A Ghastly Mess

10/02/2021

I have recently re-read Sir John Egan’s report ‘Rethinking Construction’ which was published 20 years ago in 1998. Sir John was ably assisted by a ‘task force’ of construction industry experts and amongst many of their excellent recommendations (better working conditions, improved health and safety, standardisation of components – to name but a few) were suggestions that productivity should improve by 10% year on year, capital cost should reduce by 10% year on year and construction time should also reduce by 10% year on year.

Well, at the risk of sounding somewhat negative towards Sir John and his ‘task force’, I can’t begin to comprehend how this was supposed to be achievable. I admit that I have had to reach for my ‘O’ level (they’re like GCSEs – but older) maths text book for some assistance, but by my calculations a project that took 100 weeks to complete in 1998 ought (according to Sir John’s aspirations) to be completed in a little over 12 weeks in 2018! And the £10 million price tag should be £1.2 million in today’s money (ignoring the effects of inflation).

I fear that the admirable intentions with regard to improved productivity, reduced capital cost and reduced construction periods about which Sir John and his chums waxed lyrically, were somewhat mis-placed; and I will explain why.

Firstly, Construction is not at all like other industries where we might be manufacturing thousands of identical widgets (or Jaguar cars for that matter) and sending them whizzing along a conveyor belt. The challenges in the construction world are very different. Each construction project is unique and has its own set of constraints and challenges. The contractor is effectively required to set up the equivalent of a new manufacturing business from scratch each time a new project commences.

Secondly, every brand-new construction project is governed by a fascinating read entitled the ‘Building Contract’. This is the set of rules we must follow in order to administer the work and it has an unusual and unique characteristic. Unlike your common or garden Contract, the vast majority of ‘Building Contracts’ include an express right to change the original scope of works. It could be said that the Building Contract is the chameleon of the contract world. It might start life as a bargain to build a house in 20 weeksandendupbuildingtwobungalowsin30 weeks – and it is all perfectly permissible without fear of vitiating (it means wrecking, destroying, messing up or scuppering) the contract.

Thereby lies the root cause many four woes in the construction industry. The customer is allowed to change his mind time and time again. He can omit work, add work and change work willy nilly – and there is little that the hapless builder can do to prevent it.

The upshot of all this change is very often that a ghastly mess ensues. Additional tradespersons appear on the site, subcontractors are delayed and disrupted, the original sequence of work disappears out of the window (which in all likelihood was originally a UPVC window and changed on a whim to hardwood – which is on a 15-week delivery period) and the intended ‘order’ is replaced by ‘disorder’…

Could we fundamentally change the nature of construction… “in short, we have a ghastly mess” as Mary Poppins’ employer once said.

Of course, all of this is catered for by the Building Contract and there are steps that can and should be taken to avoid things deteriorating into a ghastly mess. Procedures are in place that deal with changes, extensions of time and loss and expense (in various guises depending on your form of contract). So, whether you are a Client, a Contractor or a Sub-Contractor you really ought to ensure that your staff understand what is required to protect your interests.

Even if your staff are properly trained in the dark arts of successfully administering the Building Contract (Pyments is able to do this for you incidentally) it is time-consuming and fraught with difficulties. Considerable time and effort is required to manage and avoid potential disputes.

A heavy burden is placed upon construction staff to keep the requisite good quality, contemporaneous records and to give the correct notices. Of course, failure to give notices can be potentially disastrous; a Contractor may lose otherwise legitimate entitlement to additional time and money for delay and an Employer may be faced with making payment of an interim or final application for payment irrespective of whether or not the correct amount has been claimed.

If it all goes belly up there will be disputes to resolve and claims to prepare or defend. In the absence of the requisite good quality, contemporaneous records and the correct notices you will be faced with trying to make a silk purse out of a sow’s ear.

If your own staff are struggling with any of this Pyments can help. We strongly advocate a policy of dispute avoidance by early deployment of the appropriate resource. However, if you do end up with a ghastly mess we can assist with the ‘silk purse’ thing as well.

One final thought: Could we fundamentally change the nature of construction such that buildings are designed 100% prior to starting work on site? Could we change the Building Contract to prevent the customer from changing his mind?

Well… call me a pessimist, a defeatist, a cynic or a prophet of doom if you will, but I fear not. In my view Sir John’s aspirations of year on year improvements in productivity are unlikely ever to be realised. In my experience the industry suffers from a general lack of the discipline required to manage change successfully. And without discipline – as George Banks observed “- disorder! Chaos! Moral disintegration! In short, we have a ghastly mess”.

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