With the market on the up we do need to worry about main contractors feeling the pinch as subcontractors push their margins up
With the start of the new school year, some of us are sending our recalcitrant darling teenagers off to university for the first time. Here at Aecom we have a fresh and rather large group of ambitious graduates ready to conquer the world and each aiming to become CEO within five years.
As their elders, they’re looking to us for guidance and advice, so the question becomes “what do we say?”
According to David Cameron and the media, Britain is “on the up”, so presumably we tell them all is good and the world is their oyster? Or, after spending the last five years in the doldrums, do we add a note of caution?
Similarly, as a consultancy business, our clients are looking to us for advice on what form of contract is best in an “up market” and what will inflation do?
And of course we have advice. I can’t remember (maybe it’s the age) how often in the past few months I have heard the words from the more mature in our industry: “When we came out of the last recession…”
So yes, we do believe the market is on the up; no we’re not talking the market up; and we do need to worry about main contractors feeling the pinch as subcontractors push their margins up.
What form of contract is best in an up market? Certainly as the market improves there’s going to be less of an appetite for contractors to take on risk, but if you have that high-profile star project they will still want it.
The problem is that clients, rather like my teenager, sometimes don’t really want hear what we’re saying and if possible would like us to make it disappear with a magic procurement route.
Similarly I think the chances of my teenager blending some work experience in with their studies rather than going to Ibiza is falling on deaf ears. As for our graduates, I envy their enthusiasm and ambition so it won’t be me telling them that their trip to the top may take a little longer than they envision.
Friedrich Hegel’s old adage springs to mind “the only thing we learn from history is that we learn nothing from history.”
Jo Streeten is head of project management London at Aecom