Opinion

‘The Government Must…’ Really?

Beth West, HS2

HS2 commercial director Beth West explains why it must be the private sector supply chain - not government - must take the lead when it comes to investment in research and development.

In my various procurement roles, I quickly came to the conclusion that having an open discussion with your suppliers about your pipeline of work is the first step to achieving competitive and high quality bids. 

Unprepared suppliers mean last minute bids which are likely to result in sub-optimal outcomes for both parties.  So when I joined HS2 Ltd, I was committed to talking to our potential supply chain, particularly considering the size and scale of the programme and the need to mobilise a massive supply chain.  So we’ve been talking.  A lot.

"Yes,  clients have a massive role to play in procuring for value rather than lowest cost.  But we need something back in return.  We need to see that contractors are providing us with that value."

And because we’ve sought to demonstrate that we’re a collaborative client, we’ve listened to what our potential suppliers have had to say and we’ve adjusted our strategies accordingly.  And we think that this approach will end up with a higher quality bids, more appropriate partners and better outcomes.

But there has been a consistent theme that I’ve heard from the contracting community:  that ‘Government should do more to provide us certainty of work.’  I find this attitude particularly troubling as it seems to be unique to the construction industry and is absolutely counter-productive to their long-term self-interest.  

As far as infrastructure investment in the UK is concerned, it’s never been so good.  The commitment and cross-party consensus towards infrastructure investment is amazing.  In most other industries, companies would look at this massive opportunity, figure out how they’d like to profit from it and invest accordingly.  

This does involve taking risk and not everyone will be successful.  But many industries have this investment culture as part of their DNA.  No one knew that they wanted an iPad until Apple invented it.  Why should it be different for the construction industry?

"We need to see that contractors are providing us with value."

Two percent margins, you say.  Shareholder pressure.  Privately held companies can do it but we can’t.  

I worry that if this is the approach that construction companies have to the incredible opportunities that we have at this moment in time, we’ll all lose.  To win, and to improve margins, research and development is needed.  Yes, we clients have a massive role to play in procuring for value rather than lowest cost.  But we need something back in return.  We need to see that contractors are providing us with that value.  

And if we don’t, and delivery of this infrastructure investment is late and over-budget, the window on infrastructure investment will close and we’ll all look back on this period as opportunity lost.  To the detriment of everyone.

Beth West is commercial director at HS2 Ltd