Programming performance
Resurgent tender prices are not a new challenge.
In many ways, they are a return to the inflationary pressures seen last year when soaring post-lockdown demand collided with constrained supply.
The supply chain’s response to 2021’s spike in demand does provide some comfort as the industry digs in for a second wave of inflationary pressure.
But the experience of last year also shows that clients who ‘firefight’ inflation in isolation may lose focus. Both the ability to achieve and target wider goals such as Net Zero, accommodating hybrid working patterns and embedding social value into their operations can be compromised.
The best way to address so many overlapping challenges at once is to adopt a programmatic approach that divides and conquers complex issues, diversifying the supply chain and increasing productivity.
Having withstood both the pandemic and its initial inflationary aftermath, UK construction must double down on the agile pragmatism that stood it in such good stead in 2021.
Above all, clients who plan their strategy at a programmatic level will be the best placed to thrive and see off the inflationary threat. Effective collaboration across the programme, with resources pooled and key data shared, boosts efficiency and also represents the industry’s best hope of keeping the recovery on track.
Whether your project or programme is at investment strategy stage, pre-contract planning stage or post contract and ‘in flight’, great delivery starts with brilliant basics.
And whatever stage the programme is at, there are various mitigations and responses you can adopt to effectively manage these risks.
Investment strategy
Inflation is increasing the cost of construction and the cost of borrowing is also increasing – this will make investment decisions more finely balanced. Robust cost planning, estimating and value management is key to making the right decisions
Pre-Contract / Planning
During the pre-contract or project planning stages, clients should give due consideration to how inflation exposure or commercial risk can be managed and mitigated; starting with a robust understanding of the materials and commodities required, the market conditions and potential supply-chains
Post-Contract – in flight contracts
Clients can still manage inflation risk where contracts are already in place and live. Clients should proactively review their contract conditions to determine next steps
Underpinned by brilliant basics – Design management, project management, cost management, planning/scheduling, risk management, project controls & management information, commercial management. Integration of functional capabilities is crucial to support decision making
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