ISO/FDIS 22058

Construction procurement -- Guidance on strategy and tactics

Marchés de construction -- Recommandations en matière de stratégie et de tactique

General Information

• Status: Published
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: ISO/TC 59/SC 18 - Construction procurement
• Drafting Committee: ISO/TC 59/SC 18/WG 2 - Governance, strategy and tactics
• Current Stage: 5060 - Close of voting Proof returned by Secretariat
• Completion Date: 22-Dec-2021

Standards Content (sample)

FINAL
INTERNATIONAL ISO/FDIS
DRAFT
STANDARD 22058
ISO/TC 59/SC 18
Construction procurement —
Secretariat: SABS
Guidance on strategy and tactics
Voting begins on:
2021-10-27
Voting terminates on:
2021-12-22
RECIPIENTS OF THIS DRAFT ARE INVITED TO
SUBMIT, WITH THEIR COMMENTS, NOTIFICATION
OF ANY RELEVANT PATENT RIGHTS OF WHICH
THEY ARE AWARE AND TO PROVIDE SUPPOR TING
DOCUMENTATION.
IN ADDITION TO THEIR EVALUATION AS
Reference number
BEING ACCEPTABLE FOR INDUSTRIAL, TECHNO-
ISO/FDIS 22058:2021(E)
LOGICAL, COMMERCIAL AND USER PURPOSES,
DRAFT INTERNATIONAL STANDARDS MAY ON
OCCASION HAVE TO BE CONSIDERED IN THE
LIGHT OF THEIR POTENTIAL TO BECOME STAN-
DARDS TO WHICH REFERENCE MAY BE MADE IN
NATIONAL REGULATIONS. © ISO 2021
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ISO/FDIS 22058:2021(E)
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ISO/FDIS 22058:2021(E)
Contents Page

Foreword ........................................................................................................................................................................................................................................iv

Introduction .................................................................................................................................................................................................................................v

1 Scope ................................................................................................................................................................................................................................. 1

2 Normative references ..................................................................................................................................................................................... 1

3 Terms and definitions .................................................................................................................................................................................... 1

4 Options for engaging the market for new or refurbished construction works ................................2

4.1 Concept .......................................................................................................................................................................................................... 2

4.2 Financing of the project .................................................................................................................................................................. 4

4.3 Design responsibilities .................................................................................................................................................................... 5

4.4 Interface management responsibilities ............................................................................................................................ 5

5 Framework for developing a procurement strategy ..................................................................................................... 6

5.1 General ........................................................................................................................................................................................................... 6

5.2 Strategic considerations ................................................................................................................................................................ 7

5.3 Procurement objectives ................................................................................................................................................................. 8

5.4 Spend, organizational, market and stakeholder analysis................................................................................. 9

5.4.1 General considerations ................................................................................................................................................. 9

5.4.2 Spend analysis ...................................................................................................................................................................... 9

5.4.3 Organizational analysis ............................................................................................................................................ 10

5.4.4 Market analysis ................................................................................................................................................................ 10

5.4.5 Stakeholder analysis .................................................................................................................................................... 10

5.5 Packaging strategy .......................................................................................................................................................................... 11

5.5.1 Concept ..................................................................................................................................................................................... 11

5.5.2 Framework or non-framework agreements ........................................................................................... 11

5.5.3 Identifying work packages ..................................................................................................................................... 11

5.6 Contracting strategy ......................................................................................................................................................................13

5.6.1 Concept ........................................................................................................................................... ..........................................13

5.6.2 Standard forms of contract .................................................................................................................................... 13

5.6.3 Selecting a suitable standard form of contract and pricing options .................................13

5.7 Targeting strategy ............................................................................................................................................................................ 15

5.7.1 Concept ........................................................................................................................................... ..........................................15

5.7.2 Key performance indicators .................................................................................................................................. 16

5.8 Selection methods ............................................................................................................................................................................ 18

5.9 Documenting a procurement strategy ........................................................................................................................... 19

6 Tactics ..........................................................................................................................................................................................................................20

6.1 Concept ....................................................................................................................................................................................................... 20

6.2 Publicity ..................................................................................................................................................................................................... 20

6.3 Procurement planning and sequencing......................................................................................................................... 20

6.4 Setting up of procurement documents .......................................................................................................................... 21

6.4.1 General ..................................................................................................................................................................................... 21

6.4.2 Tactical variables associated with the process of offer and acceptance ....................... 21

6.4.3 Identification of a suitable standard form of contract .................................................................. 21

6.4.4 Specific conditions of contract ............................................................................................................................ 23

6.4.5 Approaches to achieve quality ............................................................................................................................ 24

6.4.6 Cost-effective procurement ................................................................................................................................... 24

Annex A (informative) Delivery management concepts and practices ........................................................................27

Bibliography .............................................................................................................................................................................................................................32

iii
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ISO/FDIS 22058:2021(E)
Foreword

ISO (the International Organization for Standardization) is a worldwide federation of national standards

bodies (ISO member bodies). The work of preparing International Standards is normally carried out

through ISO technical committees. Each member body interested in a subject for which a technical

committee has been established has the right to be represented on that committee. International

organizations, governmental and non-governmental, in liaison with ISO, also take part in the work.

ISO collaborates closely with the International Electrotechnical Commission (IEC) on all matters of

electrotechnical standardization.

The procedures used to develop this document and those intended for its further maintenance are

described in the ISO/IEC Directives, Part 1. In particular, the different approval criteria needed for the

different types of ISO documents should be noted. This document was drafted in accordance with the

editorial rules of the ISO/IEC Directives, Part 2 (see www.iso.org/directives).

Attention is drawn to the possibility that some of the elements of this document may be the subject of

patent rights. ISO shall not be held responsible for identifying any or all such patent rights. Details of

any patent rights identified during the development of the document will be in the Introduction and/or

on the ISO list of patent declarations received (see www.iso.org/patents).

Any trade name used in this document is information given for the convenience of users and does not

constitute an endorsement.

For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and

expressions related to conformity assessment, as well as information about ISO's adherence to

the World Trade Organization (WTO) principles in the Technical Barriers to Trade (TBT), see

www.iso.org/iso/foreword.html.

This document was prepared by Technical Committee ISO/TC 59, Buildings and civil engineering works,

Subcommittee SC 18, Construction procurement.

Any feedback or questions on this document should be directed to the user’s national standards body. A

complete listing of these bodies can be found at www.iso.org/members.html.
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ISO/FDIS 22058:2021(E)
Introduction

Procurement is defined in the ISO 10845 series as "the process which creates, manages and fulfils

contracts". Procurement accordingly commences once a need for goods and services or any combination

thereof has been identified and it ends when the goods are received, the services and construction

works are completed, and contracts are closed out. It embraces the concepts of (see ISO 21502):

— planning for procurement when procurement strategies are developed, procurement criteria are

identified and contract specifications are developed;

— the evaluation and selection of a contractor in accordance with selected criteria;

— administering contracts involving the monitoring of contract performance, managing contract

changes and corrections, dealing with claims and ending contracts and closing contracts;

— closing contracts when the contract obligations of the parties have been met or the contract is closed

early in accordance with the termination clauses.

Delivery management is the critical leadership role played by a knowledgeable client to plan, specify,

procure and oversee the delivery of construction works projects resulting in project outcomes.

Procurement yields the necessary resources to deliver projects while delivery management provides

the necessary leadership and oversight management and forms part of the governance or quality

oversight arrangements for construction-related projects.

ISO 10845-1 describes generic procurement processes and establishes generic methods and procedures

for procurements enabling a procurement system to be established within an organization. ISO 10845-

4 contains standard conditions for the calling for expressions of interest enabling respondents to be

prequalified to be admitted to a data base or be invited to submit tender offers. ISO 10845-3 contains

standard conditions of tender enabling the process of offer and acceptance to be conducted. ISO 10845-2

establishes a uniform format for the compilation of calls for expressions of interest, tender and contract

documents, and the general principles for compiling procurement documents for supply, services and

construction contracts, at both main and subcontract levels.

ISO 10845-1 describes a number of techniques and mechanisms associated with targeted procurement

procedures, all of which are designed to promote the participation of targeted enterprises and targeted

labour in contracts. Key performance indicators (KPIs) relating to the engagement of enterprises, joint

venture partners, local resources and local labour in contracts are needed to implement many of these

procedures. ISO 10845-5 to ISO 10845-8 establish KPIs to measure the outcomes of a contract in relation

to the engagement of target groups, and to establish a target level or performance for a contractor to

achieve or exceed in the performance of a contract.

The ISO 10845 series only addresses parts of the procurement and delivery management system

required for the delivery of construction works projects. It focuses on the characteristics of

procurement processes, methods and procedures and the detail relating thereto, concentrating on the

acquisition phase of procurement i.e. the areas which are commonly of greatest interest to regulators.

The ISO 10845 series introduces the concept of procurement strategy for a particular procurement,

provides a range of methods to solicit tender offers, but falls short of providing definitive guidance on

the development of a procurement strategy and procurement tactics and ignores the funding options

that are available.

There are a number of options relating to how construction works are funded and how design and

interface responsibilities are allocated. There are also options relating to the different types of contracts

that may be entered into during the life cycle of a project, how contractors are to be remunerated, how

secondary objectives are to be promoted through a contract and how the market is to be approached to

solicit tender offers. Such choices impact upon procurement and project outcomes.

This document provides guidance on the development of procurement strategy and the procurement

tactics which are necessary to effectively implement a procurement strategy.
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ISO/FDIS 22058:2021(E)

Annex A describes basic delivery management principles and practices which can inform decisions

made regarding the options for engaging the market for new or refurbished construction works.

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FINAL DRAFT INTERNATIONAL STANDARD ISO/FDIS 22058:2021(E)
Construction procurement — Guidance on strategy and
tactics
1 Scope
This document provides guidance on:

a) options for engaging the market in satisfying a client’s need for new or refurbished construction

works;

b) the development of procurement strategies for one or more projects involving the acquisition of

goods, services or any combination thereof, irrespective of complexity, size, duration or life cycle

stage;

c) the formulation of procurement tactics which enable identified procurement strategies to be

effectively implemented.

This document is applicable to the private sector, public sector or community organizations.

Note A client can be a project owner or an entity within a supply chain which contracts for goods and

services
2 Normative references
There are no normative references in this document
3 Terms and definitions
For the purposes of this document, the following terms and definitions apply.

ISO and IEC maintain terminology databases for use in standardization at the following addresses:

— ISO Online browsing platform: available at https:// www .iso .org/ obp
— IEC Electropedia: available at https:// www .electropedia .org/
3.1
construction works
everything that is constructed or results from construction operations

[SOURCE: ISO 6707-1:2020, 3.1.1.1, modified — The US preferred term and notes to entry have been

removed.]
3.2
framework agreement

agreement between a client and a contractor, the purpose of which is to establish the terms governing

orders (3.3) to be awarded during a given period, in particular with regard to price and, where

appropriate, the quantity envisaged

[SOURCE: ISO 10845-1:2020, 3.17, modified — "employer" has been replaced by "client".]

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ISO/FDIS 22058:2021(E)
3.3
order

instruction to supply goods, carry out construction works (3.1) and/or provide services under a

framework agreement (3.2)
[SOURCE: ISO 10845-1:2020, 3.20]
3.4
secondary procurement policy

procurement policy that promotes objectives additional to those associated with the immediate

objective of the procurement itself
[SOURCE: ISO 10845-1:2020, 3.30]
3.5
stakeholder

person, group or organization that has interests in, or can affect, be affected by, or perceive itself to be

affected by, any aspect of the project

[SOURCE: ISO 21500:2021, 3.18, modified — "programme or portfolio" at the end of the definition has

been removed.]
3.6
value for money
optimal use of resources to achieve intended project outcomes

Note 1 to entry: Optimal use of resources results in the most desirable possible outcomes given expressed or

implied restrictions or constraints.
[SOURCE: ISO 10845-1:2020, 3.40]
4 Options for engaging the market for new or refurbished construction works
4.1 Concept

A client, where new or refurbished construction works is required, needs to answer basic questions

relating to (see Figure 1)
— the financing of the project on a “buy” or “make” basis (see 4.2), and

— if the decision is to “make”, whether or not design responsibilities (see 4.3) and / or responsibilities

for the management of interfaces between direct contracts (see 4.4) are to be retained or transferred.

This is an important decision as the choice of “buy” or “make” determines the number of contracts that

need to be procured and directly overseen as well as the capacity and capabilities of the client delivery

management team which needs to be put in place to oversee the delivery of the required construction

works (see Annex A). It also informs the procurement strategies that are adopted (see Clause 5).

It may be necessary to perform certain feasibility studies and financial exercises including commercial,

economic and fiscal feasibility prior to a contract being concluded. Strategies such as early contractor

involvement, or where the other party to the contract is likely to subcontract most of the works, early

supply chain involvement, may need to be pursued. It may also be important to engage in strategic

collaboration to embed economic, social and environmental value and align expectations regarding

practices such as those relating to health and safety and employment.
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ISO/FDIS 22058:2021(E)

NOTE Clients appoint their own personnel or contract professional service providers to perform their

allocated design and interface management responsibilities in the delivery process

Figure 1 — Common options for engaging the market for new or refurbished construction

works (“buy” or “make” decisions)

NOTE A structured approach has been developed in this document to deal with decisions and descriptions

of procurement approaches. Rather than focusing on contracting methods, the distinguishing features of each

have been identified in a way that leads to the answering of the six underlying questions relating to the following

which explain how any specific project is being procured:

— source of funding e.g. owner-financed, public sector-financed, developer-financed, PFI, PPP;

— selection method e.g. negotiation, partnering, frameworks, selective competition, open competition;

— responsibility for design e.g. architect, engineer, contractor, in-house design teams, supplier;

— responsibility for co-ordination e.g. client, lead designer, principal contractor, joint venture, construction

manager;

— price basis e.g. work and materials defined by bills of quantity, cost reimbursement, whole building, a fully-

maintained facility, performance;

— supply chain integration e.g. single-source, integrated, fragmented, competitive, collaborative.

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ISO/FDIS 22058:2021(E)

These questions derive from the differences between historical contracting methods and provide a basis for a

systematic approach to the procurement strategy for future projects that will remain contextual despite new

terms for different approaches being coined.
4.2 Financing of the project

It is possible that the source of funding is not an option as it can be a matter of policy or regulation for

any given client.

The financing of the project on a “buy” basis requires the market to pay for the acquisition incrementally

as the client pays only for completed work. Under this financing mechanism, the developer typically

carries the cost of providing the required construction works and commonly receives payment either

in the form of a lump sum, a monthly amount for the term of the contract or a percentage of the income

stream following the completion of the project. The options commonly available to the client where the

market funds the acquisition are indicated in Table 1.
Table 1 — Options where the client requires the market to fund the acquisition
Client requirements Options available to the client
Purchase completed construction works
Enter into a public private partnership or a private finance
initiative agreement
Client requires ownership
Establish a joint venture
Enter into a lease to own agreement
Contract on a design, build and operate basis
Client does not require ownership
Enter into a lease for construction works

The parties to the contract can agree to share skills, technology and responsibility and transfer risks.

Partnership arrangements can take on different forms to address issues such as spreading the cost

of investment over the lifetime of the construction projects, greater predictability over cost and time,

lowering of procurement costs, flexibility of programme delivery, performance incentives, potential

to be off-balance sheet, ability of public sector to retain influence over strategic decisions, potential

for continuous improvement through successive phases of work, early commercial input from private

sector parties. Public sector partnering arrangements vary with the level of involvement and risk

that the private entity holds in the arrangement with the public entity and how projects are financed.

Partnership arrangements can range from simple collaboration to mitigate risks to the transfer of risks

to the private party to the extent that this party puts its own capital at risk by funding its investment

in the project with debt and shareholder equity. Partnership arrangements may also include the setting

up of joint ventures to deliver specific projects, payment based on successful delivery, transferring

of institutional function to the private party and permitting the private party to make use of public

property.

The client’s involvement in the delivery management of a project where the market funds the project is

generally limited (see Annex A). In procurements of this kind, a client may need to appoint a transaction

advisor as the other party to the contract oversees or has already overseen the delivery of the project.

A client nevertheless needs to undertake a procurement process or negotiate a contract to acquire the

outcomes associated with the selected project delivery route. Furthermore, clients need to source some

professional capacity to ensure that due diligence is undertaken at an appropriate level to confirm that

the requirements of the contract are delivered in accordance with the terms of the contract.

The financing of the project on a “make” basis, on the other hand, requires the client to directly pay

all contractors for the goods and services associated with the delivery of the project incrementally as

the works proceeds. It also requires that the client play an active role in the delivery of the project as

indicated in Annex A and to make decisions regarding the allocation of design and interface management

responsibilities between the parties to a construction contract. A client needs to appoint professional

service providers to undertake design and interface management responsibilities which it has retained,

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ISO/FDIS 22058:2021(E)

where it lacks in-house professional expertise to assume these responsibilities. Accordingly, decisions

made regarding responsibilities for design and interface management determine the nature and

number of professional service agreements that are entered into.

Strategies and tactics appropriate to the selected option to engage the market need to be adopted to

attain desired outcomes.
4.3 Design responsibilities

A client can retain design responsibility, in which case the contractor undertakes construction on the

basis of production information issued by the client (design by client strategy). Alternatively, the client

can assign design responsibility to the contractor in which case the contractor:

— designs the works based on requirements established by the client and constructs it (design and

construct strategy) or provides a solution to the client’s requirements and manufactures and

installs the required works or component thereof (design and supply strategy); or

— completes the production information based on a scheme design provided by the client and

constructs it (develop and construct strategy).

In the design and construct and develop and construct strategy, a client needs to have a capability to

procure the necessary professional resources to develop the end-of-stage deliverables which form the

basis of the scope of work for a contractor who is assigned design responsibilities. This is also necessary

for the reviewing of the outputs of the contractor for general conformity with the scope of work and

what has been agreed at each stage following the appointment of a contractor. A client may, to obtain

continuity in aspects of the design, novate professional service providers to a contractor as a condition

of contract e.g. mechanical design. (Novation is the substitution of a new contract in place of an old one

or the substitution of one party for another party in a contract.)

Table 2 indicates the appropriate usage of strategies involving different allocations of design

responsibilities. The client is at risk for delays in production information where the client retains

design responsibilities. The attractiveness of the assigning of design responsibilities to contractors is

that there is single point responsibility for design and construction which overcomes fragmentation

in design through integration. However, early contractor involvement (the practice of appointing

a contractor before the design is complete) linked to a design by client strategy, possibly though a

framework agreement, also enables construction knowledge, experience and inputs to be obtained

earlier than normal to reduce costs, before the price
...