You will have no difficulty recalling Building’s many column feet over the past few years devoted to tales of disastrous contracts and distressed contractors.
And we’ve often wondered out loud why firms wanted to do such thankless work. Well, we now have an answer: they don’t. As Davis Langdon reports this week, only a handful of contractors are prepared to bid for projects worth more than £100m, and they are using the two-stage tender system to virtually dictate their terms. And that goes for specialists in steel, concrete, M&E and cladding, too. On large schemes, price hikes of 20% are common. And as we saw with the Olympic stadium, some projects are lucky to get anyone at all.
As developers tend to worship at the altar of the market they can’t complain about, well, the market. What’s making it even more difficult for them is that although the projects are there to do, the rise of mixed-use and the pressure to use signature architects to secure planning permission makes them riskier, and therefore less attractive, to the new breed of cautious bidders.
So the days when contractors cut their throats to put food in their stomachs are gone, and clients need to reflect this in their procurement strategies. We could see construction management return to favour – indeed British Land, for one, already uses a form of it. Clients might also consider splitting the work into smaller packages. One thing they should certainly do is co-operate with firms on improving efficiencies and reducing costs. This is particularly relevant given the levelling off in developers’ yield and rising interest rates, which have tended to foreground inflation in construction costs. Stanhope’s prototype consolidation centre, analysed on pages 52-53, is one way forward.
Finally, developers can take comfort in the thought that, as the golden prizes begin to glisten again, contractors may regain their appetite for the spectacular and the national – if for no other reason than because the top flight graduates they recruit will be fired with the desire to make their names building them.
Triffic idea – but can we make a sugestion?
Wot a good idea the Construction GCSE is. As we report in our feeture on pages 54-56, the qualificashun shood get kids intrested in our industry from a yunger age. At Ridgewood skool in Doncaster, one of 55 pilots, the department hed speaks of making construcshun “something to aspire to” for the top set rather than “sending the idiots down to the craft department”. So it’s a shame that exam board Edexcel doesn’t care if students are barley literate. Exams are mostly multipul choice, but in the few instances when they have to rite anything, they’re allowed a hole range of spellings. Perhaps employers don’t mind, but we think it pays to know your “scaffolding” from your “skafoldin” ...
Denise Chevin, editor