Signs of recovery in the UK construction sector?

Tough times for UK construction

The importance of the construction sector to the UK economy is difficult to overstate,  as it employs 1.5 million people and  makes up roughly 10% of the UK’s GDP. However, as the construction sector is  investment led, it can suffer particularly hard in times of economic decline. The recessions of the mid 1980s and early 1990s had a severe effect on the sector, only for it to bounce back in the late 1990s with changing government policy (Private Finance Initiative funded investment) – which led to a comprehensive programme of building in the educational, health and transport sectors. So, the unprecedented economic troubles of the last two years have presented yet another obstacle for the sector to overcome – this time things are a little different though, there has been very little good news for the sector in three years and the fall in activity has been the sharpest in 35 years.

With this in mind, the Construction Products Association (CPA) has produced an interesting report highlighting the current status of the UK Construction Sector, and although the news is somewhat mixed – there are at least some signs that things are beginning to turn.

The Bad:

• A 3% decline in construction activity during 2010 (last year dropped 12%)
• 2011 until any growth is expected, with only 1% a year in 2011, 2012 and 2013
• Since November 2008, private sector construction fell by almost 20%  (a further fall of 4% is anticipated during 2010)

The Good:

• A growth of 32% in private house building expected between 2010 and 2012
• A boost from infrastructure work in the regulated sectors of rail, water and energy sectors
• Olympic Park construction is well underway and some of the Olympic Village is now complete
• £100m prison in East Dunbartonshire
• Barbour ABI report that the number of roads projects in 2010 has remained broadly flat compared to 2009, the value of these projects has increased fourfold
• Meanwhile, work on the £16bn Crossrail project continues and £1.1bn was announced for electrification of the Liverpool-Manchester line.

This report is an interesting indicator of the current status of the UK construction sector, what are your opinions? Will construction be able to rebound from this economic downturn as it has in previous years? or is the decline now so deep seated that things will never return to normality? We welcome your thoughts.

What are the tendering guidelines for local government in the UK?

Someone just asked me this and I kinda hummed and hawed about it. These do exist but off the top of my head I couldn’t, for the life of me, remember what local governments have by ways of guidelines for dealing with – and making available – contracts and tenders.

So I thought it’d be a good idea (for my sanity as much as anything) to put some online so I can send anyone who asks to it without trying to remember them.

Guidelines for advertising local government tenders and contracts

Over at the  Information commissioner’s office (ICO) there is a set of tendering guidelines for staff which is a useful place to start getting an idea of the ways in which councils and other government bodies should be advertising the  tenders that they have available at any time. Basically if it’s between £5,000 and £50,000 it should be findable by an average business. Which may be online or offline (visibility in both is generally expected):

4.2 Stage 1: Supplier sourcing

4.2.1 The tendering process should be as open as possible, and thus consideration

should be given at the outset to compiling a tender list of potential suppliers.

4.2.2 In selecting potential suppliers, consideration should be given to the skills and

experiences or qualities that will be required.

4.2.3 Ideally a tender proposal should be advertised to attract a wide pool of potential

suppliers. When advertising, a wide range of media is available in order to

reach the target audience.

4.2.4 Consider using the ICO website, national or local press, trade magazines,

mailing lists, representative bodies or even public meetings.

4.2 Stage 1: Supplier sourcing

4.2.1 The tendering process should be as open as possible, and thus considerationshould be given at the outset to compiling a tender list of potential suppliers.4.2.2 In selecting potential suppliers, consideration should be given to the skills andexperiences or qualities that will be required.

4.2.3 Ideally a tender proposal should be advertised to attract a wide pool of potentialsuppliers. When advertising, a wide range of media is available in order toreach the target audience.

4.2.4 Consider using the ICO website, national or local press, trade magazines,mailing lists, representative bodies or even public meetings.

I know this is only one example and each government body may have differences etc but is a good idea of the kind of ways that tenders may be available to you for bids.

Generally you should try the local press (which can be less successful than you may imagine) this really depends on where you live. Generally the simplest ways to locate a contract to bid for start by doing some research online: there are a number of sites that offer free trials of their system so you can see the value of it to your business before you have to pay (and free’s always good).

Hope that helps you out somewhat – away to compile info on what vendors look for in tender documentation to help you make your bidding process stronger and more  effective.

Choosing What Tenders To Bid For

Tenders in Target

With such a vast array of opportunities out there, it can be tempting to bid for every single tender that you uncover – no matter how outwith  the parameters of your business the tender may appear. This makes targeting the correct tenders for your business an absolutley essential consideration. To bid for tenders that you are unlikely to win is a waste of business time and resources that could be channeled more effectively. As such there are a number of questions that any business should ask themselves before entering the tendering process.

• Who is making the ultimate decision on this tender? and do we have an existing relationship with them that we could utilise?
• Is our business uniquely placed to win this tender – do we have an advantage that no other business could offer
• Internal motivation – is there an in-house resource that has the drive to see this tender process through to completion?
• Time – is pursuing this tender a sensible use of our business time?

These are just some of the major questions that any business should ask themselves, if there are any others that you feel should be added please leave a comment.

Looking at the OJEU financial thresholds process

Financial thresholds - Integrated currencies and legislation

Like much of the legislation and directives around the European tendering sector, the rather dry language used in much of the documentation can render it rather difficult for alot of businesses to comprehend. Like all legal language however, it can be broken down into terminology that anyone can understand – its just that no-one really ever does it, therefore we thought we’d trawl through various websites and blogs give it a go.

What is a threshold?

Threshold, Definition: (from The Free Dictionary)

The place or point of beginning; the outset.

Of course, in terms of tendering for contracts, thresholds apply to the financial aspects of any particular tender. These thresholds define whether or not a contract opportunity must be published in the OJEU (Official Journal of the European Union).

Procurement directives from the European Union (guidance PDF) stipulate that public sector organisations, as well as private companies operating in the water, energy, transport and postal services (collectively referred to as Utilities), have to publish OJEU notices advertising that a competitive tendering process for a particular contract is underway.

However, due to the sheer number of tenders offered on a daily basis throughout Europe, forcing each of these to publish in the OJEU would be an administrative nightmare and impossible to keep track of. Therefore, legislators within the EU set a series of financial thresholds, above which it is required for a contract opportunity to be advertised.

Yet more acronyms become involved…….

Things get complicated when external bodies outwith the EU become involved. Essentially, the OJEU thresholds are updated every two years in line with World Trade Organisation legislation (the Government Procurement Agreement – GPA) – to which the European Union is a signatory. Confusingly, whilst European legislation sets out the thresholds in Euro currency, the GPA defines them in the form of something known as Special Drawing Rights (SDRs).

(Deep breath). SDRs are an asset established by the International Monetary Fund (IMF) – sorry yet another acronym.  SDR value fluctuates on a daily basis and is based on the relative values of the Euro, Sterling, Japanese yen, and the US dollar. The bi-annual updates to the EU thresholds factor in relative movement between the SDR and the Euro (see the document here). Obviously for those outwith the Eurozone (i.e. the UK) there has to be a further alteration to the figures in order to bring them into line with the new threshold levels – luckily some legal minds at the EU publish these for our benefit (PDF). (Breathe out).

What are the current OJEU thresholds?

Public contracts from January 2010

	SUPPLIES	SERVICES	WORKS
Schedule 1 entires	£101,323 (€125,000)	£101,3232 (€125,000)	£3,927,260 (€4,845,000)
Other public sector contracting authorities	£156,442 (€193,000)	£156,442 (€193,000)	£3,927,260 (€4,845,000)
Indicative Notices	£607,935 (€750,000)	£607,935 (€750,000)	£3,927,260 (€4,845,000)
Small lots	£64,846 (€80,000)	£64,846 (€80,000)	£810,580 (€1,000,000)

Utilities contract thresholds from January 2010

	SUPPLIES	SERVICES	WORKS
All sectors	£313,694 (€387,000)	£313,694 (€387,000)	£3,927,260 (€4,845,000)
Indicative Notices	£607,935 (€750,000)	£607,935 (€750,000)	£3,927,260 (€4,845,000)
Small lots	£64,846 (€80,000)	£64,846 (€80,000)	£810,580 (€1,000,000)

There are exceptions to these thresholds, each of the following have a threshold of £156,442 (€193,000).

• Part B (residual) services
• Research & Development Services
• Television and Radio Broadcast services
• Interconnection services
• Integrated telecommunications services

Thanks very much for persevering with this post, the threshold issue is rather complex – we hope that things are slightly clearer. If there are any other resources which you feel could be useful is helping us to understand this issue then please point us in the right direction.

Brown Calls for Change of EU Budget

British Prime Minister, Gordon Brown, called today [20th Jan 2010] for an urgent review of the EU’s Budget, including its procurement and tendering process.

According to the PM ” Half of Britain’s international trade is with the EU. More than three million jobs depend on Europe.”

His plans were given in a joint press conference with the EU President Herman van Rompuy. In which it was stressed that with the correct economic strategy, there could be 15 million jobs created across the continent, whilst raising economic output by about 4%, or nearly €500 billion [£436 billion].

Further meetings have been arranged for February when more discussions will take place in order t review rules on State Aid, and procurement, in order for government to assist new industries.

Westminster Council Tender to Update Information Network

Westminster City Council has published in the Official Journal of the European Union a tender to upgrade their Data Network, worth possibly up to £160 million for the successful candidate.

Although the council are aiming their tender towards London based companies, European Union procurement law means that the tender has to be made available to other interested parties.

David Wilde, chief information officer for Westminster was quoted as saying: “For some time London has been talking a lot about joined up services around networks, but the procurement set up has been a constraint. What we have put in place here does not prevent others from taking advantage.”

It is hoped that after the new system is in use throughout Westminster, it can be extended so as to cover other boroughs throughout the capital

Reaction to first EU president van Rompuy

Last week the EU elected its first president Herman van Rompuy, and needless to say in as complex a continent as Europe, the reaction to his ascencion has been mixed to say the least.

 

He was endorsed by most of the top leaders within the EU:

Gordon Brown, UK Prime Minister:

He has a reputation for integrity and resolve and… his qualities as a diplomat, as a statesman and as a negotiator will be qualities that he can bring to the European Council and to his new position as president.

Nicolas Sarkozy, French President

He is a man who is profoundly European and I believe it is a very wise decision to have chosen as the first stable president of the council a man who comes from a founding country of the European Union.

Jose Manuel Barroso, EC President

I think it will be impossible to have a better choice. It is also a tribute to Belgium. When selecting the current Belgian prime minister, a man of great qualities as Herman van Rompuy, I think the European [Union] also expressed its gratitude for the work of Belgium and the constant support that this country at the heart of Europe has been giving to our common project.

Fredrik Reinfeldt, Swedish Prime Minister

The idea is to have a leader of the (EU) council… who actually gives room for everyone, who listens to everyone, who creates winners not losers.

 

President who? – The media reaction

The Independent seemed to summarise effectively the typical reaction from the media/blogosphere – Herman who? The world greets new EU President

The EU Observer – Van Rompuy – Van Who?

The Wall Street Journal had an interesting US take on matters:

……..the appointments last week ……….. to those posts seem calculated to say as little as possible.

 

So there we go, essentially it seems that the election of van Rompuy was designed to be as uncontroversial as possible – whether or not this lack of profile will continue is another matter – the new president is already making some waves with his ‘Euro Tax’ proposal.

What is your reaction to the appointment of a President of the EU? Will it make any difference to the functioning of the European Union?, and will business development within the EU be affected in any way? We welcome your opinions…….

 

Should The OJEU Be Reformed? – Poll

The UK Conservative Party  has said that it is working on a proposal to overhaul the OJEU procurement process,  they wish to (in their words) make it more open.

See the original Architects Journal article for more information.

What do you, as business owners who have to work within the OJEU process think? Are the Conservatives correct to call for refrom of the OJEU processes? or is the system fine the way it is? Please vote in our poll……….

Hope As Eurozone Climbs Out Of Recession

There was some collective economic hope around the continent of Europe today as figures emerged detailing growth in the Eurozone economy between July and September. The 16 nations that operate under the euro grew 0.4%, after shrinking by 0.2% between April and June. The EU as a whole, including non-eurozone countries (including the UK and Sweden) – also grew 0.2% in the third quarter of 2009.

However, there are still questions as to whether this growth is sustainable as the French and German economies grew less than expected.

There is already a great deal of reaction to these figures available from many sources online:

Eurozone escapes recession – Financial Times

BBC News – Eurozone emerges from recession

Yahoo News – Eurozone emerges from recession in 3rd quarter

The Euro Zone grows again | The Big Picture

Eurozone Finally Growing Again (0.4%), But France And Germany …

Eurozone GDP Breaks Through Zero… Concerns Still There

Forex Traders » European Market Update: Euro-Zone moves out of Recession

 

What is your opinion of this news? Is this a sign of a long term sustained recovery throughout Europe in 2010?

London Olympics 2012: £700m Tenders up for grabs!

Some  excitng news today from the organisers of the London Olympics in 2012 – they have revealed over £700m worth of tenders related to goods and services.

Contracts will be available in the following categories:

• Facilities management and catering
• Production services for ceremonies
• Security
• Services
• Sports
• Technology
• Transport and logistics
• Venues and venue logistics

You can read full details of the announcement on the Events Magazine and BBC website. Lord Coe has told the BBC that the scale of the contracts on offer is ‘potentially massive’.