Construction Working Lunch - Glasgow August 2019

1. Whole Life Approach to Procurement

This requires an early focus on what are the required outcomes for the project – in Project 13 terminology, a “problem statement” rather than a design brief. In the hub model, the amount of work up-front to design the brief results in less change through the life of the project.

There is value in getting the brief right and for that to be as complete as possible before the design stage commences. The process of having people round the table early and during development of the brief is essential. Unclear briefs are a cause of issues later on in the project

Construction contracts make it easy to make changes as the work progresses unlike the manufacturing industry, changes can be made at any point (albeit with time and cost consequences). The benefit of this for clients was recognised but the down side is that when it leads to delay and cost increases, it can be a trigger for disputes.

A mindset shift may be what is required to address these issues. The key to success was considered to be a relatively simple concept – start with a clear view of what the required outcomes are, greater clarity around what is to be built and a realistic timetable and robust budget. This requires project development only to begin once the brief is fully thought through, the vision, aspirations, targets and objectives of the brief fully articulated and properly understood, and then fixed. The responses from contractors must then fully and properly address the brief. This avoids projects being set up to fail.

A higher investment at the outset can lead to lower cost overall, over the lifecycle of the building and can take account of the need for flexible use of the building to allow for changes in use over its life.

The question was raised as to whether every project need to be bespoke. There can be real benefits to standardisation in terms of driving efficiencies. The English schools programme was moving towards standardised, modular build. In Scotland, there has been resistance to that but it was thought that even within non-standardised shells, there was scope for standardising elements of buildings.

2. Value of Innovation

The value of innovation goes beyond the capital costs of innovating as it brings wider benefits.

However, often when clients request “innovation” what they are looking for is in fact faster, more efficient delivery. The need for innovation goes beyond this into the wider areas, for example, responding to government’s declaration of a climate emergency, the “smart” revolution – smart energy, smart campuses.

One block is that those tasked with delivering the project on time and on budget are not incentivised to take risks and try out innovative processes. There is also a need for the return to be worth the investment in time and effort which is unlikely to happen on a 1-off project and where there is a lack of clarity around future project pipeline.

The question was raised – “who suffers the cost if there is no innovation?” It is thought that by 2025 there will not be sufficient people in the industry to build the projects needing to be built and solutions are required. There is a tension between this and the traditional risk-averse approach to construction.

However, it could be that market forces such as lack of labour supply will act as a catalyst for innovation as opposed to innovation being a driver in itself.

3. Incentivising Collaboration

There is a need for “built in collaboration”. This involves a combination of critical success factors but key was that “contracts do not make people perform, behaviours are the key”. Collaboration breaks down when people revert to old-style behaviours. An aspect of some projects is behavioural workshops to try to address this. There can be tension when balancing factors such as shareholder/investor interest where the focus is on demonstrating value in financial terms.

Factors which might assist include:

• A long-term approach through a focus on, for example, 4 – 5 year pipelines of work which maximise the ability for parties to innovate and to work together.
• Avoiding the race to the bottom and potential for a squeeze on quality.
• Putting value and not cost at the forefront of decision making.
• Fair risk allocation, risk sharing and all parties having a role in the management of risk, regardless of who owns it.
• Disincentivising disputes.
• Insurance cover to stand behind the project.
• Building trust requires time and is difficult to achieve on 1-off projects. Frameworks give it a chance to develop.
• Incentives based on meeting project aims and objectives. These can be broader aims than simply the narrow focus on out-turn cost and time and include factors like educational or other community benefits.

The concept of major asset-owners in particular geographic areas interfacing with each other to join forces in terms of making their work pipelines known was thought to bring potential benefits. This would allow the supply chain to have visibility across the entirety of the pipeline in an area allowing for planning and investment. The challenges of aligning clients on a city-wide basis though, are not to be under-estimated.

4. Investment in Innovation

The fragmentation of the construction industry in the UK where even the major players have a relatively small percentage share of the market and the diversity of the industry in terms of ability to invest make innovation difficult. However, there could be benefits from industry players joining forces – for example, if one develops a particular capability, it can then become a supplier to others. Another option is to involve researchers and academics to fast-track developments.

There needs to be some incentive for early-adopters to encourage use of new products and ideas as they come to market to allow them to be tried and tested and for trust in them to be developed.

There was a real question over whether there is sufficient ability in the industry to pay for the levels of investment in innovation and technology which will be required. There is also a challenge in terms of availability of test facilities in the UK. Government tax-breaks or other incentives could help to kick-start this.

A further issue was the need for Building Regulations and those who apply them to be on board for innovative methods of working and materials. A risk- and change-averse approach to this causes delay and stifles innovation.