The news that the UK Contractors Group and the National Specialist Contractors Council are likely to merge is welcome. It will rationalise the number of representative bodies and provide an opportunity to resolve the issues between majors and specialists.
Top of the agenda must be the issue of payments. The existing business model does not work well enough. Without repeating myself, it seems bizarre that the majors make their money as accountants, not for the skills they bring to the delivery of buildings.
This creates uncertainty and increases the risk for all those in the supply chain. Ultimately the system brings enormous risk to the client as well. The spate of construction administrations has left supply chains in tatters and clients struggling to get projects finished.
"The spate of construction administrations has left supply chains in tatters and clients struggling to get projects finished."
A recent report based on Companies House data showed a net increase of 5,000 new construction businesses in 2013. This is encouraging because in the previous year there was a net reduction of 7,000. These numbers hide a salutary fact: in 2013, 39,000 construction businesses were formed, which means 34,000 were closed or went out of business. This is an enormous waste.
Admittedly a lot of these are probably small one-man bands operating in the domestic sector who close down one day and restart the next. It’s the sort of stuff you see regularly on television, giving a negative image of a part of the construction industry.
As far as the domestic sector is concerned, I am increasingly persuaded that it should not be possible for anyone to set up as a builder and create mayhem. I would like the new government to consider some sort of licensing scheme for builders at this level. The barriers to entry are too low.
Governments are reluctant to regulate on this and I understand why. The opportunities for fraud and misrepresentation are extensive without comprehensive regulation. A poorly supervised regime allows crooks to prosper, so governments have left it to market forces. This is surprising because clients – householders – are voters. They are also the ones who end up with the wrong image of the construction industry.
A new deal is also needed for mainstream contracting. It is inevitable that project bank accounts will become the norm rather than the exception.
Maybe the merger of the two trade bodies is the catalyst for change. Unless we do something different, the current model is not sustainable.
