NEWS Opportunity in austerity A


new independent report has been


published to encourage


best practice in procurement to boost the involvement of small and medium sized construction companies in public sector construction contracts and help stimulate prosperity in the sector more rapidly.


The report, which highlights examples of best practice in the West Midlands, has been produced following the establishment of a specialist task force, comprising key representatives from the construction sector, including the West Midlands Centre for Constructing Excellence.


The coalition government recently confirmed their target to ensure that 25 per cent of all public sector contracts should be awarded to SMEs but, according to WMCCE, those involved in public sector procurement need to be sympathetic to the specific challenges facing SMEs if this target is to be achieved in the construction sector.


The report also highlights the steps that these businesses need to take to improve their approach to tendering for public sector work, with research from WMCCE showing that procurement is the area that SMEs want the most help with to grow and improve their businesses.


The report, Opportunity in Austerity, which is available at www.wmcce.org, has been written with relevant information for all of the parties involved – public sector bodies responsible for commissioning construction work, lead contractors, SMEs seeking public sector work and industry support bodies.


Nov/Dec 10


The report clearly identifies an action plan for each of the groups involved in the procurement of public sector contracts as Phil Wilson, executive director at WMCCE, explains: “It’s great that this report isn’t another academic exercise and we welcome the production of this practical working document, which can be used and acted upon to preserve the future of many great construction businesses with a rich heritage in the region.


We’re keen to partner with public sector organisations and Local Enterprise Partnerships to help turn these actions into a reality and keep public funds that are being spent on construction projects in the local area by helping to create local supply chains.


“Despite recent figures showing a boost in the construction sector, these remain lean times for many businesses, particularly SMEs. The construction sector is primarily made up of SMEs, so ensuring their stability is critical for the health of the wider economy.”


WMCCE is well-placed to help deliver against the action plan outlined in the report, having worked with more than 100 construction businesses in the West Midlands, providing advice and training in procurement during the last 12 months.


Sam Williams from Allround Plumbing Tipton in Sandwell is one business that has been helped by support in navigating public sector procurement. He attended a course funded by WMCCE earlier this year: “The course really highlighted the depth of the levels of compliance needed in public sector procurement and a wide perspective for forward planning


and continuous improvement of the business.”


Public sector contracts account for a third of all work awarded in the construction sector, which is why WMCCE believes it is so important to ensure that there are no barriers to tendering for work.


Phil Wilson comments: “While the construction industry relies on the contributions of small businesses, these businesses cannot always demonstrate their full capabilities or potential contributions, and their value is not always recognised. There is a lack of consistency in the procurement process even within the same organisation and this can be frustrating for SMEs that don’t have the resources to dedicate to what are often complex and confusing requirements. Clients, large contractors, SMEs and support agencies all have their roles to play in leading the industry out of recession and towards a fairer, and hopefully more sustainable, future.


“The public sector remains a significant source of work for the construction industry and in these lean times it could be a lifeline to many skilled and innovative businesses.”


Public sector seeks greatest cost savings through restructuring, mergers and


consolidations, says survey


Over half of public sector organisations will seek their greatest cost savings and efficiencies over the next 12 months through restructuring, mergers and consolidations, says a survey from finance and business advisors, Grant Thornton UK LLP. Public sector directors also see opportunities arising from this to develop more strategic and smarter systems and to innovate.


According to the survey, 58% of public sector directors and senior management staff will focus their attempt to achieve savings and efficiencies through restructuring, mergers and consolidations over the next 12 months. This is followed by a concentration on making savings in shared services (18%).


Directors from the public sector see mergers and consolidations as an important approach to implementing spending reductions as indicated by the 74% who identify this as an opportunity to reduce costs. Moreover, 49% see this as a chance to develop more strategic and smarter systems and 47% as an opportunity to innovate.


Despite the focus on mergers and consolidations in the sector, the majority of respondents do not anticipate they will have a positive impact on staff. 56% of public sector directors and senior managers say that previous mergers and consolidations have had a negative impact on employees, however 30% say that in the past, mergers have improved efficiencies.


By far the biggest challenge in undertaking a merger is cultural differences between organisations, as perceived by 61% of respondents.


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