OFT implicate 112 companies in bid-rigging

Following allegations from the OFT implicating 112 construction companies in bid-rigging practices, Nickleby's Closed Shop? report findings bring some light to the issue.

The study found that one third (34%) of contractors believe that fraud is rife within the property maintenance industry, and one fifth (18%) of property managers agree.

Contractors also estimate that almost a third (31%) of contracts and tenders are lost due to unethical practices in the procurement process (see further statistics below).

Harvey Laud, a Director at Nickleby - which has had first hand experience of fraud within the industry, believes that the tradition of driving down contractors profit margins can work to encourage such practices.

He also believes that a lack of intelligent systems to manage and give property directors visibility on work that needs to be carries out, and adequate measurement tools, adds to the problem.

A Dysfunctional Relationship?.

* One third (34%) of contractors believe that fraud is a major problem in the maintenance industry.

* one fifth (18%) of property managers agree.

* Contractors estimate that almost one third (31%) of contracts and tenders are lost due to unethical practices in the procurement process * Three quarters (74%) of contractors believe that price is the primary criteria for property managers when awarding maintenance contracts (just 20% of occupiers agree - 44% state that quality is the main criteria).

* Two thirds (66%) of contractors state that they are often forced to bid too low in order to win a contract with the result that they are unable to provide a quality service.

* 82% of contractors believe that when property managers select contractors purely on price, "If they pay peanuts, they get monkeys".

* Contractors believe that their relationships with property managers are based on "constant demands to reduce costs and querying our invoices".

* One fifth (22%) of property managers cite the use of maintenance contractors as a 'necessary evil', and one third (36%) believe that commercial property managers are 'at the mercy' of contractors.

* One fifth (20%) of contractors believe that property managers don't trust them to do the job they have been paid to do.

* Maintenance contractors believe that nearly one fifth (19%) of their customers' maintenance spend is wasted - equivalent to GBP1.1 billion a year.

* conducting long term, planned and preventative maintenance could yield savings of nearly half (48%) of current spend, which amounts to GBP2.7 billion.

Harvey Laud, Director, Nickleby, said: "British companies need to revolutionise their approach to property management to develop a strategy with increased focus on accountability, forward planning and creating value.

"Maintenance has become an expensive business blind spot.

The only solution is for property directors and contractors to work together - and to make transparency and openness the basis for this working relationship.

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