Leaders: Public interest and building firm profits must balance

Published on 27/08/2012 00:00

BOOSTING the construction industry, as the Scottish Government never tires of telling us, is vital to economic recovery.

And yet, according to the Scottish Building Federation, the hoops through which construction firms have to jump in order to win a public sector contract are now so many and so complex that many firms do not try to win public sector work. Something is wrong here, surely?

Perhaps, but it is a more complex issue than building firms make out. In the recent past, too many public contracts habitually ended up costing more than was initially estimated and were completed late. One major reason for that was that too many contracts were poorly specified and became subject to change after work had commenced. As any householder who has had even minor extension work done will know, changing a contract when work is under way is a sure-fire way of escalating costs and enhancing the builder’s earnings.

This was always unacceptable, but in the current financially straitened times, it is even more so. Taxpayers are demanding better value for money and the public sector at all levels is under pressure to deliver that. In public procurement, that necessitates paying much more attention to detail and tying down as many aspects as possible in order to prevent cost variation.

This, from the taxpayer point of view, means that builders, in order to make a profit, have to look more to completing a project ahead of time and within specifications rather than to making money from time-consuming variations. But that also means, from the builder’s viewpoint, that bidding for a contract is a much more exacting and costly process.

Balancing the taxpayer interest against reasonable commercial interests is a difficult business. One innovation introduced a number of years ago to try to reduce the cost of bidding was a qualification process whereby firms could show that they were competent to carry out work only once, rather than each time they tendered for work.

But, say the builders, too many firm are being rejected. This may be because public officials, anxious to ensure public money does not get lost, are being over-cautious and excluding firms where there is the merest hint of risk.

Thus, while public sector organisations may have become more professional in contract specification, there may be an unintended consequence of making the bidding work so complex that it deters firms from tendering, thus also reducing competition. More evidence is needed to sustain that proposition for, if the SBF is correct that seven out of eight bids are rejected, there is still plenty of competition. And in any competitive process, there can be only one winner.

Nevertheless, there does seem to be a case for discussions to be held between the two sides. Scottish taxpayers need public procurement to be efficient, but the economy also needs a thriving private sector.

Armstrong’s step will live forever

OF FEW people can it be said that their name will live for ever. One is Neil Armstrong, the American astronaut, the first man to walk on the moon. His name will always be written along with the likes of Marco Polo, Christopher Columbus and Roald Amundsen in the pantheon of great explorers and travellers.

But while their achievements were ones of determination to fulfil personal visions, Mr Armstrong’s has different qualities. The vision was set out by others and realising it took a huge team effort. As Mr Armstrong always pointed out, that he was first to set foot on the moon was down to them and his colleagues, especially his fellow travellers, Buzz Aldrin and Michael Collins.

That does not diminish his achievement; it merely puts it in a different category. It is a reminder that going boldly where none have gone before requires many people to be focused on a single goal that only a few will attain.

Neither does it diminish his courage. Though the Apollo 11 mission seemed unimaginably sophisticated at the time, today’s kitchen contains more computing power than Mr Armstrong’s lunar landing capsule did. And subsequent disasters in space exploration showed that the margin between triumph and tragedy was thin indeed.

Space remains the final frontier and much of the technology needed to conquer it has yet to be invented. Man may reach Mars within our lifetimes, but getting out of the solar system still remains the stuff of science fiction.

Neil Armstrong showed that fiction can be made fact. And Scots can know a little bit of Scotland – a piece of Armstrong tartan – is on the moon because of him.