Are We on The Road to Recovery?
The past month has seen many key economists announcing, that the UK is well on the road to economic recovery. However, though the construction industry is now contracting at a less alarming rate, it is still struggling.
In August, we welcomed news that the rate of deterioration had slowed. However, this can mainly be attributed to a decrease in demand for new houses. Indeed, there are still many challenges, threatening the industry’s full recovery.
The most unanticipated of which, is the decline of the civil engineering sub sector. Throughout the recession, this sector had remained remarkably buoyant. However, August witnessed the sectors worst ever recorded results. Not only does this indicate that – despite initial reports of economic recovery – the UK’s construction industry is still volatile, it also highlights flaws in the government’s economic stimulus plan.
In other areas, the residential construction sector has experienced a slower rate of contraction in August than reported in previous months. Meanwhile, the number of construction workers facing redundancy has been though to have significantly reduced.
In conclusion, as the rate of contraction slows across all areas of the construction industry, it definitely seems that we are on the road to recovery; however, the question as to whether the construction industry will ever fully recover from the impact of the recession over the last year, remains unanswered.
Bid-Rigging Contractors To Face Lower Penalties
When the story bid rigging in the public sector broke over 18 months ago, it again raised the issues of inefficient tendering in the public sector and cover pricing. Cover pricing is a progress where a potential bidder and a client agree that the bidder will tender an massively over priced bid without any intention of carrying out the work, in order to satisfy client requirements for a certain amount of competition and ultimately keep costs low.
At the time, leading industry experts claimed that private sector clients were well ahead of the public sector, mainly due to the fact that the government procures projects based on low price rather than quality and reputation.
The scandal prompted calls for an inquiry by the Office of Fair Trading, as piling contractors, and many other industry sectors felt the current situation was illegitimate.
A report in the Sunday Times revealed that the construction companies that co-operate with the OFT, will face much more lenient penalties.