At a time of national crisis the construction sector can be proud of the way it has put self-interests aside and acted collaboratively, says James Wates
September may have brought the return of some elements of normality, but it is clearly not business as usual this year, and the developments of recent days have only added to that sense of uncertainty.
Parts of the construction sector, like much of the economy, are still very much under pressure. We continue to see companies in the supply chain falling into administration, and it was telling that ONS statistics released in August showed that only 28% of construction firms saw themselves as not at risk of insolvency.
Plenty of dark clouds loom on the horizon, too, notably the possibility of a no-deal Brexit and what appears to be a second wave of covid-19.
What a relief, therefore, that in the midst of the initial pandemic crisis this spring, we actually showed ourselves at our best. The Construction Leadership Council (CLC) stepped up and into a key role as a central coordinator of sector activity. As its name reflects, it showed real leadership and delivered what we needed to keep building.
The CLC led the development and continual updating of the Site Operating Procedures, which had a 90% compliance rate and kept some level of productivity going throughout lockdown and then the staged relaxation of restrictions.
The CLC’s statement on payments and contracts issued in April was a brilliant argument for a sensible, collaborative approach, reminding us all that “our actions at this time will be remembered. All firms should think hard about how their reputation could be damaged by not doing the right thing.”
In other words, it was not the time to be squeezing your supply chain.
Collaboration is about sharing the pain, and recognising that fighting for everything can leave you with nothing
Nor was it, or is it still, the right time for clients to be reissuing calls for tender in the hope of getting contractors desperate for cash flow to reduce their prices. If clients want stability in the market – essentially, if they want to keep building – awarding contracts on the basis of lowest cost is not sustainable.
The CLC’s work on contracting for value pre‑dated the coronavirus crisis, but it stepped up a notch this summer and supported the release of the Construction Innovation Hub’s value toolkit. This is a positive contribution, helping clients and the whole supply chain to understand the quality compromises entailed in the drive to lower costs.
Perhaps the biggest accomplishment of this crisis was the CLC’s publication of its Roadmap to Recovery, which is serving as an excellent overview of what needs to happen next. I hope that the working groups tasked with implementing it maintain a focus on the practical steps that are needed and avoid sinking back into our old mentality of narrow interests.
In crisis mode during the spring and summer, we were able to put those narrow self-interests aside and act collaboratively as a sector, not just talk about it.
Collaboration is not just a what, but a how. It is about how we make decisions: based on the health of the whole construction ecosystem.
A collaborative ethos means that we continue to share resources. For example, when we produce materials to help our own teams carry out procedures on site while adhering to restrictive social distancing, we don’t hide them under a bushel. We share them with our trade associations and the CLC.
When we are faced with a contractual disagreement, we take a pragmatic approach. Collaboration is about sharing the pain, and recognising that fighting for everything can leave you with nothing.
The collaborative ethos is about how we treat our partners on routine matters – and I am pleased that the statistics on payment performance released under the duty to report regulation in late July showed that, despite the challenging financial situation many of us find ourselves in, we managed to improve our average time taken to pay invoices, and a larger percentage than ever are paying invoices within the 60 days required by the Prompt Payment Code.
We can be proud of the way that our sector has responded to the crisis. We have recognised that construction is a complex ecosystem and most of us have been making decisions with the bigger picture in mind. We are well advised to keep that mentality as we face continued pressure in the months ahead.
By the time you read this column, I will have chaired my last meeting of the CBI construction council, handing over the reins to Greg Craig of Skanska. Construction is well known for being a fragmented industry, but we have worked hard to ensure that the council is clear on its remit and actively brings together perspectives from across this diverse and amazing sector, which is so critical to the UK economy. I am confident Greg will continue this good work, which is now more important than ever.
Sir James Wates CBE is chairman of Wates Group and the BRE