RSUA participated in a meeting with the Finance Minister, Conor Murphy MLA, as part of the Construction Industry Forum (CIFNI). The meeting was to discuss government construction funding and spending plans, preventing a race to the bottom, ensuring appropriate risk allocation in contracts, and achieving prompt payment through the supply chain. NICG is seeking action on a range of areas:
Action: Provide clarity on funding and spending plans
Currently the industry is not clear what funds from 20/21 have been allocated to the various areas of construction spend. We are also conscious that clients will not have been able to spend at the normal rate in the first part of this financial year.
We seek clarity from all Government Construction Clients on funding for construction projects in 20/21:
- How much has been spent to the end of May or June?
- How much is left for the rest of year?
- How that has been allocated in terms of areas of work or projects?
We welcome the recent government commitment to longer term funding cycles in future budgets. We note that to secure confidence in the construction sector there is a clear need to link funding and budget allocation, to a dedicated, transparent procurement pipeline with committed programmes for development and expenditure.
Action: Prevent race to the bottom
In recessionary times bidders have been known to go to any lengths to secure work, including submitting unsustainable prices. We seek the immediate introduction by all Government Construction Clients to put in place measures to prevent the race to the bottom with regard to pricing. Different measures are likely to be appropriate for the design stages and construction stages. Methods to consider including the client setting the fees at a healthy level and bidders competing on quality alone, the use of the narrow average, the adjusted lower average or the average of the lowest three.
Action: Ensure appropriate risk allocation
Asking contractors and consultants to price in risk of unknowns and unknowable’s was shown the last recession to be a bad idea. We seek agreement from the Government Construction Clients that during these unprecedented times that bidders will not be asked to provide a fixed price for elements which are unknown or unknowable. Mechanisms should be put in place to deal with these elements after appointment.
Action: Ensure monthly payments for all
Cashflow is particularly important to all construction businesses at the moment. We seek agreement from all Government Construction Clients to put in place contractual measures that ensure monthly payments to contractors and consultants (with no retentions) and ensure payment throughout the supply chain.
RSUA will continue to engage with government, clients and policy makers as we emerge from lockdown. If there are specific issues that you would like us to raise on your behalf then contact firstname.lastname@example.org