Spending cuts leave construction buyers on shaky ground

8 April 2011

8 April 2011 | Angeline Albert

Purchasers of building projects at UK councils, housing associations and health authorities are witnessing job losses as a result of the government’s Comprehensive Spending Review (CSR).

In a survey of 136 buyers conducted by Constructionline, 46 per cent said redundancies would be made in their procurement team to deliver savings over the next six months. Of the 75 council buyers, 58 per cent said they would make staff cuts in their procurement office over the next six months.

Cancelling construction projects was the priority for those surveyed: 68 per cent said this followed the CSR. A further 36 per cent said they were asking suppliers to reduce prices and 30 per cent were retendering projects.

Since the CSR, 39 per cent of the construction buyers said their organisations had changed the way they tender for building work by centralising procurement responsibility to a single department or office. Some 39 per cent said their organisation had changed by forming a buying consortium with other organisations and 36 per cent said they had joined a framework agreement.

Constructionline conducts regular polls with purchasers, but this is the first time it has conducted a survey concerning the impact of the CSR.

In a survey of council buyers, conducted last July, it found 70 per cent had seen a regular supplier become insolvent in the past year. As a result more than 90 per cent of the 32 councils quizzed said a contractor’s financial performance had become a more important factor to consider during the tender process.

Constructionline now plans to conduct surveys of construction buyers on a quarterly basis.

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