We are now half way through our review of the ten most important themes to be adopted by those wishing to achieve integrated collaborative working in the modern construction industry. We have looked at the drivers of the industry and asked how effective it is in meeting its customers’ needs. In particular we have questioned the appropriateness of the traditional and most frequently applied sequential ‘design – contract – deliver’ process and asked if this is helped or hindered by the procurement activity that supports it. Having made some suggestions along the way for things to consider to improve the situation, this blog will shift the focus to addressing change as a strategic objective in its own right.
How far have we really got?
Now it’s not for us to tell you that you need to change, that is entirely your decision. If you think the lessons from Building Down Barriers, FUSION, HEX and Terminal Five to name a handful of high profile demonstrations, are now fully imbedded in the industry, then you probably don’t see any need for a radical change programme. However, if you note that most of these initiatives are from the 90’s, are still mostly unrepeated and that Latham’s 1994 report ‘Constructing the Team’ still describes the way things are usually done, then you may see a different perspective. Granted the infrastructure folks have been doing a sterling job in adoption with initiatives like Project 13 at the peak of a significant amount of collaboration and alliancing, but it’s still far from becoming the norm especially for building and housing where collaboration is more likely to be promoted than actually achieved.
This blog is for those who, like the CW Champions, believe that whilst the construction industry has become aware of the need to integrate and work more collaboratively, it has so far failed to achieve a significant enough transition to suggest this is about to become the norm any day soon. If you are not one of those, then do read on as you may still find the suggestions useful but let us make one final attempt to convince you that the amount of change so far achieved is rather less than we would like to imagine, with this 1683 quote from Marshal Vauban Chief of Fortifications for Louis XIV who wrote;
“In recent years a considerable number of projects have not be finished, nor will they be finished. This disorder, Sir, is caused by the depressing prices frequently obtained for your works:…..these cut prices are illusionary, especially as a contractor who is working at a loss is like a drowning man who clutches at straws. In the case of the contractor this means he does not pay his suppliers, cheats everyone he can, underpays his men, getting the worst, not only using the most inferior material, but quibbling over everything and always begging forgiveness for this and that. Abandon this, re-establish good faith, give the estimation of the works and do not refuse a reasonable payment to a contractor who will fulfil his obligations. That will always be the best transaction you will be able to find”
Obviously we have moved on but far enough given over 330 years’ worth of opportunity? And why might that be?
Primarily because real, sustained and particularly holistic change is very difficult to achieve. As change agents you can spot us in a room, we are the ones with the flat foreheads obtained by repeated banging them against the same brick wall (see blog #2 if you want a reminder of which brick wall). We know that first you have to raise the awareness of the need to change, then you have to find or become the champion to lead that change and finally you have to hope for a “perfect storm” in order to deliver it. This means a time when all the interested parties, the advisors, supporters, blocks and stoppers all collectively agree that the time for change has come. The larger an organisation the more difficult it is to get the necessary alignment and if this becomes societal – like Brexit, you begin to wonder if it is ever possible to reach consensus on if and what change is necessary, let alone how to achieve it! Generally it takes some kind of crisis to deliver the necessary alignment, like a natural disaster, war or financial collapse and then the new direction will suddenly emerge with little ability to manage our part in it. Some say construction hasn’t experienced the necessary crisis, some say it’s here now.
We say you can either be a part of change, helping it to form the direction you want to experience, or you can sit back and leave it to others and hope the new norms will be in your favour. So if your prefer participation to voyeurism what should you do?
Model for Change
In 2002 Accelerating Change was published which included the following model developed by the forerunner of Construction Excellence.
The change model says that the starting point for industry change is to focus on the needs of its customers. This seems such an obvious starting point, especially if you look at how other industries have developed and improved and yet large swathes of our industry have differing objectives.
For example, the primary contractor’s business model has been built around the exploitation of clients’ money to re-invest in self-owned high profit ventures. Perhaps you weren’t aware of this, so let’s explain how it works. A contractor who wins a project is paid by the client to deliver it. If this money can be held on to, i.e. paid much more slowly to the supply chain, then the contractor’s activities can be funded almost entirely by the client.
The contractor aims to make a small profit on this turnover of client money. If the turnover is sufficiently large enough then these small profits accumulate to provide the funds to invest in the contractors own developments, where they seek to make a much larger profits. So long as they continue to win client projects there will be a flow of cash to invest in these higher return projects.
Thus we get the scenario where large contracting organisations will choose turnover, introduce ridiculous late payment strategies and feed off the profits made through their own developments until either there is a downturn and they are forced to ‘buy’ turnover at a loss to maintain cash flow, or their own developments fail and suddenly we are all “shocked“ at the demise of another multinational, even though it is entirely predictable, if not inevitable.
Changing the Game
If we can repeatedly meet the needs of the customer, we will have a much better chance of differentiating ourselves, adding value to the customer’s purpose and achieving superior returns – but only if we collectively eliminate the playing field which allows, if not encourages, low profit tendering that undermines the attempts of those organisations who swim against the flow in seeking to offer genuine value added propositions.
This is going to require a different mind-set if we are going to achieve it. Most change is what is known as adaptive, that is small increments which are then fine-tuned before another incremental change is applied. We need holistic, radical and disruptive change if we are going to put construction on an entirely different footing.
The change model says that we need the alignment of a shared vision which is led at all levels. It then says we need to focus both on the adoption of common processes and tools and of achieving a collaborative culture and behaviours. To date we have tended to put all our eggs in the process basket. Relying on contracts to drive change and on tools to control actions and ‘realign’ those who aren’t doing what we wanted from them. Supported by separate blame based insurances, we attempt to manage industry fragmentation through a big stick approach, penalising those who make mistakes, misunderstand the needs, or fail to deliver despite their best attempts.
We have woefully neglected the cultural and behavioural issues that mean even in projects assembled through the worst examples of the sequential process, it is still possible to enhance the outcomes by working closer together and negating as far as possible the endemic fragmentation.
Note the fulcrum at the bottom of the change model. That’s there to suggest it’s only possible to achieve sustainable improvement if there is equal attention paid to both cultural and process issues throughout. But equal attention is not sufficient, it is time to recognise that the process focus has an inherent negative influence on our ability to change and collaborate.
So we have to decide what to do, if we think the behaviours that currently drive our industry are the right ones then we can carry on with business as usual. But if we think it is only through the adoption of genuinely collaborative and inclusive behaviours that this industry can achieve what it is truly capable of, then we ought to find a way of facilitating these behaviours.
If we are brave enough to replace the sequential fragmented process with its separate blame based contracts and insurances with a radically new delivery model, we will have the chance of creating an industry that is unrecognisable to Marshal Vauban. An industry characterised through collaborative alliancing and driven by the efficient use of information, in which offsite manufacturing is the norm and all parties are incentivised to achieve a common outcome in a no blame environment, which is underpinned by an integrated insurance that protects the collectively team and the project in the event of a problem. Then we may finally have an industry where needs are paramount, a fair price is paid for a fair outcome and superior value is available to all when superior outcomes are achieved.….. and it should be lots more fun too!
Behavioural Changes to Adopt
- Ensure you invest as much effort and energy in achieving cultural and behavioural change as you do in adopting new contracts, methods, technologies and procedures.
- Coach and nurture behavioural change throughout – one collaboration workshop is not going to make the necessary difference.
- Be clear about your change strategy.
- Make sure your behaviours reflect your strategy.
- Ensure your partners behaviours reflect their stance on change – saying you work collaboratively is not the same as being collaborative.
- It’s never too late to benefit from working collaboratively, but if you want maximum benefit it needs to start at the beginning.
- Adopt a radically different process if you want a radically different outcome.
- Don’t expect people with different contractual obligations to have aligned objectives.
- Recognise the imbedded part that blame plays in the utilisation of construction insurances.
- Remember Newton’s Third law – For every action there is an equal and opposite reaction; you have to exhibit collaborative behaviour if you want others to behave collaboratively with you.
With thanks to Keith Hayes (Graham) for continued feedback.
Chair and Coach of the Collaborative Working Campions of Construction Excellence and Founding Director of Integrated Project Initiatives Ltd, the creators and delivery organisation for the Integrated Project Insurance (IPI) Delivery Model.