Industry on the line?

he Joint Major Contractors Group (JMCG) meets five times a year for serious, structured discussion. It has spent much time discussing whether there should be a Major Projects Agreement (MPA) and, together with Amicus, was the initial driving force behind the MPA's establishment.

The JMCG devotes much of the meetings to industrial relations and training matters. That is appropriate because the major firms need to be leaders in both those sectors. It also discusses political issues, in so far as they affect the business of m&e contractors.

While the JMCG only discusses and advises, the delivery organisations take careful note of the major firms' views, while balancing them with the perceptions of smaller and medium-sized firms. The Specialist Engineering Contractors' (SEC) Group, ECA and HVCA are large organisations with a broad spread of membership. The JMCG never insists upon a course of action; it realises that the Associations and SEC Group must represent the whole m&e sector, not just the big firms.

That is rarely an issue because the same problems affect large and small firms. Take retentions, where the SEC Group and the Associations have been particularly active in lobbying ministers and bringing pressure to bear upon the Department of Trade and Industry, through skilful contact with the House of Commons Select Committee.

I attended the agm of a trade association of which I am president a few months ago. Its members are not involved in m&e. One member complained that the National Specialist Contractors Council (NSCC) – the equivalent to the SEC Group for trade contractors – had not got rid of retentions.

I pointed out that until a few years ago, when the previous Constructors' Liaison Group took up the issue, followed by the SEC Group and the NSCC, about 99% of Members of Parliament would never have heard of retentions. Even the 1% who may have known what they were would have regarded them as an entirely commercial and industrial problem which was nothing to do with MPs.

If your company is asked to take part in an online auction, the best response is to e-mail two words back to the enquirer: ‘no thanks’

Due to high profile campaigns by the Associations, the Select Committee has reported twice on the issue and construction minister Nigel Griffiths has made sympathetic noises. There is still a long way to go, but the days of cash retentions in public sector contracts are now numbered, especially if the SEC Group keeps up its pressure, as it surely will.

Another campaign of importance to the JMCG is against online tendering. If the client is seeking to buy large numbers of high volume, low value items, such tendering makes good sense. There is little difference in quality between the products in competition with each other. However, such an approach is totally unsuitable for the procurement of construction projects, particularly for the large added value that m&e brings to the completed scheme.

Despite the protestations of the advocates of online tendering, it effectively becomes a Dutch auction, held at high speed, where the name of the game is cutting specification, forcing down the prices of subcontractors and suppliers and looking for scope for claims and variations under the contract. Such an approach inevitably involves exactly the adversarial atmosphere that Best Practice and Egan has sought to avoid.

If you seek bids of cheap peanuts, you will end up with scrawny monkeys. It is particularly disappointing that some public sector clients, and even the Office of Government Commerce, which has been responsible for much excellent good practice guidance in recent years, should be contemplating using online tendering for any part of the construction process.

This issue was discussed at a meeting of the Strategic Forum for Construction earlier this year. The Office of Government Commerce, a member of the Forum, offered to discuss this issue with the industry. The SEC Group, with the support of the JMCG and in conjunction with the Construction Industry Council has produced guidance to the m&e sector that online auctions are not an appropriate procurement route for high value projects like construction.