Archive for the 'Constructing Excellence' Category

We are delighted to be able to feature a guest blog from Paul Wilkinson:

‘Social media’ figures a lot in my construction PR and marketing consultancy work, but when asked to give an example of how it could ‘open doors’ I used to struggle with an answer. Not any more: blogging has got me talking to senior government decision-makers.

As well as advocating blogs to clients, I have been blogging since 2005 - writing a construction collaboration technology blog and, more recently, a PR/marketing/social media blog. In my technology blog, I wrote several times about the impending government appointment of a Chief Construction Advisor.

When Paul Morrell’s appointment was announced, I wrote an open letter to him, asking him to ensure that information and communication technologies (ICT) was fully utilised in helping to co-ordinate a low carbon policy and to improve the government’s return on its investment. I highlighted how ICT could play a vital role:

• “promote best practice in construction procurement” – think about the efficiency savings that come from automating aspects of tendering, making information available online and reducing paperwork.
• “implementation of Government policy” – from Gershon to Greening Government IT, ICT is now a cross-cutting strand within government and the Strategy for Sustainable Construction, albeit modestly, gives scope for government to encourage better ICT use across the industry at large and support its low carbon policy.
• “championing the industry’s image” – Too often described (sometimes unfairly) as ‘technophobic’, the industry could at least partly transform construction’s low-tech image by incorporating ICT more effectively into its day-to-day operations. This could range from high-end BIM collaboration to the ways in which industry manages its conversations with clients, supply chains, local communities, regulators, new recruits to the industry, and others (see post).

I then added a public PS, inviting him to consider social media tools and techniques (blogs, online forums, social networks, even Twitter) as a way to engage in online conversations with construction industry people.

To my surprise, Paul Morrell got in touch. In possibly his first ever foray into the blogosphere, Paul wrote a detailed reply to my post. He said he needed no persuading about the enormous potential of ICT:

“Just one those topics (and I need no persuading that it is a big one) is indeed the enormous potential that lies in more intelligent use of ICT. On that subject, the part of my mind that is closed is the part that is already persuaded of that potential in improving communications, reducing or removing transaction costs, transforming the way that buildings are designed, creating more direct links between design and fabrication/assembly, removing the coordination errors that too often block productivity etc. The part that is open is in recognising that there will be still more potential beyond my current understanding, and indeed beyond the general understanding of the industry – and also the part that addresses the hard issue of barriers to adoption. These are easy to list out: too many people of my generation in positions of influence, the multiplicity of systems (so that any single member of the supply chain who moves one way, will certainly find themselves dealing with other members who have gone a different way), the fact that if we don’t do it pragmatically we could spend the rest of several lifetimes talking about inter-operability etc; but I am open-minded as to which of these barriers are perceived and which are real, and as to the best way of hurdling them.”

He went on to say that he also intended to start his own limited engagement with social media:

“…I certainly intend within that period to set up a blog which, whilst it may be a bit slow motion for generations Y and Z, will provide an opportunity to show emerging thinking – and, above all, get some thinking back.”

Last month, I went to hear Paul Morrell speak at a meeting of the London Constructing Excellence Club, and when LCEC chairman Andrew Bowles introduced me to him, he immediately remembered the blog exchange (telling me also that he wasn’t quite sure he’d ever embrace Twitter). I am looking forward to supporting his efforts to build an online dialogue with construction industry people, and not just about the role of ICT or of social media.

Constructing Excellence is already embracing such tools (including this blog, use of Twitter, and deployment of social network platforms for G4C and the Collaborative Working Champions, among other things), and I am talking to LCEC’s February meeting about them too. Social media platforms are augmenting conventional communications, and - as my experience shows - they can be very useful in opening doors and starting conversations with the influential industry people you might want to talk to.

I have generally given up being shocked by opinions, especially when espoused in a search for votes. However, one particular policy statement announced this week took me aback somewhat. Did Kenneth Clarke really suggest that HSE inspectors were ‘intrusive’? Funny that. I thought that was part of their job.

Clarke has stated that, were the Conservatives to win the next election, contractors would be able to “curb the powers of intrusive inspectors by allowing firms to arrange their own, externally audited inspections and, providing they pass, to refuse entry to official inspectors thereafter”.

The new plans would see an initial health and safety assessment being carried out by a contractor’s employee and this being externally audited. I would like to outline two fundamental issues with this approach.

The first is purely logistical. The Conservative statement seems to require a new project role to be developed - the supply side health and safety auditor. A few questions:

• How does a contractor choose an auditor?
• Who audits the auditors to ensure that they can fulfil the role?
• At what point in the construction process does an assessment take place?

Clarke’s sales pitch for this was based on an appeal to the delights of a reduction in bureaucracy. However, all he appears to be doing is shifting the interface from being between the HSE and those that deliver construction work to being between the HSE (or equivalent) and those that audit those that deliver construction work.

It is also suggested here that the health and safety assessment take place once, after which ‘official’ inspectors could be banned from site. When would that be exactly? This proposal utterly fails to take account of the nature of construction work where the health and safety risks change over time. The present system isn’t perfect but, under the present regime, the way in which random inspections can take place at least fits with our understanding of construction risk.

My second issue is that making health and safety assessment a transactional relationship makes it utterly open to abuse. The Conservative statement does not provide detail on who would pay for the external audit to take place. My fear would be that there would an open market and that the auditor would act as a consultant to the contractor. If the auditor were employed by the contractor in this way, that auditor could potentially be influenced to pass unsafe practices for risk of not winning any future work from the contractor. In addition, the initial assessment being carried out by a member of the contractor’s staff could also lead to that person coming under pressure to not hold up a job on site. I have no doubt that the majority of those working in our sector would not seek to influence the results of any assessment but it does seem like the Conservative proposals take unnecessary risks around human nature.

We work in a sector that has made huge strides in health and safety performance over the last ten years but still results in far too many fatalities. As Rita Donaghy’s recent report states, One Death is Too Many. Many within our sector think that the HSE does a good job and would actually like to see them more heavily resourced. I believe that, rather than a deregulation of health and safety assessment, would lead to a reduction in accidents and a much healthier UK construction sector in all senses.

Repeated below is the Executive Summary of the new report from Constructing Excellence, published on 14 October 2010, entitled Never Waste a Good Crisis. Authored by Andrew Wolstenholme of Balfour Beatty Management, the report looks to determine the level of industry progress since Rethinking Construction and define the improvement agenda for the next decade.

Since Sir John Egan’s Task Force published its report Rethinking Construction in 1998, there has been
some progress, but nowhere near enough. Few of the Egan targets has been met in full, while most
have fallen considerably short. Where improvement has been achieved, too often the commitment to Egan’s principles has been skin-deep. In some sectors, such as housing, construction simply does not matter, because there is such limited understanding of how value can be created through the construction process.

For the last decade, the industry has been sheltered by a healthy economy. This has enabled construction to prosper without having to strive for innovation. The current economic crisis is a perfect opportunity for us to think again. We can not afford to waste it.

Looking ahead, there are major challenges on the horizon. Most clients have already cut their long-term investment plans, and capital budgets will be at risk for many years to come as we anticipate a long period of recovery from the current recession. For Government, there is huge pressure to reduce public spending. But perhaps the greatest challenge is how we can deliver a built environment that supports the creation of a low carbon economy for the UK. So while there is no crisis yet in our industry, we are approaching a time when UK plc can no longer afford to build and maintain, the infrastructure capable of supporting our future needs as a society.

So what will make the industry change now when it has failed to do so before? We believe that an essential step is for suppliers, clients and Government to adopt a new vision for the industry based on the concept of the built environment. This means understanding how value is created over the whole life cycle of an asset, rather than simply looking at the building cost, which is only a part of the total equation. It is about how the relatively small up-front costs of design and construction can have such huge consequences for future users, whether expressed as business or social outcomes, as well as for the environment.

The impact of this vision is potentially immense for our industry. We need to abandon our existing business models that reward short-term thinking. Instead, we should incentivise suppliers to deliver quality and sustainability by taking a stake in the long-term performance of a built asset.

How will this be achieved? We believe that the era of client-led change is over, at least for the moment, and that it is now time for the supply side to demonstrate how it can create additional economic social and environmental value through innovation, collaboration and integrated working – in short, the principles outlined in Rethinking Construction. Clients should focus instead on professionalising their procurement
practices to reward suppliers who deliver value-based solutions.

Government, as a client, needs to understand the enlightened thinking that better and more intelligent designs improve patients’ recovery in hospitals and learning outputs in schools. So, rather than reduce the number of schools and hospitals being built, it must sponsor smarter and more productive solutions and reduce the amount of money wasted on the procurement process. For Government as a policy maker, the challenge is to create an environment that incentivises innovation and speeds up the modernisation process.

There are other stakeholders with a key role to play. We need an education and training system that promotes holistic learning across disciplines, so that industry professionals are equipped with an understanding of how better integration delivers value. We also need industry bodies and professional associations to cooperate better to represent our industry effectively to Government and the public.

Above all, we need leaders who can engage the public and key stakeholders about the ‘new value’ the built environment brings, who can engage employees to deliver the necessary changes and who can attract more talented people from a wider pool to work in our industry. If our present leaders do not feel up to the task, they should at least support the development of the next generation, who appear to understand very clearly what is needed.

Today saw OFT’s announcement of fines averaging 1.5% of turnover for around 100 companies caught in its two-year investigation of ‘bid rigging’. The coverage raised some interesting issues for me:

1. For once, the industry’s spokespeople did well. And much better than when the story first broke in April 2008. Specifically, I heard Stephen Ratcliffe, chief exec of the UK Contractors’ Group, on BBC Radio 4’s Today programme. The BBC’s line was that the fines could have been 10%, so why weren’t they, considering the tax payer had been ripped off “in every case”. More of this in a minute…. But Stephen did a good job of putting across the contractors’ case, whilst reminding the interviewer that even the OFT had led by saying that only a handful of cases involved collusion, the others were the lesser matter of ‘cover pricing’, in order “to stay sweet with the client”, he said twice. A ‘sticky’ phrase, so good work. All in all, great to hear a good spokesperson for the industry on prime time radio, even if in a defensive mode.

2. Cover pricing. We all strongly condemn all anti-competitive practices. Such activity is entirely incompatible with best practice and achieving best value. And it was hardly Ratcliffe’s strongest point when he said that the industry had worked with the OFT to produce a new voluntary code of practice. What? We voluntarily agree not to rip off our clients?? However, cover pricing is, in part, a symptom of poor client practice and is facilitated both by lowest price tendering practices and also rigid prequalification ‘rotas’ in which bidders are fearful of not putting in a bid for fear of being excluded from future work. Our evidence is that lowest tender price doesn’t even deliver lowest outturn price, let alone best value, leading more often than not to claims and an outturn cost greater than the tender price – data shows anything between 20% and 25% on average. Where’s the good competition in that?

3. By the way, by definition there can be little evidence that cover pricing cost anyone any money. Remember they were trying to ensure they lost! We do not know what price the company who sought the cover would otherwise have derived for themselves. It is quite likely that it would have been higher than the other, real, bidders. Therefore it would be hard for any lawyers to justify advising their clients to sue past contractors, or losing bidders, or to blacklist any of those fined by the OFT.

4. Any client who thinks lowest tender price is always best is vulnerable to this sort of thing, as well as other stupidities. The much better approach is collaborative working. The selection of integrated project teams requires much greater rigour and scrutiny at selection and award stages than does lowest price tendering. Selecting lowest price is likely to create a process where collusion is possible. Any fool can bid lower than the next person – and all can count the cost later. Open book accounting, and other commercial techniques of collaborative working, when established at the outset and used during the bid stages and beyond, reduce the risk of cover pricing and forms of collusion. The other need is for a greater focus on the value side of the equation, understanding the outcomes that end users actually need from the project.

So, a dark day for the industry, especially those companies who were fined of course, but “every cloud…”, and if it adds to the case for systematic collaborative working, then all praise the OFT.

This is the first part of a two-parter on ethics in the built environment sector. This first part will look at where I believe the debate on ethics in the sector is currently while the second will start to reflect on particular ethical issues and determine how some of the great western philosophers would have considered them.

As those of you that have met me may know, my background is in philosophy, and specifically in ethics. I somehow ‘landed’ in construction around ten years ago. I have always described it as such deliberately as if I were somehow a visitor from another planet. And quite a distant one at that.

Over the last few years, however, ethical considerations have become more prominent in construction although the use of ethics as a term is still rare. Instead, moral judgements are ensconced in the language of sustainability, corporate social responsibility, fair payments, procurement, collaborative working and elsewhere. I would like to argue that, at present, the built environment sector is only addressing a limited part of the ethical agenda and that a significant widening of that agenda is required if construction can be considered as an industry that is behaving ‘morally’.

What struck me immediately when looking at our industry is that strong parallels exist between how ethical considerations of war and how an ethical framework for construction could be developed. This is not, by the way, because I’m suggesting that construction is inherently a battleground! We’ll have none of that reverting to type round here thank you. Just War Theory is traditionally divided into two main constituent parts. The first, Jus Ad Bellum, is concerned with the decision to go to war; the second, Jus In Bello, considers conduct once hostilities have started. The two areas are not interdependent, i.e. a just war can be fought unethically.

I would argue that the same holds true for construction and would like to posit that there should be a ‘Just Wall Theory’. (No groans at the back please. Trust me, it gets worse). At present, the discussions about ethical behaviours in construction largely consider what happens after a decision has been taken to construct - the Jus In Buildo stage if you will. (Told you). What is missing is consideration of that former stage – the question asked is “can we build it”, but not “should we”. This seems to chime with our view of the world – that there are some things that simply shouldn’t be built. I mean, can any of us really morally defend snow domes in Dubai?

If one agrees that in some cases the act of construction is in itself unethical it leads to the question of how we make that decision. I will move onto that discussion in Part 2 which will come at a later date.

In the meantime, for those of you within the sector that are interested in this topic, I would recommend you seek out Ethics for the Built Environment by Peter Fewings. I was delighted to be able to share a stage with Peter at last year’s Construction Ethics Symposium in Bristol, which I believe to be the first such event in the country. Hopefully more such events will take place in the future to take this debate forward.

By Don Ward

Building returned to this theme again following their interview with Steve Morgan, the new capital projects director at BAA, in their June 26 issue and the accompanying leader. Such was the postbag they received, headed by yours truly, that they then asked Stan Hornagold and I to debate the issue, a transcript of which appeared in the August 7 issue with another leader, this time entitled “Anyone for a free lunch?”.

I enjoyed the interview with Steven Morgan of BAA, and I have arranged to meet him to discuss his plans and our views, which will be really valuable. At the time I felt it was easy to misinterpret what he had to say about frameworks and collaborative working, and it certainly did not justify the leader “Is partnering dead?”. Frameworks are but one aspect of collaborative working, but too many people see them as a way of avoiding EU procurement process on every project, instead of realising the real benefit of the efficiency and cost improvements which come from the same team working together on successive projects – provided the process is well managed and there are stretching improvement targets in place. No-one should confuse this with negotiation or a soft touch, no-one from Egan onwards has advocated anything other than fierce competition. What we want is the right sort of competition, based on quality, trust and on whole life cost and value and which procures the whole team, instead of a lowest price bidding ‘game’ and a sequential risk dumping process down the supply chain.

So what’s next after frameworks for the public sector? Probably more frameworks, but manage them properly this time!

PS. The Building debate was also a useful reminder always to be precise in how you say things to the press. I got slightly misquoted in the heat of the debate, and managed to come across as lumping the (original version of) ProCure 21 in with poorly managed frameworks such as the OGC consultants’ framework, for which I apologise to ProCure 21, which is undoubtedly one of the better frameworks.

I wasn’t wrong when I made my prediction for this year’s MIPIM. This is property and construction and I was actually half right!

I said numbers would up despite everyone saying they wouldn’t be going. Well, they were down but venues were still surprisingly busy at times. The alcoholic bell weather, Caffe Roma, was as busy ever at times. Restaurants were difficult to get into early in the week but eased off by Thursday evening which historically used to be the busiest day of the week.

There was a lack of developers, a shortage of funders, a dearth of actual clients and (now struggling for collective names) a complete absence of deals. This is what happens when the concept of value is attacked.

RDAs and local authorities were putting a brave face on it and even cooperating with each other and Sir Bob was attempting a world record on the number of MIPIM speaking engagements in one day (but there again he has to build 3 million homes all of which are still falling in value long before they are built!).

Leeds loved Bradford, Luton is a gateway, London is the only game in town (as long as you have a blue card), Leicester is the place to be, the Manchester stand was the place for peace and quiet, Birmingham stand was flashy, never saw anyone on the Liverpool stand, all I saw from Coventry and Wales were hanging banners.  

I was there to try and get a feel for the keenness to cooperate and deliver projects in a collaborative way as well as  influence people to keep the faith and an eye on the prize.

With few deals to be done at MIPIM this was the one where people who believed in the event made the effort to come and actually spent time with new friends trying to understand them. All that work by Michael Latham and Sir John Egan was all about working closely with all parts of the supply chain and you can’t do that with people you don’t know.

This year’s MIPIM was more in line with that than ever before. When the deals come, as they will, I hope these new best friends will remember.

As for me I twittered like there was no tomorrow and I am likely to continue to be a fan of twittering just as I am of the annual pilgrimage to the Cotes D’Azur. I will be back.

Don Ward is Chief Executive of Constructing Excellence

Last week I went to the regular meeting of the Herts and Beds Constructing Excellence Club. A big turnout, over 50 people, and a very good presentation by Renewables East.  Paybacks are much lower than 10 years ago. But the conversation afterwards turned to the extent to which the recession will mean that such ‘nice-to-haves’ as renewables will take a back seat for a while. The leader in Building magazine the week before took a similar line: “Sustainability like collaborative working is a child of the boom years”, wrote the editor Denise. Which begged a reply from me that, in that case, now is the time for them to come of age and be taken seriously…..

Everyone is telling me of stories that the industry is ‘reverting to type’, particularly with single stage lowest price tendering and aggressive commercial behaviours such as arbitrary demands for 10-20-50% price reductions “or else…”.  Six months ago Building’s front cover asked whether we would soon be seeing the return of the claims QS, and sure enough, many say we have. So how much of the last ten years’ improvement in the industry could be undone, and will all that effort prove to be wasted?

I suspect not. It seems to me that budget concerns are a fact of life, and clients or contractors always want more for less – recession or no recession. There are two schools of thought on how to achieve that: one is to focus on the tender price and drive it as low as possible, even to the point of a sub-economic bid where the contractor must make a loss – unless of course they can make some claims. Which is pretty likely as it is a long time since most people saw a fully-complete set of drawings or an accurate Bill of Quantities.

The industry loves lowest price tendering - it invented it, and back in 1963 codified it in the NJCC’s code of practice for single stage tendering. Large parts of the industry have since conspired with clients over the years to continue with lowest price tendering – it is easy, and it means you don’t have to work too hard to deliver on value. But let’s face it, it usually knowingly sets the project up to fail. It’s a bizarre process - as a questioner said at a conference the other day put on by the Universities of Reading, Loughbrough and Salford, construction must be the only industry that competes to deliver the same thing for the client rather than something different? And is it the only industry that thinks it’s clever to make its money by screwing the client and/or the supply chain?

There is another way, of course, which is to sit down with the team early, talk to them about the target price, remove any concern about profit by ring-fencing that amount, say 3%, and then work together on the remaining 97% to drive out cost and waste. When suppliers are asked to achieve 10-20% cost reductions in order to keep a project viable, well that can’t be done by sharpening the pencil or threats about future work, it requires lean techniques and, above all, collaborative working.

We are at a crossroads in industry improvement, and now need to see leading firms avoid the temptation to turn back if the change is to be sustainable.

Welcome to the new Constructing Excellence blog.

Constructing Excellence is committed to embedding Web 2.0 technology into its web offering and our new blog is the latest way in which we are attempting to do this, and in turn to provide our website users with new and different ways by which to engage with us as an organisation.

The blog will feature many authors, both from within our organisation and from the wider Constructing Excellence membership.  It will feature opinion pieces on the issues facing our industry.  I hope you find it an enjoyable read and we look forward to reading your comments.