Integrated Guidance for Climate-Resilient Infrastructure

Based on the review of over 150 existing publications and tools on climate-resilient infrastructure, the following key actions have been identified to support practitioners in integrating climate resilience into infrastructure development in the Procurement phase of the infrastructure lifecycle. These actions are summarized in the table below and grouped by theme. Each action is further elaborated on in this section and references and links to key publication and tools are shared.

View all Themes and Actions

Theme 1: Systems Thinking

Central to embedding climate resilience within Procurement is adopting a new approach based on longer-term, systems-level thinking.

The field of climate-resilient procurement is very underdeveloped in existing literature. Although some high-quality published guidance on sustainable procurement exists, resilient procurement guidance was a gap identified by the LCCP ^[1] that remains mostly unfilled, and there is low awareness of the guidance that does exist^[2]. There is considerable overlap between the two concepts, so the guidance for this phase of the infrastructure lifecycle adapts existing sustainable procurement literature where applicable and appropriate.

6.1.1 Maintain awareness of the core principles for effective procurement for climate resilience

There are two primary areas through which the procurement phase can support climate resilience:

• By creating opportunities to enhance the resilience qualities of the project overall: This largely centres around the creation of a delivery team that can embody resilience qualities of integration, flexibility, and resourcefulness (see Resilience and Systems Thinking).
• By enabling climate resilience developed during earlier phases of the project to be carried forward properly throughout the remainder of the lifecycle: This involves ensuring that requirements for climate resilience are fully understood by suppliers, that they are embedded within the procurement requirements and contracts, and that selected suppliers are appropriately incentivised and have the necessary skills and resources to deliver climate resilience

The ASCE sets out the high-level qualities that should form part of a resilient project in their Sustainable Procurement for Infrastructure Standard. These qualities consist of robustness, recovery, adaptability, redundancy, mitigation, avoidance, and integration, outlined on page 18 of the standard ^[3]. Many of these qualities will be fully realised through other phases of the lifecycle; however, it is important to retain a view of these qualities when developing requirements, reviewing and evaluating responses.

An alternative list of key principles is provided by ISO 20400, this list is concerned with sustainable procurement in general, rather than climate resilience. However, several of these principles are also beneficial for climate resilience. These include accountability, transparency, respect for stakeholder interests, integration, seeking innovative solutions, the analysis of costs, and continual improvement, outlined on page 7 of the standard ^[4]. These principles underline much of the guidance provided in this phase of the infrastructure lifecycle.

6.1.2 Recognise the resilience requirements and drivers relevant to different forms of procurement

Procurement is considered its own phase within the project lifecycle. However, it is a phase that extends across the lifecycle as procurement activities are required to support every other phase in some capacity. Procurement might include works, supply and installation, goods, consulting and non-consulting services, and the lease or purchase of existing infrastructure assets^[5]. The procurement process, and subsequent climate-resilient considerations, will vary for each type of procurement.

Government and infrastructure owners and operators should push for climate resilience at the procurement phase. Several drivers encourage organisations to adopt climate resilience into their procurement practices. Again, these overlap considerably with sustainability drivers. Key drivers adapted from BSI^[4] Service Continuity and ReliabilityService Continuity and Reliability include customer expectations around safety and reliability of service, Capacity BuildingCapacity Buildingstimulating innovation from supply chains, stakeholder expectations, reducing risks to infrastructure, avoiding disruptions to the supply chain, and conforming with legislation, regulation and policy. There are few legislative requirements currently, but as legislators increasingly consider climate change and resilience, climate resilience may need to be demonstrated throughout the supply chain as part of the procurement process to comply with legal requirements. Policy commitments, goals and action plans, such as the UN SDGs^[6] are the top driver for sustainable public procurement implementation according to a UNEP (2017) ^[7] survey.

6.1.3 Employ long-term approaches to procurement

Traditional procurement is frequently conducted with only a short-term view towards cost savings. This can frequently lead to projects which fail to meet their intended outcomes ^[8]. Decision-makers can easily become “locked-in” to an approach of short-term, piecemeal procurement which favours the maintenance of the status quo and makes it difficult to invest in solutions that will see long-term benefits at larger initial expense. Future-Oriented PlanningFuture-Oriented PlanningShifting towards procurement processes intended to operate on longer timescales can lead to improved project outcomes ^[9]. The key factor is altering an owner’s or investor’s focus from reducing the initial capital expenditure to a holistic vision of value that benefits a range of stakeholders and enabling “a shift away from procurement of new infrastructure as a series of individual projects each procured independently in the market”^[8].

This approach is particularly essential for increasing climate resilience, as climate-resilient infrastructure often requires increased initial capital expenses in return for greater ability to cope with climate hazards and long-term climate change impacts.

6.1.4 Consider the criticality of procured assets and their role relative to the wider system

Criticality is an indicator of how crucial an asset is to the wider system. Action 5.2.4 discusses how to assess this^[10].

Systems ThinkingSystems ThinkingAssessing the criticality of procured assets and how these relate to the wider infrastructure system allows the procuring authority to better understand the role these assets play in maintaining a stable system or the importance of their contribution to the overall resilience of the system. This includes understanding what vulnerabilities they are exposed to within the system and the impacts that exposure to these vulnerabilities could have on the procured assets themselves as well as the wider system. This should allow the procuring authority to address the vulnerabilities at the asset and system-level, through design, construction, or O&M interventions, which are discussed in the preceding and subsequent lifecycle phases. At a minimum, considering the criticality will prevent diminishing the ability of the system to withstand climate shocks and stresses if the asset is altered in any way post-procurement.

Optimising the procurement approach in this way has downstream and systemic benefits. Placing the asset within the context of the system as a whole, rather than as a siloed entity, provides greater insight into the critical links and interactions with other assets and systems. Inclusive EngagementInclusive EngagementBeing able to account for these at the procurement phase will allow procuring authorities to more effectively exploit these synergies downstream, through cooperation with other relevant stakeholders, thereby building a more robust and interconnected system.

Theme 2: Climate Risk and Uncertainty

6.2.1 Incorporate climate risk assessments into procurement

The need to develop capacity in incorporating climate risk into procurement processes was identified in 2015 and thought to be critical in achieving the Paris targets^[11]. Since then, limited progress has been made in identifying opportunities, practices and techniques for accounting for climate risk in procurement.

One approach that offers a limited opportunity to incorporate climate risk, is proposed by the Stichting Klimaavriendelijk Aanbesteden en Ondernemen^[12]. Their procurement guide, which sets out a framework for a low-emissions procurement approach, advocates for a methodology that sees buying organisations account for and minimise their relevant ‘scope 3 emissions’ throughout all stages of procurement. The handbook’s definition of these is emissions that “can form a risk for the company”. This guide focuses on climate change mitigation, however similar principles apply to climate change resilience and adaptation.

Systems ThinkingSystems ThinkingClimate risks do not occur in isolation, those responsible for procurement should therefore look to identify climate risks holistically across the entire supply chain. Inclusive EngagementInclusive EngagementEngaging with relevant suppliers and service providers to understand the impact the climate has on their products and services and the steps they are taking to minimise and mitigate against those impacts is therefore key to managing and reducing climate risk.

As per the Inter-American Development Bank’s recommendations^[13], climate resilience considerations should be included as early as possible in the procurement process. Section 3 of their Climate Resilient PPP Toolkit guides buying organisations on how to include climate resilience in the procurement process. These qualifications can be mandated by the relevant buying organisation, or, under appropriate circumstances, could be a requirement stipulated at a governmental level. See the Policies and Plans phase for further guidance on regulations supporting climate resilience. Assessing a supplier’s climate resilience credentials at the primary stage of procurement in this way can have several benefits. Firstly, it helps to streamline the procurement process, as unsuitable candidates will not be considered going forward. Secondly, as this practice becomes more widespread, considering climate resilience at this stage in the lifecycle process will ideally become part of business-as-usual procurement operations.

Tool 3.1 of the IDB toolkit offers guidance on including climate resilience considerations at the Request for Qualification (RFQ) stage of the procurement process, with approaches for this outlined in Tool 3.2. Tool 3.3 offers guidance on integrating climate resilience into output specifications.

While the toolkit targets Public Private Partnerships (PPPs) which are discussed further in Action 6.4.2, the guidance is high-level enough to be applicable in other instances and detailed enough to still provide useful insights^[13].

6.2.2 Create systems to distribute climate risks

At the procurement phase, there are two primary areas of risk management related to climate change impacts: management of risks due to climate change impacts throughout the asset life and of risks related to a failure to deliver on the climate resilience objectives of the project. The risks from the former category are primarily assessed and addressed in other phases of the project lifecycle. However, a high-level review and prioritisation of climate change issues should be undertaken during procurement. Depending on the lifecycle point, this should be able to draw on various existing risk assessments. As an adaptation of a sustainable procurement approach presented on page 10 in ISO 20400, a review of each issue’s relevance to the organisation, Evidence-Based Decision MakingEvidence-Based Decision Makinganalysis of the severity of adverse impacts to the organisation and supply chain, and the effort and capacity to influence the level of impact could inform this prioritisation^[4]. This review should inform how an organisation, through its procurement activities, exercises its influence through direct or indirect control to mitigate climate risks.

Climate risk and resilience requirements may at times be complex or less well understood, and there is therefore potential for contractors and suppliers to regard them as higher risk. This therefore places additional importance on the proportional allocation of risks between the different project parties^[14]). Mechanisms to allocate climate risks include^[15]:

• Payment mechanisms – defining how parties will be compensated, which can be made contingent on the mitigation of risks.
• Express contractual provisions – setting explicit guarantees and obligations to adjust the risk allocation implicit in the project structure.
• Provisions for financial re-equilibrium of contracts to deal with supervening events.

These above mechanisms are from a PPP-related source but have broader applicability. In the case of PPPs, the private partner, through the project specific ‘Special Purpose Vehicle’ (SPV), usually takes on most of the risk of non-performance and disaster risk^[16]. Under other models of procurement, the majority of the risk defaults to the owner and investor in the assets^[17]. A three-tiered approach to supervening events in climate-resilient PPPs is proposed by the IDB on page 142 of their toolkit, consisting of^[13]:

• Compensation events – The buying organisation pays compensation to the developer, in addition to any other contractual relief required, to leave them in the same position as before the event.
• Relief or delay events – The developer takes on financial risk for an event but is given relief from other consequences of non-performance resulting from the event. Typically used for insurable or short-duration events.
• Force majeure events – Events beyond the control of all parties that render performance impossible. Typically, these are uninsurable, uncontrollable, and catastrophic events. Parties usually each bear their own consequences for these events, although contracts which make allowances for force majeure events do exist.

Climate risks are traditionally treated as Force Majeure. Future-Oriented PlanningFuture-Oriented PlanningHowever, a more nuanced, hazard-specific approach can improve this classification and enable better allocation of climate risk for events which are potentially foreseeable and avoidable^[13]. The IDB Climate Resilient PPP Toolkit includes a simple tool (Tool 4.2) for redefining climate risks.

6.2.3 Prepare adjustment, dispute, and grievance mechanisms to help adapt to changing circumstances as the project progresses

Future-Oriented PlanningFuture-Oriented PlanningLong-term projects are likely to require contractual changes during their lifetimes, especially given the high uncertainty surrounding climate change. This may include unforeseen changes in climate, advances in technology or adaptation of assets and operations. The creation of adjustment mechanisms introduces flexibility within procurement contracts to allow projects to adapt to this uncertainty. Furthermore, putting mechanisms in place to deal with supplier issues can help ensure both smooth project delivery and that all stakeholders have equal opportunities to address problems.

Future-Oriented PlanningFuture-Oriented PlanningPreparing mechanisms to deal with change in procurement agreements from the outset allows them to deal with uncertainty, a particularly important factor given the high levels of uncertainty around climate change. For example, a project that intends to use adaptive design (discussed in Lifecycle Phase 5), should clearly state the trigger points within the contracts with the supplier responsible for their enactment^[16]. Long-term contracts will typically include mechanisms for contract renegotiation due to unforeseen risks or changes in the law. Learning and IterationLearning and IterationContracts may also incorporate a regular review of their requirements, for example a 5-year updated masterplan for airport concessions to respond to changes in climate predictions and new technologies^[16].

Future-Oriented PlanningFuture-Oriented PlanningThe creation of a dispute resolution process (DRP), that outlines steps for resolution of disagreements between the procuring body and supplier and assigns responsibility for its facilitation, is recommended on page 38 of ISO 20400^[4]. These are particularly important in the complex, ideally long-term, agreements likely to be required to deliver climate resilience. Disputes are also increasingly likely to be triggered by extreme climate events. A DRP should ^[16]:

• Aim to facilitate high level negotiations between the two parties, perhaps including an impartial third party as a mediator.
• Include a dispute resolution board including two independent experts, one designated by each party and a 3rd selected by mutual agreement.
• Consist of a process where evidence is presented to the third party, who makes the final decision.

For climate-related disputes, the expert and mediator roles could be filled by climate experts.

Inclusive EngagementInclusive EngagementA transparent grievance mechanism should be established to allow any stakeholders who feel they have been negatively impacted by the project. This might include members of the community, and should be made open to everyone, particularly vulnerable groups. This mechanism should ensure grievances can be addressed in a mutually agreeable, safe and equitable manner. Equity and Social Co-BenefitsEquity and Social Co-BenefitsThis can play an important role in mitigating negative impacts across the supply chain^[18] and is an important part of ensuring equity through procurement.

Theme 3: Procurement Approaches and Mechanisms

Decisions can be made at the procurement phase around the selection of procurement approaches and mechanisms to leverage and facilitate resilience beyond the direct scope of procurement and throughout the project life. The earlier resilience can be embedded in a project, the greater impact small investments can have on the overall resilience of an infrastructure system^[19]. These opportunities include both creating systems that will encourage resilience to be carried forward and Learning and IterationLearning and Iterationthat can be adapted, adjusted and improved as the project progresses.

The approaches available to procurement officials during public procurement activities will typically be limited by national regulations and requirements. Therefore, it may not always be within the power of decisionmakers at the procurement phase to freely select their approach. Furthermore, climate resilience is not the only consideration behind procurement approach selection. This guidance should therefore be regarded as recommendations from a climate resilience perspective only.

6.3.1 Select procurement processes that support climate resilience

Climate resilience is an emerging, and often technically complicated field. It therefore requires innovation and technical expertise to deliver. A procurement process that best enables suppliers to demonstrate their technical credentials, the integration of different areas of expertise, and flexibility for contractors to innovate where necessary will therefore be best suited to deliver resilience value.

The procurement procedures available to a public buying organisation will typically be restricted by national procurement requirements and regulations. Open, restricted and negotiated procurement procedures are all frequently employed, each with their own particular uses. Inclusive EngagementInclusive EngagementCompetitive dialogue processes have been recommended by some authorities for use in ‘complex’ projects as they offer the advantage of including participants in the tendering process. In competitive dialogue procurement, pre-qualified bidders participate in a dialogue to develop alternatives for later evaluation^[14]. This allows for innovative solutions to be developed, could increase contractor buy-in to climate resilience measures and could prevent later issues developing due to contractors being unable to deliver. However, there is usually limited room for changes to the proposal to be made later and suppliers are likely to be resistant to change due to the time and expense required, potentially resulting in inflexible project arrangements^[14].

There are many different project delivery systems employed during the procurement phase. Of the five primary functions of procurement, Design (D), Build (B), Finance (F), Operate (O) and Maintain (M), traditional procurement focuses on D, B, D&B or O&M contracts (GCA, 2021)^[16]. Each of these systems has its own benefits and disadvantages and there is no single system best suited to all conditions. However, systems which integrate several roles into a single contractor, or expand the responsibilities of the contractor, may be beneficial in areas where the market has greater expertise than the infrastructure owners, as they allow greater innovation among suppliers (UNEP, 2018)^[20]. On the other hand, these arrangements may be inflexible and unable to deal with uncertainty, or adaptive approaches if handled improperly. For example, a contractor procured for design-build may be locked-in to a particular approach which will receive less scrutiny and be less open to change than if the two phases were procured separately. Future-Oriented PlanningFuture-Oriented PlanningOwners should ensure they are clear on their desired outcomes before entering an inflexible, multi-function agreement.

Procurement specialists may consider procuring more integrated teams that encourage cooperation while remaining flexible. Alliance Contracting consists of procurement approaches that utilise joint contracts between parties. The integrated project delivery (IPD) approach incorporates elements of Alliance Contracting, emphasising openness, shared risks and rewards, and collaborative decision making. IPD is intended to utilise versatile expertise, in addition to nascent tools, techniques and procedures^[21]. All these aspects are potentially beneficial to a project attempting to be climate-resilient and could be taken into account when selecting a procurement system, alongside other project requirements.

ICE’s Project 13 attempts to present an alternative model of infrastructure delivery based around integrated ‘enterprises’ rather than transactional, independently procured projects. This approach aims to increase the integration of project teams as well as the governance and capabilities of the organisation^[8]. A key aspect of this is the creation of an ‘integrator’ role, an organisation responsible for integration between the different components of an enterprise. Under this model it is this integrator role that is responsible for establishing the procurement strategy and incentivised commercial agreements^[17]. Increasing the levels of the resilience quality of integration through a role like this could enable the more effective coordination of activities around climate resilience Systems ThinkingSystems Thinkingbetween different organisations and better facilitate systems thinking throughout the remainder of the project.

6.3.2 Consider partnering directly with the private sector

Public Private Partnerships (PPPs) are mechanisms for public procurement that involve a private sector organisation working closely with the public sector on an infrastructure project to provide investment and expertise. They are typically long-term contracts, in which the private sector bears significant risk and responsibility for project management, reward is linked to performance and most or all areas of the project are procured at once^[16]. Other procurement mechanisms which place greater emphasis on the role of the private sector include Mutual Investment Model (MIM) agreements^[22] and Direct Procurement for Customers (DPC)^[23]. In addition to offering opportunities to mobilise additional private sector investment, PPPs and similar agreements may in some cases provide opportunities for enhanced climate resilience for several reasons outlined on page 24-25 in the GCA’s handbook^[16]:

• Incentivised performance – Service Continuity and ReliabilityService Continuity and ReliabilityPayment is often based on performance, therefore allowing the integration of climate-resilient principles into reward structures and incentivising outcomes. This is discussed further in Action 6.3.3.
• Output/results focus – An output focused approach that enables private sector innovation, Environmental Co-BenefitsEnvironmental Co-Benefitssuch as the integration of Nature-based solutions. This can also be combined with incentives to encourage innovation and maximisation of co-benefits.
• Long durations and whole-life costing – Future-Oriented PlanningFuture-Oriented PlanningAs PPPs and similar agreements operate on longer timescales than traditional public sector procurement, the private sector actors typically taking responsibility for operations and maintenance for a number of years, so they are more likely to effectively address long-term climate resilience issues.
• Widespread use – PPPs are relatively common in many markets and so organisations should be more capable of working within them comfortably than more novel procurement approaches, reducing the complexity of climate resilience integration.
• Risk transfer – As PPPs and similar agreements typically include risk-sharing among the participating organisations they are well suited for reviewing and tackling risks related to climate change effectively.

It should be noted that the status and popularity of PPPs and similar agreements is variable across the globe, with some national and regional governments favouring them while others do not support them. Likewise, their popularity with contractors is variable depending on attitudes within the market.

The GCA’s^[16] four phase PPP project lifecycle on page 13 of their handbook illustrates how different key concepts of climate resilience, decision-making under uncertainty, stakeholder engagement, characterising the future and nature-based solutions, can be embedded within the phases of a PPP.

The IDB toolkit for decision making in Climate-Resilient Public Private Partnerships includes many tools useful for the delivery of PPPs and some with applicability to other procurement mechanisms. The toolkit includes tools (Tool 2.4 – 2.9)^[13] to help decision-makers evaluate the value for money (VfM), business case and other factors to decide whether to pursue a PPP based project, with consideration of climate change.

6.3.3 Consider outcome-based procurement approaches

Outcome-based procurement approaches employ performance and functional requirements. The former defines performance standards to be met by the supplier and might be combined with a definition of how the supplier should deliver to optimise this performance. The latter define a function that is to be met by the goods or services delivered by the supplier without any requirements for how it is to be delivered. A combination of performance and functional requirements can enable suppliers to propose the most efficient technical solution for the required performance or function within sustainable procurement^[4]. This is likely to be beneficial provided the available suppliers have sufficient capabilities and expertise surrounding climate resilience. However, the creation of these performance and functional requirements for climate resilience may be more challenging than for climate mitigation, due to the inherent uncertainty around climate risks. Suppliers are likely to be hesitant to accept requirements that too broadly require ‘fitness for purpose’, as this is usually uninsurable.

It is essential that outcome-based procurement requirements are well considered to ensure that they are within the supplier’s power to influence, achievable, and clearly measurable. Climate resilience might be incorporated into outcomes-based requirements through:

Continuity of quality service – Requirements around the ability of infrastructure to consistently deliver quality service to end users. These might include maximum allowable periods of service losses. Reasonable levels for these criteria should consider the criticality of the service and services dependent on it, the value generated by the asset, the level of redundancy in the system, and the repair or recovery time of the asset^[16].

• Design standards and safeguards – Clearly specifying standards to be met for the project can increase resilience. However, most standards currently published do not account for climate change^[24]. Procurement officials should therefore specify clear, climate informed, benchmarks that might go beyond the current standard requirements. This might include the use of rating systems^[16].

Key performance indicators – Establishing key performance indicators that must be met^[16]. Service Continuity and ReliabilityService Continuity and ReliabilityExamples of these might include quality of service requirements, damage by disasters and extreme weather events, efficiencies of the asset over time, reductions in independently assessed hazard ratings across a network, the number of interventions against climate change impacts made, and any other indicators considered relevant to the specific requirements of the project^[16]. The Re:focus Toolkit for Procuring Resilience includes some high level guidance on performance metrics for inclusion in a procurement contract for resilience with consideration of environmental, social and economic benefits delivered^[25].

Future-Oriented PlanningFuture-Oriented PlanningOutcome-based requirements for climate resilience may require long durations before they can be effectively measured, and may subsequently be ineffective unless long-term procurement agreements, such as PPPs, are utilised. Some requirements may be shorter term in nature if they are independent of whole-life performance, they are therefore easier to implement across shorter contract periods but likely to be less suitable for ensuring long-term climate resilience.

6.3.4 Incentivise the delivery of climate-resilient outcomes through payment mechanisms

Selecting incentive structures that incorporate climate resilience is a useful lever to support the delivery of resilience outcomes as a project progresses. Service Continuity and ReliabilityService Continuity and ReliabilityThese incentive structures are a common form of outcome-based procurement which explicitly tie contractor renumeration to the delivery of performance metrics or the provision of a reliable service.

Performance-based payment schemes legally bind suppliers to agreements which tie payments to measurable outputs according to a predefined performance standard^[26]. Service Continuity and ReliabilityService Continuity and ReliabilityThe creation of such mechanisms can provide a financial incentive to stimulate better risk mitigation and preparation, in addition to higher quality operational responses and repairs^[16]. Future-Oriented PlanningFuture-Oriented PlanningAdditionally, performance-based payments can encourage longer term thinking and integration of different contractors, for example by jointly incentivising multiple contractors to deliver on the same long-term performance objectives^[17]. Performance-based payment mechanisms are already well-established in some industries, sectors, and nations. For example, 100% of maintenance contracts on South Africa’s national roads were delivered through performance-based contracting^[27].

The Project 13 Commercial Handbook, page 21, outlines a methodology for performance-based reward centred around the establishment of a performance baseline, the allocation of shares according to who is best placed to maximise value and mitigate risk, and payment based on each organisation’s respective shares and the level of performance above the baseline^[17].

PPPs typically employ performance-based payment mechanisms. Additionally, PPPs often include payment through user charges, for example the right to charge for a toll road, and penalties or fines for failing to deliver outcomes, all of which must be fully defined in the contract^[13]. Service Continuity and ReliabilityService Continuity and ReliabilityThese further incentivise the private partner to ensure reliable service delivery. The IDB PPP toolkit includes a short tool (Tool 3.7) to help develop PPP payment mechanisms to incentivise and enforce climate resilience.

Theme 4: Requirements and Evaluation

Supplier requirements for climate resilience, in terms of qualifications and deliverables, must be embedded into the tendering and selection process to effectively deliver climate-resilient projects.

Although the precise figures vary depending on hazard, asset type and location, the creation of resilient infrastructure typically requires a Future-Oriented PlanningFuture-Oriented Planninglarger capital cost in exchange for future cost savings and additional social, environmental, and economic benefits^[19]. Procurement practitioners are typically required to ensure that value for money (VFM) is achieved through their procurement. If the added value of climate resilience is not appropriately considered it may end up being deprioritised during the procurement process. Approaches should therefore be adopted where possible that help evaluate, stress, and enhance Systems ThinkingSystems Thinkingthe total resilience value of a project at the procurement phase.

6.4.1 Specify clear requirements for contractor and supplier capabilities and actions for climate resilience

Incorporating explicit climate change requirements into procurement documents such as the Request for Qualifications (RFQ)/ Selection Questionnaire (SQ), Request for Proposal (RFP)/ Invitation to Tender (ITT) and contracts can help guarantee a minimum level of climate resilience action from the selected partners, through ensuring suppliers have the necessary credentials to deliver and that the activities they will have to undertake are embedded early within the project. Including climate resilience within the RFQ/ SQ can help reduce the number of bids from under-qualified candidates. For example, procurement professionals might consider setting requirements for past experience of having undertaken a similar role on projects with similar climate change considerations, which might have a set minimum level or form part of an initial evaluation of candidates^[13]. The IDB Climate Resilient PPP Toolkit provides some additional guidance on this within Tool 3.1.

Requirements might be taken into further detail as part of the RFP/ ITT. As in the RFQ/SQ, these might take the form of minimum pass/fail requirements or evaluation criteria. Minimum requirements should only be considered where the procuring agency is clear on what it requires from the bidders, whereas evaluation criteria can be used to differentiate bidders where the procuring agency is not certain about what they want delivered^[13]. In addition to qualifications, minimum requirements might include proof of sufficient insurance coverage regarding potential climate risk and the submission of disaster prevention and risk response plans^[28]. Other requirements might include the use of a specific project system and capabilities with a particular tool or rating system^[3].

Many requirements for climate resilience might be incorporated into the project specification. As with sustainability criteria, climate resilience criteria included in specifications should be objective, verifiable, clearly defined, transparent, and fair, with consideration of the capacity for contractors and consultants to respond^[4]. The Re:focus Toolkit for Procuring Resilience provides high-level guidance on the design of resilient procurement RFIs, Competitions and Performance contracts at different levels of complexity depending on the nature of the project.

The specific language used in specifications and procurement documents is key to delivering some of the above qualities, ensuring that it is concise and unambiguous. Tool 3.4. and 3.6 in the IDB^[13] toolkit includes example language for a requirement to produce an emergency preparedness and response plan and periodically updated climate risk mitigation plan respectively, indicating how the use of language might develop depending on the particular stage and circumstances of procurement. Chapter 4 of ASCE’s Sustainable Procurement for Infrastructure Standard includes numerous examples of requirements from RFQs, RFPs, and contract documents for sustainability which might be adapted to suit other projects. For example, the RFP for rehabilitation of a pumping station in Madison, USA, included the clause “…a project team having a successful track record of incorporating sustainable thinking into projects and programmes … [including] applied decision-making frameworks such as the Institute for Sustainable Infrastructure’s EnvisionTM” and several other sustainability frameworks. Professionals might also wish to incorporate requirements for the delivery of sustainability co-benefits, which often overlap with resilience outcomes at this stage, for which the ASCE standard has helpful guidance.

There is potential for prescriptive requirements in procurement documents to become excessively onerous, preventing suppliers from being able to enter the market or fairly compete. This might be particularly true of novel climate resilience requirements which only a limited number of suppliers may have the capabilities to deliver. Inclusive EngagementInclusive EngagementMarket engagement, discussed further in Theme 6.5, is key to preventing and identifying these issues^[29].

6.4.2 Utilise resilience rating systems and standards in the supplier selection process

Evidence-Based Decision MakingEvidence-Based Decision MakingRating systems and standards provide a useful, transparent, and standardised way to evaluate bids and suppliers. Qualification of bidders might require a minimum level of achievement under a specific rating system^[3]. They might be used to evaluate responses or be included as a delivery requirement^[16]. The incorporation of rating systems with a climate resilience element can help ensure resilience is appropriately valued during supplier selection. Many of these systems consider resilience alongside sustainability.

Tools such as the Envision rating system and SuRe Standard for Sustainable and Resilient Infrastructure are designed to evaluate infrastructure projects according to a series of sustainability criteria, which incorporate some climate resilience elements. They provide guidance for assigning levels of achievement to each of these criteria^[30]. However, these tools are mostly suitable for evaluation of projects themselves during delivery. The evaluation criteria set out in these guides may not all be suitable for procurement; however, they could provide a useful foundation for the development of evaluation criteria with minor adaptation. The criteria largely focus on inputs and actions to be taken by the team, making them useful for proposal evaluation.

The IS Rating System is similar to the above, with the same limitations for procurement. However, ISC have also developed the ISupply Directory, which allows suppliers offering products and services that meet the IS Rating System’s criteria, which includes resilience and climate adaptation considerations, to connect with potential clients. Evidence-Based Decision MakingEvidence-Based Decision MakingThis is a good example of how rating systems can be directly incorporated into supplier selection.

6.4.3 Employ evaluation approaches that consider total resilience value

Criteria for the evaluation of received bids should be leveraged to incorporate climate resilience. This can include technical evaluation of climate resilience solutions and staff qualifications, in addition to how the infrastructure fits into broader climate-related goals^[16]. The IDB Climate Resilient PPP Toolkit includes high level guidance on the inclusion of climate resilience as evaluation criteria (Tool 3.6).

Evaluation criteria should be clearly set out in the RFP for transparency purposes, along with a description of the factors that will be considered when assessing sub-criteria. Independent evaluation and scoring of technical criteria before reviewing financial criteria, as is required by EU procurement regulations, can help prioritise these technical criteria over cost and subsequently total project value over initial CAPEX savings^[16]. It is also critical that the personnel responsible for reviewing the responses are technically competent. Capacity BuildingCapacity BuildingThis should be considered as part of the professionalisation of procurement discussed in Action 6.2.1.

Theme 5: Capacity Building

Central to the embedment of climate resilience within procurement are measures that can be taken to manage and enhance the industry’s capacity to deliver climate resilience goals and to get the most out of the private sector’s existing expertise. Capacity BuildingCapacity BuildingThis includes improving the capabilities of both procuring bodies and suppliers and strengthening the relationships and processes necessary for resilient procurement.

6.5.1 Build governmental capacity to deliver climate resilience through procurement

There are many ways that the organisation of the procurement process can be improved to better facilitate climate-resilient decision-making and implementation. Capacity BuildingCapacity BuildingCreating a supportive organisational culture, implementing performance management, providing education, training, and other forms of support, will all help to give all those involved in the procurement process a full understanding of the reasoning behind climate resilient procurement and their role in delivering it^[4]. There is a recognised need to increase the professionalisation of the procurement process and the level of expertise in sustainable procurement^[31]. This will be important for procurement that supports climate resilience due to its technically complex and underdeveloped nature, where a check-box approach to procurement will not be sufficient.

Establishing specific, clear, and accountable roles within the procurement team with climate resilience integrated into the team’s objectives and job descriptions can help the delivery of resilient outcomes and the overall transparency of the organisation^[4]). Transparency of procurement processes can be particularly important in the case of partnerships between public and private institutions^[32], discussed further in Theme 6.1. The CoST Infrastructure Transparency Index is a tool intended to measure the transparency of infrastructure procurement to help improve the quality of associated processes.

Climate resilience, and resilience in general, is poorly acknowledged in most existing resources. The encouragement of resilience education for procurement could help to raise the profile of this issue and produce benefits for businesses. Government would have the primary responsibility for establishing requirements for resilience in procurement and supporting education programmes.

6.5.2 Engage with stakeholders to understand the market and build the capacity of consultants and contractors

It is important for procurement practitioners to understand what suppliers within a particular market can deliver, to develop trusting working relationships with suppliers and to build their skills in the field of climate resilience. Suppliers may perceive requirements outside of traditional infrastructure, such as those around climate resilience, as higher risk. This may lead to increased prices or a reluctance from some suppliers to bid for climate-resilient projects. Capacity BuildingCapacity BuildingMarket engagement and capacity building therefore plays a key role in familiarising suppliers with resilience concepts, building confidence in their delivery, and subsequently lowering the perceived risk. This is particularly key in developing markets where climate change expertise may be less widespread.

In the realm of public procurement, the LCCP (2009)^[14] (identified policymakers, contracting authorities, industry organisations, and contractors as the stakeholders with the greatest potential to “influence the extent to which climate change is embedded into public procurement” (p.67), and therefore targets for stakeholder engagement activities.

Systems ThinkingSystems ThinkingEngagement with suppliers, partners and subcontractors throughout the supply chain can help expand the scope of resilience activities, potentially allowing for longer-term initiatives and activities that reach beyond the first tier of suppliers, i.e. those that a buyer organisation typically interacts with directly^[4]. This may provide opportunities to increase the resilience of the entire supply chain and to use supply chain innovation to improve the resilience of the overall project. Example engagement techniques which could be adapted to a climate resilience context, set out on page 17 of ISO 20400, include^[4]:

• Supplier development plans – The organisation supports suppliers to develop their capabilities: these might include climate resilience, risk assessment and development.
• Supplier diversity initiatives – Aim to increase business opportunities for under-utilized groups of suppliers by including them in procurement decisions. Diversified supply chains typically have greater resilience to disruption^[33].

Learning and IterationLearning and IterationThe UK Government^[29] recommends early engagement with the market to help promote procurement opportunities and provide a forum to discuss delivery challenges and risks associated with the project. This allows decision-makers to assess the deliverability of their requirements and the feasibility of alternatives so that they can be improved in future.

Industry outreach might similarly be conducted to gauge private sector capabilities and interest in a particular project at early stages of the procurement process to ensure it is commercially viable^[32]. Additionally, early market engagement has been employed to encourage innovation through an open dialogue, encouraging the generation of research and development projects and furthering understanding of the field^[31]. Outreach might allow buying organisations to tailor their assessment criteria and requirements to mitigate damage to contractor’s willingness to deliver climate-resilient infrastructure, by identifying criteria that contractors find unreasonable.

National public procurement requirements typically mandate free and open competition, intended to deliver equal opportunity to all bidders. Principles of non-discrimination, equal treatment, and transparency are typical of international public procurement agreements^[34] and many national procurement requirements. Ensuring that public procurement is equitable is additionally challenging when complex climate change requirements are included, as this may make it difficult for local suppliers, and small and medium enterprises (SMEs) to compete. Equity and Social Co-BenefitsEquity and Social Co-BenefitsThis amplifies the importance of capacity building activities that will expand the range of potential qualified suppliers.