Cast your vote

The date of the next general election is hotly tipped as 5 May. The Specialist Engineering Contractors’ (SEC) Group, the industry lobby body whose members include the ECA and the HVCA, has already contacted the main political parties with the issues it wants to see topping the bill on their election manifestos. It has identified several areas (see box), with the priorities being:

• review of the Housing Grants, Construction and Regeneration Act 1996;
• corporate competence;
• fair payment;
• project insurance.

Reviewing the Act

The Review Group analysing the Construction Act under the chair of Sir Michael Latham has submitted its report to the construction minister Nigel Griffiths. The next step is for the Department of Trade and Industry (DTI) to publish a consultation paper; this is expected in early 2005.

The SEC Group has written to Griffiths expressing concern at the delay of the consultation paper. The review of the Construction Act allows the Government and industry an opportunity to address and resolve various concerns about payment, including the impact on small and medium-sized enterprises (SMEs) of insolvencies further upstream in the construction industry.

“The Group’s objective is to ensure that amendments to the Act provide an effective and simple regime to certainty of payment for everyone involved in construction,” says SEC Group chair Trevor Hursthouse. During the consultation period the Group will liaise with members to invite firms to engage their local MP.

Corporate competence

The SEC Group has met with Geoffrey Norris, senior policy advisor to the prime minister, with regards to qualification. It emphasised the difficulties caused by the rising number of schemes that require firms to gain approval through processes that are time-consuming and often of dubious value.

This is an ineffective exercise that creates enormous cost, particularly for SMEs. “The view of SEC Group is that the problem be eliminated by recognition of existing competence and quality standards provided by trade associations,” says Hursthouse.

Poor payment practices significantly add to the inefficiencies in the industry

Trevor Hursthouse

Fair payment

Following the SEC Group initiative on retentions, Paul Boateng, the chief secretary to the Treasury agreed that the Office of Government Commerce should chair a Fair Payment Task Group and the SEC Group supported its work to improve payment across the public sector.

“Poor payment practices and myriad schemes as well as the retentions culture significantly add to the inefficiencies in the industry, increasing the cost to the client,” claims Hursthouse. Payment abuse also adversely impacts upon the profitability of SMEs, which diverts resources away from training, health and safety, IT and innovation.

The traditional process of payment in the industry remains a key factor in continued adversarial attitudes. The SEC Group solution is to secure the project monies by placing them in a project account (in trust status) where the beneficiaries are the supply chain.

Project insurance

The Accelerating Change report confirmed that project insurance should be made available to underwrite the whole team to facilitate integrated working.

The traditional approach to risks inherent in any project was to pass these onto others through contracts. They are then expected to insure that risk, usually by a liability insurance policy. This could result in duplication of insurance and is inefficient and costly. It also militates against the spirit and beneficial practice of integrating and building efficient project teams and supply chains. Hursthouse concludes: “Project teams must have integrated insurance policies to achieve the necessary co-ordination and collaboration within the team.” Insurance risk should be based on the competence of the team and insurers should reward those that can provide evidence they have the ability to undertake the work safely, not least by employing suitably qualified staff.