ONE OF the strengths of Sir John Egan's Rethinking construction report is that it has real relevance to the issues facing UK construction. But it is not without flaws; NCE has already reported on the lack of attention it pays to sustainability. It is now becoming clear that Sir John missed another trick by not specifically including regulators in those able to influence construction efficiency.
The influence that the regulators of privatised utilities can have is underlined by the Ove Arup/ EC Harris report prepared for the water companies on the system used to set capital spending levels (see News). The report argues that the system is a crude tool which takes little account of either the complexity of schemes or local factors. Ofwat counters by saying the system has proved succesful in driving down costs and therefore, by implication, the amount which has to be passed on to consumers.
It is an argument familiar to anyone who has worked in local government during the last two decades and wrestled with the implications of compulsory competitive tendering.
It is widely agreed that CCT is now inappropriate and produces inefficiencies. It is in the process of being replaced by best value, a system which in theory is more flexible and takes greater account of quality of work. It is a move largely in the spirit of the Egan zeitgeist and one reflected across government departments such as the Ministry of Defence and a myriad of forward thinking private sector clients.
Unfortunately, privatised utilities have become the sort of popular hate figures that local authorities were in the 1980s. This makes it difficult for regulators to be seen doing anything other than hammering their charges. Without wishing to show too much leniency to a group of companies which have shown some skill in feathering their own nests, both industry and consumers would benefit if Ofwat took a leaf out of the Egan report and showed a more co-operative approach to setting the capital spending framework. In return the water companies need to come up with a viable and transparent alternative to or variation on the current system.