There’s nothing wrong with prequalification in theory. Alas, there’s no shortage of things wrong with it in practice. Greg Verhoef explains how the system works
A long time ago, in a galaxy far, far away, built environment specialists were faced with collating and submitting huge amounts of information critical to their pre-selection. However, this process was not always easy, mostly because there was no standardised template for submitting such information. Consequently, each submission required a bespoke set of documents to be written and submitted, which took up huge amounts of time.
Once this information was put in the post (you could rely on the post in those days), we sat back, imagining with blissful naivety that we, like everybody else, would be subject to what we thought was a fair and rigorous selection process.
We assumed that this process would identify the good, the bad and the ugly, and that those companies with the “right” credentials would have the privilege of tendering. I suppose we expected that the process would consider all aspects of eligibility – turnover, design capability, and financial standing. In those days the word “sustainability” was not common in our industry and global warming was thought to be a myth dreamed up by people who knitted their own yoghurt.
Once we were selected, the tender rolled through the door, was duly calculated and submitted with a myriad of other information – and we waited for the other side to make a move. As the process ground on, we were informed we were “not under financial consideration” and some months later we were advised that a cheaper bid had been accepted by the site team. In fact, obtaining a cheaper quote from a non-compliant subcontractor was applauded as a way of driving down bid costs. All of this resulted in small companies taking on work far beyond their capabilities and, as to be expected, many projects being under supervised and ultimately of poor quality.
Main contractors had set out a detailed and comprehensive prequalification process, but nobody was sticking to the rules. To add insult to injury, we were often approached again, part-way through the project, to deliver a rescue package.
The ‘we don't care if they are trading from a caravan in the middle of a field – they are the cheapest’, mentality is finally disappearing.
Eventually the Main Contractors Group (MCG) promised to complete the standardisation of the prequalification process, but back on Earth the reality was, that, while these intentions were virtuous, the establishment of these benchmark standards never happened.
Today, there is no doubt that the process has become much faster. This is mostly owing to digital technology, but main contractors do respect the prequalification process more. This is, in part, because of the focus on health and safety. We are seeing main contractors actively seeking out the right specialist companies who are committed to health and safety – and sustainability. Clients are now only too aware of the many recent failings of inadequately skilled and financially under-resourced specialists that have resulted in considerable financial penalties as the projects have overrun. So the “we don't care if they are trading from a caravan in the middle of a field – they are the cheapest”, mentality is finally disappearing.
And now we are truly entering hyperspace – as the process is refined, some main contractors are outsourcing the whole process to outside consultants who analyse and audit submissions. The cost of these consultants is often passed onto us, the specialist, and can be in the region of £3,500. And, if we are one of the happy few that attain preferred status, then that fee continues forever – all with no guarantees of any improvements in the inquiry stream.
So, is the prequalification process affordable to small, specialist contractors? Well, the jury is out on this. If it becomes the norm that main contractors pass on the fee for the cost of subcontracting the prequalification process, then maybe not; we will have to wait and see.
We do believe that the prequalification system can benefit all parties if the process is transparent and fair. One thing is for sure, the whole process requires 100% commitment from both parties. Because, let’s face it, we do not want to return to the good old days. May the Force be with you all.
Greg Verhoef is director of Szerelmey