Regarding the article “Housebuilders scramble to tackle credit crunch crisis” (18 January, page 9), while it is right that all organisations – clients, housebuilders, local authorities – have a focus on cost reduction, it is important to consider how best to go about it.
The most effective solution is never a blanket demand to reduce charges across the supply chain by a standard percentage.
In fact, this approach can often be counter-productive as it alienates suppliers and forces them to submit low tender bids that will more often than not have to be revised upwards to protect profit margins.
Instead, it is in the interests of all parties to build collaborative relationships that protect the profit margins of all across the supply chain. In this way, everyone can be incentivised to identify cost savings. This provides a more effective solution for all.
Neil Jarrett, chief executive, CWC UK