News Roundup – March 2011
Maude: help us buy smarter
Paymaster general Francis Maude has outlined a plan to open up public sector construction contracts to new entrants and SMEs, and rethink “rigid” framework deals in pursuit of fresh thinking and better value.
Maude’s far-reaching comments were made last month at a meeting of MPs and senior industry figures held by the All-Party Parliamentary Group for Excellence in the Built Environment. The group, co-ordinated by the Construction Industry Council, was launched shortly after last May’s General Election.
”Improving public procurement” was the topic of February’s meeting. Speakers included CIOB vice president Alan Crane, who presented details of the CIOB’s recent survey on the subject (CM January).
Maude called for an end to complex, over-cautious public procurement. “It’s a costly process for the suppliers so the smaller ones drop out. So you end up with a less competitive environment.
“You don’t need a prequalification phase in all projects — often it demands you’ve worked on a similar scheme before. That narrows down the choice,” added Maude.
“For us with a massive budget deficit we want new entries into the market, and we need to encourage innovation. Procurement mechanisms need to be based on outcomes rather than inputs.”
Maude also said that the rigidity of frameworks was often a convenient way for public sector bodies to find their way around the complexities of OJEU requirements. But he argued: “We can do things far quicker, and use a robust qualitative judgement and still be compliant. We need a much more dynamic approach so we can bring more suppliers into frameworks and be less rigid.”
He also recognised that public sector clients needed more procurement expertise and asked the industry to “lend us some of your people to make us smarter at buying”.
And drawing attention to the glacial pace of many public sector deals he said: “We procure things very slowly in the UK and the OJEU process is Byzantine. In Germany, what might take 40 weeks to procure would take 77 in the UK. This costs a whole lot of money and the project can be obsolete by the time it’s delivered.”
The Cabinet Office minister is on a mission to slash the government’s overall procurement bill. He has already brokered agreements with 34 of Whitehall’s largest suppliers — including construction firms Balfour Beatty and Carillion, solicitor Slaughter & May and ICT supplier Logica.
At an SME summit held last month to mark the deals, and reported in Construction News, prime minister David Cameron and Maude made similar comments about the need to breakdown the “oligarchy” of major suppliers, including construction contractors.
For industry views on this story, scroll down to see our vox pop.
John Spanswick CBE is chairman of Bovis Lend Lease, but will be retiring this month after 48 years at the firm. He will continue to chair the Strategic Forum’s working group on health and safety and is a member of the Considerate Constructors Scheme Strategy Board.
How do you see the future of the construction industry, especially in the current austere climate?
I’m actually quite optimistic. People might be being laid off now, but that situation won’t last forever. The UK is committed to six nuclear power plants by 2020, which is a massive civil engineering commitment and will require investment of £3-4bn a year. And there’s a manpower and skills shortage out there that’s certainly concerning the energy industry.
What key policy changes would help the industry?
The nature of procurement itself. We need to realise that we have to make designing and building a more efficient process — people can’t afford to spend £2,000 a sqm on a school, for instance. We need innovation by standardising design and procurement methods, without loss of the qualitative aspects.
What other challenges need to be addressed?
Construction no longer leads the board for accidents at work — that now falls to agriculture. But the industry needs to look seriously at occupational health. The Olympic Delivery Authority has made great strides in the Lea Valley in improving the everyday working environment for labourers, but the baton needs to be picked up.
What can be done to encourage more students into construction?
There needs to be dialogue with 15-17 year-olds to encourage them into the construction industry, and the government, as the biggest procurer in construction, needs to lead the drive. There also needs to be incentivisation for young people to develop real skill sets by entering the industry through an active experience route.
Has Lend Lease been moving in this direction?
We run a scheme called Beyond Site, with the aim of getting young, disadvantaged kids off the streets or out of job centres, and on to site. We have even brought young offenders into the fold, and the effect on some of their lives has been transformatory.
Bouygues is part of a consortium that will construct the Paris Philharmonia in La Villette Park in Paris. The £187m project will be one of the first to be completed under the Grand Paris urban renewal plan. It will include a 2,400-seat auditorium, eight rehearsal rooms, secondary performance spaces, a teaching centre and administrative offices. The entire roof will provide walkways open to the public. Completion is expected in 2014.
Wates joins charge into renewable energy
Wates-backed Myriad CEG has boosted its position in solar energy.
The Wates Group construction company has followed contractors Carillion and Kier by boosting its capabilities in the renewable energy installation sector, in a move that confirms how mainstream construction companies are staking their claim to renewables contracts, writes Jan Carlos Kucharek.
The family-owned contractor group is a major investor in renewables company Myriad CEG, which has recently acquired Segen, a move that brings additional capacity in commercial-scale solar energy systems and wind turbine projects.
Jonny Wates, chairman of Myriad CEG and a member of the family’s fourth generation, said: “I think our latest move shows that the construction market is consolidating around renewables. We are joining Carillion and Kier in bearing out these new industry realities.”
Last month, Carillion paid £305m to purchase 2,000-strong Eaga, which already has contracts to install green energy solutions for a number of social housing clients. At the end of last year, contractor Kier acquired PV installation specialist Beco.
Myriad CEG works with a range of contractors and consultants, and is not part of the Wates Group. But as well as the history of financial backing from Wates, two of its non-executive directors sit on the boards of Wates Group companies, and two are former Wates directors.
According to Myriad CEG marketing director Dermot Coady, its total turnover in 2010/2011 will be £18m, although the company has ambitions to double this. He described its market as “somewhere between domestic installations and industrial arrays”.
But Coady downplayed the impact of the coalition’s unexpected review of Feed-in Tariffs, after fears that the available funds were being siphoned away from individual households and community projects by large “solar farms”.
“Our business case is based on the longer term obligations for government to meet its renewable obligations. FITs will continue to incentivise uptake in the solar energy market,” he said.
Month in numbers
718m In pounds, the delivery fee for the CLM consortium, delivery partner to the Olympic Delivery Authority, after it was awarded an extra £24m for keeping costs down. Laing O’Rourke and CH2M Hill both have 40% shares in CLM, with Mace owning 20%.
0.2 The percentage expected increase in construction tender prices nationally in 2011, as predicted by consultant EC Harris.
10 The percentage price rise for some roofing and waterproofing products announced by Icopal, blaming the rising cost of raw materials and energy.
57bn The value, in pounds, of UK commercial property loans in default, according to de Montfort University. CB Richard Ellis says one in three commercial property lenders have pulled out of the market.
100,000 The minimum value, in pounds, for public sector contracts that need to be procured through Pre-Qualification Questionnaires, says cabinet minister Francis Maude.
288 The height above ground, in metres, where Romeo the fox was found living in his penthouse suite at the Shard, London.
CIOB takes on Wikipedia to define ‘construction management’
You may not have heard of Pete Fowler, a construction manager from San Clemente, California, but he wields worldwide influence. Fowler wrote the Wikipedia definition of construction management, and efforts by the CIOB to edit it to reflect a broader definition that members would recognise have proved frustrating.
“We have tried to broaden the definition by adding our own citation to the entry, but current Wikipedia protocols means that Mr Fowler has the right to amend the additions or remove them altogether, which is what he’s been doing,” says Saul Townsend, CIOB press and communications manager. “Our feeling is that with the entry as it stands, we are losing the opportunity to correctly inform and influence those interested in the subject.”
Last year, the CIOB published a new, six part definition of construction management, an initiative led by then-president Professor Li Shirong and PPCIOB Professor John Bale. At the time, Li said that the CIOB definition ‘‘accurately depicts the wide spectrum of professionalism practised by our members in every part of our world-wide Institute.”
CIOB deputy chief executive Michael Brown feels it is important to agree on a Wikipedia definition of construction management that is internationally recognised and inclusive.
“The implication of a narrow definition is that the full value of what construction management brings to the table is not recognised, and that could be reflected in government, industry, education and elsewhere.”
He would like members to see the issue as a rallying call. “We’re starting with Wikipedia and invite anyone involved to look at it and question whether it describes what they do. And we encourage people to look at our definition and tell us what they think.”
Carbon group launches website
The CIOB’s Carbon Reduction Working Group is to launch an interactive website offering practical help to contractors and the rest of the industry on reducing building-related carbon.
The site, due to go live in May, will focus on measures and technologies that can make an immediate impact. Rather than general exhortations to
“do better”, it will provide clear guidance and metrics on how to measure existing carbon emissions and the success of steps taken.
“We’re saying, ‘if you do this and measure it in this way, it will have an impact’,” says Fiona Roberts, policy development manager at the CIOB. “People get the broad instruction [to reduce carbon], but not necessarily the detailed know-how. We’re filling in the how, the practical stuff.”
The measures on the website will be split into seven sections, spanning the life cycle of a project from design through construction, maintenance, retrofit and end-of-life.
Half the measures can be addressed by the supply side of the industry, such as fitting smart meters to all new and existing buildings. The other half will require input from government, clients and education bodies.
When the site launches, the CIOB is due to announce its own corporate commitment to reduce its carbon footprint, including staff travel.
The Carbon Reduction Working Group is chaired by CIOB vice president Alan Crane, and membership is drawn from senior members and ambassadors with a range of technical expertise.
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The government is considering opening up public contracts to more SMEs. Is this the future or folly?
If increasing opportunities for SMEs means a move towards abolishing frameworks then it is a bad idea. Frameworks already provide opportunities for smaller organisations to get involved, albeit as second tier suppliers. Public sector clients have a huge range of objectives to meet and large contractors are the only ones with the ability to manage the broader agenda.
It isn’t just about getting the work done. A properly set up framework can drive better value, provide proper incentives, KPIs, remove waste and inefficiency, and increase consistency.
If you open up the market to smaller contractors and dismantle frameworks, there’s a danger of a return to single-project lowest price, which inevitably means projects don’t get delivered on time, are of poor quality, and in turn contractors suffer and clients are unhappy. It all goes back to the principles set out by Latham and Egan.
Peter Stone MCIOB, managing director, GB Building Solutions
Anything the government can do to stimulate demand for services from SMEs has got to be a good thing. The public procurement pre-qualification process is so onerous it puts many SMEs off, and the “big boys” shouldn’t be the only ones able to win work. It’s necessary to challenge the barriers to entry in any marketplace. Having said that, there’s a need for basic checks and balances in any procurement system, for example, we need to check all contractors are financially robust.
Paul Nash FCIOB, Cyril Sweett
It’s time the government recognised the powerhouse that is the SME contractor. Large contractors have the money and the public presence to make themselves heard, but the smaller ones don’t have a voice, even though they represent a much larger group of workers. SMEs should get a bigger chunk of what business is out there.
Opening up the market should enable contractors that are geographically closer to projects, and hence emotionally connected to an area, to become involved.
Vance Babbage MCIOB, director, B&M Babbage
SMEs are the lifeblood of our construction and building industry and many have suffered as a result of excessive bureaucracy and exclusion from public frameworks. Do we want a significant number of the 90% of our industry who are the SMEs to fail because work is excluded to them? No, but lowest cost tendering should not be encouraged either. We have to find a balance which allows frameworks and SMEs to co-exist.
Michael Thompson, chair, Built Environment Improvement Network
BAM is on the new Partnerships for Schools academies framework, which will also be the recommended route for Free Schools. The framework locked out a lot of SMEs due to the bureaucracy involved. For many smaller contractors, the only way into the public sector is therefore to partner with the large contractors like us. On the positive side, this allows BAM to take charge of the time-consuming and costly bureaucracy, and allow SME supply chain partners do what they do best — deliver projects at the coal face.
Keith Rayner, framework director, BAM Construction
My comments are... ‘SMEs have lower administrative overheads and management costs than larger firms plus short management chains and approval routes, so they can respond quickly to changing requirements. SMEs are often better able to offer a more personal level of service. SMEs can retain skills, originality and commitment... that are greater than those found in large competitors.’ These are not my words, but extracted from a 2008 government report into engagement with SMEs.
Steve Burditt MCIOB, managing director, Steele & Bray CBC
Do you have an opinion on any of this month’s articles? Email: [email protected]
UK construction experts take new ideas abroad
Construction students and young people in Iraq, Sudan and Turkey are benefitting from new knowledge-sharing programmes run by UK construction academics and CIOB experts.
Teams from Nottingham Trent University and Salford University are participating in the DelPHE Iraq project, a £3m British Council programme funded by the Department for International Development (DFID), to improve standards of higher education in the country.
Salford staff are working towards establishing a Built Environment Centre of Excellence at the University of Basra, modelled on the Built Environment Centre at the University of Salford.
Nottingham Trent University is focussing on building services, architecture and engineering, and will engage with three universities in Kurdistan, northern Iraq: Salahaddin University-Hawler, the University of Duhok and the University of Sulaimani.
Exchange visits between academic staff from the UK and Iraq will take place between October 2010 and March 2012.
NTU project co-ordinator Dr Fouad Mohammad is a senior lecturer in structural design, and an Iraqi-born British citizen. “[During the Saddam era] Iraq was very isolated from the international community, and taught its students in a very classical and traditional way,” he told CM. “We hope to improve teaching and learning in our partner institutions, and to strengthen Iraqi higher education.”
He added that the linkages would help UK standards and methodologies take root in the Iraqi construction sector. “I personally have expertise in Eurocodes, so I’m encouraging the construction students to be involved in Eurocodes,” he said.
Meanwhile, Reading Unviersity’s construction management school is working with the faculty of architecture at the University of Khartoum on improving standards in Sudan’s construction industry. Again, the programme is managed by the British Council and funded by DFID.
The partnership will promote the exchange of ideas, academic materials and publications, and host joint workshops and international conferences. When Reading staff visited Khartoum in February, issues discussed included international construction, and sustainable social housing.
Dr Gamal Hamid, dean of the faculty of architecture, said: “It was very useful in sharing knowledge and expertise, and in developing new approaches for emerging issues in Sudan, such as the status of women in the construction industry and in post-conflict regions such as Darfur and Southern Sudan. We look forward to more interaction with colleagues from Reading.”
Finally, the CIOB is involved in two projects with Turkish universities. Youthbuilding Europe, led by Gazi University, will see an international team including the CIOB and Young Builders Trust set up projects that allow disadvantaged youngsters to access training and career paths in construction.
And Anadolu University, working with the CIOB and others, is developing short animations showing construction accidents to improve health and safety in the Turkish construction industry.
New-look website embraces social media and international members
The CIOB will be putting its new website at the heart of all its member communications, following an upgrade due to be completed by the end of the year, writes Jan-Carlos Kucharek.
Sarah Naxton, marketing, communications and web manager at the CIOB, said the work picks up themes in an internal report she wrote in 2009 analysing how the web could better serve the CIOB’s membership.
“Technology is changing rapidly and forcing us to deliver more relevant content in real time. We are keen on creating a better and more interactive user experience, as well as creating online communities,” she explained.
The initiative gained speed last year, following an open letter to the CIOB and other professional institutions in the UK from Martha Lane Fox, creator of Lastminute.com and now the government’s digital champion,
urging greater web access for all.
The new site will facilitate social networking and discussions among the CIOB membership, offer online CPD, and allow members to make hassle-free online payments for events and services.
It will also bring the Institute’s six international websites under the umbrella of CIOB.org, to reflect its international role.
Naxton says the revamped site will build on the CIOB’s developing presence on social networking sites such as Facebook, LinkedIn and Twitter.
“The networking sites appeal to different sectors of the membership, with Twitter appealing to the younger crowd with about 1,000 followers, and LinkedIn, which has about 2,000 CIOB members profiled, appealing more to the older, more experienced membership,” says Naxton.
Development of the site will involve focus group workshops attended by members, plus the CIOB’s web developer iO1, to identify the services being demanded and the level of interactivity required. Members will also receive online questionnaires as part of the consultation.
Naxton says traditional communication methods, such as telephone and letter, will not be abandoned. But she adds that the new-look website will be almost unrecognisable from the current site. “In the future, if I’m travelling to Australia, I’ll instantly be able to find out what’s on out there, and who’s out there,” she says.
Ties with architectural technologists renewed
The CIOB and the Chartered Institute of Architectural Technologists (CIAT) have renewed their Memorandum of Understanding (MoU), which is reviewed every five years.
The move reinforces a partnership that has existed since 1997 when the two institutes began working to strengthen mutual links.
Benefits to members of both bodies include joint CPD and networking events in the UK and abroad, and a 25% reduction on standard membership fees for dual membership.
CIOB president James Wates said: “The construction industry is made up of many professions working together. Collaborative working between the professions is essential for our industry to meet the demands and challenges of economic recovery, and the creation of a sustainable future. That’s why the CIOB takes pride in its partnership with CIAT.”
Barry Le Beuvant, CIAT president, said: ”We are delighted to renew our strong and effective partnership with the CIOB. The industry must prepare now for the skills and understanding necessary for a low carbon world as we come out of the recession, and working together will ensure that this is achievable.”
CIAT represents more than 9,500 professionals working and studying in the field of architectural technology.