Contractors have defended the industry against accusations it cannot provide the cost efficiencies required to warrant major government investment, as the James Review consultation closed this week.
Sir John Egan, who sat on the board of the James Review of school building and has been instrumental in challenging the industry to improve, told Construction News only a handful of contractors could provide the economies of scale the review calls for.
But in their responses to the James Review, which called for savings of 30 per cent to be made to the education programme, contractors indicated their willingness to embrace new ways of working.
Sir John said that the industry had made great strides since his 1998 Rethinking Construction report in areas such as safety, but warned it was not able to deliver cost efficiencies on the scale required by government.
He said: “I think that the government will be very nervous in investing. What’s the point, when if you look at the Building Schools for the Future programme it was absolutely terrible, and we’re no better building schools now than we were before it started.
“You are seeing one or two companies getting up and doing things, like Laing O’Rourke, but they have hardly any competition.
“If I were in a position of authority I would be saying don’t bother investing until people have established that they can do it cost effectively.”
But the government’s chief construction adviser Paul Morrell told Construction News contractors “could be trusted” to deliver better value.
Vinci’s consultation submission states that the contractors should agree upfront an “open book” policy on their approach to profit and overhead, and any surplus profit should be distributed on a sharing mechanism with the public sector.
It adds that simplifying the procurement process, shortening timeframes, standardising “where it makes sense” and increased flexibility within FM contracts will lead to efficiencies, and advocates the introduction of a skilled panel of contractors and investors to be used to avoid procurement delays in a similar way to the health framework ProCure21.
James Review consultation
Lend Lease education programme Director Chris Spiceley:
“A number of good recommendations have been proposed, such as introducing procurement timescales; reducing the regulatory burdens on the development and conversion of school buildings and evolving the standardisation of a ‘kit of parts’ for new buildings.
“A number of crucial questions still need to be addressed, and a further consultation is ongoing, but the signals from Government are generally positive. This, and the recent Priority School Building Programme announcement, gives Lend Lease confidence in the future of the UK’s education estate.”
Chartered Institute of Building policy manager Eddie Tuttle:
“Mandated standardisation of some design elements and the sharing of best practice across the industry as appropriate from completed projects would help drive a better procurement process.
“A number of these issues are not new and we would hope that the proposed centralised body would help deliver an integrated project delivery approach - underlined by the government’s drive and advent of BIM into the design/build/operate process.”
UKCG director Stephen Ratcliffe:
“At the end of the day it’s about who is going to win this battle: Is it Mr Gove with a centralist approach or is it going to be Mr Pickles setting local authorities free?
“It is not until that is sorted and you have the forward pipeline that confidence will start coming back into the market.”
The UK Contractors Group submission says the key to making the savings under the James Review is a consistent procurement and design approach driven at a national level with a visible pipeline of work.
UKCG director Stephen Ratcliffe said: “All the contractors that I have spoken to believe there are opportunities for getting cost efficiencies and capturing knowledge from the construction of one project to another, so I don’t think there is anyone arguing with Sir John that it can’t be done quicker and better.
“Where I would argue with him is the suggestion that only a few contractors could deliver.
“But the client also needs to be doing work to ensure we get this optimum price, and the first instance is what do they want us to build for the next few years?”
Bouygues UK deputy managing director Arnaud Bekaert said the contractor is already attempting to find cost efficiencies wherever possible and is working on a new standardised schools concept.
The firm is preparing bids for academies and free schools work, but is looking at expanding into private sector commercial development to supplement the reduction in education work.
Mr Ratcliffe said the UKCG has been lobbying the government for more than a year about the danger of contractors reducing their in-house ability to deliver on education work.
“If the government suddenly says next March we are going to build 40 new schools in the next year, then there are certainly going to be some capacity constraints because the capacity has been wound down.”
Chief construction adviser Paul Morrell:
It is, I think, a matter of consensus that we can get better value out of the public construction programme. This is the message of both the Government Construction Strategy and the IUK Cost of Delivery Study.
However it is simplistic to reduce this to a blanket allegation of inefficiency on the part of the industry. If it were so simple, then British contractors would be totally uncompetitive when they venture overseas, and foreign contractors could clean up by coming here.
The rather less convenient truth is that the problem is systemic. Cost and waste is built into the system through the way work is brought to the market; the lack of settled programmes and long-term relationships; random differences of brief; the fractures in the value chain between design, management, execution and operation; the resulting lack of integration on the supply side and the absence of a feedback loop; aspects of the regulatory regime; and so on.
The plans being developed by the Cabinet Office and IUK are designed to address these issues at their roots. It will not be quick, or easy, but we have the evidence that it can be done, because it is being done now by knowledgeable, determined clients (in both the public and private sectors) working with motivated supply chains. We just need to do consistently what we already know how to do well.
It follows that the industry could certainly be trusted with an expanded programme - as long as proper attention is paid to what works, and investment is directed towards those who can demonstrate that they have the conditions for success in place.
July 2010: Education secretary Michael Gove announces that the Building Schools for the Future programme will be scrapped.
April 2011: James Review sets out recommendations including that a central delivery body and procurement model is established to procure major pipeline projects.
July 2011: Mr Gove announces a new privately financed school building programme, worth up to £2 billion and a further £500m in funding for schools in the greatest need of increasing places.
September 2011: Consultation on the James Review closes and final applications for funding under the new school building programme accepted
Winter 2011: Early indications of successful applications under the new school building programme set are expected to be revealed.