Cabinet Secretary Francis Maude has told delegates at today’s Government Construction Summit that main contractors must adopt the same attitude as government to reforming procurement and saving tax-payers’ money.
Contractors need to do more to ensure prompt payment to their suppliers, he said, but at the same should simplify and standardise pre-qualification of sub-contractors to ensure “the elimination of waste runs right down the supply chain.”
“Whilst we in Government are doing everything we can both to be a good client, and to encourage the same good behaviour in those who contract directly with us, we do expect to see the benefits of that reflected in the prices paid,” Maude told the conference.
“This means that you simply have to start to discriminate, when pricing bids, between those who simplify things for you, reduce your own transaction costs and also ensure timely payment; and those who stick to the bad habits that you have rightly complained about for so long.
The summit also coincided with the release of a Cabinet Office review, The Government Construction Strategy One Year On, updating progress towards its target of reducing costs by 15-20% by 2015 – freeing up £1.2bn a year.
The report identified life cycle cost savings so far of £279m on a spending programme of £2.6bn.
In other news from the summit, Geoffrey Spence, chief executive of Infrastructure UK, said that an announcement on ‘second generation’ PFI would be made within weeks.
And Paul Morrell, the government’s outgoing Chief Construction Advisor, highlighted his doubts over the government plan to raise £20bn from pension funds to pay for new infrastructure projects.
“I think it’s a pretty common view that there won’t be a barrel-load of funding coming in from pension funds for greenfield [new] infrastructure. It’s not their business and I don’t know anyone who thinks it is,” Morrell said.
According to a Financial Times report, pension funds have so far only agreed to set up a fund of £2bn, which could be launched next year.
