Now is not the time to renege on long-standing partnerships, argues Duncan Melville.

COMPANIES are consistently hearing about contracts being won at ‘cut throat’ prices and in the current climate where ‘cash is king’ they naturally want to take advantage of the situation.

However, this represents a significant danger to the industry.

With tender prices continuing to drop at an increasingly rapid pace, organisations are being tempted more than ever to take advantage. Construction has come a long way post Latham and Egan (two reports on the construction industry which outlined models of good practice) and now is not the time for organisations to turn their backs on partnership working. We must not return to the days of battling quality issues and claims with contractors as they attempt to recover a margin, having won the job on a lowest price basis.

It is easy to be blinded by a 20% cost reduction. However, it is unlikely clients will achieve such savings in the long-term.

Clients should still look to fully align their objectives and share risk and reward fairly with their partners to weather the downturn; this will promote the retention of skills and encourage a longer-term approach, ultimately maximising benefits for all.

Perhaps more critical for the residential-affordable sector is the impact this cost myopia can have on the skills gap and local communities. Many are focusing on price rather than looking at the opportunity to contribute to maintaining sustainable communities.

Clients should read again their partnering charters and focus on the overall benefits of such arrangements.

By fully leveraging a partnership relationship, effectively using expert advice and operating on an open-book basis, the cost base is able to be reduced throughout the supply-chain, whilst maintaining the delivery of a high quality, tenant focused service.

Duncan Melville, is a partner at built asset consultancy EC Harris