‫ە‬Messages from Departments and Centers of NILIM

Challenges facing public procurement andperspectives of national land management
TERAKAWA Akira,Executive Director for Research Affairs andDirector of the Research Center for Land and Construction Management(Keywords) Public procurement, Construction management, National land management
㸯㸬Introduction
The mission of the Research Center for Land andConstruction Management (“the Center”) is to support
the planning and proposal of policy related to thedevelopment and management of housing and social
infrastructure under the jurisdiction of the Ministry ofLand, Infrastructure, Transport and Tourism (MLIT).
The Center fulfils this mission through research
activities focused on the key phrases of “national landmanagement” and “construction management”.
In the following report, I would like to introduce oneof the main themes of research by the Center – thechallenges currently facing the system of procurementin the public works sector and the status of initiatives
aimed at solving them, including perspectives ofnational land management.
2. Challenges facing procurement in the publicworks sector(1) Ensuring and improving the quality of public works
To steadily promote the development andmanagement of social infrastructure that supports asafe, comfortable and energetic national lifestyle, itgoes without saying that expanding public trust andsupport for public works is a major requirement. To
that end, as well as ensuring the transparency andcompetitiveness of procurement processes, a systemfor ensuring a certain level of quality is seen asnecessary.
The “Act on Promoting Quality Assurance in PublicWorks” enacted in April 2005 was an epoch-making
revision of the public procurement system, in that it
initiated a shift from the conventional “procurement bycompetition based only on price” to “procurement
based on combined excellence in price and quality”.
The method of awarding bids based on overall
evaluation, in which the winning bid is decided from acomprehensive evaluation of the content of thetechnical proposal combined with the bid price, has
gradually been expanded in scope while its application
has been continuously revised based on trials. Thismethod was applied to almost all of about 11,100 works
under the direct jurisdiction of MLIT in FY2009.
Incidentally, the comprehensive evaluation method
also became applicable to survey and design work inFY2007, and was applied to about 20% of 17,400 cases
in FY2009. Adding about 34% decided under the
proposal method, this meant that around 54% of
contract partners were decided in a form not based
solely on price.
Every year, the Center compiles and publishes
annual reports on the implementation status of thecomprehensive evaluation method in public works andconstruction consultancy, etc.1) 2).
We also carry out research aimed at making adaptive
improvements, considering discussions at the“Informal Discussion Group on Ensuring the Quality of
Public Works under Direct Jurisdiction of MLIT”(chairman: Professor Kazumasa Ozawa, University ofTokyo). The ultimate aim is to create a system ofcontract bidding that effectively encourages efforts toimprove technical ability among the bidders.
(2) The role of construction industries in exhibiting
local leadership
When considering the ideal shape of the constructionindustry in future, its role as a leader of regional society
is also an important perspective. To appropriately
maintain and repair aging social infrastructure stock
and increase its longevity, the presence of construction
companies with the necessary technical capability isessential. Undeniably, maintenance and repair works
have until now tended to have a rather drab image
compared to new works, including their budgetary
treatment. However, considering that the weight ofsuch works is inevitably going to increase in future, weneed to form attractive markets in which companies
with sufficient technical and business capabilities cancontinue corporate activities and reap the necessary
profit to make further improvements to their technicalcapability. To this end, initiatives such as setting
estimated prices based on small-scale, dispersed site
conditions and flexible work processes, orders for
combined maintenance inspection and repair works,
continuous orders over several years for several works
sites within a fixed area, and others have been started
on a trial basis. Now, the time is right for efforts aimed
at developing the market environment while
ascertaining the effects of these measures.
The role of construction companies in the event of a‫ە‬Messages from Departments and Centers of NILIM

natural disaster should also not be forgotten, in thatthey take emergency measures and make other direct
and indirect contributions, either autonomously orbased on disaster response agreements withadministrative bodies. In particular, locally-based
companies often make tremendous contributions totheir communities through swift emergency action
using their own heavy equipment and materials,
drawing on their close familiarity with the local terrain;
they take responsibility for “protecting the nation” atgrass roots level, as it were. To respond flexibly todisasters that could occur at any place and at any time,
construction companies with business developments allover the country need to establish an environment inwhich they are always prepared for local disasterprevention activities.
(3) Harmonizing with international public procurement
processes
Global strategies by industries aimed at harnessing
the economic growth of newly emerging markets in
Asia and elsewhere, as an energy that will revitalize
Japan’s economy, are cited as one mainstay of theJapanese government’s new growth strategy.
In pursuing the global expansion strategies of theconstruction industry sector, where production-to-orderis the norm, mastery of the procurement rules of thecountry in question is also a major challenge underpresent conditions, in addition to responding to normal
market risks.
Preparations are currently in progress to start trial
contracts based on the standard contractual terms
determined by the International Federation ofConsulting Engineers (FIDIC) in some works under
direct MLIT jurisdiction. Part of the aim in doing so is tocontribute to the training of engineers and experts incontractual practicalities who can be active ininternational projects, thereby aiding the international
development of the construction industry. Of course, thenational infrastructure, society and economic conditions
in western countries differ from those in Japan, and there
is no need to apply internationally standardized
contractual terms mainly formulated by engineers fromthose countries unconditionally to Japan. Nevertheless, it
is expected that this will provide positive lessons on thebest aspects of works contract rules that have gradually
been brushed up through application in various countries.
At the same time, it may provide hints for improving
Japan’s system of construction production.
(4) Contributing to the creation of a recycling society
The construction industry, where various materials
are invested on a massive scale, has the role ofencouraging market formation and technology
development and guiding the creation of a recycling
society. It does so not only by recycling and reusing
construction by-products generated in the process ofworks, but also, for example, by actively promoting theeffective use of waste from other sectors where inside
recycling is difficult.
Green procurement in the public works sector, based on
the Law Concerning the Promotion of Procurement ofEco-Friendly Goods and Services by the State and Other
Entities enacted in May 2000 (the “Green PurchasingLaw”), has made steady progress over the last 8 years3).
In the future, as well as further strengthening efforts
from the design stage, it is hoped that the industry, byintroducing life cycle assessment (LCA) and otherrelated measures, will transmit information both in Japanand abroad as actual examples of the development ofsocial infrastructure that can serve as models
internationally, according to the demands of the times.
3. Summary
In the foregoing, I have cited the challenges facing
procurement in the public works sector from a numberof angles, and introduced directions for related research
initiatives. These challenges are closely linked to eachother. While making sure that in such cases the solution
to one problem does not cause new problems or sideeffects (though this is by no means limited to publicprocurement), a holistic approach is required in order tofind the best solutions for the problem as a whole4). It
might be fair to say that the role and targets of theCenter’s activities lie in achieving this.
References1) National Institute for Land and InfrastructureManagement: Implementation status of thecomprehensive evaluation method in survey & design
work under direct MLIT jurisdiction (FY2009 annualreport), December 2010(http://www.nilim.go.jp/lab/peg/siryou/kisyahappyou/H21nenji.pdf)
2) National Institute for Land and InfrastructureManagement: Implementation status of comprehensive
evaluation method in works under direct MLIT
jurisdiction (FY2009 annual report), January 2011(http://www.nilim.go.jp/lab/peg/siryou/kisyahappyou/
H21nenji (kouji).pdf)
3) Akira Terakawa: Roles and challenges ofprocurement in the public works sector – from theperspective of supporting a recycling society, FY2010
NILIM Lectures, NILIM Journal issue No. 614, pp.
65-78, December 2010.
(http://www.nilim.go.jp/lab/bcg/siryou/tnn/tnn0614pdf/ks061410.pdf)
4) Akira Terakawa: Perspectives of comprehensive
flood risk management, Civil Engineering Journal
Vol.50 No.12, pp.4-5, December 2008