For building firms and their suppliers this week’s “Government Construction Summit” has offered some mixed messages for the future. The summit focussed closely on government procurement policies and efficiency savings; but amidst a rash of cuts in government spending, what do these efficiencies amount to? Both the cabinet office minister Francis Maude and his chief construction advisor Paul Morrell outlined the current position for the construction industry and their own thinking on government building contracts, strategy and procurement. The summit had a keen focus on both saving money, with some suggestions of possible opportunities for the building industry.
Building firms, however, may be less interested in how the government proposes to streamline its processes and more on the availability of construction contracts. The summit showed that last year the number of contracts for new schools fell by thirty per cent while for roads the figure was nearly fifty per cent. For many this is no surprise as the government’s austerity measures begin to bite and the effect on the construction industry has been clear with big names such as John Doyle going into administration last month and the subsequent loss of 290 jobs. Like many other suppliers to the construction industry Doyle’s disappearance from the industry is a significant indicator of the effect that the lack of large scale projects is having on the industry.
Future PFI Contracts?
The Private Finance Initiative (PFI) sector has provided a good market for construction firms in the past, however, at the summit the Treasury’s Infrastructure Unit could only announce that plans for the successor to the initiative will be made clear well before the autumn, and could be available in the next few weeks. If this raised hopes for construction firms the statement was qualified by the statement that ‘we have had the largest successful investment in s social infrastructure since the Second World War already. That “already” may be one that suggests there may not be much more on the PFI front planned for the near future.
It’s taking part that matters (if you’ve paid your entry fee)
Despite a cast of thousands in construction terms, the Olympian task of constructing the facilities for the Games Atkins remains the only construction company permitted to use its involvement in the project for marketing purposes. This was confirmed at the summit, although smaller contractors were advised they could always tell prospective clients that they had been involved. Sort of along the lines of “It was this big. Honest”. Having paid for the privilege, it seems that Atkins intend to hold onto their exclusivity, while the smaller firms who have helped to make the Games possible will receive marginally less recognition than your average torch bearer.
Tsunamis are not normally considered a great idea, but Terry Fuller the Homes and Communities Executive director promised one is on its way for construction firms, as housing finances are handed back to local councils. This particular mega-wave is expected to come in the form of a flood of building contracts, according to Fuller, as councils rush to spend their new found rental income. On the same theme Fuller disclosed that social housing landlords who fail to meet construction targets may have their funding removed and passed onto others, to ensure enough homes are built on time.
Overall the summit provided a glum picture of the construction industry at present, despite the major construction projects promised in the form of nuclear power plants and at least one high speed rail link in coming years. While the government’s plans to rationalise its spending may not be of much interest to building firms, the changes to funding for housing could offer some hope, as could changes in the way grants are administered to social housing. For construction firms, large or small, finding their own efficiency savings seems to be the order of the day.
For all sectors in the construction industry, from concrete batch plants suppliers to scaffolding firms, the governments summit this week has provide small portions of hope and some very mixed messages.