The fallout from Carillion’s collapse and the recent gender pay gap data underline the urgent need for our industry to change
A common theme for my columns is the need for change in the construction industry. I do try to strike a balance between cajoling everyone to help hasten change and championing the great things that are already happening – as there are quite a lot of reasons to be optimistic – but recent developments warrant a return to the theme of needing more rapid change.
I would be remiss if I did not at least mention the gender pay gap. I know that there are a lot of positive things happening – within my own company and across the sector – to make us more inclusive and to attract more women to pursue careers in construction. I’ve written on this subject before on these pages (Diversity is All, 27 October 2017), and I do believe we are making progress, but the recent numbers have shown that construction has the highest gender pay gap of any industry sector in the UK. There is a median pay gap of about 25% in construction companies, two-and-a-half times the national average.
I won’t belabour the point, because I think we all accept that we’ve got to do better. But I wonder whether we all share the same sense of urgency. If we don’t achieve real improvement soon, we will be trapped at the back of the queue for talent and may fail to recruit the people we need to be successful.
The other harbinger of change has to be the collapse of Carillion. The impacts being felt across the industry – and the worrisome conclusions some people are drawing from them – demonstrate the need for an increased pace of change.
Seventy percent of businesses believe that procurement decisions are being made solely on the basis of lowest cost. Is it any wonder we have a crisis of quality?
We simply can’t maintain the status quo. For example, the Carillion collapse has brought to light the massive risks created by irresponsible underpricing. Too many companies are chasing cash flow and tendering proposals that are simply unfeasible in the long term, a practice that is unfortunately rewarded by the market. Interim results from a survey being conducted by the CBI suggest that 70% of businesses believe that procurement decisions are being made solely on the basis of lowest cost. Is it any wonder we have a crisis of quality?
Surely we’ve got to do a better job of demonstrating – to public and private sector clients alike – that long-term value is more important than short-term cost.
And we’ve got to be more effective at communicating to the government and the UK as a whole just how important construction is.
Construction is absolutely essential for our quality of life: it provides our homes, workplaces, schools and the infrastructure that connects them all together. We do a great job of engaging with communities and fostering social mobility. We have a real impact on the economy.
In my ongoing effort to champion the great things that the construction sector does, I was pleased to have been asked towards the end of 2017 to take over as chairman of the CBI Construction Council.
Many of us on the council would agree that in the past it has not achieved its potential. I have aspirations that the group can assume a more important and influential role in promoting the interests of our sector to the government and indeed to the broader public.
Carillion was a lesson in the risks of short-termism. If we can remember that lesson and convert it into action, we’ll be moving in the right direction
I want it to be a high-performing, results-oriented body – to act with pace and velocity in championing change.
As CBI president Paul Drechsler said at our last meeting that the Construction Council is like a gym membership: the more you put in, the more you get out. So I hope that my colleagues will join me in committing to using the council as a vehicle for driving change.
I am confident that the Construction Council can be an effective vehicle for uniting us around our common interests. As chairman, I am hoping that it can be:
- Focused – representing the sector on broader economic and political issues, while playing a supporting role to trade associations on specific commercial issues.
- Results-oriented – being not just a talking shop, but a body that takes actions which can be measured.
- Open – a forum in which members can express concerns and learn from our mistakes.
Moving forward, a critical theme for the council will be that of collaboration. To boost productivity, we as a sector need to do better at collaborating, both horizontally with some of our competitors, and vertically throughout the value chain, from clients to designers to engineers to builders to facility managers. Naturally, we need to allow firms to protect areas of commercial confidentiality, but we can be more explicit in identifying areas where we can collaborate more openly, such as in skills and in health and safety.
This will enable, for example, real change in the adoption of modern methods of construction, and will create a stronger voice in lobbying government for changes that will allow us to deliver better value for public sector contracts.
So I look forward to doing all that I can to lead the CBI Construction Council towards having a substantive influence on the sector – to help us learn lessons and to drive change.
Carillion was a lesson in the risks of short-termism. If we can remember that lesson and convert it into action, we’ll be moving in the right direction.
James Wates CBE is chairman of Wates Group, the CITB, the CBI Construction Council and the BRE Trust