Driving change through sustainable infrastructure: A procurement perspective
Learn best practice infrastructure procurement to help achieve sustainability objectives
By AnsaradaWed May 17 2023Advisors, Industry news and trends, Innovation, Tenders, Audits and compliance, Security and risk management, Governance Risk and Compliance, Environmental Social and Governance
Procuring sustainable infrastructure is a complex action governed by both philosophical as well as practical best practices.
By way of background, sustainability is a concept that is used to oversee project decisions along three dimensions: environmental, economic, and social. Sustainable procurement involves organizations meeting their needs for public works in a way that achieves value for money, value for people and value for future throughout the project’s life cycle. Sustainable infrastructure (which can also be called green infrastructure or blue-green-infrastructure) refers to decision-making that is driven by the principles of building with nature and being sensitive to an ecological framework for social, economic, and environmental health.
It is important to note that sustainable infrastructure best practices should also be tied to resilience strategies which refers to the ability to design buildings and infrastructure that can absorb outside negative natural forces without suffering complete failure. These concepts need to be interwoven into procurement strategies and requirements to ensure bid responses are aligned to sustainable infrastructure principles.
How to procure for sustainable infrastructure
To procure sustainable infrastructure, it is important that specific sustainable goals and thresholds are set by procuring agencies that clearly define desired sustainability and resilience outcomes. To ensure that infrastructure procurement initiatives are successful, it is crucial that sustainable procurement best practices are employed, specifically programs that are harmonised with national development goals, that have political and stakeholder buy-in, and are economically viable. In the case of Public Private Partnerships (P3 or PPP) procurements, projects also need to be commercially viable.
The achievement of sustainability best practices requires procurement that is fully competitive and transparent. Without this caveat, it would be difficult to attract innovative partners that can deliver sustainable infrastructure for the best possible price while also meeting considerations of delivery quality, quantity, time, and location.
According to the Asian Development Bank, sustainable public procurement demands a systematic approach to identifying and encouraging the procurement of works that are assessed to be less damaging to the environment during their production, use, and disposal than other goods or services that serve the same purpose while also considering economic, social, and institutional impacts.
The Asian Development Bank’s sustainable procurement guidelines stress the adoption of procurement criteria that aim to establish the minimum acceptable performance that must be met as well as additional criteria that are used to reward sustainability performance that exceeds minimum standards. The guidelines stress the need for evaluation criteria that highlight increased efficiency, defined sustainability and resilience desired outcomes, improved performance and fitness for purpose. These criteria are relevant to the procurement and construction of sustainable and resilient infrastructure.
The World Economic Forum has identified six qualities of sustainable infrastructure that stress technological and life cycle sustainability. They include:
- Increasing access to essential services and benefit-sharing
- Enhancing environmental responsibility and resilience to climate change
- Engaging with all stakeholders to increase social acceptability
- Ensuring economic and institutional effectiveness, transparency, and capacity building
- Future-proofing through planning for lifecycle maintenance and the end of life of assets
- Promoting critical mass potential through planning replicability, replicability, and financial scalability
In summary, properly procured sustainable and resilient infrastructure should demonstrate economic benefit sharing through environmentally responsible actions that are harmonised with stakeholder’s aspirations that ensure future proofed projects supported by effective planning and financial scalability. It is particularly important that projects are financially affordable as well. Bankrupt projects, half completed projects, and substandard projects that are caused by poor financial metrics do not serve sustainability by any means.
Best practice in infrastructure procurement to help achieve sustainability objectives
Sustainability principles need to be institutionalized if procurement best practices are to be mobilised for robust and resilient infrastructure. This requires clearly documented policy and explanations of these desired outcomes in procurement terms of reference. Additionally, if truly innovative partners are to be sought, transparent and competitive procurement procedures are preferred as they are more likely to encourage the most technically qualified parties to respond.
It must also be recognized that public agencies might not be aware of cutting edge and emerging technologies and strategies that can enhance sustainable and resilient infrastructure. In this case, procuring agencies should be open to considerations of unsolicited proposals (USPs) from innovators which have a proven track record. To mitigate concerns about procurement probity, it would behove procuring agencies to turn USPs into competitive procurements with the following caveat of offering the originators of innovative ideas incentives to participate in an expanded procurement. Incentives could include protection of demonstrable intellectual property rights and licences, procurement bidder evaluation credits, and opportunities to counteroffer other parties’ bids.
Best practice requirements being articulated in procurement documents include demonstrations of:
- Increased efficiency of infrastructure delivery outcomes, and outputs
- Delivery of Value for Money
- Explanations on how sustainability and resilience desired outcomes will be delivered
- Tried and tested technical and engineering performance improvements
- Improved risk mitigations
- Procurement that can deliver better fitness for purpose
- Clearly articulated KPI indicators and means of verification
- Performance incentives
- Harmonization with accepted international suitability standards that recognize ESG constraints and SDG goals
There are increasing concerns from sustainability advocates that procurement calls for innovative sustainability practices are not being taken seriously by bidders, especially as they can be costlier in the short term. This has led to stakeholders accusing bidders of “greenwashing” their commitments to sustainability in their financial bid proposals and of governments turning a blind eye to this, all within the context of current budget constraints being experienced globally due to economic headwinds. In these instances, obvious risks to projects are often blatantly ignored.
This shortsighted approach where the lowest cost bidder wins, irrespective of- and at the expense of the technological innovation being offered, undermines the procurement of sustainable infrastructure to the detriment of risk mitigation in the long term. The question must be asked of why sustainability requirements are being undermined, thereby placing projects at risk of being substandard or prone to failure.
To prevent a drift towards watered down sustainable procurements of sustainable and resilient infrastructure careful procurement probity and oversight tools need to be used. They must track bid compliance with sustainability KPIs, and desired outcomes, enhance protection of bidder’s innovative intellectual property, manage all communication on sustainability requirements, ensure unbiased evaluations of bids to guarantee that “greenwashing” is mitigated, and safeguard long-term storage of innovative institutional knowledge gathered during procurements. If these measures are in place, they will encourage truly innovative bidders to respond to calls for sustainable infrastructure procurements.
The author, David Baxter, is a Senior PPP Advisor to the International Sustainable Resilience Center (ISRC) located in New Orleans. Additionally, he is a steering committee member of the World Association of PPP Units and Professions (WAPPP). During 30 + years of international development consulting he has worked in Asia, Africa, the Middle East, Europe and North and South America. David has collaborated on infrastructure policy, project development, and project procurement for institutions such as the World Bank, Islamic Development Bank, African Development Bank, USAID, and the Millennium Challenge Corporation (MCC).David Baxter, Senior PPP Advisor, International Sustainable Resilience Center (ISRC)