Developers will never deliver better public spaces if they see construction as a nasty diversion from the real business. Thankfully, a new guide tells them how to get involved
“It's just a mucky little process we have to go through.” This is the attitude to construction that commercial clients all too often take, according to David Crump, head of project management and construction at developer Quintain.
The commercial market has been hit badly by a downturn of demand for space since 2000, and especially since 9/11. Economic uncertainty and poor market conditions forced US giants such as Cisco, Morgan Stanley and Credit Suisse First Boston to shed millions of square metres of space in the worst hit of the UK markets, the Thames Valley and central London. Occupiers were left with vacant space caused either by redundant staff or surplus space that was rented but never needed.
City and West End agents were left with little to do - there were barely any potential occupiers to show around the empty buildings, and very few deals.
The rest of the UK also suffered, but it took a softer blow because the regions are simply not affected by the cyclical peaks and troughs that bless and blight the south-east of England.
Road to recovery
2004 showed signs that the market was tentatively on the road to recovery, backed up by research from property services companies CB Richard Ellis and Savills.
Good news, of course, for both developers and contractors. This presents more opportunities for a hungry construction market that has relied on a strong flow of public sector work to offset the decline in commercial activity.
After 9/11, ideas about how buildings should be designed and built changed, and building regulations are also set to have a significant impact. Crump argues that the client, as well as the contractor, has a responsibility to change the construction industry, and should serve as a catalyst.
Quintain is working on the £1.3bn redevelopment of Wembley, next to the new national stadium in north London. It is one of the first companies in the commercial sector to adopt the principles of the ICE Demolition Protocol regarding the recovery and recycling of materials.
In one of the demolition contracts in place on the scheme, a massive 80% of the resulting materials will be reused.
Crump stresses the importance of a collaborative approach to projects. Trained as a contractor himself, he is a firm believer in respecting the construction industry and refuses to condone the tendency of clients to dump all the risk on contractors. This doesn’t make sense, not least because developers “fork out every penny to deliver a project,” says Crump.
He has put his money where his mouth is and has used the NEC ECC form of contract at Wembley, which means that clients and contractors share the pain of a delayed project and, on the flip-side, the benefit of finishing ahead of budget.
But it’s difficult to trust people. Crump says that while he often relays confidential commercial information to his construction partners, he understands why it doesn't always work the other way around.
“The ‘cover my butt’ culture has yet to be fully broken down and I don’t always get the same honesty returned. If the industry is really going to change for the better, the dinosaur method of management by fear and humiliation must be put to rest.”
Clients and contractors need to work together with Constructing Excellence, which champions the idea of best practice and research and innovation within the commercial sector.
The cross-industry networking that CE is calling for is slowly being taken up but many have not engaged as widely as Quintain.
The Construction Clients Group (CCG), which was launched in April 2004, is a good example of how both public and private sector clients are engaging and seeking better communication with the construction industry.
Christopher Morley, CCG’s executive director, says that the organisation is now in the black and has a swelling membership that includes developers as well as the Highways Agency, the NHS and, recently, English Partnerships.
Morley agrees with Crump's point that change must be driven by both clients and the contractor: “Partly the clients can become better educated, but the construction industry also has to ask the right questions,” he says. “We're trying to aid that communication process.”
New framework for the client relationship
CCG has been working closely with Constructing Excellence and has produced a Clients Charter which informs clients about the sort of issues they should be thinking of. These include leadership, working together and respecting people. It was created by clients for clients and has received backing from the construction industry and government. The intention is to create a framework for the relationship between a client and its project team.
The Charter looks at specifics. For instance, it advises clients to appoint a project manager from within the company no matter how much outside help they intend to buy in. It highlights the importance of collaboration between client, designers, contractors, and other stakeholders. It advises on planning, noting that a project is more likely to receive permission if it responds to the social context.
While some of these points may seem obvious, Constructing Excellence has revealed statistics to show that by implementing the principles of the Charter, clients can actually make a measurable saving to bottom line numbers. It is not simply a matter of creating a better world through team-work and respect: it makes a good business case.
According to CE, projects where the principles are used cost 6% less than the industry average, and are 30% more productive.
Perhaps of greater note is CE’s finding that projects using Charter principles are 19% more predictable in cost and 29% more predictable in time. Given that one of the biggest criticisms of the construction industry is its tendency to run over budget and behind schedule, Morley believes it would be foolhardy for the commercial world to ignore the Charter, because “predictability of costs is massively important to clients.”
At this stage, change for the better is being driven by the big players.
“Inevitably it is being driven by the big repeat fish like NHS Estates, but we are interested in how we can help the occasional client,” says Morley.
He cites Whitbread as an example of a company where construction is a small part of the business, but pivotal nevertheless.
Coca Cola's biggest cost is sugar, but construction of its distribution facilities can also make a difference to the efficiency of the business.
So clients who refuse to place much importance on their relationships with their construction partners are missing a trick. Construction is not just a mucky little process, but if managed appropriately, one that can affect a company’s bottom line.
The five principles of The Construction Clients Charter
1 Define the business need and how the built asset has to function, and set out the objectives that have to be satisfied for project success.
2 Prepare the business case by comparing alternative ways of achieving the objectives. Understand whole-life costs, risks and the required timescales.
3 Apply practices for selecting and appointing all the construction team that ensure their joint, early and effective contribution to meeting your project objectives.
4 Assess tenders from potential construction team members and negotiate with them to achieve a team who will collaborate together and will commit to meet your project objectives.
5 Control the design and construction of the project through a project manager (or project sponsor) from within the client who is involved, active and demanding.
Measurable gains from applying the Charter principles, according to Constructing Excellence:
1- Projects using Charter principles cost 6% less than the industry average.
2- Projects using Charter principles are 19% more predictable in cost and 29% more predictable in time.
3- The rest of industry is 2.7 times more dangerous to work in than Charter projects. This costs 8.5% of turnover.
4- Charter projects are 36% more productive than the industry average.
5- Projects using Charter principles achieve 20% higher satisfaction for clients.
6- Projects using Charter principles have 34% fewer defects than the industry average and a 74% lower impact on the environment.
Constructing Excellence 2005
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