Blog: Cutting costs may cut value for money too
My text for this blog is, unusually, rooted in an article I read recently in another publication.
This article suggested that a review being undertaken by Buying Solutions, of work being carried out by the eight firms on the Estates Framework Agreement, was with a view to establishing who would be given access to further public sector projects.
The source of the story was not disclosed, but I really do struggle to understand the suggestion being made.
It is true that Buying Solutions has written to each adviser but all that we have been asked to provide is three examples of work undertaken under the contract during the course of the last financial year.
The most basic information only was requested and I really cannot see how this could be used in any way to establish who would is best placed to undertake further work for the public sector in the future.
There was a also suggestion that fee-cutting under the framework is not allowed.
Certainly, there are fee scales which were submitted as a part of the original tendering process which form a part of the contract. The fact is, however, that in every instance where a further competition between the eight members of the panel is requested there is an expectation that significant cuts in the originally quoted rates will be offered.
Fee-cutting is therefore already happening on a fairly grand scale.
Whether this is leading to value for money for the public sector however is very debateable. Recent competition has in some cases resulted in fee quotations which are just not sustainable.
While competition is desirable, it cannot be in anyone’s interest to award work at a level where it has to be impossible to fulfill the requirements of the brief for the cost proposed.
It just seems to me that there are now individuals prepared to take on work at almost any price, just to be seen to be keeping busy even though they cannot possibly be covering their costs.
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Richard Haynes is a partner at King Sturge
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I would say that companies on the list have been earning too much and paying too
much for staff, non fee earners and premises and it has been a public money bonanza and merry go round. Partners should go back to
pre boom pay levels and more modest premises and behave more professionally.
As with banking huge transaction fees paid to who offered the highest price to
rent of buy a biulding have not proved valueable advice as so much pension fund and
other peoples money has been lost.
Off lower cost base lower fees will secure better value for tax payers.
Thank you
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