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Why do publicly procured
construction projects go
wrong so often?

Why do publicly procured construction projects go wrong so often?

August 12, 2019
Chuttersnap Nmrutsa7094 Unsplash

Recent media coverage regarding the delayed opening and spiralling costs of the new children’s hospital in Edinburgh has raised questions about why yet another publicly procured construction project appears to have gone wrong.

However, it may be questioned whether there is actually a higher percentage of public projects that go wrong than in the private sector.  The construction industry is dispute driven.  Disputes are common place in both the public and private sectors.  And dispute does not necessarily mean that the project has gone wrong; but rather an indication that the tension between employer and contractor is finding its fair balance.  But if there is a higher percentage of disputes in publicly procured construction projects, this may be because politics are involved.

Decisions are often influenced by a political imperative to get the job started, whilst the current administration is in power and the project is being approved.  Focus is then on persuasion that the project is needed, will achieve longer term added value, or even will increase the current government’s (local or national) standing.  The personnel involved in the procurement process are civil servants, politicians and governors of the benefactor. This means that the project sponsor may be naïve to the complexities in time, cost and quality, involved in high value construction projects.  Cost and time are, in good faith, under-estimated. The project may not be fully developed before works commence, leading to design changes and extensions of time as the they progress.

Of course, there are issues around the funding models used.  PFI has had its critics.  NPD is little different; but it’s a bold government that allocates the otherwise required capital expenditure to a large project out of tight budgets.

One wonders whether the vagaries of public procurement are all just a necessary cost of democracy at work?

Follow Ross on twitter @RossTaylorLaw and on Linkedin for more views and comment on dispute resolution in the construction sector.

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