Denise O’Leary, founder of Purpol was delighted to be featured in The Times – Future of Outsourcing supplement commenting on the effect of the Carillion collapse on the Construction Industry.
Carrying on after the lessons of Carillion
Now that the dust has settled, how can the outsourcing sector get back on track following the collapse of Carillion?
… All seemed rosy. And then Carillion went bust and the entire industry went into panic mode. Leader of the Opposition, Labour’s Jeremy Corbyn, called it the beginning of the end for outsourcing. Confidence evaporated and ever since the out-sourcing industry has been in crisis.
Front and centre is the problem of oversized bidders. Yes, the SME bidders were growing in numbers, but the mid-size were getting hammered.
Denise O’Leary, boss of Purpol Marketing, a construction industry bid-writing specialist, witnessed the calamitous erosion of mid-sized bidders. “The government procurement method of placing value on the largest organisation had already driven the collapse of many regional and local contractors from the supply chain,” she says.
In the recession, the larger companies chose to win projects at under cost to keep their teams busy, and cash-strapped local authorities took as many savings as they could, even if they recognised that their selection may not be sustainable for the duration of the project.”
Big bidders built a track record of handling big contracts, despite the wafer-thin or negative margins, leading to further bid wins. Ms O’Leary puts it this way: “Large companies had most evidence of past projects, which were given highest weighting in the assessment model. Many of these had to be in the last five years, so only organisations that had chosen to make a loss and taken jobs then had the case studies to prove their suitability for future ones. This then squeezed more and more contractors out of the supply chain.” It was a recipe for disaster.
What a great achievement to be featured in a National paper with £1m readership!