3. Procurement

The start of this chapter summarises recommendations on the preparation of procurement using new priorities such as EFCS. The chapter also includes examples of how procurement criteria have been utilised to reduce emissions from construction sites, citing the Green Deal in Finland, Oslo City, and the Swedish Criteria Bank. Subsequently, the chapter introduces a suggested method that outlines how minimum requirements, award criteria, and bonuses can be applied in procurement to promote emission reductions at construction sites. Finally, the chapter discusses follow-up methods to ensure the ongoing effectiveness of these procurement strategies.

Procurement for EFCS should be predictable, harmonised, and preferably simple to implement. In order for EFCS goals to be realised, ambition levels should match political mandates. Since LCA demands and limit values will be standard in all the Nordic countries within a few years, one method is to use criteria based on those requirements to build upon existing legal obligations.

Procurement takes place at different stages in the construction process. It is commonplace to go to tender once the design is finished and before construction; this is typically referred to as the Design-Bid-Build (DBB) method. This chapter primarily discusses this form of tender.

Contracting authorities may fear a lack of valid tenders when stipulating emission reductions in the tender. Flexibility within the criteria is therefore preferred, which makes the suggested method below useful. In this method, LCA criteria allow bidders to choose which parts of the construction site, or modules A4 and A5, the emission reductions will come from. However, if during the planning phase the procurer identifies significant potential for reducing emissions from certain parts of the construction site, then focusing the criteria in that direction can be successful.

3.1 Preparation

As mentioned in the previous section, a good plan is an important foundation that can make a big difference. This also applies when it comes to procurement.

Time

When incorporating EFCS in procurement, extra time should be factored in, as should extra costs. Due to the complexity of the contract, there might be a need for additional time from when the project is tendered until the bidding period ends as it can take longer to bid on a project with new requirements. A longer lead time at the outset facilitates a smoother transition for the market as it adapts to new requirements, fostering greater participation and innovation. In addition, extra time might be needed during construction due to a new emphasis on reduced emissions and difficulties in implementing new methods. Although more time means more cost, it mitigates defects that could be costly later on.

Cost

The ability to implement the goals of EFCS can depend on funding, especially when the first steps are taken, as there is an increased need for green machinery, better organisation, and more time. Nevertheless, in Norway where there is a decent level of experience, there are promising examples of bids that feature a plan for reduced emissions at the worksite and a lower price.

E. A. Fossland, ‘Veinor AS var mest miljøvennlig og vant anbud i Bodø’, NRK. Accessed: Jul. 01, 2024. [Online]. Available: https://www.nrk.no/nordland/veinor-as-var-mest-miljovennlig-og-vant-anbud-i-bodo-1.16151182

Goal setting

Establish ambitious goals from the outset that align with the organisation’s strategies. One such goal is included in the environmental conditions set forth by Ríkiskaup, which state that the generation of waste in construction must be minimised, regulations on noise must be respected, and better energy efficiency must be ensured. This aligns well with the aims of EFCS

Ríkiskaup, ‘Umhverfisskilyrði fyrir byggingaframkvæmdir - Grunnviðmið’, Ríkiskaup. Accessed: Jul. 01, 2024. [Online]. Available: https://www.rikiskaup.is/is/innkaup_og_utbod/samfelagslega-abyrg-innkaup/vistvaen-innkaup/umhverfisskilyrdi-i-utbodum

. LCA demands and limit values are expected to become standard in all the Nordic countries within a few years. As knowledge of the environmental impact of modules A4 and A5 improves, and with the inclusion of these modules in international standards such as the European standard EN 15804, it is likely that A4 and A5 will soon be incorporated into LCA requirements across all the Nordic countries. To build upon existing legal obligations, one approach is to use criteria based on these LCA and limit value requirements.

Dialogue

With the market expected to evolve and diverge rapidly across the Nordics in the next few years, engaging with potential contractors early in the procurement process can be beneficial. This provides a mutual understanding of expectations and an opportunity for the buyer to clearly communicate their objectives or ambitions for the purchase to potential bidders and learn what possibilities exist

‘The Concept for the Green Deal for Zero-Emission Construction Sites | Hankintakeino.fi’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.hankintakeino.fi/en/materialbank/concept-green-deal-zero-emission-construction-sites

. During stakeholder dialogue, it is important to remember that the contractor’s business and performance goals can influence their attitude towards emissions reductions. Performance goals often conflict with efforts to reduce emissions at construction sites. However, there are also instances where the market goes further than the regulations require, with stakeholders demanding more stringent requirements than those currently mandated. They seek such regulations because they provide stability and enable contractors to know what to expect, which helps in planning and meeting market demands effectively. For the same reason, procurement methods should be predictable and consistent. An example of the market going further than the regulations require is the Reduction Roadmap in Denmark.

‘Reduction Roadmap’, Reduction Roadmap. Accessed: Jul. 01, 2024. [Online]. Available: https://reductionroadmap.dk

Key points

Expect extra time and cost.
Establish goals that align with the organisation’s strategies.
Engage with potential contractors.

3.2 Procurement methods

Different procurement methods and forms of criteria can produce varying results. Examples of criteria used in the Nordics to reduce emissions on construction sites include those adopted by the City of Oslo and the criteria included in the EFCS component of the Green Deal agreement Finland. The Swedish Criteria Bank provides many good examples of EFCS criteria. Below is a non-exhaustive list of procurement methods and criteria that have been used.

Minimum requirements

Minimum (mandatory) requirements in tenders describe the properties required in the service to be produced. These are used when market engagement indicates sufficient maturity, which is when multiple suppliers can cater for a demand. In the case of technologies that are already widely available, such as small electric NRMM and subsequently bigger machinery, requirements can be set without issue. Heating and drying processes, such as those involved in concrete foundation work, can also be mandated to have zero emissions. When formulating these mandates, it’s crucial to emphasise the desired outcome, such as eliminating the use of fossil fuels, rather than to prescribe specific solutions.

Big Buyers Initiative, ‘Public Procurement of Zero-Emission Construction Sites’, Big Buyers Initiative, 2022. Accessed: Jan. 19, 2023. [Online]. Available: https://bigbuyers.eu/fileadmin/user_upload/Materials/BBI-ZEMCONS-lessons-learned.pdf

Award criteria

Award criteria (evaluation) are used to determine which tender will be awarded the contract when the basis of “the economically most advantageous tender” is applied. These criteria can, for example, give preference to tenders that use a greater proportion of emission-free machinery on site. The weighting of the award criteria should be significant enough to influence the bids. As technology advances, these criteria can gradually be adopted as minimum requirements.^[21]

Contractual requirements

Contractual requirements are placed on the supplier or the service and are conditions that must be met during the execution of the contract. These requirements ensure that suppliers adhere to specific environmental and performance standards throughout the project. For instance, contractors could be required to report regularly on their emissions, use only specified types of low-emission machinery, or adhere to strict waste management protocols.

Application of bonuses

Bonuses can be applied to incentivise contractors’ ambitions to go beyond the minimum requirements. Bonuses can be awarded for delivering additional environmental benefits, such as surpassing emissions reduction targets, implementing innovative green technologies, or completing projects ahead of schedule with reduced environmental impact. Financial incentives can motivate contractors to strive for excellence in sustainability, pursuing continuous improvement and the adoption of best practices. These bonuses are generally awarded after the project is complete to allow for a comprehensive evaluation of performance. However, the exact timing can depend on the specific provisions of the contract and the structure of the project.

3.3 Examples from The Green Deal

The aim of the Green Deal Agreement for Public Procurement, a voluntary commitment, is to promote zero-emission construction sites. Procurement units and government parties in Finland collaborated on its development. While the private construction sector is not mandated to adopt it, procurement units can choose to require full or partial compliance with it.

An example of award criteria is quality scoring, where price accounts for 70% of the evaluation and quality for 30%. Quality points for the budget as a whole are awarded for the use of electric machinery. The contractor may enter up to five electric machines for scoring (e.g., 100 points for five electric machines, 80 points for four, 60 points for three, and so on).

Procurement criteria for machinery and energy consumption in the Green Deal concept for zero-emission construction sites include minimum requirements such as: At least 30% of the machinery used for the project being powered by electricity, hydrogen, or biogas. The remaining machinery at the construction site must use non-fossil fuels. Acceptable non-fossil fuels include ethanol (e.g. ED95) and renewable HVO diesel or fuel oil in accordance with the EN 15940 standard.

Other methods that seek to reduce emissions should be considered in proportion to the scope of the procurement in order to avoid unnecessary restrictions on the market. Within the Green Deal, most contractual requirements will be applied to contracts worth more than EUR 1 million and may also be applied to smaller contracts. Such requirements include the requirement of an emissions-reduction-related environmental plan, an environmental management system that adheres to a standard or that is verified by a third party, and that all small machinery (power of less than 4 kW) used at the site needs to be electric.

The application of bonuses includes: EUR 25 per hour for the use of electric or biogas machinery weighing more than 1.5 tonnes at the construction site, based on the operating hours of the machine in question. EUR 0.25 per kilometre for using biogas transport vehicles. EUR 15 per hour for STAGE V machinery in active use at the construction site, based on its operating hours. The maximum bonus payable is EUR 30,000.^[19]

Minimum requirement	Award criteria	Contractual requirement	Application of bonus
30% electric, hydrogen, or biogas. The rest non-fossil fuel.	Quality points are awarded for electric machinery, where quality accounts for 30%.	Environmental plan, environmental management system, small machinery = electric.	- EUR 25 per hour for >1.5 tonne electric/ biogas machinery. - EUR 0.25 per kilometre for biogas-fuelled transport vehicles.

3.4 Examples from the City of Oslo

As part of the City of Oslo’s ambitions to have fossil-free and, in time, zero-emission construction sites, the city has standard climate and environmental requirements.

Klimaoslo, ‘Climate and environmental requirements for the City of Oslo’s construction sites’, Klimaoslo, Oslo, 2019. [Online]. Available: https://www.klimaoslo.no/rapport/climate-requirements-construction-sites/

Contractual requirements are mandatory for all procurements valued at NOK 500,000 and above. When the estimated value of a procurement exceeds NOK 5 million, both the contractual requirements and award criteria come into play. However, for procurements with an estimated value of less than NOK 5 million, while the contractual requirements apply, the use of award criteria is optional.

Furthermore, for procurements valued at more than NOK 51 million, the minimum requirements must be adhered to in addition to the contractual requirements and award criteria. This tiered approach ensures that procurement processes are appropriately tailored based on the scale and complexity of the project, balancing regulatory compliance with operational efficiency.

The minimum requirements require that all energy consumed for heating purposes shall be zero-emissions. This applies throughout the construction period. This can be achieved by using electricity, district heating, or other zero-emission technology. This requires that the infrastructure owner be contacted during the planning stage in order to ensure that the infrastructure is ready in time.

As standard, environment-related award criteria account for 30% (with a minimum of 20%) of the total weighting. At least 50% of this environmental weighting pertains to construction machinery and transport to/from the site. If no additional environmental requirements are planned, the weighting of these criteria may be increased. Points are awarded to the contractor based on the ratio of zero-emission and/or biogas-based machinery and vehicles. The contractor is also awarded points for the reduced transport of material and for their ability to reduce the use of fossil-fuel vehicles for the transport of waste, equipment, personnel, etc.

The contractual requirements state that all machinery used on the site shall be fossil-free and zero-emission by 2025. All vehicles used for transporting bulk materials and waste shall comply with Euro 6/VI emission standards as a minimum, make use of fossil-free fuel, and be zero-emission by 2025. In addition, running on idle is not permitted for any machinery or vehicle.

Minimum requirement	Award criteria	Contractual requirement	Application of bonus
Heating and drying must have zero emissions.	Minimum 20% weighting, half of which is attributed to machinery and transport.	All machinery used on the building/construction site shall be fossil-free.	-

3.5 Examples from the Swedish Criteria Bank

The procurement criteria used in Oslo and the Green Deal are focused primarily on energy use and machinery. Below are some examples of criteria from the Swedish Criteria Bank covering other areas of the construction site. Most are technical specifications, which are a type of contractual requirement in tenders.

Reducing climate impact from mass handling

Using procurement criteria to reduce the climate impact from mass handling can be effective. Although designers can have a significant influence on emissions related to these factors, there are also various requirements that can be imposed on contractors.

One approach is to mandate the development of a mass disposal plan. The governing priorities of such a plan should include minimising transport, reducing the climate impact of fuel use, avoiding the use of new raw materials, pursuing the reuse and recycling of materials as locally as possible, and minimising landfill. Additionally, when selecting locations for bulk handling, those with the least impact on the natural environment should be chosen.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Masshantering för minskad klimat- och naturpåverkan – totalentreprenad | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/schaktning-och-masshantering/upphandling-av-totalentreprenad-masshantering/masshantering-for-minskad-klimat--och-naturpaverkan--totalentreprenad/basniva/

The contractor can also be required to work according to the client’s mass disposal plan. The mass disposal plan must be updated and adjusted before excavation begins, with the goal of reducing total transportation and idling, and ensuring that as much material as possible is reused and recycled, and as locally as possible.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Masshantering för minskad klimat- och naturpåverkan - utförandeentreprenad | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/schaktning-och-masshantering/upphandling-av-utforandeentreprenader-masshantering/masshantering-for-minskad-klimat--och-naturpaverkan---utforandeentreprenad/basniva/

Protection and management of materials

It is logical to minimise waste during construction in order to reduce emissions. The effective management and protection of materials during construction is essential for minimising waste.

Mandating that building materials must be stored in such a way that they are not damaged or do not attract moisture or dirt is one way of ensuring the protection of the material through the technical specification. Instructions must be given in a language that those who handle the material can understand.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Skydd av materialet | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/totalentreprenad/skydd-av-materialet/basniva/

A technical specification that mandates that construction waste must not exceed a certain weight per square metre can also be used. The contractor is required to report on the project’s strategy for achieving the waste targets and their integration in planning and purchasing.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Avfallsmängder, nybyggnad | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/totalentreprenad/avfallsmangder-nybyggnad/basniva/

To insist that the contractor must systematically sort leftover materials, resources, and construction waste throughout the implementation of the project is another technical specification that can be used. The aim of such a requirement is to increase the degree of reuse and recycling, reduce the amount of waste, and contribute to the increased circularity of resources.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Resurser och avfall - Sortering i fraktioner och statistik | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/totalentreprenad/resurser-och-avfall---sortering-i-fraktioner-och-statistik/basniva/

Another possibility is to require the contractor to draft a material and waste management plan with the aim of achieving the resource-efficient management of resources, materials, spills, and waste, and reducing the impact on the environment and climate during the various phases of the project.

Such a plan should include instructions, routines, measures, and means of documentation. It should also mention the quantity that is planned to be reused, recycled, etc., and include information on where the sorting containers should be placed at the construction site, how many containers are needed, and if they are needed the whole time or just for a period of time.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Material- och avfallshanteringsplan | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/totalentreprenad/material--och-avfallshanteringsplan/basniva/

Avoiding energy and material consumption

In procurement, there should be a focus on avoiding energy and material consumption during construction. An easy way to achieve this is to reduce errors, deficiencies, and damages in the project by developing a good project culture.

The Swedish Criteria Bank offers a description of how to use “Good project culture” as a procurement criterion (special contract conditions), where there is the possibility of adding weight to environmental issues.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för God projektkultur | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/upphandling-vid-projektering/god-projektkultur/avancerad-niva/

It states that the person who discovers or is informed about errors, deficiencies, and damages is to correct these if doing so falls within their role and capacity Examples include seeing building material wrongly stored and therefore being damaged, or witnessing unnecessary idling of machinery. Naming those responsible increases the weight of responsibility and gives the client the opportunity for better visibility into the contract. Qualification requirements for a quality, environment, and security manager can be useful.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för Kvalitets-, miljö- och arbetsmiljöansvar | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/bygg-och-fastighet/flerbostadshus-nybyggnad/totalentreprenad/kvalitets--miljo--och-arbetsmiljoansvar/basniva/

Renewable energy requirements

When there is a requirement for using electricity over fossil fuels, the source of the electricity needs to be taken into account. A technical specification could be that the electricity for charging vehicles (and machinery) must come from renewable sources.

Upphandlingsmyndigheten, ‘Hållbarhetskrav för El från förnybara energikällor | Upphandlingsmyndigheten’. Accessed: Jul. 01, 2024. [Online]. Available: https://www.upphandlingsmyndigheten.se/kriterier/fordon-och-transport/drivmedel/stationstankning/el-fran-fornybara-energikallor/basniva/

This is similar to the requirement that biodiesel must be produced using renewable raw materials and bio-waste.

3.6 Suggested method

With LCA demands and limit values set to become standard across all the Nordic countries within a few years, it is logical to use criteria based on these requirements to build upon existing legal obligations. Contracting authorities may worry about receiving too few valid tenders if the criteria are too strict. Consequently, flexibility within the criteria is essential.

Setting criteria for lowering emissions from A4 (transport of products to the construction site) and A5 (construction and installation processes) as a whole can be more effective than specifically asking for green energy machinery. This approach gives bidders the flexibility to choose how they will achieve the required emissions reductions, fostering innovation and cost-effective solutions.

LCA criteria

Various approaches for contractors to reduce emissions from A4 and A5 are suggested in the chapter on “Implementation” in this report. The reference amounts can be derived from generic numbers (see Table 1.2) which can be expected to be frequently updated in the near future as data collection improves. As regulatory limit values are established, the goal should be to set the criteria lower than these legal thresholds (if the limit value for A4 and A5 is specified). The criteria for emissions can be set as a percentage of the limit values, depending on the environmental aspirations of the project. This should ensure that emissions reductions at construction sites do not come at the expense of other parts of the LCA but rather encourage targets for even lower emissions and in more areas.

Application of bonuses

LCA-related criteria can be used in different procurement methods. An easy starting point is to use this as a bonus application criterion, whereby a bonus is calculated and paid for a reduced amount of emissions from A4 and A5 (based on estimated emissions) once the construction process is complete. The bonus amount can be connected to a calculated carbon price. Where more data is needed, a softer start can be to pay a bonus for every sub-module (A4, A5.E and A5.W) whereby specific data is gathered along with verification.

Award criteria

The use of LCA criteria as an award criterion where quality points are awarded for planned emissions reductions from A4 and A5 would be a more ambitious approach. One quality point would be awarded for each 10% reduction from the estimated emissions, up to 10 points for a 100% reduction. The estimated emissions might stem from an LCA calculation if there is a requirement to calculate the LCA at the design stage or if the project owner has it calculated for the procurement process. Although the calculation could also be based on generic figures (see Table 1.2), it is recommended to be more precise for this method. When award criteria are used, it is recommended that the percentage attributed to price does not exceed 60%. This approach increases the likelihood that environmental factors will have an impact and reduces the probability that an ambitious bid will be undercut by a cheaper one. The remaining 40% can be allocated to quality points and environmental points, or entirely to environmental criteria.

Minimum requirements

In the most ambitious projects, LCA criteria would be used as minimum requirements or a mix of minimum requirements and award criteria. As a minimum criterion, emissions from A4 and A5 would need to be a certain amount below the estimated emissions where the amount would need to be well-considered based on market capacity and ambition.

Additionally, a combination of award criteria and minimum requirements can help ensure that environmental priorities are not compromised. The minimum requirements keep bidders aligned with mandatory standards, while the award criteria encourage a higher level of ambition.

Key points

Application of bonuses:

A bonus is awarded for every sub-module that is evaluated (where generic figures are not used).
A bonus is awarded for reducing emissions from A4 and A5 by XX%. The bonus amount can be connected to a calculated carbon price.

Award criteria:

Quality points are awarded for reducing emissions from A4 and A5, with the percentage attributed to price not exceeding 60%. One quality point is awarded for each 10% reduction, up to 10 points for a 100% reduction in emissions from A4 and A5.

Minimum requirements:

Emissions from A4 and A5 need to be XX% under the stated estimated emissions.

With this procurement method, it is important to state clearly that carbon balancing is not allowed and will not be counted as emissions reduction.

Dialogue

The contractor should engage in dialogue with the designers or those responsible for the LCA calculations. There is a possibility that an LCA has already been conducted during the design phase (if national regulations mandate LCA calculations before construction). Data collected to verify that procurement promises have been met can be valuable when processing the LCA after construction.

3.7 Follow-up

To ensure the contractor’s fulfilment of the conditions, the procuring organisation should explain its follow-up plan or strategy for monitoring compliance in the procurement documents. The follow-up approach should always be adapted to the content, size, and duration of the contract. Regular follow-up meetings, involving both the contractor and the client (or their representatives), should be scheduled. These meetings can be integrated into construction and/or environmental meetings attended by the client. Additionally, random checks can be conducted, during which the contractor demonstrates and explains how the conditions are being met.

Action plan

An action plan for how the contractor will reduce the emissions from A4 and A5 (except for the first suggested method of the application of bonuses) should be a requirement in the follow-up of suggested procurement methods. This action plan should include information on which sub-modules the reduction stems from. At follow-up meetings, it should be checked that accounts are being produced for the sub-modules for which emission reductions had been proposed (Table 4.1 in the evaluation chapter can be used). When the contract includes the use of clean energy machinery, an up-to-date equipment list should be reviewed along with the machines used on site.

Sanctions

Included in the climate and environmental requirements for the City of Oslo’s construction sites is a provision regarding breach of contract. The provision states that if the supplier is unable to meet one or more of the environmental requirements or does not deliver in accordance with the tender, the project owner is entitled to levy a proportionate daily fine for the period of time during which the breach lasts. In the event of repeated or severe breaches of the environmental provisions, the project owner is entitled to terminate the contract with immediate effect.

Klimaoslo, ‘Climate and environmental requirements for the City of Oslo’s construction sites’, Oslo, 2019. [Online]. Available: https://www.klimaoslo.no/wp-content/uploads/sites/88/2019/11/Climate-and-enviromental-requirements.pdf

Key points

Follow-up meetings, review action plan.
Propose a step-by-step plan if promises are not kept.