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NECC Column: Does feelgood extend to the building trade?
9:00pm Tuesday 17th September 2013 in Business
AUTUMN may be upon us now, but it’s fair to say that we enjoyed quite the summer, writes Brian Manning, NECC Durham Committee Chairman.
We’ve had fantastic weather, an Ashes victory for England and plaudits for hosts Durham County Cricket Club and a general perception that private and public sector are working a lot closer together - presenting a regional united front.
There is a feelgood factor as business confidence returns slowly but surely, but does that optimism extend to the construction industry, one of the economy’s key drivers?
Those linked to the housing market, like Esh Group, are experiencing an upturn. However, other sectors remain flat, exacerbated by areas of public sector procurement threatening regional companies across the country.
It’s rare that three of the region’s largest construction companies work together, but Surgo, Tolent and Esh Group have united to highlight the cost to taxpayers.
We understand the difficulty regional public sector bodies have in ensuring compliance with legislation. We also recognise improvements have been made.
The problem is little construction work is coming out of local authorities; by-passing regional procurement which could be filtered through NEPO (North East Procurement Organisation) and procuring work via national frameworks that preclude regional contractors.
In areas where spending is occurring, such as education, more and more work of relatively small value is routed through national frameworks meaning no opportunity for regionals to even enter bids.
Framework providers such as Scape point out that over the last five years 1,174 construction projects have been carried out to budget, so they are saving tax payers money rather than costing them.
At first glance this is fantastic, in fact after 40 years in construction, I would go as far as to say unbelievable, but then we begin to realise they are talking about a budget as against a market price and we all know what’s happened to the market over the last five years.
The Scape single contractor also works with the customer to work up the budget. We have to realise that a framework is awarded for a number of years and only model schemes are priced at the selection stage, so the framework contractor has lots of scope. It’s good work if you can get it and no doubt it ticks all the legislation boxes, but is it best value?
There is no doubt certain larger construction projects need the experience of some national contractors, but at the moment it’s the bread and butter that’s being taken away and leaked out of the regions.
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