In 1969, Joseph McGrath brought Terry Southern’s comic novel “The Magic Christian” to life in a film starring Peter Sellers, Ringo Starr and a host of other well known actors and comic performers. Largely panned by the critics both at the time and subsequently, the recurring theme revolved around “everything and everyone has its price”.

A century earlier, John Ruskin was purported to have said:

​”There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price alone are this man’s lawful prey,”

and:

“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.”

Although the authorship of the above statements is now debated, there remains an inevitable and haunting truth in the sentiments expressed.

It is not wrong to obtain best prices in an open competition, but it is wrong to be driven by cost-cutting for the sake of it, and where doing so lowers the level of quality and, indeed, safety.  However, where ‘Value Engineering’ cuts quality to achieve a Client’s unrealistic budget, it’s a dangerous game, and is bound to result in often catastrophic failures.  At the core of all construction projects, there must be a bottom line for levels of Quality, Health and Safety that cannot be breached.

Alternatively, ‘Value Management’ defines and adds value, focusing on innovation, objectives and outcomes before solutions and obviously has its place in modernising the Construction Industry.  Where a Contractor offers Value Management services with the aim of improving the contract offer, this must be done collaboratively with the whole team, including Client and Consultants, with the interests of the end users, be they residents, school children, teachers or public sector employees, very much at the fore.

Don’t cut coat according to your cloth, if doing so leaves you and those who depend upon you vulnerable.

Mark Farmer’s 2016 review of the construction labour model, alarmingly entitled “Modernise or Die”, was another wake up call to not only the construction industry, but also construction professionals, suppliers, clients and governments alike.

Report after report from “Reaching for the Skies” in 1934, “Emmerson” in 1962 and “Latham” in 1994 to “Egan” in 1998, “Modernising Construction” in 2001 and “Never waste a good crisis” in 2009 has carried broadly similar messages. However, no other author has been as hard-hitting or as astute as Farmer, who tells it like it is, however uncomfortable that may be. I recently heard him answer a question about the role of the Quantity Surveyor in collaboration and driving down cost. As a Quantity Surveyor himself, he surprisingly replied that the profession must change, and not be so obsessed with price and prices. “Money is the glue for collaboration. QSs are not the glue, they drive divisiveness.” He suggested that we should all move away from the detail and see the bigger picture, the out-turn cost, whether it be monetary, collaborative, social or otherwise.

One of the recommendations of Farmer’s report, in respect of OffSite Construction, encouraged Government to act to provide an ‘initiation’ stimulus to innovation in the housing sector by promoting the use of pre-manufactured solutions through policy measures, prioritised either through the conditional incentivisation of institutional development and investment in the private rented sector, the promotion of more pre-manufactured social housebuilding through Registered Providers, direct commissioning of pre-manufactured housing or a combination of any of the above. Government should also consider planning breaks for pre-manufactured approaches.

So what was Government’s response? As the report was commissioned by Construction Leadership Council (CLC), the ministers for housing, education and construction (Alok Sharma, Anne Milton and David Prior, respectively) asked Andrew Wolstenholme, Co-Chair of CLC, who wrote “Never waste a good crisis”, how he could best address this and drive improvement, “matching the scale of the challenge with a commensurate response”. Government looked forward to hearing his thoughts on “how CLC will lead on this agenda in collaboration with the wider sector”.

Is not the whole point of the recommendations that Government should lead in addressing the growing problem? Farmer has exposed the Pachyderm that has been in residence for a century or more. Government should act, not talk or ask others to talk about rehousing the beast.

They may have announced over £25 billion of investment to increase housing supply. The Housing White Paper may have set out measures to stimulate innovation and increase the use of modern methods of construction (MMC) in housebuilding. Those measures may include the Accelerated Construction Programme, the Home Builders Fund and support for Custom Build, Housing Associations and Build to Rent. They may also include joint working groups regarding mortgages and planning for MMC, working with local areas who are supportive of MMC, innovation and growth funding and support of financial incentives. The Government may also be “determined to ensure more houses are built more quickly, while maintaining quality”, and “keen to work with firms that can achieve these goals through innovative construction methods”.

But until Government acts like a governing body, Colonel Hathi and his Jungle Patrol will continue to roam through the construction industry.

In June 2015, I wrote a blog entitled “Fit for purpose: A generalist’s charter”, in which I suggested that “rather than setting out clear standards and specifications that are required to be followed, some construction professionals will merely list a number of (usually out of date) International, European or British Standards, trade specifications and/or the ubiquitous but totally meaningless Best Industry Practice, and override the whole thing with ‘reasonable skill and care’, or ‘fit for purpose’.

At the time, a court judgement had recently awarded damages of €26.5m against a design and construct engineering company for failing to provide wind turbine foundations that were ‘fit for purpose’, despite having followed the specified standards. Unfortunately the standard had erroneous data, and the resulting foundations did not did not satisfy the customer’s requirements for a twenty year life. So under this judgement, any contractor could diligently carry out his duties by following the required standard, but still be liable if the standard was incorrect.

The whole thing was turned on its head, by a successful appeal in which the judges threw out the award. The learned judges held that ‘fit for purpose’ and ‘reasonable skill and care’ clauses cannot over-ride any specification or specified standard.

That may be all well and good if there are comprehensive specifications and specified standards, but what is the case when a ‘specifier’ has specified very little and had relied on ‘fit for purpose’? I suggested that the ‘specifier’ has very little to stand by. “That’s not what I wanted,” will cut very little ice when the response is “You didn’t actually tell me what you wanted.”

This would also apply when the ‘specification’ for a replacement window, door or kitchen is described as ‘like-for-like’ and/or ‘fit for purpose.’ If you fail to set out a comprehensive specification of your requirements, you cannot expect the contractor to second guess what you require. I concluded that commissioning surveyors should set out their specific requirements comprehensively, to ensure that they would get what they wanted. Failure to do so would result in them getting what they deserved.

Recent events have led me to a modified conclusion. As well as setting out a proper specification, I believe commissioning organisations and their consultants should ensure that the outcome will also be ‘Fit for Purpose.’ The erring Contractor or Consultant who has ‘Value Engineered’ out the safety of residents and occupants will be in breach of their duties if a catastrophic event occurs and will be less likely to propose potentially unsafe, cost-cutting measures.

Similarly if a Client has a duty to commission projects that are ‘Fit for Purpose’, there will be less incentive to drive costs down at the expense of Health and Safety.

The over-riding concern should be: if it doesn’t feel right, it probably isn’t, despite all the tests and certifications it may have.

The UK Government’s Crown Commercial Service has issued Procurement Policy Note 07/16 that at best is unclear and at worst wrong.  The guidance states that all sub-central public contracts valued over £25,000 should be advertised in Contracts Finder, not only before the contract is tendered, but also when it is awarded.  Guess what? Although they may like that to be the case, they’re not only misleading, they’re also wrong.

There’s even a disclaimer that the PPN should be read alongside “Guidance on transparency requirements for publishing on Contracts Finder,” where readers who access the link will find just how wrong the PPN is.

The obligation in the Public Contracts Regulations 2015 to advertise prospective contracts on Contracts Finder only applies where a public body advertises a contract award opportunity, and the regulation then goes into some vague detail about what constitutes advertising.  It does not apply where an opportunity is not “advertised”

For example, an opportunity is not advertised where it makes the opportunity available only to particular economic operators, for example companies appointed to a framework.  Neither is it advertised (and this is where the regulation gets vague) when companies have been selected via an “ad hoc” list.  The complication comes when deciding how ‘ad hoc’ is defined and how to set it up.  Surely the public body would advertise openly, thereby requiring an advert in Contracts Finder.  Or does the Head of Procurement use other methods to set up this ‘ad hoc’ list?

There are two specific circumstances where a contracting authority is required to advertise a below EU threshold contract publicly:

1. “cross border” interest or
2. EU based or other grant funded contracts where the conditions require public advertising.

Beyond this, CCS’s further guidance puts the onus on a Contracting Authority to interpret the regulation.  “Where a contracting authority is satisfied it is lawful not to advertise an opportunity and chooses not to advertise the opportunity at all, the requirement to advertise on Contracts Finder does not apply to that contract.”

Well that’s not frightening at all is it, except the Procurement Officer is petrified about his/her level of legal satisfaction.  What’s more, the CCS explain that “This may be the case where, for example, a contracting authority has a standing order stating that advertising is not required for contracts with a value below a certain amount, and (note, not ‘or’ ) there is no legal requirement to advertise the contract.”  So we go back to the procurement officer’s level of confidence in his legal satisfaction.

The publication of award notices in Contracts Finder is an even more complicated issue.  Regulation 112.—(1) states that “Where a public contract is awarded, the contracting authority shall, within a reasonable time, publish on Contracts Finder”  There are no “if’s or but’s”, any sub-central Contracting Authority awarding a public contract above £25,000 must publish that award, whether the contract opportunity was advertised or not.

So, to restate my original question, is this PPN 07/16 clear and unequivocal helpful advice, or is it an attempt to create the illusion of an obligation, where none exists?

(Note: The facetious comments in this post are mine entirely and have no connection with the thoughts or opinions of Tim Oakley, Head of Consultancy, LHC)

Over the past three weeks, I’ve read and heard (and in a couple of cases even written) articles and podcasts on the implications of BREXIT on public procurement, data protection, standards and othe…

Source: BREXIT: Can’t live without regulations

When an opposition politician wishes to rubbish a Government Department he/she will usually use an over-used, well-worn but totally misunderstood expression, describing the subject of his/her venom as “not fit for purpose.”  In reality, what he/she is saying is that their own opposition party would run the department in a far more effective and efficient manner than ever the Government in power has been doing.  They will often gloss over the fact that their own party was probably responsible for setting up the non-performing department in a previous administration and had non-performed just as abysmally.  They may even acknowledge that they set the Department up, but vehemently state that the present administration has starved it of resources, resulting in the catastrophic failure.

This politician’s ‘sound-bite’ has now been purloined by industry, and I’m particularly referring to the construction industry, which is my own field of interest.  Rather than setting out clear standards and specifications that are required to be followed, some construction professionals will merely list a number of (usually out of date) International, European or British Standards, trade specifications and/or the ubiquitous but totally meaningless Best Industry Practice, and override the whole thing with ‘reasonable skill and care’, or ‘fit for purpose’

Until recently, such ‘fit for purpose’ clauses would set contractors into panic mode.  Specifically, a court judgement recently awarded damages of €26.5m against a design and construct engineering company for failing to provide wind turbine foundations that were ‘fit for purpose’, despite having followed the specified standards. Unfortunately the standard had erroneous data, and the resulting foundations did not did not satisfy the customer’s requirements for a twenty year life.  So under this judgement, any contractor could diligently carry out his duties by following the required standard, but still be liable if the standard was incorrect.

However, the whole thing has now been turned on its head, by an appeal in which the judges have thrown out the award.  It is now held that ‘fit for purpose’ and ‘reasonable skill and care’ clauses cannot over-ride any specification or specified standard.

That may be all well and good if there are comprehensive specifications and specified standards, but what is the case when a ‘specifier’ has specified very little and had relied on ‘fit for purpose.’  I would suggest that the ‘specifier’ has very little to stand by.  “That’s not what I wanted,” will cut very little ice when the response is “You didn’t actually tell me what you wanted.”

This would also apply when the ‘specification’ for a replacement window, door or kitchen is ‘like-for-like’ and ‘fit for purpose.’  If you don’t set out a comprehensive specification of your requirements, you cannot expect the contractor to second guess what you require.  Indeed I’m reminded of the time many years ago, when I asked a West Country contractor, dear old Pat Ifold from Bray and Slaughter, if he could do me a like-for-like joinery installation at a NatWest Bank in Cardiff. His withering reply was “I couldn’t in a million years do a job as bad as that!”

So, you commissioning surveyors out there. Set out your specific requirements, comprehensively, and you will get what you want. Failure to do so will result in you getting what you deserve.