President's Column September 2023
Category: President's Column
We all know the age-old expression about being a jack of all trades but a master of none, and this concept has been recognised and used within the steelwork industry for many years in the knowledge that specialist advice is required during the design of certain buildings and structures.
This advice can come in many different formats such as validation of cost plans, complexity of fabrication and construction sequence & methodology, but the principle is always the same, seek the assistance of the experts rather than adopting a more-risky generic approach.
For some time now and in specific relation to our BCSA members, this strategy has been formalised into what we have come to know as PCSA’s (Pre-Construction Service Agreements) where the Steelwork Contractor is brought into a project at an early stage to help steer the design towards a more efficient and practical solution.
I have been involved in many projects where the PCSA appointment has resulted in major commercial and programme savings, but are we currently in danger of moving away from the original and valued intent of a PCSA?
I know a number of steelwork contractors who currently have no interest in negotiating or entering into a PCSA agreement, and with the growing evidence that I see before me, I am leaning towards a support of this stance.
Yes, PCSA’s can work if all parties adhere to the rules, but to get to this position there are a number of important points that need to be understood.
First, steelwork contractors do not sell engineering hours, they sell fabricated steel. So, any submitted tender cost of a PCSA appointment will probably be at a nett loss to the steelwork contractor. However, this may be a risk worth taking if, in return, there is some form of assurance that any major efficiency savings developed during the PCSA period will remain unique to that contractor and not be shared amongst competitors in an open tender competition.
Second, PCSA’s should be used to gain a level of knowledge of the project risks such that the appropriate cost and programme can be agreed between all parties. The PCSA should not be used solely to drive down the cost of the steelwork contract as seems to be the current trend.
Finally, if during the PCSA period, no mutually acceptable agreement can be reached for the steelwork contractor to continue into the supply and build contract, then due allowances should be made in recognition that other tenderers will not have an equal knowledge and understanding of the project risks than the PCSA contractor will have. This should be taken into account when comparing tender returns.
To deliver a successful PCSA there has to be an element of trust between all parties, but unfortunately this trust is often eroded by the commercial pressures that can result in a two-stage project tender, thus separating the PCSA from the supply contract.
As is often said, the clue is in the title. A PreConstruction agreement suggests that a Full-Construction agreement is intended, so let’s get back to what we do best, identifying opportunities and savings through specialist knowledge, but only for a fair price that precedes the intention to negotiate a full project award.
Surely this is something for all sides of the industry to reflect upon.
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