QS’ failure to price projects with the accuracy their clients demand is a stark warning to rethink how they operate
It’s been a long, long time since contractors held the aces in construction. But, much to the relief of firms in that most battered part of the industry, it seems they are finally coming up trumps in negotiations over work.
With enquiries flooding in, contractors in some parts of the country have over the last six months moved from effectively holding out a begging bowl to clients, to being able to choose what work to take on, and for whom. And crucially - with margin growth now the key game in a sector where resource shortages are constraining pushes on turnover - contractors can avoid working for those clients they believe deepened their woes during recession. The clients who paid the poorest, or the latest, or those that refused to offer any flexibility on payment terms when short-term cashflow problems bit.
This reversal in fortune has been on the cards for a while. And it will upset few people in the sector to see certain clients reap what they have sown - whether through a sense of comeuppance, or a hope that this might lead to a more understanding approach to their supply chains next time a downturn comes. But as the pendulum swings and the power shifts, there are also some who stand to lose out much less justly.
These include those clients that did go the extra mile to support companies during the recession, many of which are still struggling to put tender lists together due to the pressure on contractors’ top teams. But another, far more unexpected group of losers, is the QS profession - whose very place in the sector is being called into question due to its collective failure to predict the steep cost rises that have accompanied the dramatic swing in power to contractors.
The failure of QSs to anticipate the speed and scale of cost rises, has led to clients being faced with costs as much as 10% higher than QSs’ tender forecasts. Clients are more than entitled to question why they are paying these consultants if they cannot price procurement accurately. There is a distinct sense here of “You had one job to do….”
The failure of QSs to anticipate the speed and scale of cost rises, has led to clients being faced with costs as much as 10% higher than QSs’ tender forecasts
As so often, however, the reality is more complex than it first appears. QSs’ methods have undoubtedly left them struggling to keep up with the market - and perhaps the profession should rely more on making informed judgments on anecdotal evidence on top of its formulas and calculations. This will help it keep pace with a market influenced just as much by individual contractors’ behaviour as by more readily modelled materials and labour price rises. But in their defence, both QSs and their clients can still point to significant cost savings when the consultants are involved as a go-between, particularly given the element of score-settling that is almost certainly creeping into some contractors’ pricing strategies.
As a result, the current pricing failures should act as a warning to QSs rather than the death knell some have hinted at. But an added headache for QSs is that such criticism comes as their future is already under scrutiny, in the wake of sector grandee Paul Morrell’s controversial assertion that the status of construction’s professions could be all but eroded within 10 years due to the failure of their institutions to modernise.
Against this backdrop, Morrell’s suggestion that the profession carves out more of a role for itself in research and advising on longer term policy appears even more timely. After all, if cost consultants’ core role isn’t quite adding up for the sector, it doesn’t take a genius to see that they would do well collectively to demonstrate they can also bring a good deal of value elsewhere.
Sarah Richardson, editor