LEADING CLIENTS have been taking contractors 'for mugs' according to newly knighted Tarmac chief executive Sir Neville Simms.
Simms, who also chairs the Major Contractors Group, said contractors were not gaining sufficient reward for the cost savings and efficiency improvements they had achieved for clients. 'We will not continue to be taken for mugs,' he said.
Although Simms said there were notable exceptions, he claimed that many 'good' clients were still using 'demeaning' methods of payments to hold contractors to 'ransom' during projects. Partnering, he added, had not delivered the increased profitability that contractors had hoped and clients had promised.
'If we save clients 30%, which we have done regularly, why aren't we seeing 10% of that?' he said. 'Why should we continue to work for 2% margins? We are a much more efficient industry than we were in the late 1980s - leaner, fitter, more imaginative and creative - and we deserve better rewards. Unless contractors begin to see more advantages - such as the speeding up of payment - in doing some of the things the clients want us to do, then they'll become disincentivised.'
Simms signalled out the government-sponsored efficiency drive chaired by BAA chief executive Sir John Egan for criticism. While admitting that the industry still had much to do to improve, he claimed that the Egan task force had begun with 'a fixed view' of construction which Simms was determined to challenge. 'We are not as inefficient as they think,' he said.
At NCE's Construction 97 conference in October, Simms told the audience: 'I intend to make the drive for profit through greater efficiency - not just for my company, but for all the industry - the focal point of my efforts over the next few years'.
Simms said he was now discussing with his MCG colleagues how to drive the campaign forward. 'We'll start by getting people's attention,' he said.