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Morrell demands 20 per cent reduction in public building costs

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The government’s new construction strategy which sets out a range of measures to help deliver 20 per cent savings on procurement has been published

The strategy, first revealed by sister title Construction News on 19 May, sets out measures that the government will take to reform its construction procurement over this parliament term, including the appointment of chief construction adviser Paul Morrell to chair a new construction board.

The new strategy will see projects thrown outside frameworks if those inside the agreements do not meet strict price benchmarks under a trial system.

The strategy advocates two new procurement models as part of the government’s plan to find 20 per cent savings on the cost of public construction projects.

The first model will invite framework contractors to bid for work against strict cost benchmarks set out by government. If no contractor on the framework can beat that benchmark then the project will go to tender and framework contractors will be banned from bidding.

The other model being considered will offer a guaranteed maximum price underwritten by insurance that extends to protection against defects.

Minister for the Cabinet Office, Francis Maude said: ‘The commitment to reduce the cost of construction by 20 per cent is no small thing, but…this strategy will stimulate growth by enabling more to be constructed within the funds available.

‘The public sector needs to be a better, more informed and strategic client. The construction industry, in turn, will benefit from a more collaborative working relationship with the public sector, allowing for innovation, increased efficiency, and delivering better value for money.’

Morrell added that the government’s construction board will ‘strengthen the public sector’s client power in the scoping, design, procurement and delivery of all construction projects.’

He added: ‘We will work with the government and the construction industry to enable more effective relationships between the two in order to enable growth and sustainability across the sectors.

‘The strategy sets out challenging new ways of working that will deliver considerable benefits not only to the taxpayer, but also enabling growth in the industry and better understanding of the future direction for public sector construction.’

A steering group drawn from the government and industry will be established to provide industry joint leadership in implementing the strategy.

The Cabinet Office will lead its implementation, co-ordinating with the Infrastructure UK Cost Review programme, and other activity across Government and industry to ensure the benefits are delivered on live projects and programmes.

IUK executive chairman, Paul Skinner said: ‘The new government construction board will play a vital role in coordinating  implementation of the new Government Construction Strategy with the IUK Cost Review programme, ensuring  that we have a coherent strategy for dealing with the wider construction industry.

‘The challenge now is for industry leaders to respond and provide the coordinated level of support needed.;

RICS chief economist, Simon Rubinsohn said: ‘The new construction strategy represents an excellent opportunity for the government and the industry to work together to ensure value for money across public construction and infrastructure projects.

‘Taking into account new developments such as Building Information Modelling (BIM) will help this process along with the move to a more collaborative approach to relationships between the public and private sector. The rolling two year forward programme of projects will demonstrate the government’s ongoing commitment to this process and will provide the certainty needed by the industry to take long term business planning and investment decisions.

‘Recognising the public procurement system needs reform is the first step and it is now up to all those involved in the process to ensure value for money for taxpayers, efficient delivery of projects and a system that encourages effective collaboration.’

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