Author of Rethinking Construction attacks culture of lowest price procurement in public sector
Sir John Egan says public sector clients have themselves to blame for the alleged rigging of bids among contractors, currently being investigated by the Office of Fair Trading.
Egan, who wrote the seminal Rethinking Construction report, said: “I have little sympathy for government over this OFT investigation. What do they expect if they persist in procuring based on lowest price? I am very sad the public sector is still using this ‘short cut’ approach.”
His comments come 10 years after the publication of Rethinking Construction, which set a number of targets for the industry to improve and urged clients to procure based on quality, not simply cost.
“We always said it would be difficult for the construction industry if the government didn’t play ball. In 1998 we said the government was a relatively poor client. This is still the case,” he said.
Egan added that the public sector was “still producing huge problems for the industry.
It is still procuring on lowest price and as long as this is the case, proper tendering can’t happen. Connected to this is the fact that the government is also still some way off partnership arrangements”.
Egan said private clients were well ahead of the public sector. He cited the example of Severn Trent Water, of which he is now chairman. He said the company had cut costs by 6% over five years by following the principles in the Rethinking Construction. “We also have no claims between us and our supply chain,” he added.
However, Don Ward, chief executive of Constructing Excellence, said: “It’s not true that the government buys based on lowest price. Health, education, highways, prisons all use frameworks now, which involves an extra layer of rigour when selecting suppliers.”