Ashfords Solicitors - Egan Tells Construction Industry It Could Do Better

A reception was held at the House of Commons to celebrate ten years of the Egan Report and Sir John Egan gave a speech in which he made some interesting comments. He started by saying he was delighted that people are actually measuring performance, presumably a reference to Key Performance Indicators, but he then went on to say that the results being measured were "pretty patchy" and nowhere near the improvement that could have been achieved.

Sir John Egan gave details of some improvements that have been achieved across demonstration projects as follows :-

Costs are now something like 20 or 30% lower
Demonstration projects are taking something like 40% less time
Profit margins are up from 6% to 10% in the construction industry
78% of demonstration projects conclude without any injury to the work force
Productivity measured year on year showed an almost 80% improvement

Sir John Egan put this down to working as a team which he considers to be essential to a successful construction project.

He took a swipe at lowest cost tendering which he described as "absolutely ridiculous".

He made the point that a designer, a construction team and supply chain working together can produce a good cost but that lowest cost tendering starts the designer and construction team off as separate groups which means that a good cost is not produced.

He made the point that you cannot cost a project until it has been designed and that it costs you around 10% of the total project cost to design it. He is of the view that the Clients should share that cost with the industry and also share risk with them more. In that way he feels that cost savings would accrue for both parties.

Sir John Egan's main recommendation was to introduce in every possible project a pain gain share between the Client and Contractor with a target cost based upon an agreed set of parameters and a sharing of any saving or overspend.

In the meantime, Sir John Egan commented that he would only give the industry about 4 out of 10 "for trying" and recommended another big effort to improve working methods so that projects cost less and come in on time and on budget with fewer injuries to the work force.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.

30th May 2008

Key Contacts

Egan Tells Construction Industry It Could Do Better

Introduction