Procuring Net Zero Construction

Procuring Net Zero Construction Presented by: Dr. Vornicu Date: 28 November 2022 Agenda - KCL research outputs in the Construction Playbook and Carbon Net Zero Guidance - SOLUTIONS in Carbon Net Zero Guidance - SOLUTIONS in KCL Society of Construction Law Net Zero Carbon paper - FAC-1 and TAC-1 Net Zero Supply Chain Collaboration - Net Zero Gold Standard Action Plans - The Four Is of the NZC procurement Overview - As we speak, the COP27 summit is taking place in Egypt; - November 17th is the SOLUTION DAY, with previous thematic days looking inter alia into: Energy Day, Decarbonizations Day and Finance Day - The November 2021 COP 26 recognized the need for the construction sector to deliver powerful net zero solutions. - What Will be the COP27 advancements for the construction's sector NZC's solutions? SOLUTIONS proposed by the Net Zero Carbon Guidance - Pipelines, Portfolios and Long-term contracting • Supply chain decarbonization'(...) Contracting authorities should work with their supply chains to increase awareness of shared decarbonizations and how this can be achieved'; • Digital and MMC (...) Adopting digital and offsite manufacturing technologies in the delivery is essential to improving carbon and sustainability outcomes'; • - Waste and resource efficiency Early Market Engagement • Whole life approach Embedding a whole life approach at an early stage will enable greater consistency in delivering higher quality and sustainable outcomes across the life of projects and built assets'; • Including sustainability in outcome based specifications 'Clear and measurable outcomes should be set at the outset of a project pr program' • - Construction Innovation Hub Value Toolkit Effective Contracting with Should Cost Models that benchmark carbon, with Climate and Sustainability contractual clauses, with shared learning through Framework Contracts and all contracts integrated with strategy, procurement and management - Successful Delivery and the Transition to Operation • Evaluation and Contract Award • Capturing Lessons learned and disseminating good practice • Government Major Projects Portfolio (GMPP) required to publish close out reports and they should include carbon reduction lessons • Asset performance monitoring into the operational phase Can't We Just Instruct Net Zero Compliance?... - The 'Climate Contract Playbook' (part of the 'Chancery Lane Project') proposes tackling climate change by: • Amendments to standard form construction contracts covering 'Energy Efficiency and Environmental Obligations', 'Green Project Modifications' and 'Green Design and Construction Standards' (pp. 184,187,191) • A 'Carbon Budget' to incentivize the industry to reduce GHG emissions across the project lifecycle. (p.197) - Consultation on 'NEC Option X29' envisages 'Climate Change Requirements' included in the 'Scope ‘linked to targets and incentives in a 'Performance Table' - These proposals are valuable, but they cannot deliver significant impact unless they form part of a long-term strategic approach using collaborative construction procurement and contracting systems Net zero Supply Chain Collaboration..... - FAC-1 and TAC-1 (clause 6.3) describe the system of 'Supply Chain Collaboration' through which all parties commit 'to reduce carbon emissions, to reduce use of energy and or natural and manmade resources, to improve waste management using a shared 'Timetable to: • Review and compare the value offered by supply chain members • Review the potential for more consistent, longer term, larger scale supply chain contracts and for other improved supply chain commitments and working practices • Jointly renegotiate or retender supply chain contracts • Agree more consistent, longer term, larger scale supply chain contracts and other improved supply chain commitments and working practices CASE STUDY - Ministry of Justice £1 billion New Prisons Program, a Construction Playbook pathfinder - Uses systems set out in an overarching Crown Commercial Service FAC-1 framework alliance contract and in an MoJ FAC-1 multi-party 'sub-alliance contract' with ISG, Kier, Laing O'Rourke and Wates - All four contractors, with Mace as alliance manager, collaborate on methodology that prioritizes Net Zero through Modern Methods of Construction (MMC) and digitization of the construction process - Contractors work together through FAC-1 Supply Chain Collaboration, Building Information Modelling (BIM) and MMC to drive innovation, maximize social value and create a prison estate that delivers on 2050 Net Zero Carbon targets - Supply Chain Collaboration attracts innovations and creates Net Zero efficiencies through early engagement and aggregated strategic commitments across all four prisons with each key supply chain member for each key package GOLD STANDARD ACTION PLANS - 'Constructing the Gold Standard' is a KCL independent review of public sector frameworks, published by Government in December 2021 and widely supported by the UK construction industry - Constructing the Gold Standard priorities rapid progress towards Net Zero through strategic relationships under 'framework alliance contracts' such as FAC-1 that provide for Supply Chain Collaboration, joint Risk Management, better use of BIM and mutual licenses of Intellectual Property Rights enabling shared learning - Constructing the Gold Standard proposes that we should not wait for the next framework procurements but should also immediately agree additional commitments under contractual 'Action Plans' - Binding Action Plans can be added current contracts that bring agreed Net Zero objectives to life without an additional public procurement procedure - Jason Russell will share case studies that illustrate this approach The Gold Standard 'Four I's' Of Net Zero Carbon Procurement - Strategies that establish the intention of clients in terms of credible plans, commitments and timescales for meeting Net Zero Carbon targets, with clear requirements for project outcomes and clear expectations for improved value and reduced risks - Procurement processes that exchange relevant information between clients and prospective consultants, contractors and supply chain members in advance of making appointments, demonstrating and evaluating how plans, commitments and timescales to meet Net Zero Carbon targets will be implemented - Contracts that create and sustain the integration of the plans, commitments and timescales agreed by clients, consultants, contractors and supply chain members to implement the agreed steps to achieve Net Zero Carbon targets - Management that achieves incentivization through instructions, support, guidance and motivation for clients, consultants, contractors and supply chain members to deli integrated Net Zero Carbon targets using agreed plans, commitments and time scape.