A review of the public sector’s procurement of lead contracts is needed following Carillion’s collapse according to a construction leader.
Speaking to Move Commercial, Pochin’s CEO Jim Nicholson says the industry will continue to operate with “inherent risks” until old habits are addressed.
As of 3 April, 1,802 people had been made redundant following the liquidation of the country’s second biggest contractor, with significant developments across the North West facing continued disruption.
Nicholson, CEO of North West property and construction specialist Pochin’s, says: “Naturally Carillion’s collapse has had an effect on the delivery of a number of significant projects around the North West, including some very large university and hospital projects.
“But while the delivery of those schemes will ultimately be fulfilled, in the long-term, we need to review the criteria by which the public sector procures its lead contractors.”
Nicholson believes there has been a propensity with public sector contracts to go for the lowest price “on the false assumption that slim margins, negated by large turnover, will still ultimately deliver quality to budget”.
He adds: “It’s fair to say that regional organisations are disadvantaged by areas of the public sector who view the higher turnover of national giants as an ultimate differentiator – something that is often apparent in tenders and could be replaced with a focus on turnover relevant to the location of the project.
“Until we address these habits then the industry is going to continue operating with the inherent risks that saddled Carillion.”
Move Commercial took a closer look at the impact Carillion’s demise has had on the region in its lastest issue.