{"id":470106,"date":"2022-12-02T06:50:14","date_gmt":"2022-12-02T06:50:14","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=470106"},"modified":"2022-12-01T16:26:47","modified_gmt":"2022-12-01T16:26:47","slug":"bouygues-boss-race-to-the-bottom-reversing-despite-inflation","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/buildings\/bouygues-boss-race-to-the-bottom-reversing-despite-inflation-02-12-2022\/","title":{"rendered":"Bouygues boss: race to the bottom \u2018reversing\u2019 despite inflation"},"content":{"rendered":"

Client bodies are moving away from \u201crace to the bottom\u201d procurement, having come to understand contractors\u2019 struggles with inflation, the chief executive of tier one contractor Bouygues UK has said.<\/span><\/p>\n

Racing to the bottom on procurement usually refers to clients valuing low-cost options above all else.<\/span><\/p>\n

Speaking at the CN Transforming Construction conference, Rob Bradley (pictured) said that public sector clients, in particular, had been more accommodating of risk after inflation began soaring earlier this year.<\/span><\/p>\n

\u201cEncouragingly we\u2019re seeing good behaviours from public sector procurement because of inflation, because contractors are no longer willing to take the risk on lump-sum, fixed-price contracting,\u201d he said.<\/span><\/p>\n

\u201cFor the first time in a long while we\u2019re seeing a number of government departments procuring on NEC [New Engineering Contract] target-cost options, which I haven\u2019t seen for a long while. That\u2019s across lots of sectors including health, so I\u2019m quite encouraged by the fact that inflationary pressures have actually, for us, seen a reversal of the race to the bottom.\u201d<\/span><\/p>\n

He added: \u201cThere\u2019s a realisation that if you want to procure the right people, you actually need to share that pain-gain risk and reward \u2013 especially when it comes to inflation \u2013 and work in a collaborative way. It\u2019s only really happened in the last six-to-nine months, but there\u2019s definitely a shift in that direction.\u201d<\/span><\/p>\n

Bradley also said the contractor was cautious about inflationary risks and was actively seeking out clients that would share the risk. He added that the company wanted to do business with supply chain partners \u201cthat work with us rather than against us\u201d.<\/span><\/p>\n

Construction material price inflation stood at 17 per cent in October, down from 25 per cent in September, with the Builders Merchants Federation and Construction Products Association<\/span> jointly warning last month<\/span><\/a> that energy-intensive products such as bricks, blocks, glass, steel, cement and ceramics were likely to see further price increases in the new year.<\/span><\/p>\n

During the same panel discussion at the<\/span> CN<\/span><\/i> event, Skanska executive vice president Thomas Faulkner was asked whether more use of the Project 13 concept \u2013 a policy of the Institution of Civil Engineers, which seeks to make procurement collaborative rather than transactional \u2013 would help the industry to deal with inflationary pressures and market uncertainty.<\/span><\/p>\n

\u201cDefinitely,\u201d he said. \u201cThe challenges [\u2026] aren\u2019t [things] that can be solved by one party; they have to be resolved by everybody working together. The fundamental principle of P13 is everybody focuses on a common goal and common outcome underpinned by a very strong commercial model incentivising their performance. This is exactly [what] will drive out some of those risks.\u201d<\/span><\/p>\n

He said that by working through alliances and long-term frameworks, contractors could work with clients more smoothly on issues such as design changes and the lowering of carbon emissions on projects.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Client bodies are moving away from \u201crace to the bottom\u201d procurement, having come to understand contractors\u2019 struggles with inflation, the chief executive of tier one contractor Bouygues UK has said. Racing to the bottom on procurement usually refers to clients valuing low-cost options above all else. Speaking at the CN Transforming Construction conference, Rob Bradley …<\/p>\n","protected":false},"author":53981,"featured_media":455888,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[530,547,552,543],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n