The government wastes £2.6bn of its construction spend, then wonders if the industry is efficient enough. What’s really annoying, though, is that it doesn’t have to be like this
I sense growing frustration among contractors that the government isn’t listening to us. Faced with the current changes in the Labour party’s leadership, this may be predictable but, given our contribution to the nation’s GDP, it’s certainly no excuse.
This frustration is most apparent when the government questions our ability to deliver its infrastructure programme. It doubts we can do it, but is distinctly reluctant to make the best use of the resources on offer.
Our message should be short and to the point – help us to help you. First, it needs to improve the efficiency of its spending programmes. Two years ago, a National Audit Office (NAO) report found scope for savings of £2.6bn a year in public sector construction, if best practice was more widely adopted.
Sadly, there seems to have been little progress in realising that goal. So the Treasury’s recent announcement on transforming government procurement, and in particular the measures to create a stronger and more professional Office of Government Commerce, are very welcome.
There are several simple steps the government could take right now to deliver those savings.
First, it should commit itself to a clear investment strategy for the next three years and beyond, with capital funding rising in line with growth in the UK economy. There should be clear, long-term information on investment programmes and strategies. That would gives the industry the confidence to work together to create efficient supply chains, invest in workforce training and develop products and solutions.
Another step is to maintain a steady flow of deals that tallies with the published timescales. This is critical because it enables the industry to keep experienced teams together, to deliver projects more effectively and to benefit from economies of scale.
Although it has clear output targets in several critical areas, a big drawback in the government’s present investment programme is that it fails to record progress towards meeting those targets; nor does it communicate well with our industry when programmes are delayed or changed.
For best results, projects should be delivered through integrated supply chains. Sir Michael Latham reached that conclusion in the early nineties and his message was echoed in the NAO report. Involving all partners at the earliest possible stage is the best way to achieve maximum efficiencies in the design and construction process.
The government should maintain a steady flow of deals. That will enable us to keep our experienced teams together
In the private sector, there is plenty of evidence that this approach can reduce bidding costs by up to a third. Some government clients are also taking that stance, particularly Defence Estates and the Department for Work and Pensions. So imagine the savings that could be made if other departments followed their lead.
Building long-term relationships with contractors and their supply chains, coupled with greater standardisation of contracts, processes, design and products are two more key steps towards efficient procurement.
But it’s not all doom and gloom. Right now, our industry is being offered high-profile platforms to explain what we do – and how we are striving to do it better.
One is the House of Commons trade and industry committee, which is conducting an inquiry into the construction industry against the backdrop of the Comprehensive Spending Review, which defines the government’s capital spending programmes.
We need to use our evidence to committees such as these to educate public sector clients and persuade them to work more closely with us. Together we can deliver greater value and make best use of capacity.
The Construction Confederation and the Construction Products Association did just this with their joint submission to the review. They were joined by a third umbrella group, the Construction Industry Council, to present written evidence to the select committee. When we act as one, we can put forward a coherent message.
We must act as one to make our voice heard and ensure that the review reflects the increased levels of investment required to keep pace with growth in the economy.
In turn, government needs to work more closely with us and make progress to improving efficiency in the delivery of this investment.
Let us hope the new chancellor, whoever that might be, is prepared not only to listen but also to act.
John Spanswick is chairman of the Major Contractors Group