A Catalyst for Change

Continuing the theme of change and the effect of recession as a catalyst for change, what have I noticed since being back in the UK?

The most noticeable change is the ever increasing influence of contractors who seek to build stronger direct relationships with clients who in turn seek more reliable outcomes in terms of delivery dates and out turn cost. This makes perfect sense simply because they are prepared to take more risk than consultants by agreeing a fixed price for delivery by a fixed date. Consultants on the other hand provide advice and information but do not provide any certainty.

The recession has accelerated this change as contractors seek turnover in a shrinking market and are prepared to work for smaller margins delivering profit through volume. Risk is still an issue but they have learned quickly.

Contractors responded well to the criticisms levelled at them during the years of CM/MC procurement and moved swiftly to design & build solutions – a full 180 degree swing from little or no responsibility for outcome to full responsibility but they have reduced risk by realising that design information is the key to success.

During my days working as a QS for contractors delivering JCT lump sum contracts there was a total reliance on information flowing to them from consultants over whom they had no control so my job was to identify mistakes and conflict, and prepare claims for additional time and cost which in truth was often not difficult to do as information was often issued late and/or incomplete. Consultants, in particular QS’s, were only too happy to endorse D&B as it put all post contract responsibility into the hands of a single entity early in the process thereby minimising their exposure and maintaining the cosy status quo. Perhaps this approach is starting to backfire as contractors take control and increasingly become entities who engage design and cost consultants.

A design & build approach works well on a number of fronts but as ever there are issues which need be carefully managed such as:

  • Maintaining quality
  • Delivering best value for money
  • Delivering what was purchased in the contract
  • Novation of design teams to the contractor team.
  • Protecting the clients interests post novation.

This is where those of us who have worked “on both sides of the fence” come into our own as we understand the challenges faced by both the designer and the builder. A “forced marriage” between designer and contractor within a design & build contract does not necessarily solve the problem but does make problems less visible to the client. Such an arrangement can have a negative impact by breaking the special relationship between the client and his architect who now has to answer to his new “master” whose prime focus is time and cost (rather than quality) so as to try and achieve a decent margin. As a consequence pressure is put on the architect to “downspec” to find faster and cheaper solutions which can lead to reduced quality, less value for money and a final outcome that is not what was purchased by the client.

It seems to me that rather than solve problems all we have done is sweep them under the carpet and pretend that all is well. The answer surely lies in contractual arrangements where risk is shared within an interdependent culture such that the client, consultant and construction teams work together and share benefits from successful outcomes.

Nick Schumann

Nick Schumann

Founder and Director at Schumann Consult Ltd
Having built the world’s largest specification consultancy and developed innovative methods for the implementation of new design management techniques Nick is considered to be one of the world’s leading authorities in his field writing, lecturing and providing advice to many industry leaders.
Nick Schumann

Posted on February 19, 2013 in #justsaying

Responses (2)

  1. Rob Garvey
    February 19, 2013 at 10:51 am · Reply

    Nick

    The Government Construction Strategy’s task group on Procurement has sought to understand what drives the adversarial behaviours in the industry. In doing so, the Final Report of the task group (https://update.cabinetoffice.gov.uk/sites/default/files/resources/Procurement-and-Lean-Client-Group-Final-Report-v2.pdf) has proposed three new procurement models, or in your terminology: contractual arrangements.

    Trial projects have been established to test these new models and whilst this is focused on the public sector, it doesn’t mean private sector clients can’t learn. Maybe, just maybe, this is a real opportunity to solve some of the issues and achieve your stated aim of an interdependent culture with different stakeholders working together and sharing benefits from successful outcomes.

    • Nick Schumann
      February 19, 2013 at 6:14 pm · Reply

      That is very interesting – thanks. I will read with interest. I have spent my whole career in the private sector and have never had much opportunity to contribute to things like this – perhaps i should.

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