Viewpoints

Leadbitter has long believed that value cannot be measured by cost alone, and the ‘best practice’ procurement approach of recent years aligned well with our company values and culture, which place an emphasis not only on delivering high-quality buildings, but also on using construction projects to create long-lasting benefits for the surrounding community. This ethos encompasses many aspects of the Egan agenda outlined in the 1998 report ‘Rethinking Construction’.

While a recent review of industry progress since the Egan report by Constructing Excellence reveals that the implementation of the recommendations has been patchy at best, many procuring agencies have in recent years developed an appreciation of the role that quality construction companies are able to play in developing strong local communities. They have recognised added value items, such as training provision, use of local labour, educational support and understanding of sustainability issues, considering these benefits alongside cost and making decisions based on the overall value a contractor could bring to a project.

This approach has allowed construction firms like Leadbitter to invest in and develop a wide range of expertise to further support clients, providing everything from pre-construction advice to apprenticeships and training programmes to post-handover care.

Procuring agencies receive first-class service and support to get their projects up and running quickly, and the inevitable concerns raised by constituents about possible inconvenience caused by construction are tempered by the benefits the local people can see coming from the projects. After handover, the construction firm retains a presence to help ensure the building’s smooth transition into use.

Even in the previous decade of economic growth, the Constructing Excellence review revealed that the public sector hasn’t become a ‘coherent champion’ of the Egan agenda, stating that: ‘While the leadership of public organisations may be committed to the idea of best value, their procurement teams often still want to achieve lowest price.’

Now, faced with a recession and the subsequent pressure central government has put on procuring agencies to cut spending, many agencies that have championed best practice procurement have had to revert to an outdated approach where value is synonymous with cost.

Yet clients still desire the added-value items they’ve come to expect, at an ever lower price. In the short-term, construction firms will no doubt continue to offer these valuable services. For its part, Leadbitter has invested in this expertise, and we are passionate about providing our clients with the best service available. We genuinely do understand the pressure that housing associations and local authorities are under. And we are not alone in this.

However, just as procuring agencies yield to pressure from central government, if the cost-based procurement approach becomes a long-term strategy, eventually it is inevitable that a number of construction firms will yield, unable to sustain the level of training and other added-value programmes currently offered.

The risk is a return to an environment where construction is solely about bricks and mortar building, and communities no longer benefit beyond receiving a new facility. Local people who have already been hit by the recession will have even fewer training opportunities, and local businesses will suffer as firms look for deeper discounts. Local authorities could also find their resources stretched even further if they have to handle the pre-construction and post-handover issues that construction firms had previously helped them to manage.

Beyond even these immediate challenges, returning to cost-based procurement – and continuing to think of construction as a commodity purchase, rather than a long-term investment that can improve the effectiveness of services and reduce operational costs and carbon usage over the life of the building – will further endanger our economy in the long-term. What is constructed now will need to last for decades to come; constructing facilities which are not sustainable, which use too many resources in operation, will only hamper our ability to achieve the low carbon economy necessary to sustain our quality of life in the future.

It is only natural to look for short-term solutions like cost-cutting in difficult economic times, but as Constructing Excellence’s report shows, we must not lose sight of the long-term goals we have been working toward in recent years as many of us on both the client and supplier side have endeavoured to build not just bricks and mortar facilities, but economic and social opportunities and strong communities. We hope that local authorities and housing associations will consider the long-term impact of cost-based procurement and continue to believe in and fight for the best practice approach that has generated such benefits in recent years.