Modernising Construction

Modernising Construction: Report by the Comptroller and Auditor General, was published by the National Audit Office (NAO) on 11 January 2001. At 122 pages, It is a very detailed, analytical report ‘…about how the procurement and delivery of construction projects in the United Kingdom can be modernised’ suggesting that there was an urgent need for change.

It highlighted inefficiencies in the industry, including the mistaken belief that the lowest bid gave the best value for money, and suggested that the government / industry relationship was ‘…characterised by conflict and distrust which have contributed to poor performance…’ In a damning assessment, the NAO pointed out that 73% of government projects were delivered over budget and 70% were late.

The report suggested that construction costs could be reduced by between 10 and 30%. It proposed better integration and collaboration with more risk sharing, less adversarial relationships and better procurement, recommending greater use of partnering contracts and the adoption of the OGC gateway review process (an Office for Government Commerce review process first piloted in 2000) on all government projects.

A number of specific recommendations were made for key groups:

The Department of the Environment, Transport and the Regions:

Provide more co-ordinated direction.
Use its influence as a member of the Movement for Innovation Board (since absorbed into Constructing Excellence) to ensure that demonstration projects are innovative.
Develop more sophisticated performance measures.

The Office of Government Commerce:

Disseminate good practice more widely.

Line Departments:

Actively measure improvements in performance.
Train more staff to be effective clients.

The Construction Industry:

Make greater use of innovation.

Responsibility for government construction procurement was allocated to the Department of the Environment, Transport and the Regions (responsibility for securing improvements within the industry and its clients) and The Office of Government Commerce (the promotion of improvements in the performance of government departments and agencies).

NB The Office of Government Commerce (OGC) has now been absorbed into the Efficiency and Reform Group (ERG) within the Cabinet Office. The Department of the Environment Transport and the Regions (DETR) portfolio has now been split between: the Department for Communities and Local Government (DCLG); the Department for Environment Food and Rural Affairs (DEFRA) and the Department for Transport (DFT).