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Constructionline's recent survey of public sector clients shows difference in procurement strategies adopted by different client types

Date Published:

31/05/2011

While local authorities are more likely to join a framework or buying consortium to reduce construction bills, housing associations and health sector clients are far more likely to ask suppliers to cut their costs.

Some 46% of housing associations and 40% of local health authorities are asking suppliers to cut their prices, in contrast to just 29% of local authorities.

The anonymous survey of 136 public sector construction clients has revealed how the procurement landscape has changed since the government's comprehensive spending review (CSR) last autumn.

Unsurprisingly, 96% of respondents have less construction budget following the CSR, but 57% of NHS organisations have saved their construction projects from the cuts.

Among the minority of NHS organisations postponing projects, only 51% are scrapping new build projects.

In search for cost savings, only 16% of health sector respondents plan to join a framework or a buying consortium to achieve economies of scale compared to a third of local authorities.

A third of health sector respondents plan to quit a framework or buying consortium and decentralise their procurement practices. This again contracts with local authorities, 53% of whom plan to centralise procurement to a single office or department.

Constructionline's Sales & Marketing Director, Philip Prince said: "The high-profile collapse of both Rok and Connaught provided concrete proof, if ever it were needed, about the dangers of lowest cost tendering. But with almost all of our respondents facing reduced budgets, clearly there has rarely been a bigger pressure to reduce expenditure.

"Our survey highlights this paradox of procurement perfectly, with cost being the number one consideration when selecting bids followed by concern over whether a contractor is built on sound enough financial foundations to see the project through."

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