Every few years the RICS carry out a survey of which contract forms are being used. In the previous survey, the RICS describes it as:
“…the single most authoritative survey of construction contracts used in the UK market”.
I’ve referred to it as it contains the only hard data I’ve been able to find on which contracts are winning the battle of the forms as far as sales are concerned. However, just how good is the survey and what can make it better?
After offering to write this piece on the current survey, I thought I’d better read back over some of the previous ones and do my own analysis of the data gathered before. Clearly the data has been methodically collected and well analysed and I’d encourage you to have a look at it if you haven’t already. For the time being, I’ve pulled out some data that looked interesting to me:
- Friday 30 July 2011: possibly the most important piece of data – the date by which completed surveys need to be returned.
- 2007: the year which was analysed in the previous survey (the 11th).
- 3: the number of years between the year for which the data is captured and the year in which the findings are published.
- 83: the number of surveys returned last time around (there had been 143 in the survey before).
- 1370: the number of projects captured in the last survey.
- £7.8 billion: the value of projects captured in the last survey in 2007 (according to the Office for National Statistics the total output of the industry that year was £104.9 billion).
- 2: the number of FIDIC contracts reported to have been used in 2007.
- 2: the number of surveys (the 10th and the 11th) that I could readily find available on the internet.
Respected survey, which suffers from under-reporting
So what do I draw from this? It’s a respected survey carried out by a leading professional organisation and the data in it is the best we have. But, while that is the case, the RICS readily acknowledges in its findings that there was under-reporting in the last survey. Of course, in many ways that is hardly surprising – the industry was still booming that year (even though the financial crisis had started, the impact on construction followed later when the pipeline of projects reduced).
The RICS reported that its sample relates to
“…17.4% of the total value of new orders received in Great Britain in 2007”.
This was an improvement on the previous survey (which captured 8.6% by value of projects carried out) but down on the 1998 which captured over 20%.
Because of the time between the data capture and publishing the findings, the next batch of data will reflect the tough market conditions we had last year but we might not see them until 2013 when, no doubt, the market will be something different again. However, if it only records two FIDIC contracts next time around, I’ll be pretty sure there will have been under-reporting again.
Complete and return survey forms
The RICS can only analyse what’s put in front of them, so it’s really up to industry to complete and return the survey if at all possible. Wouldn’t it be really useful to have the most complete and authoritative information available when advising a client on the most appropriate procurement strategy for a project? Most people will have real, leading edge market knowledge in their specialist sectors but it’s important not to lose sight of the wood because of the trees. Why not take a moment to have a look at the survey form on the RICS website?
So which form of contract did win out last time around? I was tempted to leave you to look that one up, but I’ll leave you with one last piece of data: 79% of all contracts by number (or 62% of all contracts by value; or 61% of all contracts by value for projects with values greater than £50 million) employed a JCT standard form. If that’s not an industry you recognise, you might want to speak up – while it will probably be members of the RICS that complete most surveys, I can’t see anything which stops others doing so (or encouraging RICS members to do so).
