The new legislation will change the industry for the better, and not a moment too soon
Should we be shocked at the evidence emerging from the ongoing Grenfell Tower Inquiry over the past few weeks? Rydon has provided detailed information on a range of issues related to the refurbishment, in particular how the design and build contractor relied on specialist subcontractors for design expertise, how it under-reported potential savings to its client to make up for its own “adding-up error” in the bid, and how it expected building control to check safety issues.
Given that we know about the terrible loss of life caused by the fire at Grenfell Tower, it has been hard to listen to at times, but for those experienced in the way construction works – and especially the way design and build contracts work – it has perhaps not been that shocking.
The truth is that much of what has been said so far by witnesses who worked on the building is not even that surprising – it is, to many who work in the industry, all very familiar.
Design and build, for example, which has come under close scrutiny, is widely used and reflects the very fragmented nature of the industry. It is not unusual for the main contractor to have a long supply chain and then take a managerial role organising the various specialists who do the actual work.
Then there is value engineering – the practice of making efficiencies but which is often just a euphemism for cost-cutting – which is widespread; indeed it is often expected. Clients often insist on sticking to an unrealistic budget and to win the work the whole supply chain from top down is propelled into a lowest-cost downward spiral, which can mean swapping specified products for cheaper ones, providing less site supervision and generally finding ever more inventive ways to cut corners. In short, the client asks for a cheap solution and the project team finds one.
How do you tackle this lowest-price culture? You cannot, or at least individual companies find it very hard to make a stand. Hence the perennial problem of main contractors’ low profit margins. And now covid has dealt a further blow, darkening the economic outlook with the prospect of the worst recession in living memory – one from which some forecasters do not expect us to emerge for years.
The government is now cracking down, which means it will not be up to individual firms to choose to do the right thing: they will be forced to or face tough sanctions
Underbidding is getting worse, with reports of ridiculous bids just to win the revenue. Increasingly, contractors are sacrificing profit for turnover, hoping presumably to claw back some cash once on the job through the usual routes of making claims or the dreaded product substitutions.
We may also be about to lose talented and experienced professionals from the industry as redundancy rounds start to take their toll (although, as an aside, there is some hope on this front in the form of the much welcomed Talent Retention Scheme launched through the Construction Leadership Council).
You would think the chances of safety becoming the top priority in this context are slim. But that would be to ignore the draft Building Safety Bill published last week as a direct result of the Grenfell disaster and intended to make sure another catastrophic building failure never happens again.
Key reforms in the bill, which have been expected, include the introduction of a building safety regulator that will oversee regulations of all high-risk residential buildings and the duty holders who have to ensure compliance with building regs. There are also the three gateways through which projects must pass at key stages in order to ensure compliance. As part of this, a whole new competence framework for the professions and trades is being developed.
These reforms are fundamental and far-reaching, if slow in coming – secondary legislation is required before certain measures become enforceable, meaning they may be some years away. After decades of deregulation, the government is now cracking down, which means it will not be up to individual firms to choose to do the right thing: they will be forced to or face tough sanctions, including up to two years in prison.
As Dame Judith Hackitt said last week on Building, it seems that some people need rules imposed on them before they will behave properly. Perverse incentives and flawed business models have blighted parts of this industry for far too long, and it appears that now the only way forward is to force a culture change throughout the whole industry.
For others, however, Grenfell itself may have been their wake‑up call: a “there but for the grace of God” moment. There must be construction firms all over the country asking themselves whether, if they had worked on the same refurbishment job, they would have acted any differently. If the answer to that question is “probably not”, then they are on the first step to realising how fundamentally different – and better – this new building safety regime is going to be.
Chloë McCulloch is the editor of Building