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Reverse of good sense


It's the season of good cheer and goodwill to all. Apologies then for destroying the mood, but hiding behind the Christmas tree, ready to strike a chill into construction's New Year, is the not very cheerful subject of reverse auctions.

In January the Consolidated Procurement Directive, which authorises public bodies to use reverse auctions for procurement, gets its second reading in the European Parliament. Unless the unlikely happens and 314 MEPs - half the parliament - vote against it, by 2004 it will become law.

The process is being used by a limited list of construction clients. Once Euro-legitimised, we will see it enthusiastically embraced by a swathe of clients looking for an excuse to revert to lowest price tendering for consulting and contracting services.

And despite Treasury statements to the contrary, this could include central and the 'stillreally-very-unhappy-about-bestvalue' local government clients.

Ten years of positive procurement developments like partnering will come to a crashing end.

The Strategic Forum, Rethinking Construction, Construction Best Practice and initiatives to improve quality, sustainability, health and safety will have the legs cut from under them.

Attempts to make the industry respectable and worthwhile will effectively have failed.

For in reality, reverse auctions are a dressed up way to get suppliers to secure the work by cutting prices. Yet a couple of hours spent bidding against your rivals on the internet, with the will to win taking over from all common sense and prices falling to levels that can bankrupt, cannot be good for any section of the industry.

But you can see why reverse auctions are tempting from a client's point of view. We all like to think we can get something cheaper and maybe it does work if you are buying commodities such as biros. Even so, would you really do your Christmas shopping this way?

Chanel for your wife - £40 in John Lewis; £4.50 from the man with suitcase outside the shop.

Would she notice the difference?

You bet she would. Would it be worth the saving? Absolutely not.

Head of the Strategic Forum, Peter Rogers is adamant that wholesale adoption of reverse auctions will be a disaster. 'There is always someone willing to chip something off the price but in the end the client still ends up paying more because it is less likely to get a quality job. I wouldn't entertain them, ' he says.

BAA, which started the positive partnering revolution, is using reverse auctions although says it is unlikely to adopt them for construction services. Group technical director Tony Douglas stresses they are just one tool in the procurement tool box.

'The risk is that in the wrong hands the tools are dangerous.'

So how does construction prevent that danger being realised?

Well collective action is always a good one - refuse to take part.

This is the line Construction Best Practice director Brian Moone is suggesting (see News). Similar advice from other key organisations would also help. ICE, ACE, Strategic Forum, - over to you.

The argument about having to take part because the competition does, will not stand. Construction is very busy. Clients want to work with the best companies because they get the best results. Boycotting reverse auctions may offend, but it will make clients sit up and listen.

If not 2003 will be the year for claims courses and for getting staff under 35 up to speed on construction's ancient great game.

Jackie Whitelaw is NCE's managing editor.

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