Transforming construction and the shift towards social value, net-zero carbon emissions, data and platform construction.
Late payment is, unsurprisingly, one of the key triggers of insolvency..Even way back in 2013, the Government’s ‘Construction 2025’ vision proposed that construction should no longer be characterised by ‘late delivery, cost overruns, commercial friction, late payment’.
While this has been partly addressed through legislation such as the Small Business, Enterprise and Employment Act 2015 and the Prompt Payment Code, it is still a problem.. A digital marketplace would help make payments more timely – in some cases even instant.It would also make the construction procurement process more transparent and give suppliers greater certainty of cash flow.. Thirdly: procurement is another significant cause of ‘friction’ in projects, as noted in Construction 2025.The process of arranging and issuing tender documentation and requests for proposals, scoring them and awarding contracts, is very time-consuming and labour-intensive.
Projects very often require a complex network of contracts to ensure that the main contract clauses are passed down through the supply chain, resulting in management overhead on overhead being passed back up to the client.. For these reasons, the Construction Playbook notes that:.To support the growth and inclusion of more SMEs in the delivery of public works projects, we need greater visibility of the public spending flowing down the supply chain.
Suppliers should invest in automated, digital payment and contracting systems and processes.
Digitisation will improve transparency, information exchange, payment performance and contract management across the supply chain.However with accelerating interest in Design for Manufacture and Assembly (DfMA) and Modern Methods of Construction (MMC), it sometimes seems that on-site construction is falling out of favour..
In 2019, the UK’s Ministry of Housing, Communities and Local Government (MHCLG) – as it was then called – published an MMC Definition Framework (see my earlier article,.What does DfMA stand for?).
This framework proposes Pre-Manufactured Value (PMV) as a metric for assessing the scale of MMC adoption on a project.PMV is calculated as the percentage of cost that is derived before any site works and strongly encourages maximising the proportion of off-site works.. As a result, many parts of the construction industry are focusing more and more on off-site prefabrication in pursuit of benefits including lower cost, reduced delivery timescales, higher quality, improved health and safety, less waste and more productive site labour..
(Editor: Elegant Bags)