Building on sand

22 June 2010
The efficiency drive is starting to take hold, with capital programmes of central civil government departments feeling the pinch. During the New Labour years the construction industry saw a boom in public sector investment in social housing, education and health which has significantly contributed to the headline growth. Decent Homes, Academies Programme and Building Schools for the Future are all examples of multi-billion pound capital investment programmes that provided the potential for significant investment and development of the vast UK construction sector.Positive stuff, except that with this came large centrist agencies tasked with maximising the efficiency and value of the investment programme. The actual impact and value added by them is now under close scrutiny. The Department for Education – in its most recent incarnation – is reported to be commissioning a review of the performance of Partnerships for Schools, an agency managing the Building Schools for the Future (BSF) programme. The review is set to evaluate the delivery model for investment in secondary schools and will shape the future plans. However, the contractual model developed by BSF usually entails a resource intensive bidding process which becomes the preserve of the larger equity savvy contractors and shuts the door in the face of smaller but nevertheless competent and competitive regional contractors. You only need to review the award of BSF schemes and the same major contractors feature frequently, which creates a real problem for the wider supply chain. Essentially upon award of the individual BSF programme to the major contractor, the power in the supply chain passes with it, and can be abused through aggregation and rampant standardisation. Due to the power that has passed to major contractors through the BSF programme many local supply chains have found themselves locked out of the procurement process. In the worst cases doors from China are being installed in bright new shiny secondary schools while local joinery businesses call in the administrators. There could be a case for such approaches to procurement if it maximised value for money for the taxpayer but in the majority of cases it is simply in pursuit of additional percentage points of major contractor profit. One of my children recently said to me “you do not need to watch the weather forecast, just look out of the window”. The new coalition government would do well to take this advice in reviewing the capital investment programmes of its departments. For the country to trade its way out of the economic mess that it finds itself in, opportunity must be provided to the local economy so that the government’s investment can maximise employment and wealth opportunity. Lee Parkinson is director of Parkinson Procurement Solutions  
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