View from City Road: Domination of contractors

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The Independent Online
There may be a hidden agenda in the Government's request to Hochtief, the German contractor, and a number of other unnamed foreign firms to submit ideas on how they could become involved in the pounds 3bn high-speed Channel tunnel rail link to London. The British contracting industry has a high cost base and high prices, which means its customers receive less for their money than some other countries.

There have been a number of explanations for this. One is the proliferation of professionals, including narrow specialisations such as quantity surveying that do not exist on the Continent, where architects and engineers are expected to cover a much wider range of specialities.

Add to that an adversarial relationship between the different skills, based on picking holes in each other's work, and a relatively low skill level in the workforce, and you have a recipe for inefficiency. Contracting shared little of the productivity rise of manufacturing during the last decade. There is thus a strong case for introducing a competitive spur from overseas.

Sir Robin Biggam, chairman of BICC, the cables group, remarked yesterday that it was not very often UK firms were invited to take part in big projects on the Continent. So spend the money in the UK on keeping British jobs, he said. The flaw in the argument is that part of the reason British firms may be unwelcome on the Continent is precisely because they are not efficient enough.

For the rail link, Hochtief indicated yesterday that it might be willing to invest itself - a stark contrast with the attitude of many British firms - and was looking for UK partners. This raises the question, pace Eurotunnel, of whether the overall management of large projects should be so dominated by contractors. Much more thought should be put into this before the project starts.