Construction: getting a project underway

Recent growth figures herald good news for the economy and the construction sector in particular. Figures from CIPS highlighted that at the end of 2013, the construction sector saw the biggest increase in commercial projects since 2007. Regeneration is an issue that is close to the hearts of many Kent residents, especially given the success of Discovery Park which will hopefully be replicated on other construction projects across the county.

It was good news for both the private housing and the industrial sectors with contracts for housing, factories and warehouses rising significantly towards the end of 2013.

Overall, the number of construction projects in the UK was up over 40% on this time last year and the Construction Products Association’s forecasts show private housing is set to continue its growth into 2014 and beyond!

These statistics are borne out by the experiences of our clients, one of which has recently won a massive contract with a major London borough to carry out all its highway and infrastructure works.

This resurgence in activity, whilst encouraging, can be dangerous if projects are rushed to meet business deadlines. So, if embarking on that delayed construction project now confidence is rising, what are the key things to think about?

• Use a proper contract! Most construction projects are carried out using one of the major industry standard forms published by the JCT or one of NEC3 suite of contracts. The ACA’s Partnering contract, PPC2000 is also a popular choice.
• Check the contract fits your job! Whilst the above are all excellent starting points they require amendment for individual projects to ensure that the requirements of funders and prospective purchasers are addressed. Also, in a still tricky financial climate, financial security by way of performance bonds and parent company guarantees is important. The underlying risk allocation will also need some tweaking!
• Maximise price certainty! The majority of work on a construction project (up to as much as 80%) is sub-contracted. The chief casualties of the construction recession have been subcontractors, especially those involved in mechanical and electrical work. Consequently, prices for some packages are up to 30% above expectations and contractors are unwilling to commit to prices. Reduce this by ensuring that there is enough tender information for contractors to price accurately. Also allow time for value engineering to reduce costs.
• Be innovative in your approach! Use new forms of procurement such as Partnering which provides for design development with both contractor and sub-contractor input and for a direct relationship between the client and the supply chain. Aim for risk reduction, value engineering and value management workshop to reduce risk and lead to tender prices with fewer risk contingencies and lower prices.

This content is correct at time of publication