09 October 2008
G4C Annual Debate
"What effect will the current economic situation have on our industry and the improvement agenda?"
Click here to download an audio file of this event.
Nick Edwards, Construction News
Vaughan Burnand, Shepherd Construction
Tony Giddings, Argent
The construction industry downturn is here. The residential housing market is dead, private commercial is dying. This is an unusual recession, not like any we have seen before - neither interest rates nor unemployment are particularly high. Credit is the issue. The result is that funding cannot be secured, budgets are squeezed, people delay payment and litigation increases.
Discussions were varied though much centred around the question of 'who will survive this downturn?' And, while Tony Giddings highlighted there was a strong pull for many developers to revert back to old methods, there was a general consensus among all that close collaboration is required to stay on top. Vaughan Burnand stressed that companies should stick to supply chains and co-support each other. Tony and Vaughan both agreed that well run Design and Build was the only way forward - work closely as a team, make early appointments, with target cost contracts with the aim to return savings to the Client. There is danger and risk involved when contractors get designs no better than Stage C and are asked to put a price on it. Sub-contractors tender based on sketchy information, then the money is re-couped later through claims, to the detriment of the project and profit for all.
Nick Edwards spoke of the role of the press in reporting the downturn. Has the press fuelled it by instilling fear into people? Should the press report responsibly? Well, what is responsible? Nick feels the press should be asking the question not 'Is this responsible?' but, 'Is the story right?'. In fact, he is of the opinion that the press has underestimated the severity of the situation. 10 months ago people thought all would pick up again in 2009. Now, that looks unlikely.
"Cash is King" said Vaughan. Those who run their businesses properly will be there to pick up the pieces. Look at Lloyds TSB for example being in a position to benefit from Halifax's poor financial situation. Tony explained how Argent Group rode out the last recession by being cash rich and becoming an investment company for a few years, capitalising on low land prices, and reverting back to development when the market improved. The ability to adapt is key.
The debate proved there are silver linings to be found amongst all the downturn doom and gloom. Will those able to work together and adapt to the situation be the ones to survive? Perhaps it presents a great opportunity for better collaboration. And perhaps the industry could emerge healthier and more efficient than when it went in. Let's hope so!"
Reported by Anna MacKenzie.
Seventy people attended the debate; ranging from young to old and from all sectors of the industry. Many questions were put forward highlighting the affect that the current downturn has on the industry and unfortunately there was not enough time to answer all of them.
A podcast of the event will be available shortly on the website and the discussion forum on the website is the perfect place to continue any further discussions.
The Building Centre provided a great venue, displaying the exciting and diverse industry that we work in; in a modern way.
A summary of notes taken from the evening can be downloaded by clicking here