The industry has had its say ...

As part of our preparations for the Government Construction Summit next month we asked you, the Building readership, to give us your views on government policy and performance. The response reflected the passion and intelligence of the construction industry. Five hundred people took part in our questionnaire, many taking the time to give us robust and detailed responses. In the past public sector construction has accounted for 40% of the total market, so when policy or funding changes radically it affects your livelihood and business plans. It’s clear from the polling results that the industry is still suffering from the spending cuts and programme cancellations that came after the Comprehensive Spending Review in 2010.

In total we asked 14 questions in an effort to gauge your thoughts on the state of public sector construction today. While capital spending affects the mood of the industry, legislation and the processes surrounding the delivery of public sector projects are a major issue too. In response to the question “Is the government doing enough for construction?”, one industry figure replied: “They have greater problems to deal with elsewhere. The issues of red tape, a planning system that feeds on red tape and too many consultants feeding off the red tape. Planning is a real problem that continues to frustrate the construction sector.”

Value for money

As we all know the government is looking to cut spending on projects by 20% across the board, and the industry has plenty of ideas for where to cut waste, as one respondent said: “Just look at the percentage of the costs of a contract that are expended on prelims and consultants etc compared to the percentage actually expended on the physical construction process. The government has the power to change this for the better.”

Running with the theme of best value, another person commented: “Government can do a lot more to even out the peaks and troughs in construction. They would get better value for the public purse if they procured their construction activities in periods of low output. They would also do well to direct spending to the regions rather than fuelling the mini-boom in the capital.”

As you can imagine, when asked what impact spending cuts have had on the industry, responses were forthright. One respondent looking at the bigger picture observed: “As a result of budgetary constraints, the public sector has become focused simply on price in the search for value for money. Without doubt, value for money is represented by more than simply cost but should include the ability of the contractor to deliver projects on time, to the right cost and to the highest quality. Too many contractors have fallen into the trap of pricing work to win at no margin and in many cases have gone into a loss-making bid position.”

The hiatus between the completion of Labour-legacy projects and Coalition-conceived ones is on the mind of many, as one commented: “Fewer projects are coming to the market but the medium term impact is fewer projects being initiated and conceived, which means the lag between economic upturn and increased confidence in the construction industry may be longer.”

Priority list

When it comes to strategic priorities and sectors to invest in, roads and rail featured prominently but the number one sector cited by the industry was housebuilding. Sentiment was typified by this comment: “Housing is in crisis, what better way to kick-start the economy and provide a much needed resource, construction stimulates the economy quicker and more effectively than any other measure, cascading cashflow to the four corners of the nation not to mention the exchequer.”

The industry is certainly looking for quick wins, hence an ambivalence or hostility towards distant grand projects such as HS2 or nuclear power plants. Respondents want projects now, as explained here: “Housing, urban regeneration, and smaller scale infrastructure projects which can be designed, built and in use in just a few years will mean all sectors of the industry will be active in the shortest possible time.”

Government can do a lot more to even out troughs and peaks in construction

Commenting on the Budget, many are still unsure of its likely impact, but the industry is looking for more clarity and fresh investment, as one said: “I’d like to see a greater commitment to delivering new schemes rather than re-confirming funding for existing schemes.”

Education is a leading area of public sector construction, and is touched on in several responses, including this one about the Budget: “There should be more money for primary school places. More money for secondary school places. More money for technical colleges. The idea that free schools will bail out the economy is misguided.”

Our question about what the government should announce at the summit produced a very long wish-list. The bidding process and SME accessibility has been flagged up to us consistently, hence this comment: “Scrap PQQs across the board. Framework agreements are proving to add 20-25% to the cost of the build. It should be about the outcome, the long-term life-cycle costs and good affordable design that are the drivers to making a decision and implementing policy. Frameworks are creating a monopoly and the ‘big boys’ keep getting the work at a greater cost to local government.”

What’s clear from feedback is that the industry is buzzing with ideas, energy and enthusiasm to grasp the challenges set by government. Here’s hoping that GCS will be the next step on the road to better understanding and greater collaboration between government and industry.