Tier One contractors appear positive about tighter benchmarking, target costing and supply chain management, but there have been protests from subcontractors, specialists and manufacturers, who say they are being squeezed too tightly. They claim that partnering is being used as a covering term for driving down prices rather than genuine good management.
'Water companies want to make profits but it is clear some do not expect suppliers to do the same, ' says Peter Marsh, director of the Water & Construction Business Management consultancy, a member of the British Water trade group. He highlights Southern Water as declaring that it wanted contractors to work for no profit and Thames Water for limiting the gain side of pain/gain to a simple flat rate profit.
He adds: 'Framework agreements can stymie innovation. It can be compared to the purchasing system of the major supermarkets where suppliers get drawn in so much that they become almost totally reliant on one customer, with inevitable consequences if the supermarket no longer requires them.' He agrees that best supply chain practitioners have a '50% cost advantage over their peers. Construction can shave 8.5% off project costs.' But he says the suppliers are not always fairly treated and receive little recognition for the benefits their products or services deliver. 'They need to remind clients and contractors constantly that it is not about making money at the expense of another player, but adding wealth to end users and sharing that wealth.'