As SMEs continue to express significant financial distress now is prime time to consolidate supply chains to the betterment of the construction industry and wider economy, Nicola Thompson, group compliance and performance director at leading independent consultancy Pick Everard, has said.

Addressing the issue, Thompson said: "In 2016, the government formally launched its Northern Powerhouse scheme, designed to bolster historically neglected economies outside of London. Six years later and in a post-pandemic world, the jury is still out as out as to its impact, with newer schemes such as 'levelling up' and 'towns fund' allocations still fighting the fight and taking precedent in light of the devastating effects of COVID-19.

"In the centre of this stop-start operation is SMEs – the lifeblood of the construction industry – facing stunted growth post pandemic. According to recent research, mid-tier firms in the north have seen distinctly average growth when compared with Scotland, Wales, the South West, Midlands and the East of England. This area also has the lowest 'financial strength' score in the UK, casting serious questions as to how SMEs can continue to form such an important part of the construction funnel without an adequate level of support.

"To put into perspective our reliance on SMEs, these firms account for up to 99.9% of the business population, three fifths of employment and around half the turnover of the UK's private sector. Diving further into construction, these businesses, which are crucial in driving social value, innovation, and product development, account for 20% of the overall SME makeup in the country. To effectively 'build back better' and 'level up the country', there must be a unison that balances out the same level of funding and growth across the country.

"One of the ways in which SMEs can come together and receive the backing they need is through closer consolidation of supply chains. The government's 'Construction Playbook', published two years ago, has already shown that early engagement with mid-tier firms can be more cost effective, improve innovation and minimise carbon footprints. Now, it is vital that we support local knowledge and investment to substantiate economic recovery and growth in the north.


"At Pick Everard, we strive to ensure 75% of our supply chain is made up of SMEs and micro suppliers. We believe that local knowledge outstrips that which can be found elsewhere, because these firms are invested in their local area and care about its outcomes, resulting in the best project delivery for our clients – and the most positive impact for local communities.

"The UK government has already set out rules that dictate how large suppliers cannot effectively 'outbid' an SME in the delivery of social value – that which is crucial to maximising project returns and upholding client satisfaction. It is therefore important that other firms like us adopt a similar model, directly integrating this component into the procurement stage, giving vital assurance to SMEs that are struggling through this turbulent financial period.

"A good example of SME inclusion is the Loughborough University Science Enterprise Park (LUSEP) project. Delivering 80,000 square feet net of Category A office space, this multi-disciplinary development in the heart of Leicestershire engaged main contractor Wates and local architects Stephen George & Partners (SGP).

"Each party was procured through SCAPE Consultancy – a direct award framework – designed to drive project collaboration, supply chain efficiency, time and cost savings. Early engagement with these firms proved critical, due to a strict project timescale that required progress designs and necessary surveys and investigations completed in line with a planning submission.

"In practice, the collaborative approach delivered multiple project benefits – first, delivering a case for the client to increase its available budget for construction to £21m, owing to an accurate cost estimate being produced, which agreed a £200k reduction to the client's risk allowance.

"Secondly, with regards to value engineering, revised groundworks and drainage designs saved almost £1m, which was reinvested to meet the costs of enhanced foundation and structural designs.

"Helping deliver long-term financial benefits for the region, including 500 jobs, the project is an all-encompassing example of a supply chain working in cohesion to the benefit of the client and project delivery.

"SGP was invaluable in providing an ecologically led landscape, with native tree and hedge planting, wildflower meadows and a 35m long, 3.5m tall bat commuting feature – all designed to enhance sustainability and biodiversity directives, in keeping with the local area

"Testament to the team's work was the awarding of NEC's Building Project of the Year commendation in 2021 – awards that showcase and reward good practice in collaboration, with competition set across the world.

"In taking the lessons demonstrated on the LUSEP project, we can begin to understand how working collaboratively delivers betterment across the construction board. This approach allows us to future-proof our industry as we look to close the skills gap, reduce carbon emissions and develop young and talented people throughout their careers. In shaping a standard of delivery across the industry – across the private and public sectors – the intention is to improve and stimulate a marketplace that will change for the better.

"As the government pushes to level up the country, it is critical a degree of uniformity is considered in funding, closing the north/south divide and delivering a lasting impact in the communities we serve."