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Industry saves government 10% according to report

The government this week revealed it had secured savings of about 10 per cent in the first year of its construction strategy.

Its study, Government Construction Strategy: One Year On Report and Action Plan Update, identified £279 million of savings from spending of £2.6 billion.

It said savings of £72m had been made within the first year of the strategy, and a further £207m had been identified through the life of contracts awarded in 2011/12.

The report went on to say the government was on track to meet its target of a 15 to 20 per cent reduction in contract costs by 2015.

“Cost reduction trajectories have been published by the seven departments, demonstrating that the proposed 15-20 per cent cost reductions are achievable,” it said.

Hitting this savings target could release £1.2bn, the report found, a sum Cabinet Office minister Francis Maude pledged would be reinvested in other projects.

The report said there had been “excellent progress” against milestones in the strategy.

It said the industry had engaged “energetically” with the reform programme, with about 120 private sector representatives playing an active role in its development and governance.

The government said it had played its part too, with cost benchmarking data published by the seven main purchasing departments.

The 2011/12 target for the value of contracts making use of project bank accounts has been exceeded by 100 per cent, delivering expected savings of around 1 per cent of project costs, the report added.

Mr Maude admitted in his speech that government procurement processes had historically been “notoriously bureaucratic, time-consuming and at times eye wateringly expensive”.

But he said ministers had committed Whitehall to simpler procurement, and the government wanted a relationship with the industry “characterised by openness and collaboration”. This had previously failed to happen because officials feared accusations of “cosiness” with contractors.

“You were left in the dark about what was coming up, and the government was also blind to what you could offer,” Mr Maude said. “Now at last we are being far more open.”

Procurement/Lean Client Task Group chair Nick Pollard said: “Everyone has recognised there is a step that, when taken together between industry and government clients, can create a dramatic shift in the value for money that industry delivers for government clients and the taxpayer.”


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