A year on, survey reveals mixed reactions to government proposals. Elaine Knutt reports
The industry has been left underwhelmed by the Government Construction Strategy, according to the results of a CIOB/CM online survey. Responses suggest that large sections of the industry are bewildered by BIM, untouched by payment reforms, and sceptical about the value of project cost benchmarking and new procurement pilots.
The strategy’s aim is to deliver better procurement outcomes: 15-20% capital cost savings for government clients by 2015; and improved project integration, payment culture and working practices across the supply chain.
The survey marks a year since the launch of the strategy at the end of May 2011. It attracted 254 responses from a cross section of CIOB members. The results suggest support for the reforms in principle, but slow adoption means members are struggling to see their relevance in practice.
Fair payment is one example. Funds should be flowing down the supply chain on government projects faster, reaching the bottom within 30 days. But of the 82 respondents who said they had worked on a relevant project, 50 said the rules hadn’t made a difference so far, 13 said it had simply added complexity, while nine viewed it positively.
There was a similar response on Project Bank Accounts, already in place for projects worth £500m with a target of £4bn in 2013/14. Out of 37 respondents who had encountered the system, 21 saw it as neutral and six thought it added complexity, although 10 thought it had had a positive impact.
Phil Westerman, head of construction at accountant Grant Thornton, comments: “I’m not sure how much effective change has been made [by PBAs]. Yes, you know the money’s there, but with major clients you always knew the money was there. And there can be so many different interpretations of the work done and reasons for non-payment, regardless of where the money is.”
As a response to demanding, time-consuming and over-restrictive pre-qualification systems, the industry welcomed PAS 91 in October 2010. But since then, the survey shows, only 21.5% had been asked to complete the form, and 32.6% had never encountered it.
The SME contractors that stood to benefit most from PAS 91 have been further let down after government talk of ring-fencing 25% of its procurement spend on SMEs shifted into a pledge that Tier 1 contractors would open up more subcontract opportunities to SMEs.
In the survey, 45% of respondents identified themselves or their employers as SMEs, but 31% had seen no sign of more subcontract opportunities. Asked about a further initiative where Tier 1 contractors advertise work packages on a new website, 21% considered it window dressing and another 21% thought it would do little to reshape existing supply chains.
Mike Smith MCIOB, managing director of Surrey-based Corniche Builders and chair of the CBC, said: “It is entirely cosmetic, and it doesn’t work for us at all. Government needs to listen a lot less to groups like RICS, the major contractors and all those other people and engage in a proper dialogue with SMEs, the industry’s biggest employers, and they should do it through the CIOB.”
But Eddie Tuttle, public affairs and policy manager at the CIOB, felt that some SMEs had failed to adjust to new ways of working, including local authorities’ growing interest in local procurement, albeit at subcontract level (CM April). “There’s mixed evidence on what’s happening. I think the door’s ajar and they have the chance to open it,” said Tuttle.
The government’s commitment to publish its infrastructure spending programme every autumn, meanwhile, received considerable backing: 51% either thought it definitely worthwhile or potentially good. “The more clarity the better for contractors,” notes Westerman. “But there’s still an element of distrust because government could change its mind.”
But publishing benchmarks of out-turn costs for public sector projects split opinion. Just 16% fully supported the move, while 44% felt it was useful, but risked sidelining other issues.
On the strategy overall, 54% gave it a cautious welcome, agreeing that the measures were sensible enough but it was all down to implementation. And asked about progress so far, the largest number of respondents plumped for the middle ground of neutral (32%).
What the respondents said about the strategy
On 30-day payment terms through the supply chain:
“We have evidence of at least one major Tier 1 contractor to a local authority ignoring these guidelines and imposing their own payment and retention conditions on their supply chain.”
“The theory behind this methodology is excellent, however, doubts remain about how it would be policed further down the supply chain.”
“This strategy should be adopted and enforced within the private sector”
Cash flow for suppliers does not appear to be on the agenda for commercial managers representing Tier 1 contractors. I have seen no improvement on new projects.”
On adopting the procurement prequalification standard PAS 91:
“I’m cautiously optimistic, but as with all government initiatives, implementation will be the key.”
“Would love to know how clients only interested in lowest price will use this process.”
On benchmarking and monitoring costs of government projects:
“There needs to be a comparison between tendered costs and out-turn costs.”
“Nothing will disguise just how poor governments are at managing anything, but that does not stop them trying.”
“The cost budget process needs to be scrutinised. I have seen some consultants deliberately undervalue at pre-tender stage due to the fact that the true cost would mean shelving the project.”
Last month CM brought industry figures and the government’s Cabinet Office to discuss BIM
… and we still need to talk about BIM
The survey revealed a range of opinion on the government’s BIM mandate, but responses are clearly weighted towards scepticism. “They probably said the same thing about CAD back in the old days,” says CIOB’s Eddie Tuttle. “But the industry has to deal with the reality of the government having BIM as a cornerstone of its strategy.”
Grant Thornton’s Phil Westerman says that some contractors see government-led BIM as another obligation on a long list of statutory and voluntary compliance measures. And even where the will to adopt BIM might be there, the budget often isn’t.
“Lots of people argue ‘we have enough to do keeping our head above water’,” says Westerman. “Contractors have downsized central functions so they’re concentrating on doing the basics — embracing anything else in a difficult period is almost a step too far. One £100m-plus turnover contractor told me they just do not have the resources to invest now, even though they’re aware of compromising their future.”
In fact, 25% felt that BIM is not a priority at the moment. “It’s just not on the radar for people doing £10m projects,” agrees Jason Farnell of contracts adviser CR Management.
But as the responses show, a significant minority is already delivering projects underpinned by BIM: the 18% who felt their companies were either currently offering Level 2 or 3 BIM no doubt work for early BIM adopters such as Balfour Beatty, BAM, Vinci and Laing O’Rourke.
Given this group’s enthusiasm to embrace BIM, government clients could sit back, enjoy BIM-enabled contracts and reap the efficiency benefits. But that leaves a large trailing edge struggling with outdated methods, and Tuttle wants to see more action from government “It’s a concern if we’re relying on the bigger companies to act as the educators for the rest,” he says. “The government needs to step in and filter it down to everyone in the supply chain.”
