Opinion

Editorial: Nov/Dec 2011

9 November 2011

Denise Chevin, Acting Editor, CM

CMYA winner shows the good side of PFI

The year draws to a close very much as it started, riddled with anxiety, uncertainty and the ongoing fight for survival. The Construction Products Association has declared the industry is suffering its worst decline in 30 years, whilst Mark, a bricklayer, commenting on our website (see feedback below) brings home what that means on the frontline — working for less than £560 a fortnight.

Public cuts were always going to hurt, and will continue to do so. But it doesn’t help when even the money earmarked for spending is tied up by red tape and inertia. Rows over rents housing association are planning to set are not just delaying the £1.8bn social housing programme, but house building full stop.

Then there’s the deliberations of what should become of PFI. The Cabinet knows that bringing private finance to the table in some shape or form has to be an option if we’re to upgrade public assets, and the sooner it can thrash out what form Son of PFI will take the better. Processes need to be streamlined to reduce legal and bidding costs and insurances. And if some of the unnecessary risk that’s been loaded on to the private sector could be kept with the public authority, that would reduce costs too. It’s all very well MPs holding up alternative PPP models such as local asset-backed vehicles as being more equitable, but these are not without their downsides — multi-million pound legal fees and bid costs, for example, and the fact that they can be difficult to stack up. The proposed £400m partnership between Torbay and Sir Robert McAlpine to redevelop sites in the town, fell apart last month for these very reasons.

PFI has failings, notably inflexibility at a time when health is going through rapid changes in treatment and encouraging clients to ask for far more than they could ever afford. But the government is being
a little disingenuous to blame PFI for crippling NHS Trusts when they are being allocated less money.

So at a time when PFI has become the favourite whipping boy for politicians, it’s good to be reminded that upsides exist and recall why we went down this route in the first place. Roger Frost’s triumph at the CMYA awards for the construction of the £588m Queen Elizabeth Hospital in Birmingham was, of course, an accolade for his project management skills in delivering such a complicated beast on time and on budget — for which he deserves the utmost praise. (And well done, too, to all finalists and winners.)

But the new hospital is the first to be built in the city for 70 years and, like others in the UK, is providing local people with first-class medical services that without PFI, they would be waiting for several decades longer to call on. That surely tells us something of its value to the nation?

Denise Chevin, Editor

Vox pop

As the year comes to an end we ask, what has 2011 been like for you?

Vance Babbage, Director, B&M Babbage

The industry’s flat, prices are crazy, everyone’s trying to cling on to a job, almost for any cost. Income’s uncertain so you can’t plan ahead or consider investing to bring new people into the industry through apprenticeships. We worry ourselves sick over what’s going to happen over the next two months, let alone being able to support an apprentice for three years. How is construction supposed to be the engine of the economy if we’re fighting to take people on and make a commitment to them?

High point: I’m clinging onto the prospect of a long weekend away skiing. I’m going whatever happens, even if business is on the slide!

Philip Hall, Managing director, Hall Construction

The larger domestic jobs we’re used to getting are now few and far between, so we’re having to take on smaller projects to maintain turnover and staff retention. Clients have been holding on to jobs and delaying project starts, four or five projects have been affected by delays this year. I’ve had to make two redundancies — it was a last resort and a painful process.

High point: Meeting prime minister David Cameron to urge him to reduce VAT to 5% on home repair, maintenance and improvement work.

Bernard Keogh, Managing director, Arque

Tender prices are more competitive and our hit rate has reduced — previously we’d win one in three tenders, but now it’s closer to one in five.

I’m not optimistic about the next couple of years, if as a company we can pick up the right kinds of contract and run them efficiently then that keeps us going. There’s not much work in commercial development and the public sector is starting to slide, so we’re lucky we can still get a reasonable amount of high-end domestic jobs.

High point: I’m pleased that we’re still here and in business.

Mike Smith, Managing director, Corniche Builders, and chair of the CBC Scheme

It has been a very difficult year, but we managed to increase turnover by 25%. Clients seem to be looking for tender prices well below the market rate — most tenders we win are within 10% of the lowest tender value, due to intense competition. Belt tightening hasn’t yet resulted in wage cuts, or redundancies. But if you’re pricing work at cost plus 5% it doesn’t give you much room to manoeuvre.

High point: Increased turnover by 25% compared to last year despite the depressed market.

Malcolm Smith, GVA Grimley

Things have been so flat I can’t really think of a high or a low point, we’re just bumping along the bottom, which I expect to continue. I’m pretty amazed that we have remained as busy and profitable as we are — it’s partly because many things we budgeted for, as a contingency in anticipation of tough times, were not required. Another plus to come of this is more rationalisation through joining together of contractors, but that’s perhaps not so good for SMEs.

Contact us

Do you have an opinion on any of this month’s articles? Email: construction-manager@atompublishing.co.uk

Feedback

The timber frame debate, economic woes and bricklayers’ pay

Timber frame misrepresented

Stephen Griffiths, group managing director, Allwood Timber Construction

I was disappointed to read the article, “Fire safety rules hit timber frame” in the September 2011 issue of CM.

The article ignores the fact that fires on construction sites that employ methods of construction other than timber frame are, statistically, more common and implies that good health and safety management is too expensive. A robust safety plan and adequate site rules are a prerequisite on all construction sites regardless of the construction methodology and the HSE’s “HSG168 Fire safety in construction” is applicable to all construction methods — not timber frame in particular.

The timber frame industry is alive to the risk of fire during the construction phase and cost-neutral means of mitigating the risk can be designed in.  Fire compartmentation can be achieved as the timber frame progresses, although this is traditionally dealt with during wall and ceiling finishes, ie much later, in a masonry construction phase.

The following comments were posted on our website in the past month

On Chris Blythe’s column (CM October)

Thank you Chris for putting into print what most of us realise and have been saying for years. The reference to the vicious circle of spending does not appear to be recognised by governments who think that the public sector can soak up the surplus unemployment created by the governmental job losses.

Wake up politicians! The public sector is suffering even more. For every four people made redundant, due to reduced spending capacity, a fifth loses his/her job in a service industry: be it retail, the local pub, tourism or whatever. Think of all the lost tax revenue, both direct and indirect. I think that Barrack Obama got it right when he said that he wants to get Americans back to work. Create an economy through wealth, when people have money they will spend it and therefore create tax revenue.

Robert Hartle FCIOB

On web story about employed workers earning more than freelance

We are currently working on a project for a well-known building contractor in the north west, and we are struggling to earn £560 per fortnight per man. Surely there is a minimum they are allowed to pay?

We are laying between 158 and 230 140mm 20 Newton blocks a day, each, all joined work. We are working for less than students earn in fast food outlets yet we are not entitled to sick pay, holiday pay or any other benefits. We’re told if we don’t like it we can leave, another desperate brickie will take our place. Why is the construction industry allowing this to go unnoticed?

Mark

Leave a comment