Growing relationships between clients and contractors increases project satisfaction

A continuing trend towards clients working more closely with M&E contractors has seen procurement based on lowest cost almost halve from 31% in 2001 to 16% in 2006, according to the latest Key Performance Indicators compiled by BSRIA. There is also greater evidence of negotiated contracts, up from 22% in 2001 to 36% in 2006. In the remaining 48% of projects, clients selected their M&E contractor on the basis of price or quality. However, BSRIA observes that price remains the dominant criterion — in 64% of cases. The 6-year history of Key Performance Indicators also shows a gradual increase in the percentage of clients working regularly with M&E contracts, matched by a gradual decline in the percentage of contractors being used for the first time. The latest indicators show that 38% of clients had worked with their preferred M&E contractor on their most recent construction project, compared with 33% working with that contractor only occasionally and 29% having no prior experience with this contractor. Client satisfaction with services was generally greater for projects where the client and M&E contractor had worked regularly, with 80% of projects scoring eight or more out of 10 (considered a good project outcome). The figure for projects where there had been no previous working relationship was only 49%. Client satisfaction for projects procured on a price-only basis was much lower — with only 32% scoring eight or more. Of negotiated contracts, 70% scored eight or more; BSRIA believes that client expectations are higher in these arrangements, so the improvement is doubly impressive. The design services provided by contractors continue to be more highly rated, with the percentage of M&E contractors scoring eight or more rising from 37% to 63% over the period. Contractors, however, are very dissatisfied with retentions. The latest KPI data shows that 82% of clients had assigned retentions and that the timeliness of release of retention monies is considered unsatisfactory. Of M&E contractors asked to appraise the payment terms on their most recently completed project in 2005, only 7% gave satisfaction scores of eight or more. 37% awarded just one out of 10. One M&E contractor responded, ‘Retention is very difficult to collect. Clients very rarely voluntarily pay retention money. It has to be continually chased, involving time and ’phone calls.’