From the cost of materials to the impact of legislation and foreign tensions, Marie-Claude Hemming, director of operations at The Civil Engineering Contractors Association, outlines what the future holds for contractors.
The Government’s radical proposals for reforming the UK’s procurement process will be published in a Bill which goes before Parliament later this year.
The Civil Engineering Contractors Association believes the reforms – if implemented in the spirit in which they are intended – will lead to a reduction in the cost of public procurement and projects which deliver long term social and economic value.
The policy aims will also introduce a simplified approach and clearer route of delivery, allowing the market to arrange itself accordingly.
CECA played an active role in submitting evidence to the Government’s consultation last year, and we note that many of our members’ concerns have been reflected in its response to the Green Paper which was published just before Christmas.
As we look towards the publication of the Bill, CECA will continue to ask members for their views to ensure our engagement with MPs and Peers is totally reflective of our membership.
We are currently seeking particular clarification on the operation of the proposed Dynamic Markets system and on open and closed frameworks and call for industry views to aid our lobbying as the Bill progresses in Parliament.
We will also work with Government to ensure measures introduced to address payment challenges are easy to manage.
We anticipate that the legislation will also embed the principles of the Construction Playbook and the independent review of frameworks, published by Professor David Mosey and the Cabinet Office onto the statute books.
The publication of the Construction Playbook is the result of substantial collaboration across both the public and private sectors to share learning and best practice. It is focused on getting projects and programmes right from the start and is based on a series of key principles and policies to change how government assesses, procures and manages public works projects and programmes.
This means changing public sector attitudes to risk, driving sustainability, and innovation across projects and programmes, learning from existing examples of excellent delivery and bringing the right people together at the very start.
To complement this client step change, industry and its supply chain must also demonstrate and deliver continuous improvement in safety, cost, speed and quality of delivery, data sharing, and training.
Professor David Mosey’s Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks sets out 24 ‘Gold Standard’ recommendations, reflecting a range of reflect a range of policies in the Playbook with detailed supporting actions, designed to improve the outcomes delivered by framework strategies, and to avoid the pitfalls of bureaucratic and inconsistent practices.
Clients are already at various stages of the implementing the principles of the Playbook, which was published just over a year ago. The general consensus is that the Playbook is beneficial to the whole of industry, in terms of improving delivery, effective use of resources and improving social value.
CECA members have welcomed the adoption of Playbook principles by some of our key clients. We note however, continued challenges experienced in obtaining meaningful data from client pipelines, combined with unbalanced investment cycles. This makes it increasingly hard to plan and manage resource across all company projects, with a lack of consistency in standardised pipeline information adding to the confusion.
The Construction Playbook has a three-year implementation plan, after which, CECA hopes that all clients, including local authorities and the private sector will be fully adopting the Playbook model, driving efficiencies, innovation and growth for the long term.
2022 will be a busy year for civil engineering contractors with global tensions exacerbating ongoing issues over the cost of materials and shortages of labour.
Notably, CECA is especially concerned over the UK Government’s removal of the tax rebate on the red fuel used by construction businesses in their plant and machinery in April.
We have consistently supported the aims of the policy, which are to reduce emissions and help meet net zero goals but have always stated that delivering greener growth must work for businesses and the consumer.
The legislation also removes the rebate for cleaner fuels. With greener plant and machinery not yet available at scale in the UK or in Europe, firms will simply switch to standard white fuel.
Before the outbreak of the war between Russia and the Ukraine, we estimated that the removal of the red fuel rebate would cost industry up to £500 million a year and each SME construction firm between £250,000 and £600,000 per annum.
Given the current crisis, these costs will now be much higher, with firms seeking to get back any loss in revenue from consumers and taxpayers.
The Civil Engineering Contractors Association continues to support the policy’s aims, but now is not the right time to implement this change. We are calling on Government to delay the introduction of the rules for twelve months to ensure we can continue to Build Back Better in increasingly challenging times.
The Civil Engineering Contractors Association is an official partner of Highways UK, find out more information on their upcoming projects by visiting their website: https://www.ceca.co.uk/
CECA’s Marie-Claude Hemming will be speaking at Highways UK this year on 2-3 November at the NEC in Birmingham.