Submission to the Oireachtas Committee on Housing and Homelessness
UCD School of Architecture, Planning and Environmental Policy
Written Submission to the Oireachtas Committee on Housing & Homelessness
Written and Compiled by Orla Hegarty B.Arch MRIAI RIBA
4. ‘Value for money’ and efficiency in the construction sector ‘Change the procurement models, improve competitiveness and address inefficiencies’ Orla Hegarty B.Arch MRIAI RIBA The cost of construction is a factor of the site, the design, the procurement model, the market and other local factors. Identifying elemental construction costs is relevant, however the design decisions and the mechanisms of procurement and delivery have a far greater impact on overall costs. It is critical, therefore, to overcome structural barriers, to open competition in the market and support efficient delivery. Proposal: The following technical proposals can be implemented without primary legislation in a short timescale, making efficient use of limited resources and skills, to improve efficiency and lower costs. 1.
Support design innovation The ‘hard’ construction costs (labour and materials) vary with the availability of appropriate labour and materials in the market. The most effective way to reduce costs is through investing in design (which can reduce capital and life-‐cycle costs) and also by providing appropriate supports and information to the design process. Design is critical because sustainable housing demand will not be met by standardised typologies such as 3-‐bed housing estates and high-‐rise apartments. Housing is site-‐specific and must provide long-‐term communities.
2.
Make technical information available. Technical information is critical because there is no standardized approach to construction detailing, in the context of technical advances and regulatory developments-‐ this reduces opportunities for economies of scale, adds to waste and labour costs and impacts on tender prices.
3.
Support technical innovation and efficiency in BIM (Building Information Modeling) and BEM (Building Energy Modeling) and ensure that the regulatory systems are aligned with technical advances. This can reduce waste, improve performance and expedite construction programming.
4.
Address inefficiencies in the regulatory systems. The ‘soft’ costs of construction include regulatory requirements, contractual obligations, insurances, etc. (note: taxation, development contributions, finance costs etc. are beyond the scope of this paper). (refer also to Sections 1 & 2).
5.
Optimize transparency and ‘value for money’ by using the most appropriate procurement models. Generally, procurement systems that are ‘hands off’, that prioritise cost certainty and that transfer substantial risk are more expensive. Using ‘market friendly’ procurement models to optimize competitiveness in the market and intelligent design can have greater benefits than compromising space standards, material specification and build quality.
6.
Centralise and standardise the pre-‐qualification system for public procurement. This applies to all tenderers (professionals, contractors and suppliers) and is required to address administrative inefficiencies, bureaucracy and duplication for both the commissioning bodies and the tenderers.
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7.
Prioritise direct involvement of SMEs and opening competition in the market, reduce workloads in the commissioning bodies. The construction industry is predominantly made up of SMEs and micro-‐enterprises. In 2010, 95% of construction companies employed fewer than 10 employees. This means that house-‐building is substantially sub-‐contracted so that the role of developers and main-‐contractors is principally one of management and co-‐ordination. As a result, procurement of housing through large contracts is uncompetitive and risks reducing competition by narrowing the market and introducing further layers of management. EU Procurement Policy favours SME participation in order to improve competitiveness.
8.
Modernize the building contracts in use in the construction industry in both the public and private sectors to respond to the housing challenge. In particular, the risk transfer in the PWC (Public Works) contracts adds cost and reduces competitiveness. Reform of Building Control (See Part 1) will also reduce contractual complexity, disputes and delay.
9.
Provide technical and legal support for the commissioning bodies (local authorities, housing agencies etc.) in order to standardize procedures, improve efficiency in the procurement processes and reduce contractual disputes. Publish guidance and advice on operational issues.
10.
Re-‐evaluate the insurance arrangements in the construction industry, particularly in relation to construction defects. The current industry practices are inadequate and unreliable to protect consumers and remedy defects in a timely manner. It may be more cost-‐effective for the State to retain a ‘defects fund’ for housing (1-‐2%) rather than impose requirements for multiple policies that are not fit for purpose and may have limited or uncertain cover. /END
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