The effect of economic cycles on the development and use of alternative procurement systems in the UK construction industry during the period 1965-1995

Economics has been described as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." (Robbins 1935). The link between the supply side and the demand side of the construction industry is made through the method of project procurement utilised for each particular development. The construction industry provides the service of organizing and managing the manipulation of materials and other component parts so that they combine to form a building or other works. The members of the industry, generally grouped into the functions of 'design', 'management' and 'construction' (Turner 1990), can be brought together to give the construction service in different ways known as Procurement Paths, each discrete path exhibiting particular characteristics which render it more suitable for different project types and client needs. Current thinking suggests that no procurement is best in all circumstances. The national economy and consequentially the construction sector suffers from short, medium and long term cyclical fluctuations in activity levels which manifest themselves in such key economic indicators as output, employment, income and demand. The altering relationship in the factors of supply and demand will tend to modify the type of product being sought, the services offered and consequently the appropriateness of the linking mechanism or procurement system. The most fundamental developments in this area have taken place in the past thirty years, with the period 1965-1995 encapsulating a number of excessive booms and deep depressions coupled with the popularisation, and sometimes subsequent wain, of new and innovative procurement options. The relationship between the national economy and the activity of the construction sector is examined, analysing those factors that contribute to determining the nature and volume of its output. The plethora of procurement systems currently in use is viewed against the background of how they became relevant in the context of developments in the economy and in the construction industry. These factors are then considered from the viewpoint of demand and supply and the influence exerted by clients, consultants and contractors in promoting particular systems. Ultimately, a comprehensive guide may be established linking economic factors with client requirements and contractor goals resulting in a harmonious reconciliation of these two potentially conflicting aspirations and the use of more appropriate procurement systems for each particular project in the context of prevailing economic conditions.