Is UK construction broken? Sir Michael Latham thought so. 30 years ago, Sir Michael Latham published his final report on the UK construction practice with the subtitle – Trust in the team. Teamwork and collaboration were the primary motivators for Latham’s recommendations. So, has anything changed since 1994? For sure, Latham was not naive and recognised the resistance his report would face from an industry with so much baggage.
The profit margins for construction companies in today’s marketplace are so thin, that to take on contracts with a 'flying by the seat of your pants' approach is tantamount to suicide. Has there ever been a greater need for effective risk analysis? Although in this crazy industry contractors are often so desperate to maintain their cash flow, they are prepared to take on some dodgy projects and ignore the risks.
Building magazine recently carried out an analysis of the profit made by some the UKs biggest builders. Laing O’Rourke, the biggest private contractor in the industry recently posted a turnover of £4.3bn and a pre-tax profit of £18m, which equate to a pre-tax profit margin of 0.04%. Why bother?
Over the weekend it appears as though ISG is heading for administration – the biggest industry failure since Carillion – they have simply run out of cash. As usual it’s the subcontractors that I feel sorry for, with some of the supply chain owed millions of pounds whilst many others were heavily dependent on ISG for workflow.
This is insane!
Duncan Cartlidge
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