Way back in 1994, Building asked Sir Michael Latham to explain his controversial Rethinking the Team report. Ten years after its publication, we can see that it marked a watershed in the industry’s culture … but how does its author feel about it?
It is exactly 10 years since the publication of Constructing the Team and it is sobering to realise that nine out of 10 firms in the construction industry have never heard of it. Most contractors and consultancies are small. They concentrate on the daily slog of finding work, doing it and then trying to get paid. They work directly with a client who is either a householder or a small trader, and who is totally “uninstructed”, on a one-off project or basic maintenance requirement. The client simply wants the job done as quickly and cheaply as possible. When people write to Building saying that Sir John Egan, Lord Foster or Sir Michael Latham do not know what the industry is really like, they mean that we are not involved in tiny building or consultant firms. That is true, but we run big ones and often employ little ones.
Here is another sobering story. A distinguished architect, whose name often appears in Building, addressed a group of young designers in his large practice last year. He asked them who had ever heard of Sir Michael Latham. Not a hand was raised. He then asked them who had ever heard of Sir John Egan. A few hands were raised. These young people had joined that eminent practice to design. Procurement, best practice, contract conditions, value management – such issues do not appear on their radars. They would probably regard them as coarse interferences with creative art.
I can understand that. Collaboration to produce a team does not come easily to the fragmented construction industry. One distinguished professor of business management regularly writes that power structures are what drive business and that partnering is inherently uncommercial. About 13 years ago, a leading exponent of collaboration wrote an excellent book on partnering. When it appeared, a prominent business magazine declined even to review it because the editor said that collaboration and teamwork had no part to play in a commercial environment. Every serious supporter of partnering knows that there are many doubters, not just about whether collaboration will work on their project, but whether it happens on any project.
If i had to write constructing the team again, i would lay more stress on partnering
Sir Michael Latham
Well, it does. If I had to write Constructing the Team over again, I would lay more stress on partnering. While teamwork and collaboration are at the core of the report, partnering is mentioned briefly. I thought it might be a step too far for the industry and its clients in 1994. Ten years ago, the whole atmosphere was immensely adversarial. Persuading clients or the supply side to contemplate working together on an integrated basis was a tremendous challenge. To do so on a genuinely open-book basis, where client and main contractor agree on preliminaries and overheads at cost and then built up a predetermined margin, was something that most 1994 participants would have thought fanciful. It was happening then in the USA, led by the Corps of Army Engineers, but the very word “partnering” was barely known in Britain. In retrospect, I should have been bolder and advocated it as a prime recommendation. However, the collaborative message was taken up by professional clients and the supply side from my report. It was emphasised by the Egan report four years later, which made partnering a key feature. It is now widely accepted and here to stay.
There is still much to be done. Reform never finishes. But the bigger players are now committed to a better way. The next 10 years must see the message and its benefits passed along the supply chain, involving materials manufacturers and subcontractors, and thereby dramatically widening the delivery of team working. I only hope that by 2014, when I am 72, I will no longer be addressing partnering seminars. If the message still needs preaching then, it will be time for another Latham/Egan report. Any volunteers?
What happened to those key recommendations? Marks out of five for Lathams' top 10 ...
1 - A fresh construction bill ought to be drawn up to outlaw onerous contracts and force clients to put project money in trust funds
On the whole it's been successful, but that isn't to say there shouldn't be tweaks - which the review I'm heading into the Construction Act will look at. The act didn't go as far as I wanted. It didn't establish trust funds. Latent defects insurance would still be highly desirable - I think that will come into the industry eventually, when clients want it.
2 - A forum ought to be established urgently to provide clients with a strong voice in the industry
The forum has changed names a couple of times. I never saw it as a large bureaucratic body. The Construction Clients Confederation was too regulatory. The body ought to be an informal sounding board for the private and public sector bodies to talk about what they want from the industry.
3 - Government departments should commit themselves to becoming model clients by the end of the parliamentary recess
The practice among departments has been varied. Defence Estates set up prime contracting. It's certainly talking the talk, but I'm not sure it's walking the walk. There is still quite a long way to go but it's a lot better than it was. The Procure 21 initiative on the health side has been slow. A question mark hangs over that. The Highways Agency has become a successful client.
4 - New client members should be drafted on to the Joint Contracts Tribunal and the members' right of veto scrapped
A big tick. They did what I recommended.
5 - A new family of standard contracts based on the NEC should be introduced. One-third of government departments should change to using NEC in the next four years
The NEC contracts were completely revised, which adhered to my regulations. There have also been other contracts introduced since, such as PPC200, that have been very good.
6 - Clients should implement a new regime with milestone payments. They should also scrap retention payments and replace them with bonds
There are some milestone payment regimes in place but it still tends to be monthly evaluations. I think retentions will disappear in a few years.
7 - The industry must improve its efficiency (reducing real construction costs 30% by 2000)
Since my report, Sir John Egan called for an even bigger target - to reduce costs by 10% a year. I don't think anybody knows whether we reached it or not. However some of the figures produced by the M4I demonstration projects have shown substantial improvements.
8 - Clients should choose on quality as well as price
That's now done substantially in the public sector. It was hardly done at all when I wrote my report. We do not have enough evidence to gauge the private sector but I think it has improved, especially among big clients.
9 - The image of the industry must improve
Some improvements have taken place, such as National Construction Week. The outreach to schools is much better. But there is still a lot of negative publicity that surrounds the sector over dodgy tradesmen. I am still not convinced that registration schemes such as ISO 9001 or the quality mark, which I did not recommend in my report, produce improvement on performance on site rather than in offices.
10 - The government must improve public sector project managers
That has happened. The government didn't know what project managers were 10 years ago.