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New report could change public-sector procurement

Published:  22 May, 2006

Major changes in public-sector procurement could be prompted by a report from the National Audit Office ‘Improving public services through better construction’, according to the Specialist Engineering Contractors’ (SEC) Group.

The report concludes that many Government departments and agencies have improved their delivery performance since the NAO’s previous report ‘Modernising construction’ was published in 2001.

According to Prof. Rudi Klein, chief executive of SEC Group, there is an ‘air of impatience’ about the new report.

He explains, ‘The NAO wants the pace of change to increase and believes that further savings in annual construction expenditure of up to £2.6 billion is achievable if good practice is applied across the whole public sector.

SEC Group highlights four underlying messages in the report.

• Public-sector clients must engage with their supply chains.

• The design process must be properly integrated.

• Specialist contractors must be involved early in the process, especially those involved in the engineering disciplines.

• Such early involvement is the key to the creation of innovative and cost-effective solutions.

To promote such early involvement, NAO recommends that specialist contractors be paid a fee for their design output.

The report also suggests that progress towards greater teamworking and partnering throughout construction is hampered by payment insecurity, contractual abuse and current arrangements for insuring risk.

The report also recommends that project bank accounts be established for public-sector contracts, from which all parties would be paid, and that clients consider the benefits of project insurance.

SEC Group is urging the Public Accounts Committee of the House of Commons to establish a time frame for the NAO proposals to be implemented. In particular, SEC Group argues that every public-sector project would have a project bank account within three years.



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