Sir Michael Latham The business and enterprise select committee’s proposal for a chief construction offer has been taken up. Now we need to push for integrated teams
In my column on 15 August, I wrote about the business and enterprise select committee report on the construction process, and commended its proposals for client leadership and the appointment of a chief construction officer, the second of which the government has agreed to already.
The report also made important recommendations about integrated teams, and I want to look at those today. The committee drew attention to the fragmented nature of the construction industry, with much of the work subcontracted, or indeed sub-subcontracted, out. The various groups on site then think in silos. The view is, “this is my work and I are not bothered with what he is doing, unless he gets in my way, in which case I will claim an extension of time”.
The report said that between 15% and 20% of a project’s costs could be saved through more integration.
One of the main weaknesses of traditional approaches is that specialist engineering contractors, and others concerned with detailed design, are not involved at an early stage, along with the main contractor and the architect or engineer. As a matter of hard reality, neither architects nor consulting building services engineers can work out the nitty-gritty details of mechanical and electrical systems. Those details need to be arranged by specialists. If the M&E contractor is not involved at an early stage, the likelihood is that there will need to be a redesign or reworking later, which will add to cost and cause delay. On the other hand, if specialists are involved early, before work starts on site, they can say to designers and the main contractors, “that won’t work like that, but if we do it like this, it will be much better”, and cut out aspects that do not add value.
The view of the various groups on site is, ‘this is my work and I are not bothered with what he is doing, unless he gets
in my way, in which case I will claim an extension of time’
Sadly, one of the reasons for inadequate team integration is that clients and main contractors have not demanded it. Some top-class clients, such as BAA, do insist on it, but others, including some large-scale professional clients, simply want to build for the lowest cost, and even if they may have chosen their main contractor on a partnering basis, they have not required it throughout the main contractors’ supply chain. The main contractor may have chosen its subcontractors based on lowest tenders, rather than as partners in their framework, and the first-tier subcontractors will then have passed the risk down to their own sub-subcontractors. That means that the tenders of subcontractors are probably below a feasible price, and so the teams on site will be looking for their margin through claims and variations. That is not an integrated team, as the Specialist Engineering Contractors’ Group and the National Specialist Contractors Council told the select committee.
Integration is a requirement of the new construction commitments, which are backed by the Strategic Forum. Clients, including public sector ones, should remember this at the earliest stage of planning a project. It is also something that the chief construction officer should demand from all central and local government departments and the NHS, to avoid unnecessary expenditure. The select committee rightly says that the government is missing tricks over this, and losing the chance to have a more efficient and better quality project as a result.
When I wrote Constructing the Team in 1994, I knew that I had to make recommendations about existing contracts.
In those days JCT 1980 did not include any subcontracts other than the (rapidly disappearing) nominated subcontract. The CCSJC documents ICE6 and 7 were in direct competition with the New Engineering Contract, though both were drafted in the same building by the Institution of Civil Engineers.
Some top-class clients, such as BAA, insist upon team integration, but others, including some large ones, simply want to build for lowest cost
Things have changed a lot since then. The NEC/ECC contracts are now increasingly used, as is PPC2000. My own company, Willmott Dixon, uses both those partnering contracts regularly, and we find them very helpful. I also endorse the JCT/CE
Partnering Contract, as does the select committee, and I hope that it will be widely taken up.
The report rightly recommends more use of collaborative contracts, and says that the Office of Government Commerce should take the lead on this. It is only 14 years since I recommended the same in Constructing the Team.
So, overall it was an excellent report by the select committee. Agreeing to appoint a chief construction officer was a good start, but now it is up to the government, as a major client, to implement the rest of it.