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Procurement: construction strategy's first year savings revealed

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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


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Readers' comments (1)

  • John Kellett

    The most important aspect in any quest for a value for money reduction in overall project cost, is that of spending the time getting the design right.
    This can only be achieved with the design team being involved in the brief formation stage and through contact with end-users throughout the design stage.
    The design that meets those needs is then built.
    The Government proposal would appear to be a very complicated way of achieving a different conclusion: one that places cheap building as the primary concern and a design that meets the end-users needs as secondary.
    There are certainly savings to be made by seeking the advice of specialist sub-contractors early in the process as has been proven. But to demote the design team and meeting the client's requirements to a secondary role cannot provide a 'good design'.
    The word 'architect' features only three times in the report and all references are within a text box quoting an architect inferring that use of BIM will increase the profession's fee income (therefore inviting a fee reduction by clients). In actuality any increase in fee will be matched by the greater level of information required (as has been seen previously with the change from drawing board to 2D and from 2D to 3D).
    The average architect's income is already derisory in relation to the work expected, reducing fees further can only mean poorer service or lower salaries.
    Design fee levels should at least stay the same in order that design time can be spent reducing construction and project costs, which is after all the aim of One Year On!

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