The government’s ability to offer more money to procurers on its biggest projects will enable contractors to “make proper money”, the boss of the Infrastructure and Projects Authority has said.
IPA chief executive Tony Meggs told Construction News changes to terms and conditions for government commercial professionals will mean more “market-competitive” salaries, producing stronger procurement teams and, in turn, more mutually beneficial contracts.
Speaking exclusively to CN ahead of the launch of the IPA’s National Infrastructure Pipeline, Mr Meggs said: “Government has changed [the] terms and conditions for commercial people [who join].
“We are paying for commercial experts from outside on industry-competitive wages – you can see the changes already across government, there [are] more mature conversations going on.”
He added: “The reason why people get into haggling over thin margins and so on, a lot of that is down to inexperience; you need to be experienced and more confident to bring through these more modern contracting arrangements.”
Mr Meggs also said the government was in the middle of a major recruitment exercise for procurement professionals, and hopes to bring in experienced people from the private sector to central government roles.
When asked whether the added expertise could result in contractors getting a better deal, Mr Meggs said: “Everybody gets a better deal; if you do things better and you do things more efficiently, then contractors can make proper money and the government can get a better outcome.”
The National Infrastructure Pipeline released by the government today revealed £600bn of social and economic infrastructure projects to be delivered over the next 10 years.
Within this, the “planned pipeline” – projects for which the IPA has high levels of certainty – accounts for £440bn of expected spend, £240bn of which will be delivered over the next five years.
The pipeline comes as Interserve and Carillion, two of the government’s biggest construction suppliers, face severe financial difficulties.
In October Interserve confirmed it would not meet its financial covenants, with the firm setting aside an extra £35m to cover the costs of problem EfW jobs.
The following month Carillion issued its second profit warning of the year last month and also confirmed it expected to breach its financial covenants.
Mr Meggs said the IPA was closely monitoring the UK’s largest construction firms and was now looking at ways to ensure contracts were “win-win” for the taxpayer and contractor.
“A strong economy and good infra requires strong companies that can deliver that,” he said.
“We need to procure for value and use more sophisticated methods of procuring where you form more of a partnership with suppliers.
“We are not going to suddenly be overwhelmed by an attack of generosity, but we are going to create arrangements where both sides can benefit.”
Alongside this year’s pipeline, the IPA released its Transforming Infrastructure Performance Programme, a four-point plan to transform the way infrastructure is delivered.
Included in this was an IPA pledge to support smarter clients and sponsors that use procurement to support a higher-performing industry and drive greater value and innovation.
Other areas of focus for the IPA will be better integrated planning across government departments, a drive to use technology and innovation to improve productivity in the sector, and the creation of a new internal cross-government expertise hub to measure performance of project delivery.
Better-paid procurers will make contractors 'proper money'