What next for the Government ConstruCtion strateGy? - Aecom

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What next for the Government Construction Strategy? Market conditions The UK construction market remains challenged. Despite maintaining steady levels of employment, output is down, prices are flat, and the economy shows few signs of growth. Some commentators predict that this could become the norm for our country beyond 2015, even through to 2020 – providing a difficult landscape in which to trade. Put simply, the GCS states what the supply chain must do to help the public sector secure cost reductions and drive efficiency Even so, the public sector continues to spend a significant proportion of GDP on infrastructure and construction. Public spending accounts for around a third of total construction output and is projected to be in the region of £30 billion per year over the next three years. That makes the government an important client to the construction industry, especially at a time of economic stagnation. Managing relationships with this client entity is thus a key priority for all those in construction – and the GCS guides us about how best to do that. Put simply, the GCS states what the supply chain must do to help the public sector secure cost reductions and drive efficiency. Public sector construction output £m (2005 prices) 2012 2013 2014 New work 18899 16908 16401 R&M 13234 12917 12844 Total 32133 29825 29245 Source: Experian Construction Forecasts 2014 (2012) 4
What next for the Government Construction Strategy? Changing priorities The Cabinet Office used the ‘One Year On’ report to reinforce a positive story about government savings on construction spending, and to advocate a unified adoption of the GCS throughout the public sector. In reality, not all public sector bodies have yet implemented the GCS. While there are many examples of best practice, the public sector overall tends to be slow in adopting a new direction of travel when it comes to the procurement and management of construction contracts. So the GCS principles are by no means used uniformly in public sector construction projects – although the government clearly hopes this will change in the next three years. Further impetus for the GCS may come when Peter Hansford takes up his post as the government’s Chief Construction Adviser in November 2012. We can expect it to be a few months before Hansford establishes his vision for government construction, so it is too early at this stage to gain a sense of his priorities. How his priorities will align with those of Paul Deighton (the former CEO of the 2012 Olympics London Organising Committee), who has been appointed to a ministerial role in HM Treasury to lead the government’s infrastructure push, will also be important for the industry and government. The forthcoming Autumn Statement will no doubt have implications for the construction industry. It is difficult to predict what to expect, but there will be a clear tension at play between investing in buildings and infrastructure as a means of priming economic growth, and cutting the construction budget to reduce public spending. In a fluid context, there is little certainty about the precise direction of travel for the GCS. It seems reasonable to suppose that the factors examined above will have an impact on the strategy, though, and we can expect it to be revised over the coming months. How his priorities will align with those of Paul Deighton, who has been appointed to a ministerial role in HM Treasury to lead the government’s infrastructure push, will also be important for the industry and government 5
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What next for the Government ConstruCtion strateGy? - Aecom

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