BELOW COST TENDERING BENEFITS NO ONE
When construction work is scarce there has always been a tendency for contractors to price low. Some contractors are willing to give up some profit as a means of keeping employees in work in the hope that the contract will either deliver profit through extras or that more profitable work will follow. On the face of things, keen pricing will usually be welcomed by clients who might look forward to their work being done at a price lower than they had anticipated.
There have been several significant construction industry business failures in recent months. One comment which is often made about these failed businesses is that they had been awarded large public sector contracts at prices which appeared to be below cost. It is simple economics that no business can operate on negative margins for any period of time- unless they can benefit from another source of income which can plug the gap on these loss-making projects. These business failures inevitably lead to pain- for the client who faces disruption to work and the cost of appointing a replacement contractor and for employees of the failed business who have lost their jobs. The greatest pain is often felt by sub-contractors who can be left high and dry through no fault of their own. It is hard to see any winners from such a scenario.
While public authorities are squeezed financially, this is no excuse for them awarding contracts when they must know that the tender price is below cost. Such behaviour seems both irresponsible and immoral. In looking for guilty parties in such cases, the client (who will almost always have the benefit of professional quantity surveying advice) must shoulder the lion’s share of responsibility. While it would be simple enough to encourage contractors never to price below cost, in reality there will always be at least one who is desperate enough to do so. Action needs to start with clients.
A recent proposal being considered on public sector contracts in Northern Ireland might, at least in part, provide a solution to this issue. The suggestion that any tenders which were more than 15% below the average of all tenders submitted be automatically excluded from consideration would be a start. It would only really work if most tenderers priced appropriately. It would be good to see this idea being developed and implemented and followed in other areas of both the public and private sector. The sooner everyone realises that everything in life has a price attached to it, the better.
PLUMBERS SHOULD BE PROUD OF THEIR PENSION SCHEME
When there are so many negative stories in newspapers about problems with occupational pension schemes, the Plumbing & Mechanical Services (UK) Pension Scheme has been bucking the trend and receiving considerable positive publicity in recent weeks.
Established in 1975, and still the only truly comprehensive occupational pension scheme in the UK construction industry, Plumbing Pensions has a long history of delivering quality pension provision to its 37,000 members. As a defined benefit arrangement, the Scheme is required to undertake a formal actuarial valuation every three years to check that its assets are likely to meet its future liabilities. Ideally, such valuations will show that schemes are in balance (or even better have a surplus). In reality, very few defined benefit schemes have been in that position in recent years. The 2009 valuation of the Plumbing Scheme showed that it was fully funded and had a small surplus. The Directors of the Scheme recently received the preliminary results of its 2012 valuation and were pleased to note that not only did the Scheme continue to have a small surplus but it did so on a stronger basis than in 2009. This result, which was largely due to better than expected investment performance, resulted in the Scheme hitting the front page in one of the UK’s respected pensions journals.
Although the Industry Pension Scheme has not traditionally entered into the many pensions industry awards schemes which exist, it was delighted to be advised recently that it has been nominated by Financial News for the prestigious award of “Pension Scheme of the Year”. No application process was involved and the nomination came as a very pleasant surprise to the Scheme’s Board of Directors and staff. Although the other 4 nominees are strong competition and include household names like the pension schemes for British Airways, Tesco and Santander, the very fact that the Scheme has been considered along with these much larger schemes is positive news.
The requirement for plumbing employers to enrol their employees in the Industry Pension Scheme (or an acceptable equivalent) is not always viewed positively by employers particularly when work is difficult and profit margins are squeezed. However, those who set up the Scheme almost 40 years ago had a vision that all plumbing employees and apprentices would be able to retire in the knowledge that they would receive a quality and meaningful pension. That vision remains and those in our industry who are participating in the Scheme should take pride that their pension scheme is regarded so highly in the wider pensions community. Those who are not in the Scheme (but will be required, by law, to automatically enrol all employees in an appropriate pension scheme within the next few years) should give serious consideration about getting involved in the only pension scheme which was designed specifically for the plumbing industry.
SNIPEF MEMBERS HAVE A RESPONSIBILITY TO "FLY THE FLAG"
It is often said that members of the public don’t know about SNIPEF, nor do they understand the value of using a SNIPEF member. In my experience, more members of the public are aware of our trade association than some people assume. I can recall several occasions over the years when someone has asked me what I do and my reply has been along the lines that I work for the plumbing trade association. “Do you mean SNIPEF?” has been the response to such a statement on more than one occasion.
SNIPEF takes every opportunity to advise potential customers of plumbing businesses about the unique and very valuable benefits which they will get if they contract with a SNIPEF member firm. In many ways the SNIPEF offering is extremely valuable to customers. What other approval scheme provides assurances that work will be carried out by properly qualified plumbers? What other scheme provides an independent complaints mechanism when things go wrong supported by a warranty at no extra cost to the customer? Over the last 30 years all sorts of media have been used to promote this message ranging from TV and radio advertising, press articles and adverts and, more recently social media including Facebook and Twitter. In the last year alone, SNIPEF has directed several thousand customers via its own needaplumber website to members websites. In reality, however, with limited resources, it is difficult to get its message across to every potential customer. It is even more difficult to change customer behaviour away from the view that “cheapest is best”.
SNIPEF members often do not appreciate that they too have a role in promoting to the public that they are members of the recognised national trade association. Simple actions like showing the logo on vehicles and on stationery are not taken by large numbers of members who seem to prefer to remain anonymous or at least to keep the fact that they are members of SNIPEF to themselves. Some members play their part at this and do so very well. I recently found myself behind a plumber’s van at traffic lights and there, for all to see, in the corporate colours of the business concerned was the SNIPEF logo along with another couple of logos. Alongside that van was another, which happened to be white in colour but had absolutely no indication about the identity of the firm. That van did display a logo showing that the firm in question was a member of a local authority “Trusted Trader” scheme but how customers were meant to know whose van was outside their house is anybody’s guess.
Promotion of SNIPEF membership is a two-way process and those members who play their part in this process are likely to be the ones which benefit most from their membership. Can YOUR customers tell at a glance that your firm has met the stringent requirements to become a SNIPEF member (with all the potential benefits which that could bring)?
TELL YOUR FRIENDS (AND CUSTOMERS) ABOUT WORLD PLUMBING DAY
Since the establishment of World Plumbing Day (11 March-everywhere-every year) back in 2010, I have gone into a number of primary schools to tell 8 and 9 year olds about the importance of water, health and plumbing. This presentation is not geared at recruiting plumbing apprentices in a few years’ time. It is intended to show these young people that they should not take safe drinking water and sanitation for granted. My hope (and indeed the hope of other people doing the same presentation in schools all over the world) is that these young people will grow up to take their plumbing seriously (unlike so many other people in the developed world).
I recently went to a primary school not far from the SNIPEF offices to deliver my presentation to two classes there. As on all previous occasions, the children were attentive and answered the many questions which I posed (“Where does water come from? What do we use water for?” etc). The presentations end with an invitation for the pupils to design a poster for this year’s World Plumbing Day (with prizes and certificates on offer for the best posters). I then invite the children to ask me any questions about what they have heard. One girl in Primary 3 asked me a question which I think sums up the purpose of the presentation-“Can we tell our friends about this?” “Please do” was my response “and tell them to tell their friends and families”.
Having an annual day to promote anything is not unusual. Those working in today’s plumbing industry should seize the opportunity which World Plumbing Day presents. What could you do to celebrate 11 March 2013? Who could you tell about the importance of plumbing to health? Just think of the benefits which could arise if people generally came to have a far better respect for the role which today’s plumbing industry plays. “Respect” is not a word which is often associated with plumbing but achieving respect should not be impossible.
If you need ideas on how to celebrate World Plumbing Day 2013, go to the special website- www.worldplumbingday.org
One of SNIPEF’s staff has young twin relatives in one of the classes which I visited this week and it was really encouraging to be told afterwards that both of them had gone home that night and told their parents some of the things that the man who had been into their class told them about plumbing. SUCCESS!
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