In response to the major recession of the early 1990s Sir Michael Latham’s seminal report in 1994, advocated partnering arrangements as beneficial between firms.
Such arrangements should have had the principal objective of improving performance and reducing costs for clients. They should not become ‘cosy’ relationships. The construction process exists to satisfy the client. Good relationships based on mutual trust benefit clients.
Times have been tough for the construction industry and for firms in the supply chain, in particular sub-contractors have led a precarious existence. The industry overall has experienced more than 250,000 job losses since 2008, and with the economy flatlining the outlook has been pretty grim.
There is light at the end of the recession tunnel. There are signs that the public sector project portfolio is set to increase and that the environment for specialists could benefit from a raft of government measures.
Specialists prospered in the noughties boom years as a rising tide lifted demand (and prices). Partnering did take off but the nature of work often locked out many
small firms in framework and partnering agreements. Huge school or hospital projects were only available from a limited number of firms, and many in the supply
chain struggled even when busy with big projects due to unfavourable terms.
The cosy relationships of partnering have come under scrutiny to see if they really are competitive or efficient. Specialists certainly have to be seen to be delivering ‘more for less’. The drive to reduce costs has seen tender lists lengthen and dutch auctioning becoming common place once again as sub-contractors scramble for work.
Let’s not forget that it is sub-contractors that take the risk and ‘screw it to the wall’ Latham made 53 recommendations to change industry practices, to increase
efficiency and to replace the bureaucratic, wasteful, adversarial atmosphere prevalent in most construction projects with one characterised by openness, co-operation,
trust, honesty, commitment and mutual understanding among team members.
But for business to prosper the supply chain must respect the role of each member. Abuse this resource and good long term relationships and speedy delivery will
disappear. Payment and cash flow remain the most important criteria for business; confidence and trust will return if these two elements get stronger.
Adrian JG Marsh