Executive Summary
Our data shows why it is now time for outcome-based procurement
Outcome-based procurement is about how clients procure an outcome and not the constituent parts of a building. It has been advocated for in key reports including Procuring for Value1 and the Construction Playbooks2. Done effectively, it aligns rewards with impact.
Why the industry may (finally) be ready
It is a logical progression from using value selection criteria (as advocated by the Construction Playbooks) and the new KPIs of the Procurement Act. Economic conditions have shifted, and our data shows that both supply chain and clients recognise the need for a more sustainable contracting model.
Clients are also demanding more and better outcomes – this is evidenced by the increasing sustainability demands placed in tenders. And this comes at a time when economic challenges remain in both the public and private sectors.
So, the industry has had its warm-up, the hurdles are looming, and we need a plan to get over them.
But the industry may not yet be capable
Tender documents often define the ‘what’: the bricks and mortar, often in great detail and in volumes or gigabytes of drawings, models and reports. But they seem to be failing to define the ‘how’ and the ‘why’.
Key information is typically missing – from what the sustainability objectives may be, to what measures will be used to monitor them. Most contractors are seeing badly defined information requirements and many are reporting that projects are failing to achieve sustainability objectives.
Unleashing radical innovation alongside incremental improvements
We think the time may be right for some forward-thinking clients to consider the art of the possible with some bold radical changes in procurement practices on a selection of demonstrator projects.
We also recognise that it is the incremental improvements that move our industry. We have seen this in the six years of data that our survey has been running.
Supporting data highlights
Our survey data gives a complete overview of procurement trends across all parts of the industry. Here is a summary of the data points that have informed our view that it is now time for outcome-based procurement:
For too long, procurement has been less about achieving the desired outcomes and more about getting a project across the finishing line (often limping) at practical completion. It should not be about the bricks and mortar, it should be about the better patient health outcomes, educational attainment, homes where people can flourish, and workplaces where people are at their most creative and productive.
Three things appear to be changing that make the time right for a more substantial shift to an outcome-based procurement model:
First, legislative change including the Procurement Act. More than the Act, the social and environmental legislative agenda is increasingly concerning itself with visibility down the supply chain.
Second, data-driven decision-making, and ultimately AI optimisation of the built environment (enabled by good data) is becoming the norm.
And third, economic need has placed increased burden on contractors, but the fragility of contracting models has demonstrated not only the flaws in achieving quality outcomes but the need to transition from transactional to relational contracting.
Outcome-based procurement may be achieved both through an emerging model but also radical innovation. Here are three steps to better outcomes that may be incorporated in either a radical approach or through continuous improvement:
Define the outcome, clearly and with data-driven, measurable outcomes. Select a contractor best placed to achieve that outcome.
Tools: Value toolkit, clearly articulated information requirements
Progress towards the outcomes intended needs to be monitored and measured not just at practical completion, but through construction and post-completion.
Tools: KPIs, monitoring regimes involving key stakeholders
Optimise a completed asset towards improved outcomes by ongoing contractor involvement in optimisation. Include a review regime and appropriate KPIs for review.
Tools: Performance damages and incentives, post-occupation optimisation regime (eg soft landings)
RLB © 2025 Rider Levett Bucknall