FINANCE GUIDANCE NOTE 2005/3
MAJOR INVESTMENT (CAPITAL) PROJECTS: AMENDMENTS TO SPFM AND PUBLICATION OF CONSTRUCTION PROCUREMENT MANUAL
The purpose of this note is to announce changes to the guidance in the Scottish Public Finance Manual (SPFM) relating to major investment (capital) projects and the publication of the new Construction Procurement Manual (CPM). The CPM replaces the former "Client Pack", applies to all bodies which are subject to the requirements of the SPFM, and contains complementary guidance (and links) to relevant sections of the SPFM.
The SPFM section on Major Investment has been substantially revised to implement commitments made by the then Finance Minister during the Parliamentary debate which followed publication of the Holyrood Inquiry report. The revisions include:
- a requirement that all (non-PPP) capital projects (including, but not confined to, construction projects) exceeding £5 million budget must be assessed in terms of risk level and that those which are high risk or mission critical (as defined in the Major Investment section and Finance Guidance Note 2004/03) must undergo a formal, independent Gateway Review at each key decision stage;
- Senior Responsible Owners (SROs) must maintain an official record of how Gateway Review (GR) recommendations have been implemented and circulate the GR report's findings to relevant stakeholders including the Accountable Officer who in turn should inform Ministers in the case of serious deficiencies or difficulties or probable failure to meet the planned budget;
- the risks and benefits relating to procurement route options should be fully identified, considered and evaluated and, in the case of high risk or mission critical projects, should be presented to the responsible Minister for decision (who should also be informed of differences of view between the project's owners/managers and any specialist consultant advisers);
- the guidance on the governance of major projects (roles, responsibilities and formal letters of appointment) has been updated to emphasise the requirement for those performing key client roles to receive proper training in the relevant management and technical abilities (as described in the Construction Procurement Manual).
The SPFM sections on Major Investment, Appraisal and Evaluation, and Procurement have been updated to confirm that these also form part of the new Construction Procurement Manual which applies to all bodies which are subject to the SPFM.
The Construction Procurement Manual includes links to the most relevant parts of the SPFM and to the Executive's Procurement Policy Manual, Procurement Toolkit, Procurement Policy Notes and Local Authority Procurement Circulars. Following an Overview of Construction Works Procurement, the Manual then sets out detailed guidance in 8 sections (replacing the 6 sections of the former "Client Pack"). The principle amendments are in:
- a revised Section 2 - Value for Money, which now describes the Gateway Review process;
- a revised Section 3 - Procurement Strategies and the Appointment of Consultants and Contractors, providing greater detail on the risks and benefits of various procurement route options and an updated description of the appointment process under EU rules following a recent ruling in the European Court of Justice;
- a new Section 6 - Design Quality in Building Procurement, providing guidance on key design issues, client responsibilities and design competitions; and
- a new Section 7 - Sustainability in Building Procurement, which will be further developed following completion of the Executive's sustainable development strategy.
Advice on the policy, procedural and best practice issues relating to construction procurement can be obtained from Construction Advice and Policy Division (enquiries at 0131 244 7468/7465), who will be happy to provide business areas with further guidance (including presentations on the new CPM). Further advice on the Gateway Review process can be obtained from the Division's Centre of Expertise for Programme, Policy and Project Delivery (0131 244 3953/0922).
Scottish Executive Finance
December 2005