Martin Chambers suggests that the government should create a new PFI model which is much more SME friendly.

There has been lively debate over the much maligned PFI after a damming report by MP’s on the Treasury Select Committee said that the initiative was extremely inefficient. 

The present unwieldy, expensive and slow moving model clearly has potential to be more efficient but it does also favour the largest firms and any review should also consider this aspect as there are benefits to be gained from creating a system that is more SME friendly.  Government should start to heed the words of its own construction advisor, Paul Morrell, and create competitions where there is a presumption that the contract will go to the smallest business that is capable of successful delivery.

The current model favours a ‘best average’ outcome’ A new model that is initially broken up into the specific segments that cover the separate areas of expertise and then comes together in an ‘arranged marriage’ is where I believe the answer will ultimately lie.  This would allow the client or the government to capitalise on the ‘marriage value’ created by it bringing together the best offer for each segment

The other aspect which should be addressed is taking what is perceived as the greatest area of risk, the design and construction part of the contract, away from the institutional finance market.   If a new model had this element as a separate entity then it could be financed by the government.  This way government would become the short term funder and be able to recycle its funding to the next project by placing the long term finance with the institutional investment market, once the scary design and build risk items have been overcome.   

The government has pledged to create a procurement system that is fairer for SMEs so it should not miss this opportunity to create more opportunities as they revise the PFI model.

With latest forecasts predicting a continued fall in construction output the future looks bleak for the industry but this is an ideal opportunity to push for greater innovation argues Martin Chambers, framework director at Shaylor Group.
 

We have seen a number of government reviews in recent months looking at ways to save costs but these do not get to the heart of the problem and miss the real issue that needs to be addressed, product innovation.  

Many building products have not changed for generations and rely on old technology when much more advanced systems are available.  Take taps and light switches for example.  Changing a tap requires a special tool, why do we not have a clamp arrangement and the type of push/ fit connection that is now available for plastic pipes?     This is a simple example but the capacity for efficiency savings if the kind of innovation that is needed for this type of everyday product was applied across the board is enormous.

There is huge potential to design building components so that they fit together on site in an easy and less labour intensive way.  This does not have to impact on the function or appearance of that component; this is not about design aesthetics but about production and assembly. 

Change is often resisted and there are plenty of barriers that will be raised in order to halt progress.  The impetus has to come from those clients who are the major procurers, such as the house builders, hotel & leisure providers and not least of all the government itself. 

It is only through these groups demanding innovation and being prepared to set tough deadlines for it being achieved that we will drive manufacturers to develop new products.   

They say that necessity is the mother of invention.  The construction industry faces some tough challenges so we should take this opportunity to improve and develop a modern industry that is ready for the future.