Specfinish invited a group of industry leaders to the 2013 Specfinish Industry Debate to discuss the proposition that pre-planning prevents poor performance but trust creates value and improved productivity.
For decades reports about the construction industry have referred to the need for it to improve productivity and quality. Phrases including partnering, value engineering, lean construction, pre-assembly and innovation are often misunderstood or misused. In the era of austerity hard-won modern working practices are being thrown out of the window to a point where the main contractors who procure drywall, ceilings and façades work packages only seem to want a price and programme. Or do they? Adrian JG Marsh reports.
“Contractual arrangements suffer from everyone involved having their own individual agenda. Yes, everyone wants to deliver a building successfully; yes, everyone involved should make a profit but this requires trust. Getting uncertainty ironed out sets up a successful project,” said Simon Lewis of construction lawyers Bond Dickinson who, as the Industry Debate chairman, suggested to guests why pre-planning might be important to improve performance.
“The key driver to success is relationships and the foundation is trust because, without trust, you generally don’t have a relationship,” said Sean Cook of London developer, First Base.
Adrian Buckmaster from Dmitro joined in: “Where you’ve a trusted relationship you have the confidence to offer new ideas knowing that you’ll be listened to. The best productivity improvements tend to come from being involved early, such as devising off-site manufacturing which has to be planned in early otherwise it won’t work.”
Steve Halcrow, FPDC’s executive director, said: “In construction we don’t seem to get the best from our supply chain as other industries do. How many times does someone with a really good new idea or process see it introduced. Very rarely, I suspect, because the supply chain often resists change.”
Ernie Bardrick from Sir Robert McAlpine said: “There’s not enough planning today, people rush into contracts too early. In the next business cycle if you don’t get planning right the industry will fail to capitalise. Currently many are desperate to keep turnover; it’s a question of self survival. Buildings are too cheap and to survive prices will have to rise but, as we all know, if that happens clients will retrench.
“Since 2008 clients have taken advantage of austerity by buying cheaper. This will have to change for contractors to survive but if more schemes are to proceed there’ll need to be a balancing act between contractors wanting to earn more and clients making budgets work to available funding.”
Some enlightened clients have taken to trust a few tier 1 contractors and continued to negotiate contracts, but even here the drive for cost reductions has led to acceptance of tender figures that are unsustainable for many.
Graeme Robinson at Eclipse Procurement then pointed out that during good times the supply chain is strong but when times get tough it changes and clients think of price more than anything else.
Fermacell’s David Wilson said price pressures can set the tone of a contract: “As soon as you enter into a lowest price tender process you’re not going to get new ideas put forward until you’re confident that your innovative ideas won’t be passed on to competitors or used by others. Buyers keep going to the market until they get the lowest price even if a construction team sees value in ideas and wants to use a particular contractor. This does not encourage performance improvement.”
Sean Cook, who leads the design team at First Base, said: “We have a preferred supply chain. We usually lock in specified suppliers at the beginning. We know that someone will offer a cheaper solution and generally we find that it’s not the same quality. In time we can source the best available market rate (for products) but we accept that where people take risks you need to pay them. The supply chain needs to understand what the asset actually is and what a developer really wants. Equally the client must explain what they want.”
Encon’s Chris Barlow raised concerns about communication: “Rarely does anybody ask a specialist subcontractor, the guy who puts it [walls, ceilings, etc] up, what he thinks of a new product or even ask us, a distributor dealing with a large number of suppliers, whether this or that contractor or product is any good. Currently everything is price driven and costs in isolation can create conflict if people don’t understand how a cost is arrived at.”
John Rogerson, operations director at Astins, said: “To get rid of conflict and get pre-planning right you need to make the deal a lot earlier in the life of a contract. Don’t leave to the last moment.”
Paul Little, from Birmingham-based Coen’s, argued that you can learn from other industries: “Car manufacturers involve their supply chain far more and they reward innovation. They also provide a flow of work over time to give suppliers confidence to invest.”
The debate turned to rewarding staff and subcontractors. Rewarding staff is not uncommon and appears to be more about getting everyone involved to find better ways of working from the front end to the sharp end. And yes – rewards and bonuses do play a part.
John Rogerson said: “To get to more harmonious working everybody must give a bit, and to change you must trust the people you’re working with. There also needs to be tension to keep people focused. Say 15 per cent tension is good. If you pay a bonus all the time it can have no value because people get used to it and treat it as part of their wages.”
Gary Carter, Fermacell’s UK general manager, suggested some attitudes might be a part of the British culture: “Markets are different in other parts of Europe. Engineers and qualified tradesmen have greater respect and are more valued on mainland Europe.”
“Specialist contractors are more likely to get deeply involved in pre-planning if they are assured of getting a reward,” said Adrian Buckmaster. “There’s no mechanism to give us that security. People won’t get involved with innovation if they don’t get rewarded. True innovation will only come about by security of work.”
But the complex nature of the industry means it’s difficult to predict, according to Gary Carter: “Everyone is pre-planning in isolated boxes. Until trust exists barriers will not be broken down. Human nature will dictate people will protect their position first.”
Chris Barlow agreed: “With planning it’s about sharing the risk. It’s an adversarial business because we always want someone to blame.”
Then Steve Halcrow said: ”It’s how you deal with a difficult issue that differentiates one company from another. If someone falls over you either trample over them or pick them up and help them across the line.”
Sean Cook said: “Yes, if you pick them up then the next time they are more likely to help others, creating a team effort. We understand what someone in the supply chain is good at. We want them to survive and prosper because we don’t want to reinvent the wheel and continuity helps us to de-risk the project process.”
Graeme Robinson felt it was a timing issue: “Developers are looking at when and where the market will turn. Currently we’re at the bottom of the market and the indicators are that it’s likely to rise soon. While pre-planning is important, if projects begin to move quickly we’re not going to have enough time to do them.”
David Wilson acknowledged this view: “Costs are likely to increase going forward. Yes trust will add value by creating a more efficient working environment and help to make work profitable but it’s isolated and happens in cells. Building trust is down to existing relationships and confidence in who you work with.
“More revenue will come from winning work and winning work is generally dependent on relationships. Most relationships are informal and built on trust. But formalising relationships will only really come when there is more work about and clients want to secure services of key suppliers. The key is earlier involvement so it is down to the client and main contractor to identify the subcontractors and systems they want to work with so that together they can develop and add value but to do this they must trust each other.”
John Rogerson drew comparisons with the sciences: “In sciences you’re unlikely to get a big breakthrough unless the people involved are brave enough to trust each other and work closely together. The same can be said of construction. It can happen when times are tough.”
Chris Barlow added: “Lots of systems are being talked about and everyone thinks they have a plan but all too often there isn’t one. Not asking the people who install what needs to be done is a weakness; having ideas imposed and not being able to suggest better or more efficient ways can create mistrust.”
Sean Cook then talked about planning and working with the supply chain: “You need to have a plan and plan the plan as there are many variables. You can only control what’s within your control. By forging relationships with people up and down the supply chain you can understand what you need and what other people need. These might be people that you’ve never met but they are people who can affect your activities.
“Understanding what those around you do builds trust and helps to determine a solution. Projects are a jigsaw and it’s a different picture every time. There are different variables: economic, planning, political or technical. Ultimately there are always different ways to put a jigsaw together and to be successful you have to be dynamic and responsive, find innovative solutions and communicate your vision up and down the supply chain, especially with people within your sphere of influence.”
The final words fell to Paul Little: “We all have to be responsible for innovations and improvements in what we do. You can’t force people who are on your side to do something. It’s refreshing to see people trying things differently because there’s a lot of people out there who won’t change from the way it’s been done for years.”
Despite some feisty exchanges during the evening there was general agreement that effective preplanning helps to set up a successful environment that creates innovative thinking and can deliver improved productivity. Trust, however, evolves over time and is about confidence that the team you work with, and for, will deliver their part of the bargain. Without trust and reward productivity boosting initiatives won’t happen.
When Warren Gatland shocked the rugby world and dropped Brian O’Driscoll for the British Lions series decider against Australia in July there was an outcry. Gatland’s team trusted his selection and the British Lions won by a record margin. Now that’s what construction needs more of – record margins.
Specfinish Roundtable guests
Simon Lewis – Bond Dickinson LLP (debate chairman)
Ernie Bardrick – Sir Robert McAlpine
Adrian Buckmaster – Dmitro
Gary Carter – Fermacell
Steve Halcrow – FPDC
Graeme Robinson – Eclipse Procurement
David Wilson – Fermacell
John Rogerson – Astins
Chris Barlow – Encon
Sean Cook – First Base
Paul Little – Coens
Adrian JG Marsh – Specfinish