A leading industry certification and inspection body has labelled the procurement process a “fundamental problem” that has led companies to become “complicit in poor outcomes”.
Speaking yesterday at a select committee hearing on Dame Hackitt’s review of Building Regulations, British Board of Agrément chief executive Claire Curtis-Thomas said the procurement process for main contractors represented a “real problem”.
Citing the public sector, Ms Curtis-Brown said individuals working in procurement at local government level “don’t really understand the complexity of what it is they are seeking to procure”.
She said these local government clients often started from the position of securing best price over best quality.
However, she pointed out that many contractors often commenced contracts in loss-making positions due to unsustainable margins.
This, she argued, was leading contractors to “go about subbie-bashing” to drive down costs and therefore shore up their own positions.
“A standard retrofit […] is going to cost you £1m,” she said.
“When [contractors] start that project, they know they have only got £6,000 available before they are running at a loss.
“What happens once the contract has been won is that these main contractors go about subbie-bashing – they go to subcontractors and say, ‘We haven’t got a lot of margin here, how are we going to make the margin up?’”
In Dame Hackitt’s post-Grenfell review of Building Regulations, it was suggested the industry should take the lead and decide for itself how to improve building quality and standards.
However, Ms Curtis-Brown challenged this suggestion.
“In terms of changing the culture of the companies who are actively involved in this market, it’s going to be incredibly difficult without prescription,” she said.
Sir Ken Knight, chairman of the Independent Expert Advisory Panel set up following Grenfell to advise on building safety, agreed with Ms Curtis-Brown that procurement was a fundamental issue.
Speaking at the same select committee hearing, he suggested the public sector weighted price at 60 per cent and quality at 40 per cent in the bidding process.
However, he added: “For safety-critical work, [weighting] should probably be reversed and frameworks set not based on price but based on quality.”