Blog 015 - The High Cost Of Specialising Part One

Operating as a Specialist Contractor can be an expensive business. Often Specialists are questioned over the Overhead and Profit percentages and how disproportionately high they are compared to say Tier One contractors and Employers. This is the first in a series which will look at the behind the scenes costs to the Specialist Contracting industry and see if there are any efficiencies which could be made to reduce wastage in the industry and ultimately reduce total cost of construction for the Employers.

For the opening article of this series, I want to look at the “subscription” costs that Specialist Contractors will find themselves paying across a financial year, all of which add up and increase the operating cost of a company.

Having worked for and with several Specialist Contractors below is a list of some of the “subscriptions” I have seen paid, obviously it will vary from trade to trade and based on size of company:

Considerate Constructors, CITB, Trade Associations, Trade Publications, ISO Accreditations, CHAS, Constructionline, Networking Groups, certification authorities (CARES for reinforcement, FSC for timber etc.), Staff professional memberships (ICE, RICS, CIOB etc.), Job boards, planning software, QA software, Trade Standards certification (fire doors, fire stopping etc.), Safemark, SMAS, Achilles, FORS and many more.

Specialist Contractors will work for all different Tier One’s and ultimately different Employers. A combination of Employer and Tier One will require different accreditations and certifications, requiring the Specialists to have to attain and maintain so many varying accreditations. So many of these subscription services are very similar, but with different Employer’s mandating different schemes the Specialists often have to attain all or risk being removed from tender lists of certain clients.

Beyond the obvious costs of the subscriptions required of these services, there is also the cost of the audit process. Most of these bodies / services are very reputable a thus are subject to stringent audit at specified intervals and or reports back to the body. Therefore, this often introduces another job role at the Specialist Contractor, someone who can co-ordinate all the audits and the requirements of each subscription service. What these services represent is important, they are industry recognised certification that the Specialist meets a certain standard and criteria in a specified field. However, where require to maintain two similar accreditations, this where wastage occurs. Not just in the subscription but in the reporting, the management procedures and the auditing.

With most Specialists operating mainly in the UK free market, it wouldn’t be right for one type of subscription service to mandated as the “chosen one” but it would be helpful if Employer’s or Tier One’s could engage with the Specialists and the certification providers to develop an agreement which permits “equal or equivalent” certification. This will prevent Specialists having to take out multiple subscriptions, prepare for multiple audits and undertake numerous internal compliance audits all for schemes which can be very similar in nature.

The important part of any of these services is to demonstrate a competence and minimum standard of performance, the onus should be put on the providers of these services by the Employers to meet their desired criteria. If the providers all collectively meet the Employer’s requirements, say the main members of Build UK and the Employers such as TfL, Highways England, Network Rail, Land Secs etc. then all of the accreditations could become “or equal equivalent”. This would work to massively reduce the subscription costs to Specialist Contractors, not just due to needing to take out less subscriptions but also due to the new competition between the subscription bodies. On top of this, the overhead required to operate and maintain for these services within the Specialist’s organisation will be less, further reducing costs. What this will all com back to is a reduced overhead cost to the Specialist Contracting industry and with what we know about open market competition, that doesn’t mean bigger profits for the Specialists, it means a reduced cost of construction for the Employers and a more efficient industry.

If you want to discuss more about overhead or subscription accreditation services, drop me an email.

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