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John Houlihan  
#1 Posted : 04 December 2012 09:10:18(UTC)
Rank: New forum user
John Houlihan

With the risk of potentially being invoiced for the HSE's time spent dealing with material breaches, how much do you think this will impact the construction industry's operational performance. Ultimately, if the intervention fee is prevalent, it shall increase costs. As a price driven industry, where Local Authorities employ contractors on a budget price, often providing many material breaches! I think the material breaches should extend to technical breaches where the employer is also responsible. It would be interesting to see Local Authorities accountable when turning a blind eye because of price!!
Ron Hunter  
#2 Posted : 04 December 2012 12:54:58(UTC)
Rank: Super forum user
Ron Hunter

John Houlihan wrote:
It would be interesting to see Local Authorities accountable when turning a blind eye because of price!!
Not sure I carch your drift there, John.
Canopener  
#3 Posted : 04 December 2012 13:45:13(UTC)
Rank: Super forum user
Canopener

Nor do I! “..how much do you think this will impact the construction industry's operational performance”. Time will tell I guess. I am uncertain (no, come to think of it, I aren’t really) why you should chose to concentrate your comments on LA’s. LAs are bound by comprehensive procurement processes that are in my experience generally pretty robust, overseen, audited and often scrutinised (from many directions). The lowest cost isn’t always the outcome of all LA procurement processes, although securing overall ‘best value’ is. Of course many LAs no longer have their own housing stock (I accept that this isn’t the only construction that an LA may be involved in). More to the point, the use of contractors, and sub contractors, and sub, sub contractors is endemic to the construction industry and I would have thought the VAST majority of construction takes place outside of anything to do with an LA, and I would guess that most of that is driven by one thing and one thing only; cost. So your choice of ‘target’ does seem rather misguided, inappropriate or cynical. It is for the HSE (if we are talking purely about FFI) and/or the CPS if we are to widen the ‘argument’ to ensure that all of those in the procurement process have shown reasonable care, due diligence when selecting, appointing and managing the activities of contractors.
Ron Hunter  
#4 Posted : 04 December 2012 16:55:21(UTC)
Rank: Super forum user
Ron Hunter

It is IMHO likely though that Local Authorities will suffer more than most from FFI. Such an easy target. Such a waste of public funds, transferring £££ form one public purse to pay another........
Canopener  
#5 Posted : 04 December 2012 17:23:19(UTC)
Rank: Super forum user
Canopener

You might well be right Ron and it would be rather perverse to be specifically targeting one public body in order to assist in the funding of another; unless there are genuine material breaches. But, the original poster seems to be on a crusade about construction within the public sector. I would think that the reality is that the both the amount of construction and the use of contractors within construction within LAs accounts for a very small fraction of the overall construction in the UK. Happy to be wrong though. Perhaps John could elaborate on where he is coming from?
cliveg  
#6 Posted : 05 December 2012 07:59:47(UTC)
Rank: Forum user
cliveg

Councils being held responsible for hiring cheap cowboys perhaps??
Canopener  
#7 Posted : 05 December 2012 09:21:17(UTC)
Rank: Super forum user
Canopener

Maybe, but who knows? It is for John to elaborate rather than all of the rest of us to speculate. But in general any organisation Council or not can potentially be held responsible for the actions, inactions or performance of their contractors. While I fully accept that there have been cases of Councils either not appointing competent contractors or failing to properly supervise contractors, the vast majority of construction work undertaken in the UK is not connected with Council contracts or contractors and there are plenty of examples of poor management of contractors within the private sector. I am still wondering where John is coming from.
Ron Hunter  
#8 Posted : 05 December 2012 11:29:29(UTC)
Rank: Super forum user
Ron Hunter

My understanding is that HSE have high expectations of LAs, NHS Trusts etc. (as major procurers of construction work) to raise the general standard of the construction SMEs they engage. There is a I think a misguided perception I think that (compared to private industry) we have unlimited resources in this respect. The reality for LAs is that they deal with thousands of minor works orders every month. The amount that is subcontracted obviously depends on the limits of any internal resource. The stark reality is that LAs cannot directly supervise or scrutinise each and every job out there. Not uncommon too for the casual observer (and on occasion, the HSE Insepctor) to mistakenly presume that work being done of a "public" building or on housing stock is within the ambit of the LA. The plain fact of the matter may be that a higher proportion of commissioned LA work is highly visible in the public domain?
John Houlihan  
#9 Posted : 05 December 2012 16:36:52(UTC)
Rank: New forum user
John Houlihan

Interesting replies. My post asks a question of to what degree will the intervention fee impact on the operational performance within the construction industry? Your thoughts would be appreciated! Just to provoke a discussion that may lead to greater depths I mentioned LA's. I shall elaborate on this, bearing in mind I am on no crusade but merely using LA's as an example. What does worry me about LA's though is not Contruction work being undertaken for and on behalf of them but moreso small transient construction work where private contractors appointed by the LA's are left to work to their own devices, often small sized companies. I have heard from certain companies who employ 'Freelance' construction workers who also work transiently, they are saying that if they receive any invoices under the HSE cost recovery scheme they will pass it on to those individuals committing the material breaches. Ie. Failing to wear Statutory PPE, unsafe working practices etc. The impact of the intervention fee shall have a bigger impact on companies and individuals than first envisaged, where it will end.....we shall see! Im trying to evaluate the positive outcomes as well as the negatives. I believe it will raise operational performance but at the same time crucify the unaware or small guy!
NigelB  
#10 Posted : 06 December 2012 12:14:11(UTC)
Rank: Forum user
NigelB

John An indication might be the latest ‘intensive inspections’ by the HSE in the refurbishment area of construction. It can be predicted that at least 20% of the sites visited will receive a Prohibition Notice. In such circumstances it could be anticipated each notice represents a material breach. So we can add maybe another few thousand quid to the costs of the shut down. The impact of the PN is already there as these are publicly registered and the effect is usually immediate. As many of the projects – but not all - in these inspections are on tight margins, the additional costs could have a significant impact on operating costs. It may put some out of business. However I have seen enough small/medium construction companies in the North East of England go out of business through lack of orders and cash flow problems: it is difficult to judge the additional ones that FFI may affect. However given the nature of the industry I would expect it will impact on some. I would think the owners/managing directors of such companies have more than the costs of material breaches on their mind. During the year a local small construction company had two year’s profits wiped out when another company owing them over £50,000 went bankrupt. The chance of getting any of the money owed to them back has worse odds than winning the lottery. So add the lack of orders; major competition for even small contracts; loads of construction workers not working; winter not being a good time for construction; large companies coming down the contract scale to tender cost only work smaller contracts to keep them ticking over; Local Authorities building reserves because they are uncertain about future changes; a Government that is only just waking up to the damage done to our roads over the last three years; and a shed load of other related issues, I’m not sure material breach costs will be at the forefront of construction business leader’s thoughts. It is just a guess here but for those who have even heard of FFI they may take the view that they will cross that particular bridge when they get to it: should their business survive, of course. Indeed even if they have a business that can build a bridge. This is not a post to condone not bothering with material breaches or health and safety standards but just recognition that desperate people do desperate things – and these are desperate times in many areas of construction. As with other compliance issues, until the cases where the costs of FFI can be seen clearly, I doubt whether it will register much. Once the first case carrying major costs is revealed then it may register more widely. Pity the multi-millionaires in Government couldn't do something to help construction. Cheers. Nigel
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