Main Contracting: new contracts & cautious optimism

Much like the general public, Irish main contractors are used to hearing about the upturn but have yet to feel the benefits in their own pockets. Brian Foley spoke to members of the CECA and MBCA to hear what the sector thinks about the current industry state of play, government forms of contract and much more.

When the then CIF President Philip Crampton stood up to address a large gathering of industry professionals at the Public Procurement in Ireland conference organised by the CIF in March 2013, he was in no doubt about the grave state of government contracts.

“At a time when the construction sector is suffering from a very low level of activity, public procurement has never been more important for our sector. Yet the industry has to operate with an extremely flawed system,” he said.

“Construction projects should be a partnership between the various sides but the procurement system in this country now operates on an adversarial basis. This is damaging the State, construction companies, architects, chartered surveyors and others.”

While the CIF conference framed the conversation around Government contracts the crucial next step was the announcement that a review would take place. That came later in 2013 and on 10th December a CIF delegation led by Philip Crampton attended the formal start of the contracts review with the Government Construction Contracts Committee (GCCC).

In his presentation to the meeting the CIF President said the industry was delighted to see the Government move forward with the process and implement the review.

“We believe the review will benefit everyone involved – the state, the public and our industry.”

The central point made in his speech was fairness. “A system that was meant to be fairer and provide greater clarity has achieved the opposite result.”

By December 2014 the results of the GCCC review were published and CIF Director General Tom Parlon was able to declare it as a “very positive outcome” for the industry.

Fast-forward to October 2015 and with the imminent implementation of two of the GCCC recommendations, CECA President Pat Lucey says relationships with Government have never been stronger.

Speaking before the annual CECA dinner he talks about how the construction industry was viewed as the problem but now was part of the solution. “The GCCC review is a big win for the industry. Dispute resolution and MEAT have some work remaining but the Bill of Quantities and nominated sub contracts are a very positive outcome.”

MBCA President John O’Shaughnessy thinks the changes to Government contracts are “what we’ve been looking for”.

“The old contracts were adversarial,” he says. “They contributed to business failures in the construction sector. Now we a collaborative form of contract that is fairer to both sides.

“We have to commend David O’Brien and the GCCC for their work. They delivered on what they promised.”

For Paul Stewart, from the well-known family construction firm, the changes to Government contracts are “promising.” The risk transfer is now more balanced, he says, while the private sector remains extremely unfair.

“Making the Bill of Quantities the primary reference document for the pricing of public contracts is hugely important,” he says.

Construction Contracts Act

Speaking to members of the main contracting sector, it’s evident the on-going delay in fully implementing the Construction Contracts Act is a source of frustration.

John O’Shaughnessy wonders why the Government can’t announce the commencement date and work back from that? “Again the delay has led to business failures through a lack of cash flow in the supply chain,” he says.

“The MBCA is happy about the Act’s introduction, it’s not perfect but issues can be dealt with after its implementation.” One such issue concerning MBCA members is payments terms affected by differentiation between main and sub contractors.

As with most people in the construction sector, Pat Lucey is concerned with the delay in fully implementing the Act. “As an Association we fully supported its introduction,” he says, “and we welcome Nael Bunni’s appointment as Chairman of the Panel of Adjudicators.”

Paul Stewart says the Act is “important” as it will help prevent abnormally low tendering because, he explains, the contractor knows he has to pay the sub contractor.

This is an extract from the October issue of Construction. The full article is available here

Our image shows Pat Lucey, CECA President, with Tom Parlon, CIF Director General and John O’Shaughnessy, MBCA President, September 2015 

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