2017: A year of change for the better?

I recall in my latest Comment that I was hoping for some good news for the industry as we move into the uncertain world of the UK outside Europe. On the face of it, things have become even more uncertain with the election of a controversial new US President and the prospect of more surprises in upcoming elections across Europe. Generally speaking, my Northern Irish pessimism would have me thinking this won’t deliver good news and can only be bad news for our industry and Scotland.

I was therefore a little surprised, and pleased, to see the results of a recent survey by the Royal Institution of Chartered Surveyors (RICS) which showed a growing optimism among Scottish construction businesses. The survey predicted growth in workload, employment and profit in 2017. Indeed, it concluded that the outlook over the next 12 months is rosier than it has been for some time. I hope our surveyor colleagues have got it right!

Whether they have or not, another encouraging sign relates to the main subject of my most recent Comment, the review of public sector construction procurement, and in particular the introduction of project bank accounts (PBAs) for certain public sector contracts.

In parallel with this welcome news, a further analysis of the review of public sector construction procurement is now under way to check that implementation of the additional recommendations accepted by government is going to plan. Encouragingly, this most recent ‘review of the review’ has reminded all those involved of the key issues that need addressed and, very importantly, how they can be addressed in a way that meets the needs and expectations of all.

At this late stage, SELECT’s position, supported widely by industry colleagues, is that focus should be on just a very few issues that can deliver meaningful change. Our sense is that positive action around ensuring the technical capability of tenderers, the protection of retention monies and the appointment of an industry regulator or ombudsman to ensure compliance with the raft of guidance published would be widely welcomed and deliver transformational change and effectiveness to public sector procurement.

If I had to choose just one, SELECT businesses would overwhelmingly point me towards dealing with the scourge of retentions. In an ideal world, this archaic practice wouldn’t exist but it is clear there are still too many clients that perceive value in them. This being the case, then protection of the cash retention becomes the vital issue.

Protection could easily be achieved by placing retention monies in trust. Early discussions with Tenancy Deposits (Scotland) Ltd, the body running the Tenancy Deposit Scheme for landlords, suggest a similar scheme could readily be established for the construction industry and would be easy to operate. This would provide security and certainty for all parties and deliver a real win/win for Scottish Government and Scottish construction businesses.

Newell McGuiness

Managing Director,

SELECT