not need to produce their own measured schedule of quantities and works for subcontractors to price, tenders therefore go straight to market, providing the client with more competitive and comprehensive prices. MPL can produce detailed recommendation reports within 48 hours ready for client approval.
On our £1M project we achieved feasibility through to tender recommendation within 5 weeks rather than the 8 weeks typically encountered using outline cost planning
MPL detailed cost plan service, when used from feasibility stage and for the production of a detailed schedule of quantities for the contractor, offers the client transparency on pricing, reduce the client’s workload, gives the contractor accurate quantity data (KPI of 95%) and speeds up the subcontracting process. Return tenders are similarly more consistent, greater pricing integrity and more competitive because the supply chain has been provided with the opportunity to provide their best price.
The tendering process for each contractor can cost between £1200 and £1500. Based upon six tenderers the MPL cost plan saves the supply chain £7500.
On our £1M project the additional supply chain savings equate to 0.75% as well as the subsidiary benefits of greater cost surety, better prices and reduced risk.
Project cost data from over 60 construction projects ranging up to £12M shared with the client enabling them to
A database of costs with a value of £10M per annum would be expected to cost 0.1% of contract value. Minimum saving for maintaining a database would be £1000 which is already absorbed into the cost of delivery.
MPL will produce a whole life cost model at the earliest stage of project appraisal so that the real and ongoing cost of the project can be identified and addressed from the earliest design stage. Using RIPAC, MPL will interrogate a range of databases, work with the client’s asset/maintenance/estates departments and produce a forward maintenance plan and budget. Future proofing the project’s financial control
MPL can deliver direct monetary benefits to the supply chain, conservatively estimated as a 1% of contract value ultimately saving the client £10,000 for a £1M project. The subsidiary benefits are:-