PPP agreements have been successful in getting public facilities built but there must be controls so that flaws - like the ones that caused a brick wall to collapse in an Edinburgh school - are prevented
The replication of problems across cookie-cutter construction projects doesn’t just highlight an issue with public private partnership (PPP) deals, but also for the industry’s whole approach to designing and constructing buildings.
You might think that flaws leading to dangerous defects in a completed building are a project team’s worst nightmare. But, in fact, it could be worse – if the same defects are repeated across dozens of buildings which were all built through the same process.
This is the unfortunate situation that is unfolding in Scotland, after an issue that resulted in a brick wall collapsing at a school in Edinburgh led to an investigation that found problems in the external walls of 16 other schools in the city, all built under the same public private partnership (PPP) agreement. This led to the temporary closure of the schools.
An independent report carried out for Edinburgh council concluded that the cause of the collapse was “poor quality construction”. It also made the wider observation that: “While the financing method, in itself, is not to blame, it is the view of the Inquiry that aspects of the way in which the PPP methodology was implemented on these projects, in common with many other PPP projects, in terms of how it addressed the design and construction processes, did increase the risk of poor quality design and construction.”
The debacle has prompted fears about the potential scale of the problem, and whether other PPP schemes like hospitals and Ministry of Defence buildings could be affected. Clearly, this represents a significant area of potential financial liability for large construction businesses, their insurers, and potentially their customers.
With the government’s roll out of a revised private financing model, PF2, due to commence shortly, it is time for the industry to confront some difficult questions about PPP agreements. Most pressingly, what level of quality control is baked into these agreements, and what can be done to evolve the process to help prevent incidents like that in Scotland, and the resultant commercial fallout, from occurring again.
A good starting point is to identify the conditions that permit, or indeed cause, these problems. These largely boil down to time and cost pressures.
Often, the demands of pitching for a contract means a huge amount of time pressure is placed on project teams at a very early stage in the process to come up with a design that delivers on the commercial requirements. Sometimes, this can mean poorly thought through design decisions that can come to cause problems at a later stage.
How do we create a system that safeguards quality control?
Consultants and designers are well versed in working to tight deadlines and, in the vast majority of cases, designs are problem free. However, developers need to ask themselves whether the added risk that will inevitably be involved in truncating key design phases is justifiable, given the potentially very serious consequences when something does go wrong. This is even more important when the stakes are raised from a single building to a design that is to be replicated many times over.
The second and equally crucial factor is cost pressures. It is commonplace in commercial design for a designer to specify construction and engineering methodologies, only for them to be rejected by the contractor building the project on the basis of cost. This value engineering process amounts to contractors – who are subject to their own commercial demands – forcing decisions to make the overall project more competitive. Again, this causes the likelihood of problems to increase. Often, where an option is cheaper, it is cheaper for a good reason, and some degree of compromise around quality of material or process has been made to bring that cost down.
So, how do we create a system that safeguards quality control, and where does the responsibility for making these changes lie?
Ultimately, the responsibility for this rests at the highest levels in the industry.
On the one hand, those who manage projects at a senior level need to make sure they are encouraging an ethos of attention to detail and spending time at all points in the project to make sure everything is done correctly.
We are starting to see action on this front already. In fact, many large contractors now appoint figureheads in roles - such as project improvement director, whose responsibility it is to lead from the top when it comes to quality and attention to detail.
On the other hand, there is also a responsibility on the part of the bodies that commission and ultimately finance the projects. There must be a recognition by these public bodies that if they want to have a project at the end of the process which is going to be fully free from defects then focusing exclusively on the bottom line is not the way to achieve this. They need to encourage their contractors to be honest about the time and costs required to deliver a quality building. If the commissioning bodies continue to allow themselves to be seduced by unrealistically cheap offers, they will also continue to be hit with unforeseen costs and, potentially, dangerous and very expensive defects.
The industry needs to start to recognise that a failure to invest properly up front will only result in a long trail of costs in the future.
PPP agreements are hugely important to the construction industry, and they have also proved immensely successful in allowing much-needed public facilities to be built. Yet, clearly, nobody wants to see a repetition of the very difficult situation that is still unfolding in Scotland. We can only hope that the difficult lessons it has, for both the industry and for commissioning bodies, are learned.
Paul Lowe is an associate in the professional risk team at Weightmans