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IS THERE A HIGH PRICE TO PAY FOR COST CUTTING PROCUREMENT?

Design and build contracts have revolutionised the way that many construction schemes are delivered, streamlining the process for the client, with accountability for both specification and delivery sitting firmly with the main contractor.

But what impact has that had on the integrity of the specification? Despite the inevitable value engineering involved in most projects to maximise the available budget, quality and design, integrity is usually maintained when architectural responsibility is novated across to the contractor. However, in some cases, the close collaboration between the original architect and the specialist subcontractor can be lost as a result of the procurement methodology.

Even if a balustrade system is named in the original specification, the contractor may replace it with a less robust or attractive system as an ‘equal or approved’ alternative at procurement. They may even set aside the detailed calculations and design development work done by the balustrade specialist with the original architectural team by choosing an e-auction procurement approach, simply opting for the cheapest system.

So, what are the pitfalls of this approach?  Firstly, there is a potential risk to end user safety as the calculations may not be correct, which could lead to loading discrepancies or installation integrity issues.  The quality of the chosen system may also be inferior to the original specification, which may have implications for the robustness and/or durability of the installation. For example, the e-auction process does not enable the contractor to check whether the change of specification also involves a change in fixing method and a simple switch from bolt through lugs to clamp lugs could dramatically reduce the safety and service life of the system.

A price-based change of specification could also compromise the installation’s aesthetics, along with the service and technical support capabilities offered by the balustrade specialist. This could involve areas as diverse of delivery times, health and safety, installation team training and Kitemarking.

While managing material costs is critical to maintaining margins for contractors, margins can be compromised if this is done at the expense of quality, safety, service and aesthetics. Increased lead times, reduced product quality, poor service standards and lower skill levels from installation teams all have the potential to contribute to programme delays, snagging issues and loss of repeat business.

So when it comes to cost-cutting procurement decisions, it’s worth considering whether the savings really add up to a good deal.