Opinion: Rok fallout could stem suicide bids

Grant Prior 12 years ago

It’s difficult to talk about positives following the failure of one of the country’s best-known builders, but the collapse of Rok could help to slow the spread of suicide bidding across the industry.

Ridiculously low tenders from work-starved rivals are one of the biggest complaints today among contractors as companies fight dirty to win projects.

And an accusing finger is pointed at most clients who have abandoned all thoughts of partnering and collaborative working as they race after the cheapest price.

But the fallout from Rok has now seen public sector clients realise that the lowest bid can work out as a more expensive option in the long run if a contractor goes under.

Councils and other public bodies across the country have faced huge bills retendering jobs left half-finished in the wake of Rok and Connaught before them.

Both firms were accused by rivals of suicide bidding to win work while clients fell over themselves to snap-up their bargain basement prices.

Now Highlands and Islands Enterprise is taking an extra four months to take a closer look at the financial health of bidders for its £20m Inverness Campus.

The Scottish authority doesn’t want to get burned again by accepting a low bid only to see its chosen firm go under.

And with good reason too – Highlands and Islands chose Rok for a £32m framework deal just weeks before the firm imploded.

Other public bodies are expected to follow suit fearing a public relations disaster if they hand out contracts to firms who fold before projects are finished.

A more responsible approach to contract awards by councils could also benefit smaller contractors shut-out by the recent trend to bundle-up work in large framework deals.

The bigger packages may have saved cash through economies of scale. But if a firm goes bust the whole region is hit leaving a lot of embarrassed council officials and even more angry voters.

The lemming-like rush by public clients to chase the cheapest bid is understandable in the current climate to save cash at all costs.

But the whole concept is a false economy which harms everyone and causes ruin throughout the construction industry.

Rok was the biggest victim of chasing turnover rather than profit.

But now the aftermath from its demise could provide a rare chance to stem the tide of suicide bidding from swamping the industry.

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