Main Contracting/Civils – If Contractors Are To Invest, They Need A Line Of Sight And A Pipeline Of Work
– Paul Sheridan, Director, Main Contracting and Civil Engineering, CIF, writes that the right processes, systems, capabilities and resources must be in place to enable Government to maintain the continuity of work.
Paul Sheridan, Director, Main Contracting and Civil Engineering, CIF.
The commitment from Government to invest €10.1bn in the National Development Plan in 2021 is welcomed. The priority now is ensuring that the right processes, systems, capabilities and resources are put in place to enable Government departments and public procurement bodies have the necessary processes to maintain the continuity of work. This will support employment, investment, innovation and productivity in construction. The CIF will be submitting a report to the Government as part of the current NDP review.
Construction Works Management Framework
The Government’s policy objective of reforming the construction works management framework (CWMF) will help drive its need for better value for money and underpin innovation and increased productivity in the sector. In this regard, the Office of Government Procurement (OGP) has set out an ambitious programme of work through its medium-term procurement strategy, covering areas around pre-contract risk and the use of the public spending to profile the risk associated with construction projects. We have emphasised the importance of adequately resourcing this reform schedule, and we look forward to engaging in the process on important member issues, such as price inflation, quality in tenders, risk management, collaboration and professional engagement amongst others.
The continuing greening of public procurement is expected next year on foot of the publication of the Environmental Protection Agency’s ‘Green Public Procurement Criteria’. These criteria will ultimately become part of client requirements within tender documents and the subsequent metrics that contractors’ tender submissions will be evaluated upon.
We hope to see some of the challenges around water infrastructure addressed in 2021. Irish Water is a key stakeholder in the delivery of the NDP, particularly around the delivery of critical infrastructure projects to support project pipelines across all areas of construction.
Innovation and Productivity
Innovation and productivity are becoming key drivers of construction activity, and these pillars will emerge further in 2021 as critical to the sustainability of the sector. Covid-19 has accelerated technical adoption, where practical. Innovation is driven by learning, knowledge sharing and how the system itself drives behaviours. Construction is a complex system. To optimise innovation and productivity, all parties in the construction delivery process must contribute to it. It cannot be led by the contractor alone. The client, and particularly Government, has a huge role to play in developing a contractual framework and system, which drives innovative and productive behaviour. The current system regulated by Government does not effectively support this.
To encourage contractors to invest in innovation, including BIM and off-site construction, they need a line of sight and a pipeline of work. The more continuity they get, the more certainty they have in their longer-term view on what they need to invest in, which includes attracting talent. The Government needs to look at how it delivers on its NDP projects. It also has to innovate with its own planning and construction processes.
Continued technological disruption is impacting on how the industry delivers infrastructure and built environment assets. Technological disruption is changing the consultant business model and the scope of service they offer. Client awareness of these changes is important to ensure that they understand the scope of services they are paying for and what contractors are required to deliver. Design and build contractual frameworks and procurement strategies exist to cater for contractor-designed projects. However, the current practice of consultants using traditional contracts to dump design activities and risk on to the contractor is putting the client’s assets at risk and raises a question around quality, tender processes and value for money.
The availability of Professional Indemnity (PI) insurance in 2021 has the potential to be a source of pain for contractors, without any clear solution for relief in the short term. Contractors should be aware of their insurance obligations, including notice requirements in their existing contracts and any new tender processes. It is recommended that they consider any potential for non-compliance. The insurance industry identified risk dumping onto contractors and low-cost tendering as two leading factors in the availability of PI insurance. Members should continue to monitor the growing incidence of consultant teams placing detailed design work and risk onto contractors and the wider supply chain.