The negotiation skills construction forgot to teach

News that HS2 is renegotiating contracts with its suppliers in order to rebalance risk took my mind back to 2010 when the incoming coalition government declared an intention to renegotiate existing contracts with the contractors on major government projects.

HS2’s contract renegotiations: a familiar problem

My advice was that it would be a mistake. The main reason was the asymmetry of skills between government and the private sector, where I’m pretty sure that government negotiators would leave the room thinking they had come out ahead, while contractors would leave the room actually knowing that they had – probably (tip to government negotiators) as a result of saying “We could agree to that if you would agree to this…”.

It was also relevant that the proposal came from the Cabinet Office, where government’s central procurement resource resides, and my general impression of people bearing the word “procurement” in their government job title was that they were busy destroying value rather than creating it.

This was because they tended to regard procurement as a stand-alone process conducted in a slice of time, with too little attention paid to what was actually being procured, rather than part of a complex system which required them to understand where value resided in the asset or item being purchased and the importance of building relationships with major suppliers.

Indeed, one of the surprises on arriving in Whitehall was to discover that government actually had no central record of who its major suppliers were as far as construction was concerned, leading to having to ask the rather embarrassing question of contractors as to how much business they did actually have with government.

A deal that leaves nothing on the table for the other party is not the triumph it may appear to be

I recall that a major contractor’s response was that there was no shareholder value in providing that information, so they wouldn’t be providing it: as good a measure as any of the general disregard with which many contractors treated their principal client.

We have no way of knowing, of course, whether and how these problems are being overcome in the HS2 renegotiations, but as it is largely our money, it would be interesting to know the general nature of those negotiations, how risk has been rebalanced, what savings (or “avoidance of risk in the future” as it was described to the Public Accounts Committee – not really the same thing) this is expected to generate, and how progress will be tracked to confirm or otherwise that the renegotiations were both smart and bore fruit.

Rather than retreat behind the usual claim of commercial confidentiality, I would hope that any government that is committed to transparency will find a way of insisting that some measurable oversight is put in place – not least to carry forward learning for other projects, to try and break the government habit of each department and each accounting officer demanding the right to repeat the mistakes of their predecessors.

These thoughts then lead to larger musings about negotiation in general, and where and how the necessary skills are acquired. This is not just a question for government (where the answer may well be that it will be included in the contract for half a billion pounds awarded to two consultancy practices - as an interesting footnote to government’s announced intention to reduce spending on consultants: anyone who can negotiate that deal must be worth learning from).

The qualities that will protect people’s future from [AI disruption] are the interpersonal ones - communication, collaboration and negotiation, coupled with sound judgement

But for all but the most simple of purchases (and construction is never going to be that), both the process of getting into contract and then managing it is set with bear traps for the unwary, the inexperienced or the unskilled - but where is that skill taught?

The gap in built environment education

This is relevant to everybody in construction, even those who only have to negotiate their own fees, but as a quantity surveyor (and one still happy enough to be called that - albeit more interested in measuring value than counting bricks) it always struck me as odd that no attempt was made at any point of my professional education to instil the skills of negotiation. To the extent that any have been acquired, it has been through experience, by watching people who do know what they are doing; and above all by having the self-awareness to know when I’ve been outmanoeuvred, and to understand that a deal that leaves nothing on the table for the other party is not the triumph it may appear to be. This calls for another skill: the skill of listening.

So, if those skills can be acquired by experience, why can’t they be taught, and why aren’t they regular modules in the many built environment courses that should send out people ready to hold their own?

This does not just relate to negotiation, but to the many soft skills that are neglected in the classroom but are critical in business, and which mark out those who will get ahead.

While the jury is still out on exactly how disruptive AI is going to be (before it kills us all, apparently), it is surely common ground that it is going to gobble up (or steal) anything that can be learned by rote, and the qualities that will protect people’s future from it are the interpersonal ones - communication, collaboration and negotiation, coupled with sound judgement. These are not so easy to copy; but the problem for educators is that they are not so easy to teach either.

Educators will need new skills too, both to recognise what an AI-enabled world of work will look like and then to show us how best to navigate our way through it. But who is going to teach the teachers?

Paul Morrell is the former chief construction adviser (2009-2012) and lead author of an independent review into construction product testing.