News on 12 January 2001

The government needs to change its procurement and management of new construction projects - worth £7.5bn a year – says the National Audit Office in its Modernising Construction report.

A series of major studies showed that the traditional methods were inefficient with contracts being awarded purely on the basis of the lowest price bid, only to see the final price increase significantly through contract changes, with buildings often completed late. Distrust between the construction industry and government departments also contributed to poor performance.

Sir John Bourn, head of NAO, presenting the report to Parliament, said four agencies – Defence Estates, NHS Estates, the Highways Agency and the Environment Agency – estimate that they will achieve efficiency gains of over £600m a year and improved buildings by changing how they buy and manage construction projects. He also said that as much as £2bn in total efficiency gains could be delivered if such good practice were extended across the whole of central government.

The report recommends that the entire supply chain including clients, professional advisers, designers, contractors, sub-contractors and suppliers of materials should be integrated to manage risk, encourage innovation and to develop designs which improve the "buildability" and value of projects in order to drive waste out of the process.

This would then reduce the overall costs of the construction, lead to fewer accidents, provide greater certainty of project time and budgeted costs and result in more sustainable construction.

Bourne added: “With Government plans to increase infrastructure spending to £19bn over the next three years, the need for widespread implementation of good practice now has a greater degree of urgency.”

To download the full report or the executive summary as a PDF please click here: www.nao.gov.uk/whatsnew.htm