More bad news for civil engineering contractors

First published in November 2018

The press coverage of the ongoing woes at Interserve today once again bring to light the structural fragility in contracting, and in the infrastructure sector in particular.

How on earth we have ended up in a situation where the members of the supply chain for the construction of infrastucture projects who take all the risk are working for margins of less than 1%, while those being paid on headcount are making double digit returns?

The construction industry in the UK is broken, and the responsibility for this starts at the very top. Root and branch reform of procurement is required, and if ever a time has come for a sea change in the attitude toward risk allocation, it is now.

Contractors are being forced to spend around 1.5% of their turnover on prequalification for all risk frameworks with a zero value in the forlorn hope of making less than 1% if absolutely everything goes according to plan.

Is it any wonder that UK plc has little interest in providing financial backing for the businesses that provide around 7% of the GDP in this country?

Those who looked at the demise of Carillion and thought the bottom of the barrel has been reached must think again. For every Carillion, there are many many small businesses who have either been forced to cease trading, or who are on life support in our sector that you never read about.

How much more suffering must our sector endure before reality bites for client organisations too?