Contractors not reaping performance gains

Contractors are failing to reap the benefits of improved performance, with all of the gains going to clients without any of the cost, according to Bsria.

The construction and building services association’s latest KPI report reveals that since 2001, client satisfaction has surged, but contractors’ payment terms and profitability have barely budged. (see attached document).

Contractors not getting fruits of their labour

Geraldine Samuelson-Brown, Bsria principal research consultant, said the statistics were the latest evidence of the need to scrap retentions and move to a system of “project banking” so that contractors can “forget the contract and the payment and get on with providing a good service.”

Since 2001, when Bsria’s Customer Satisfaction and KPIs report was first introduced, client satisfaction with design has leapt from 38% to 60%, satisfaction with installation as jumped from 56% to 72%, and satisfaction with service has jumped from 56% to 68%.

Clients are getting the best results, but it is not reciprocal.

Contractor satisfaction with payment, meanwhile, has crept up from 21% in 2004 (when the question was first introduced) to just 25% in 2008. Contractor profitability, as a percentage return on turnover, almost doubled in 2002, when it leapt to 4.2% but since then it has been stagnant, standing at just 4.1% in 2008.

Samuelson-Brown said: “It is 10 years since the John Egan report [Rethinking Construction], saying service had to improve.

“One of the drivers for change was about measurement so we have begun to measure. The second driver was about getting closer to the client, and the number of projects where they have worked more closely with the client has been really high.

“So there is something there for the clients. They are getting the best results, but it is not reciprocal. The ball is back in the clients’ court in terms of payments and fairness.”

However, the report revealed that it was not a clear cut improvement trend across all satisfaction KPIs, with client satisfaction in quality of O&M Manuals actually declining from 50% in 2001 to just 48% in 2008.

Improvement to satisfaction in value for money has also been meagre with a rise from 54% in 2004 to just 58% in 2008. value for money satisfaction has also fallen since a high pf 65% in 2006.