Reporting in the online News CONSTRUCTION ENQUIRER Grant Prior confirms ...
Carillion subcontractors and suppliers have cut their prices by up to 20% in a desperate bid to keep winning work with the company.
The cost-cutting comes as Carillion slashes its supplier base from 25,000 companies to just 5,000.
The Sunday Telegraph said it had seen documents showing some suppliers have offered to discount rates already agreed with Carillion by up to 20% during the next three years.
The agreements cover construction, rail maintenance and facilities management contracts.
Carillion said it has no group wide policy requiring discounts. But the Telegraph said suppliers were told that if they fail to accept the new terms they were likely to lose work as it consolidates its supply chain in an attempt to save £140m by 2013.
One supplier said he was pitching for work despite the fact it would be loss-making.
He said: “We don’t have a 20% margin to give them. To get to work on a Carillion contract is super competitive anyway.”
Carillion said it selected its preferred suppliers on “a myriad of requirements” including health and safety, quality, reliability of delivery, and pricing.
A spokesman said: “It is a competitive market and if suppliers offer discounts, and some instances double digit proposals, this sets a benchmark for other suppliers.”
David Jones, Editor-in-Chief of CDM2007.org questions that driving down the supply chain to unsustainable and loss-making levels will inevitably also have the potential to lower the focus upon safety and lessen the margin of error to a point where the dangers of the construction operations and hazards in the workplaces will increase alarmingly!
"The CDM Regulations impose statutory duty on all the duty-holders down the supply chain ~ the client who commissions the work or project has an undeniable duty to ensure adequate resources are provided to undertake the work safely ~ the term 'resources' includes properly funding the works at all levels ...
"Simply setting up massive frameworks and passing over the responsibility to a third-party to manage vast diverse construction operations where the business margins are set so low that any profit is made out of cutting into health and safety, quality, and reliability is patently wrong and a recipe for disaster!"
"Clearly, suppliers are faced with a conundrum here ... to get on these supply-chain contracts or face having little or no other work! Many of the suppliers at the end of the chain have nowhere to lay-off cuts of this magnitude ~ the buck stops there! ... answers MUST be found to build the margin back into the operations ~ but how?"
"Competence is key" says David Jones. Competence is built up from such factors as knowledge, understanding, skill, training ... all of these criteria come together in various degrees to make a capable organisation ...
CDM2007.org prides itself on being able to bring solutions to the large community it serves ~ the team at CDM2007.org understand the hard and austere times the construction industry is going through and have recently brought in a number of unique and useful ways to reduce the cost of training. On the CDM2007.org e-Learning portal there are now a range of low-cost training solutions available to suit all size of organisation from single individuals simply wanting a single module of training to vast teams needing a comprehensive solution ~ but, all training CDM2007.org provides is delivered at the consistently high quality level that wins the awards and makes CDM2007.org the 'world-class' organisation in its field ...
It is now possible to open a training credit account for future needs ~ what this means is the customer may now deposit an amount safely with Bromley Council who manage the CDM2007.org platform that will then purchase a number of credits to mix-'n-match the future training needs of their team or organisation. By forward funding in this way results in a massive overall saving which all helps to give the 'edge' that capable organisations need to avoid lowering standards whilst at the same time reducing their trading margins to beat the competition in hard times and be safe!
Ed.
