Budget: Public construction costs to be cut by 20%

A government plan to cut the cost of public construction projects by a fifth through standardising buildings was published alongside this week’s Budget.

In its Plan for Growth the government said it would introduce “new models of procurement” and cut out bespoke design in the public sector.

The document pledged to “reform the way in which [the government] procures public sector construction and infrastructure to reduce costs by up to 20%. This will include measures to encourage standardisation rather than bespoke designs, setting clear criteria for asset performance and introducing new models of procurement.”

Responding to contractors’ demands for greater clarity over capital spending, the government said it would publish the public sector pipeline from autumn 2011 and will give the industry greater foresight of public work.

Stephen Ratcliffe, director of the UK Contractors’ Group, questioned how the cut will be translated into reality, but said that the pipeline announcement would give the industry more certainty and stability. He said: “It was our number one priority”.

The government has been putting pressure on suppliers to reduce costs since it won power, and Paul Morrell, the chief construction adviser, has told the government the industry can cut prices by up to 30% if it works in a more integrated way.

Yet this is the first time the government has put a figure on how much it wants construction to cut costs by, as well as explicitly linking savings to standardisation.

Major reforms to housing and planning were also at the centre of the construction growth plan, including a shock slashing of zero carbon levels for homes.

Osborne’s budget also included pledges to encourage investors into the private rental sector and £210m help for first-time buyers.