Paul Morrell confirms move that will allow public clients to compare project costs across departments

The government will set up a central database of cost benchmarks to stamp out “unjustified” cost variations between different departments’ schemes, as part of a radical overhaul of public procurement.

Cabinet Office minister Francis Maude (pictured) said: “These savings are significant and long overdue. The commitment to reduce the cost of construction by 20% is no small thing, but it will help the government and construction.”

The move was confirmed by Paul Morrell, chief construction adviser, who will lead a government-wide push to cut the cost of public construction by 20% by 2016.

The “data resource” will set cost benchmarks for all public buildings such as hospitals and schools and will allow public clients to read costs across different departments, comparing equivalent schemes such as single-living military accommodation with student residences.

Morrell confirmed that the government has begun compiling cost data - which will include cost benchmarks for consultancy services - from departments and external bodies including the RICS.

In an interview with Building, Morrell added that the government’s new strategy would enable it to strengthen its purchasing power to improve construction across the board.
Other details to emerge from the construction strategy, launched this week, include:

  • The introduction of new forms of procurement designed to encourage the integration of the supply chain and make less use of lump sum tendering on price. This will include setting benchmarks for a job within a contractor framework, with the recourse to direct tendering if none of the framework contractors meets the price
  • The much-trailed roll-out of building information modelling to all public projects by 2016
  • A target, set in August, to extend the use of project bank accounts. Morrell said he was personally in favour of their extension, to combat the problem of contractors holding on to cash, and to “take the banking out of construction”
  • Measures to help the supply chain including greater use of integrated project insurance and fair payment provisions.

Morrell also confirmed standardisation would play a role in the reform agenda: “There’s a halfway house between full standardisation and none at all. It’s about calming down the variations and fluctuations between projects.”

Contractors to run buildings in trial scheme

Morrell wants contractors to think harder about how their buildings will operate in practice, and so from summer 2012 some trial projects will be run by the constructors for three to five years. “Post-handover defects are a regular feature of construction projects,” states the report, which adds that buildings rarely function as they are supposed to, particularly in terms of energy efficiency.

It does not appear that contractors will have to take over the full blown facilities management of the buildings in question, as in much maligned PFI schemes, but simply cover defects. “All this is doing is taking the defects liability period and extending it to five years,” says Simon Price, a director at Gleeds Advisory. Yet whether this will include tasks like repainting school corridors is as yet unclear. Price believes that, as contractors factor in the extra risk they are being asked to take on, prices will rise slightly, but in the medium term they will be forced to mitigate them through better building and costs should decrease.

Paul Morrell to chair new construction board

The reform push marks a beefing up of Paul Morrell’s role as government construction adviser, as he takes control of oversight of all government procurement.

He will chair a newly established government construction board mandated with pushing the reform agenda across the government.

The board will co-ordinate projects across the public sector and will publish a rolling two-year-forward programme of infrastructure and construction projects on a quarterly basis where public funding has been agreed.

The board will also oversee the implementation of the Infrastructure Cost Implementation Plan and the government’s responses to the James Review and McNulty Review.

 

 

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