Mark Robinson is chief executive of Scape
Having worked in the construction industry and engaged with local authorities for more than 30 years, I have seen a number of government administrations and departmental systems come and go. While we have witnessed great progress on key issues during that time, the ability to effect real change in areas such as sustainability has often been undermined by administrations either not having the dedicated resource or, alternatively, trying to effect change one step at a time.
“Imagine a world where a client knows how much profit is going to be made on every project”
Prime minister Rishi Sunak’s recent decision to split the Department for Business, Energy and Industrial Strategy into three new departments may well prove politically motivated. However, the new sustainability-focused Department for Energy Security and Net Zero provides a fresh opportunity for the government to push priorities for the construction industry to the top of what is already a busy to-do list. In my view, there are three key areas the department should be looking to address:
1. Standardising and fixing profit margins for all public sector contracts
The vast majority of issues and time wasted when delivering projects is related to price and profit. On the one hand, you have public sector clients that are concerned about contractors making large profits at the expense of the taxpayer. On the other hand, you have contractors that are trying to make decent margins so they can operate and invest in a sustainable business.
This one change – fixing profit margins – could revolutionise how clients commission work and how the industry operates. Imagine a world where a client knows how much profit is going to be made on every project so they can manage it across their work portfolio – and have the transparency and comfort of knowing that budgets are not being manipulated, as well as the assurance that the taxpayer is getting a decent deal.
As for contractors, they would know how much margin they would make across their projects. They could then make reinvestment plans, recruit better-quality people to manage their projects more effectively, and invest in new technology and equipment.
All this would take is for the government to change its policy on procurement and mandate it across all its contracts. Further work would need to be done on variations, due to the type and complexity of work carried out, along with consideration for the different sectors in which projects are delivered. But it’s the principle that counts here.
2. Mandating a single form of contract for all public sector projects
The number of types of contract used across the public sector should be minimised and a formal agreement reached that all parties use one, standardised contract: there are no discussions, no options to be considered – it’s mandated.
Again, imagine clients only needing training on one form of contract, or you only needing legal advice on one form of contract. As a contractor, this would make life easier. Your commercial teams could get on with other work instead of tirelessly trying to make a form of contract work for a specific project.
3. Making sustainability key to all projects
If we are serious about achieving our net-zero goals, then let’s include sustainability in every tender evaluation and give it the same weight as price and quality. We are never going to change the client mindset, the consultant’s advice or the building techniques of our contractors if we don’t force them to take it seriously by reducing carbon across all projects. Make it policy and let’s make sure it’s implemented.
I have been working long enough to see how the ‘green agenda’ goes in cycles and nothing ever changes. In my opinion, we are running out of time and the construction industry could do so much more to slow down or reverse the damage we are inflicting on this planet.
I would urge the newly formed government department to seriously consider these priorities in the months ahead. With government support, we can build procurement processes that ensure these priorities are included on every project.