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However, the survey results could prove disappointing for contractors that expect traditional contracting to fall by the wayside.

The survey clearly points to a decline in competitive tendering over the past five years, but found that the proportion of work procured non-competitively will nudge up rather than surge ahead.

The study of clients鈥� attitudes to contractors is one of the most comprehensive ever carried out. The views of the top 10 contractors were polled in a separate survey (page 23). The research was carried out by Davis Langdon Consultancy on behalf of stockbroker Robert Fleming Securities in association with 黑洞社区.

The results are based on the views of 34 companies out of 61 asked to respond to a questionnaire. Each of the clients has an annual construction spend of at least 拢5m. Stanhope, BAA, Argent Group, Whitbread and Defence Estates are some of the procurers that took part.

The survey paints a picture of a post-Latham industry changing along Egan lines but one in which clients, unsurprisingly, believe contractors can still do better.

For example, it points to a decline in work procured by competitive tendering, with PFI work up from a meagre 拢39m five years ago to 拢1.6bn in 1999 鈥� or 23% of the total workload.

It is likely to remain at this level for the next five years. Collaborative procurement, such as negotiated or partnered work, has risen slightly over the same period, from about 拢900m to 拢1.08bn, to account for 16% of total workload in 1999. The survey shows it will continue in this trend, rising to 18% of the order books by 2005. Seven of the top 10 contractors said their proportion of negotiated work had increased.

Add this to the the fact that clients say they are awarding work to fewer contractors and, according to Robert Fleming Securities analyst Alastair Stewart, a picture emerges of the bigger contractors winning a bigger share of the higher- value work.

鈥淭he results back up the view of a two-tier market, with big contractors winning the majority of valuable collaborative work and the middle-ranking players doing the competitive work where margins are lower.鈥�

And although there have been questions over whether a switch from competitive tendering to negotiated deals would cause a cost hike, the survey finds the opposite. Most clients do not expect negotiated or partnered work to bump up the bill.

The industry has a further reason to applaud this new form of working. Five years after Sir Michael Latham recommended a less adversarial approach, it is paying dividends.

More than 40% of the clients surveyed said there had been a reduction in both unjustified contractors鈥� claims and in litigation costs over the past five years. Nearly two out of three clients expect this trend to continue into 2005. However, few clients expect claims to be completely eradicated.

Clients have mixed views of contractors鈥� performance. At present, about 60% expect to have their projects delivered to agreed time and cost targets and about one-third still expect either time or cost, or both to increase. Less than 10% of clients expect their projects to be delivered early or underbudget.

How buildings will be procured

The results make disappointing reading for contractors that have said they will switch from tendered work to negotiated or partnered deals. Although competitively tendered work has fallen in the past five years, the next five years are unlikely to see a greater move in this direction.

In 1995, nearly 90% of work was procured through competitive forms of contract, including traditional main contracting, design and build and management contracts. Collaborative contracts, such as partnering and negotiated work, accounted for 13%. Stakeholder forms, such as private finance initiative work, public-private partnerships and prime contracting, accounted for almost nothing. By 1999, competitive work had fallen to 60%, collaborative work had risen to 16% and stakeholder contracts were up to 23%. In 2005, stakeholder work will account for the same proportion, with competitive tendering slipping to 59% and collaborative procurement nudging up to 18% 鈥� from 拢1.08bn to 拢1.23bn.

Who will be doing the work

Both the client and contractor surveys point to more work for fewer players. For example, 43% of clients expect the number of projects to increase, but 60% of them expect to reduce the number of contractors on their books. When work is competitively tendered, 59% said they would prune the number of firms on the tender list. The trend is confirmed by the contractors, who point to an increasing proportion of workload from their top 10 clients and a move towards negotiated contracts.

Worryingly for contractors, though, clients would like to see a shake-up at the top of the industry. Nearly two-thirds would like to see further consolidation among contracting firms and the arrival of more foreign rivals. More than one in four clients said they would increase the amount of work awarded to foreign firms in the next five years.

How contractors are shaping up

Clients鈥� opinion of contractors鈥� performance is better than might be expected. More than two thirds of clients expect their projects to be delivered on time and marginally fewer (58%) expect them to be delivered on budget. However, 30% of clients expect project time to increase and 36% expect project costs to increase.

Most clients do not perceive that work procured non-competitively will lead to increased costs, particularly at project completion. This is attributed to the fact that if work is not procured competitively, a contractor can submit a realistic price at the start on site and this is reflected in the final cost of the work. By contrast, contractors bidding for competitively procured projects are frequently accused of submitting unrealistic tender prices that are inevitably increased when the project reaches completion.

In terms of litigation, 42% said they had experienced a decrease in unjustified claims from contractors; 38% saw a decrease in litigation costs. Nearly two-thirds expect these trends to continue.