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Sir John Bourn, head of the National Audit Office, reported today on the progress that departments and their agencies have made to their construction delivery performance since his 2001 report “Modernising Construction”. He concluded that there had been a considerable improvement in completing projects to time and cost and that real savings were being delivered, in particular, by departments and agencies which had adopted partnering and collaborative approaches to their construction work.

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Between April 2003 and December 2004 55 per cent of construction projects were delivered to budget compared with 25 per cent of projects in 1999. If this improvement is scaled over the £33.5 billion spent on public sector construction in 2003, then the improved performance is likely to have avoided overspends of some £800 million. In addition, 63 per cent of projects were delivered to time compared with 34 per cent in 1999. The reasons for improved performance are varied but the guidance and support provided by the Office of Government Commerce (OGC) has made a considerable contribution.

A range of value for money gains from partnering and the early involvement of integrated supply chain teams are also beginning to emerge from improvement programmes of the public and private sector case study organisations included in our 2001 report. These include streamlined procurement processes, innovative solutions to the design and delivery of construction projects and improved whole life costs. Based on National Audit Office estimates, between £500 million and £2.6 billion in annual public sector construction expenditure could be saved if similar good practice was applied across all of the public sector.

Despite the progress that has been made, departments and their agencies need to develop further their and their partners’ construction delivery performance to improve the quality of public services and the efficiency with which they are delivered. For example, partnering and collaborative approaches need to be adopted more widely and construction related decisions need to be taken on the basis of the implications for all costs and benefits over the full operational life of built assets.

Today’s report makes nine recommendations to departments, including the need for them to create more certainty in the market by providing longer-term funding to maximise the benefits of collaborative working, to strengthen the leadership of construction programmes and projects and put in place strategies for developing construction management capabilities, to manage their construction activities in light of the Government’s aims for sustainable development and to make construction procurement decisions based on whole life value. The recommendations are illustrated by practical examples of good practice drawn from both public and private sector clients and set out in an associated volume to the main report.

In addition, the report makes recommendations to assist the OGC target its advisory and support activities including improving the co-ordination and leadership of public sector construction activities and making better use of the available information on lessons and best practice on projects so that this can be shared for the benefit of the public sector as a whole.

"Departments and agencies have had a reputation for delivering construction projects that were late or over budget and designing buildings that were not cost effective to operate. There has, however, been a considerable improvement in performance since my last report on the subject in 2001 and one of the significant contributory factors to this progress has been the work of the OGC in promulgating best construction practice, providing support to departments, and applying the Gateway Review scrutiny process to construction projects. Departments cannot, however, be complacent. There remains scope for further improvement and my report makes recommendations and highlights good practice that will enable departments to achieve better performance and identifies how the OGC can support them through its advisory and support activities to deliver maximum benefit in improving construction capability and performance across the wider public sector. Even if only 20 per cent of these improvements are practicable this would still release some £500 million to be reinvested in frontline public services or higher quality built assets to deliver improved public services."

Sir John Bourn


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