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Positive thinking in National Audit Office report

Published:  11 April, 2005

Major changes in public-sector procurement are expected following a report from the National Audit Office ‘Improving public services through better procurement’ — according to the Specialist Engineering Contractors (SEC) Group.

Since its first report ‘Modernising construction’ in 2001, the NAO has concluded that many Government departments and agencies have improved their construction-delivery performance, but that much remains to be done to improve performance.

Rudi Klein, chief executive of the SEC Group, says, ‘There is a slight air of impatience in their report. It is clear why the NAO want the pace of change to increase since they believe that further value-for-money savings of up to £2.6 billion in annual construction expenditure is possible if good practice is applied across all the public sector.’

The underlying message is that public-sector clients must engage with their supply chains. The design process is not being integrated. There must be early involvement by specialist contractors, particularly those involved in the engineering disciplines. Such early involvement is the key to creating more innovative and cost-effective solutions.

To promote this involvement, the NAO recommends that specialist contractors be paid for their design on a fee basis, similar to consultants.

The NAO believes that progress in securing greater team working and partnering within the industry is hampered by adversarial contracts, payment in security and abuse and the current arrangements for insuring construction risk.

To address these issues, the NAO makes two far-reaching recommendations.

• Construction projects in the public sector should have project bank accounts to ensure payment security. All parties will be paid their monies out of the project account.

• Clients should consider policies of project insurance that will underwrite teams or their individual parties.

The report has been sent to the Public Accounts Committee in the House of Commons



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