3 ms·
“Now contractors do not carry the risk. That should help keep prices down.” Perhaps, but the costs will remain the same because someone (the public) is still go
by hyko 7y ago
“Now contractors do not carry the risk. That should help keep prices down.” Perhaps, but the costs will remain the same because someone (the public) is still going to have to insure that risk. Worse still, the accounting for risk is being removed from those who are best placed to do it.
This is nothing more than a desperate bid to reduce the sticker “price”, fooling precisely nobody.
- hkt 7y agoJust as an aside, it's worth noting that there's case law in the UK suggesting that if you aren't insured you aren't a proper specialist. The insurance companies don't do nominal insurance for this purpose, so the costs are there either way. I may have a flawed understanding of this but it seems like an oddity in how we consider what constitutes professional or specialist tradesperson that would inevitably inflate costs.
- Mvandenbergh 7y agoMoving risk to the party with the lower cost of capital (contractors have a very high cost of capital) is a real saving. Obviously, yes, the risk itself still exists and will now be borne by the public.
- mytailorisrich 7y agoThere is very little competition in those contracts. There one or two main contractors and that's it. Basically, if Balfour Beatty says we need £x, then they'll get £x because the market is locked with the blessing of the government. This sort of article always tries to rationalise the price tag but rarely goes into investigating beyond that, including the issue of the glacial pace of most projects.