Will a ‘culture of low prices’ continue after Grenfell?

6 October 2020

There is concern the “culture of low prices and undercutting of competitors” will continue following the Grenfell Tower fire.

Duncan Brock, group director at CIPS, said while efforts had been made to improve procurement practices in the construction sector over the last few years, the competence of many individuals was “not yet at the required standard”.

He said discussions highlighted many examples of poor commercial practices that focused on “price and margin at the expense of safety”. 

“We know that profit margins throughout the construction industry are low and with high levels of competition there is a real concern... that the culture of low prices and undercutting of competitors will continue,” he said. 

Brock chaired the Procurement Working Group that contributed to the Competence Steering Group’s (CSG) final report Setting the Bar, which aimed to tackle “competency failings” identified by the Hackitt Review.

In the CSG’s interim report Raising the Bar published last year, the working group recommended a “procurement lead” should be mandatory on Higher Risk Residential Building (HRRB) projects.

The procurement lead would be assessed and accredited against a new procurement competence framework that identifies the capabilities and knowledge required to carry out all procurement activities for HRRBs. 

It said that “dedicated, competent procurement professionals are not currently involved in all required procurement activities” for in-scope buildings.

In the final report, the group added that while procurement leads may not be a qualified procurement professionals, they would need to be able to demonstrate competency and knowledge of:

  • How to achieve value for money outcomes within the supply chain through effective spend management.
  • The importance and benefits of early involvement of the supply chain in construction projects. 
  • How to formulate selection criteria and sourcing strategies to ensure that the organisation will achieve the appropriate choice of supplier for goods, services or works. 
  • How to create robust contractual arrangements with the organisation’s supply chain to ensure positive outcomes in cost, time, quality and safety.
  • How the external environment influences procurement and supply.
  • Recognising, evaluating and promoting the importance of ethics and responsible procurement in organisations and supply chains.

The report said: “Implementing this procurement lead role will need a culture change in the construction sector, and work is needed to raise awareness of the new competence requirements for procurement activities to ensure appreciation and compliance.”

A procurement lead with a comprehensive competence level is needed at every stage of the Royal Institute of British Architects’ Plan of Work, the report said. 

“If it is not the same person involved all the way through the project, there needs to be a clear way of transferring knowledge and information as the project progresses.”

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