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Being a better client

A busy construction industry and a shortage of people are changing the relationship between clients and suppliers.

The days when 'client was king' and procurement directors could openly boast 'I haven't been doing my job if I don't put suppliers out of business' are well and truly over. In fact, market forces mean the boot is now on the other foot.

As if to underline the point, Olympic Delivery Authority (ODA) director of construction Howard Shiplee last week declared that the ODA knew it had to make itself an attractive client if it wanted the best businesses to help it create the 2012 London Games.

Speaking at NCE's Games Briefing conference, at which the ODA launched its procurement strategy, Shiplee's comments were the clearest expression of the sea change that has occurred in client/supplier relations in the past year.

ODA is committed to using the non-confrontational NEC contract for tier-one suppliers and says it wants to see the same values driven right through the supply chain.

The Authority says it is committed to value, not lowest price, will not be using hated reverse auctions and is backing national working rule agreements with the unions.

The reason is clear - Shiplee, like so many other clients today, has to sell himself as an employer of choice for suppliers. So many people and firms fled the construction sector during the last recession that there is scarcely enough resource to feed the current boom and suppliers can now be very demanding.

Only last week the Association for Consultancy & Engineering (ACE) told consultants to walk away from any clients demanding unlimited liability cover - something consultants can only afford to do in a buoyant market. The ACE named English Partnerships, Bovis, Grosvenor Estates, the North West Development Agency (NWDA) and many local authorities as the worst offenders.

There is clear concern particularly among public sector clients who insist that they simply follow government advice.

We follow Office of Government Commerce guidelines and our legal team advise us to pursue contract terms that offer the best possible protection for public money, ' said a spokesman for the NWDA.

However, their demands are making some clients increasingly unpopular and as construction companies take a long hard look at who they want to work for, other factors will come into the mix.

For example, the head of a top 10 consultant said that his firm is considering each client considered on its individual merits: 'Any request [to provide unlimited liability cover] has to be referred to a main board member.

'We do a risk analysis on each occasion, ' he said.

Yet it is not just names on the tender lists that clients risk losing if their procurement policies and working arrangements are not attractive. They risk getting a lower quality or a less innovative solution to their problem.

For instance, in the water sector the shortage of exciting project work coupled with low profi margins means fewer ambitious engineers are staying in the sector.

That said, long-term work programmes will always be attractive to the industry and its supply chains. The question is, on whose terms will the industry continue to move forward?

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