Opinion: Time for clients to pay the right price

Grant Prior 8 years ago

Contractors caught in the industry’s never-ending cycle of feast and  famine seem to be enjoying a Mr Creosote moment.

After years of fighting for scraps from the table some contractors are now in the enviable position of turning down work where the risk/reward profile doesn’t stack up.

This is mainly a London and the South East phenomenon.

But the message could resonate across the whole country as clients come under pressure to pay more to get projects built.

The continuing recovery first saw subcontractors push up prices and pick-and-chose which main contractors to work for.

Latest research from Aecom shows that trend has now spread up the food chain with main contractors now becoming more selective about which clients they work with.

The survey showed major contractors turning down a third of bidding opportunities if clients and projects are deemed too risky.

The majors are being forced to pay more for specialists and in turn clients must adjust to the new reality of higher tender prices.

This may finally be the time to break out of the crazy main contracting model of trying to survive or thrive on 2% profit margins.

Prices were cut to the bone during the downturn with contractors happy to pick up work at any rate just to keep resources ticking-over.

That strategy has come back to haunt a host of big name firms.

Now is the time to consign that model to history and work with clients to secure a proper price for a proper job.

It’s not as if clients are not enjoying the recovery – a look at the results of some of the property world’s biggest names shows the profits to be made.

Paying main contractors more can also work out better value in the end.

Contracts are less likely to degenerate into legal squabbles over variations while a spirit of genuine transparency with set profit margins from the start of work on site can only aid efficiency.

Partnering and collaboration are buzzwords that have whirled around the industry for years to little effect.

They mean nothing without a hard financial edge for contractors and now is the time for firms to push for change while they hold the upper hand.




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