Talking Point: Thinking big
The list of up and coming infrastructure projects is quite staggering in comparison to those on offer in recent times.
With contracts for the Olympics still being placed, numerous railway station redevelopment projects being given the go ahead and not forgetting Thameslink, Crossrail, Nottingham Express Transit extension, and now the glimmer of High Speed 2 looming in the distance, the future could be quite bright for construction companies.
The question as to whether Midlands-based companies are in with a chance of reaping the rewards of these new projects will be dependant on many factors; most of which, however, are not new.
It has always been the case that most major projects are awarded to the ‘blue chip’ construction companies. Head contracts will not go to SMEs - but quite frankly would they want them to? Consider the risks, insurance levels and costs, potential liquidated damage exposure… the list goes on.
A further obstacle of course relates to whether the correct training plans or quality qualifications are held to mean that the SME is on the list of preferred suppliers of either the customer or the main contractor. If you do not meet the quality standards required by the main contract then the SME may not even be in a position to tender.
Notwithstanding the above points there will always remain the key problem of geographical location. Most of the projects that have been listed above are not going to be carried out in the Midlands and even where they are there is no guarantee that the main contract will be held by companies based in the Midlands.
This brings about two problems. Firstly, if the project is not local then this will mean an inevitable increase in cost to those SMEs which are not based near the construction site, for example: costs of relocating staff, cost of relocating plant, equipment, etc.
This factor alone could price a Midlands based SME out of the running in a tender process. The flip side to that though is where the work is to be undertaken in the Midlands and the main contractor is not based in the Midlands, yet chooses to use its regular contractors regardless of their location.
So how to avoid these obstacles and potentially be in with a chance of a bite at the cherry? It is perhaps time for SMEs to think about collaborating in relation to certain projects.
A collaboration can be as formal or informal as the circumstances permit and does not always mean the establishment of a joint venture company, which is a costly and time consuming process.
By joining together SMEs can bridge gaps that they may have in terms of skill sets, quality accreditations and even geographical issues enabling them to tender for a large piece of the action and for projects that would ordinarily be outside of their reach.
Michelle Craven, director, Nelsons Solicitors
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