Public sector pledge to safeguard construction industry's future
01 March 2010
The National Improvement and Efficiency Partnership for
Construction (NIEP), which unites the construction sectors of the
nine Regional Improvement and Efficiency Partnerships (RIEPs), is
urging local authorities to adopt Fair Payment, by demanding more
timely and transparent payment methods down the supply chain, to
help the construction industry though the current economic
climate.
Nationally, construction remains a significant area of local
authority expenditure, accounting for 30% of annual procurement
spend which amounts to approximately £50 billion. The NIEP
for Construction has collectively agreed to adopt the Office of
Government Commerce's (OGC) Fair Payment Initiative, and is urging
all local authorities to apply the Fair Payment principles to their
contracts and frameworks to assure prompt payment down the supply
chain.
When the Fair Payment Initiative was initially launched in 2007
it focused on major spending central government departments, Tier 1
contractors, their umbrella bodies and suppliers; it has now been
extended to the wider public sector. The key requirement is for
local authorities to introduce best practice payment processes -
targeted at making payments throughout the supply chain within 30
days - whilst establishing clearer payment procedures. Recent OGC
research shows that poor payment practices result in unnecessary
cost and waste within the supply chain of approximately 2%.
Over the next three years the NIEP for Construction will be
driving forward various initiatives, including Fair Payment, in its
goal to improve construction procurement within local authorities.
It will also focus on five work streams: procurement and supply
chains; asset management; client leadership and design quality;
skills, apprenticeships and learning; and highways.
Speaking about the OGC's Fair Payment Initiative NIEP for
Construction Chairman Andrew Smith said:
"Construction is going through testing times and we need to do
all we can to deliver more for less without damaging the industry.
The NIEP for Construction plays a pivotal role in supporting and
championing better ways of working for those involved in
construction projects and programmes across the wider public
sector. OGC's Fair Payment drive provides an excellent
example of one initiative we've recommended local authorities adopt
because it provides us all with a 'win win' solution. We, the
public sector, avoid unnecessary costs and waste within the supply
chain, and our suppliers gain better security through improved
payment procedures."
"The NIEP has also agreed to adopt OGC's new Collaborative
Procurement identification mark which signposts buyers to
collaborative frameworks, best practice advice and guidance for
collaborative initiatives. We are all looking for ways to maximise
value for money and visibility of this mark will clearly highlight
where we may achieve greater efficiencies."
Nigel Smith, Chief Executive of the OGC, commented:
"The Operational Efficiency Programme has set the public sector a
challenging target to deliver £1.4 billion savings in construction
by the end of March 2012. Active local authority participation in
collaborative strategies is essential if we are to reach this
target. As we all strive to deliver savings, the Collaborative
Procurement mark and the Fair Payment Initiative represent
opportunities to achieve value for money. With increased pressure
to deliver more at the frontline with less resource, public sector
buyers will be able to realize greater benefits from actively
participating in the work streams that the NIEP for Construction is
leading."
Click here to read the NIEP Factsheet.
Click here to go through to the NIEP
website.
Notes to Editors
Visit the OGC website to find out more about the Collaborative
Procurement identification mark: www.ogc.gov.uk/collaborative_procurement_mark
1. The Fair Payment Initiative
This initiative was launched in September 2007 to encourage central
government construction projects to adopt efficient payment
processes that would pay their Tier 1 suppliers and enable cascade
of payments throughout the supply chain promptly and fairly. It was
designed to ensure that the process and payment periods minimise
transaction costs and financing charges across public sector
construction projects.
At the launch the OGC published the "Guide to best 'Fair
Payment' practices" and required central government departments to
implement the recommendations stated in the guide from 1 January
2008. The wider public sector is being encouraged to adopt the Fair
Payment principles on all new projects started on and after 1
January 2009.
2. The Collaborative Procurement identification mark
The Collaborative Procurement mark is a brand logo designed for the
wide range of audiences across central government and the wider
public sector. The mark has been created as a result of stakeholder
demand and it signposts procurement practitioners to the specific
procurement initiatives and outputs which seek to deliver savings
within the pan-government's Collaborative Procurement
programme.
Organisations across central government and the wider public sector
will be able to apply to use this mark by going through a process
which is outlined on the OGC website at: www.ogc.gsi.gov.uk/collaborative_procurement_mark
To request more information about this process please contact
the OGC Service Desk on 0845 000 4999 or send an email to: ServiceDesk@ogc.gsi.gov.uk