Mark Robinson says mandating margins would benefit both clients and contractors
The boss of public procurement specialist Scape says government should set margins at 5% for all projects procured by the public sector.
Addressing 黑洞社区 Live, Scape chief executive Mark Robinson (pictured), who also said Scape鈥檚 next major projects programme would be worth more than 拢7bn, said there was no reason margins on public sector jobs could not be mandated.
He said: 鈥淚 think that margins should be set across the industry particularly on public sector projects.
鈥淲hy don鈥檛 we agree on a 5% margin on every project? Every contractor will know they are going to get a 5% margin, they can invest in the resources and the teams and then they can make sure the projects are delivered on time and on budget.
鈥淚t also means they can focus on quality not on trying to claim back money, which they spend thousands of pounds on.鈥�
Robinson acknowledged there would likely be some resistance on both sides, saying: 鈥淚f you cap it at 5% you will always have some clients who say but what if I can get it for 3% and some contractors who say but what if I could do it for 8%?
鈥淭he point is that by capping it you are ensuring quality as you are earning the same amount on each job and the focus isn鈥檛 on profit, that鈥檚 already locked in.鈥�
While saying that many main contractors were operating on a 鈥渞ubbish鈥� business model, Robinson threw some blame for the current lowest price environment on to public sector, saying they were partly responsible for driving down contractor margins.
He said: 鈥淢y opinion is that it is poor procurement practice. If you鈥檙e getting a contractor to come and deliver a project and they鈥檙e doing it at really low margins, even some negative margins, that is poor, poor procurement.鈥�
Robinson, who added Scape will be re-procuring a number of frameworks over the next few years, said he was both currently having and actively planning to have discussions with government about how mandated margins could work.
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