Procurement: construction strategy's first year savings revealed
Savings of £72million have been made in the first year of operation of the Government’s construction strategy
The strategy set out a programme to cut the cost of Government construction by 15-20 per cent by the end of this Parliament, with the savings to be reinvested in other projects.
A review, Government Construction Strategy One Year on Report and Action Plan Update (see attached), has found that costs were cut by £72million in the first year and that a further £207million of whole project life cost savings were identified on new contracts awarded in 2011/12.
These savings figures, reported AJ’s sister title Construction News, are based on some £2.6billion of spending in the main Whitehall departments that promote construction projects.
The report said the government would ‘continue to work closely with industry to achieve improvements and cost savings’, including by using Whitehall’s purchasing power to drive industry change and by “providing transparency about the forward pipeline of contract opportunities”.
It also said procurement processes would be reformed to make it easier for small and medium sized firms to win contracts.
Commenting about the savings, WSP managing director Paul Dollin said: ‘Successfully implemented, I have no doubt the Government Construction Strategy will achieve the desired outcomes. However I am concerned that many of the achievements to date have relied on the highly competitive nature of today’s industry, which will not result in long term sustainable cost savings.’
Procurement strategy at a glance
Overview of the Cabinet Office ‘highlights’ drawn up by AJ’s sister publication NCE
- Industry has ‘engaged energetically’ with the reform programme, with around 120 private sector representatives playing an active role in its development and governance;
- Cost benchmarking data has been published by the seven main purchasing departments, providing a clear baseline for targeted reductions;
- Cost reduction trajectories have been published by the seven departments, demonstrating that the proposed 15%-20% cost reductions are achievable;
- Three iterations of the construction and infrastructure pipeline have been published, providing industry with visibility over the forward work programme;
- The 2011/12 target for the value of contracts making use of Project Bank Accounts has been exceeded by 100%, providing improved payment speed and security to SMEs and others in the supply chain, and delivering expected savings of around 1% of project costs;
- The commitment to embrace Building Information Modelling (BIM) in Government projects over a five-year time frame is positioning the UK to become a world leader in the take-up of BIM and has encouraged investment in the industry to support the revolutionary change that the use of BIM represents;
- Trial projects have been established to explore how Government can improve its performance as a client of the construction industry