High demand prompts price-rigging, says construction

10 July 2007
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11 July 2007 | Lee Parkinson

Many of the shiny suits around the construction sector are praising the progress the industry has made in recent years, in pursuit of the recommendations made by Sir John Egan's report "Rethinking Construction". Yet this episode of File on 4 is likely to bring them back to the harsh reality of the corporate machines driving contractors in the UK.

The radio programme (aired last night) exposed how the Office of Fair Trading is investigating cartels and price-fixing in the UK construction industry. While the names of some of the bigger contractors involved were kept under wraps, the programme did offer some up close and personal accounts of bid rigging, exposing contractor names and the sums involved. Will Hughes, professor of construction management at Reading University, suggested such activity may be due to the current overheated demand and clients not engaging effectively with contractors. In response, Gordon Banks MP, who is part of a cross-party group looking at the construction sector, said: "I really do not think it is tolerable of the construction industry to say 'Sorry, we're too busy, we couldn't price the job properly so we've just carved up a deal with the company next door'. That does the construction industry no good and it does UK plc no good." Many of those working in the construction industry will find much of the dialogue in this programme commonplace, with much of the activities laid at the door of opportunistic middle-management staff. Yet those thinking types in the industry will draw a direct correlation between the increase in such activities and the next mega contractor's "record profits" announcement to the stock exchange or shareholding family. After listening to this programme such contractors may be inclined to reign in the suntanned Del Boys running their businesses…

* BBC File on 4 aired 10 July 2007. It will be repeated on BBC Radio 4 at 5pm on Sunday 15 July.

* Lee Parkinson is director of Parkinson Procurement Solutions Limited

See today's blog: Fixing the price-fixers


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