Industry responds to Government strategy to reduce construction costs

Government Construction Strategy
Looking for a 20% reduction in construction costs — Minister for the Cabinet Office Francis Maude.

Government plans to reduce the cost of its construction projects by 20% by the end of this Parliament, put forward in the recently published ‘Government construction strategy’ have been widely welcomed by the industry. Announcing the strategy, Francis Maude, Minister for the Cabinet Office, said, ‘These savings are not only significant, but long overdue. The commitment to reduce the cost of construction by 20% is no small thing, but it will help the Government and the construction industry. This strategy will stimulate growth by enabling more to be constructed within the funds available.’

The strategy is based on the public sector becoming a better client — more informed and better co-ordinated when its requirements are specified, designed and procured. It will replace adversarial cultures with collaborative one and demand cost reduction and innovation within the supply chain to maintain market position — rather than innovation that is focused on the bidding process, with a view to establishing a bargaining position for the future.

Paul Morrell, the Government’s Chief Construction Adviser, said, ‘The strategy sets out challenging new ways of working that will deliver considerable benefits, not only to the taxpayer but also enabling growth in the industry and better understanding of the future direction for public-sector construction.’

BSRIA’s chief executive Andrew Eastwell ‘applauds the move to integrated working and away from lump-sum tenders based on inadequate documentation’.

Andrew Eastwell elaborates, ‘We welcome the call for clients to issue briefs that concentrate on required performance and occupational outcomes and also the alignment of interest between those who design and those who occupy and manage. It is crucial that lowering first costs does not compromise long-term cost effectiveness, and processes such as “Soft landings” provide a ready-made template for industry to use.’

Roderick Pettigrew, deputy chief executive of the Heating & Ventilating Contractors’ Association, has also welcomed the emphasis on improved integration across the supply chain, standard forms of pre-qualification, the elimination of wasteful processes and fair payment.

He said, ‘If implemented, this strategy could slash construction costs by at least 20%, allowing more to be built for less. Cost benchmarking will play a crucial role, but the overall key is proper engagement of the skills and knowledge of the complete supply chain through integrated teams, with all members sharing the risks and rewards.

HVCA also believes that the role of Chief Construction Adviser should be made permanent to demonstrate commitment to the strategy and the industry, enabling whoever the adviser might be to concentrate on delivering the strategy and making sure its measures stick.

Mr Pettigrew also highlighted the proposal to retrain Government agencies involved in procurement as a major potential breakthrough.

CIBSE’s technical Director Hywel Davies also welcomes the strategy: ‘It sets some challenging goals for Government to become a better client. There is nothing surprising, and some of the proposals have been made before, but this is a co-ordinated effort to derive change in Government construction procurement. If it succeeds, then industry will need to respond and implement changes in the way we do business with public clients. So it is a significant challenge all round.’

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