Conflict in construction
- Duncan Cartlidge
- 4 days ago
- 4 min read
Conflict in construction
About 20 years ago I wrote a book called Procurement of Built Assets which involved interviewing a variety of people and organisations advocating greater collaboration in the procurement of buildings. This was only a few years after the publication of the Latham Report which urged construction to adopt a more collaborative approach.
Construction is thought by some to be unique and therefore unsuitable for the introduction of management techniques common in other sectors to promote collaborative working. This uniqueness it is claimed is characterised by the bespoke nature of the product, a proliferation of small firms forming temporary alliances resulting in little common vision and leadership. The separation of design and construction, to quote Sir Harold Emerson, ‘In no other important industry is the responsibility for the design so far removed from the responsibility for production’. In addition, there’s uncertainty due to variable demand and fierce competition created by competitive tendering for work creating low levels of commercial profitability, sometimes referred to as a race to the bottom. But is construction really that unique? For example, an industry with similar characteristics to construction is ship building. The shipyards of post-WW2 Japan were one of the first to introduce supply chain management in the 1950s into its processes despite, like construction, producing bespoke products by operations carried out in open air with large supply chains. It was so successful that Japanese ship building wiped out the majority of its competitors during the next 25 years. It was said that Japanese shipyards spent six months planning a new project with the collaboration of the supply chain then construction followed that was right first time and delivered to schedule. Whereas others started work immediately without supply chain input and spend years carrying out costly re-works and missing delivery dates.
A question: On a scale of one for no collaboration to ten for total collaborative techniques in projects during the past 12 months? How would you rate your organisation? When I address this question to an audience very few people respond with an answer over 5.
A survey carried out by the RIBA a few years ago appeared to show that only 22% of those surveyed employed collaboration techniques on all projects. The reasons cited for not being more co-operative included client concerns over risk and liability. However, is doesn’t need to be like this. In 1995 Glaxo identified the need for a new laboratory and office building in Ware, Hertfordshire, to enable rationalisation of R&D functions following the merger of Glaxo with Wellcome. The company found a construction industry that was;
Inflexible
Reactive
Cost focused
Insular
Contractual
Claims conscious
Inefficient and with
Poor profit margins
Does this sound familiar?
One of the people I interviewed for my book was Kevin Thomas the then Director of Worldwide Strategic Planning for GSK Research and Development who created FUSION based on his vision for a new way of working built on fairness, unity, seamlessness, initiative, openness and no blame.
Apart from the values-led culture, two things set Fusion projects apart from traditional construction contracts. The first was the procurement process. In a traditional procurement process the client identifies the need for the work, appoints designers to develop a specification, then appoints a different team to carry out the work. Procurement is generally by lowest price, based on incomplete information and inevitably leads to arguments over changes that occur during the design and construction process. The Fusion approach tackled things differently. The client identifies the need for the work but then appoints the whole team to help develop the specification and undertake the construction in parallel. This early involvement means that everyone understands the client's needs and can contribute fully to the project's development. It creates a team focused on the client's needs from the outset, which makes it possible to absorb changes as the work progresses.
The second difference was in the way decisions are made and communicated. By adopting a parallel design and construction approach, decisions are targeted to the needs of the installation programme rather than all being taken unnecessarily at the beginning. A project board made up of users, site specialists, company advisors and project managers works with an implementation team to manage the scope of the project, based on the client's evolving needs. The implementation team develops, implements and manages expectations. Close collaboration between the two groups ensures that the implementation plan meets the client's objectives, and that changes in scope are readily taken on board. Cost certainty is assured by everyone having access to a single project budget, which dynamically reflects decisions as they are made. As a result, the new laboratory and office buildings in Ware posted savings of 18% on cost and 40% on time compared with traditional procurement with snag free handovers and went onto win the Contract Journal Single Project Partnering Award.
So, what happened to FUSION? Well, it lives on, sort of, as Kevin Thomas was involved with the development of the Integrated Project Insurance (IPI) model which was included in the government’s 2011 Construction Strategy and the Construction Playbook as one of a series of new, more effective procurement models designed to move away from siloed, adversarial behaviour towards a more collaborative environment. The IPI model is underpinned by a form of single project insurance and a new alliance contract. This covers an alliance where the client sits alongside the design and construction teams for all risks, including third party liability, delay in project completion, cost overrun and latent defects for 12 years. I have commented on the lack of latent defects insurance in the UK previously.
IPI adopts collective sharing of project opportunities and risks, with a commitment to ‘no blame, no dispute’ between alliance participants maximising the potential for ‘gain-share’. However, as with FUSION, IPI has not been widely adopted by the UK construction industry with only a handful of demonstration projects being undertaken. It would appear that collaboration is too scary to contemplate so we’ll just stick with confrontation as its easier.
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