The Business Case for Collaboration in a Recession – But who buys?

Yesterday I was in London for some meetings (more about them another time) and I was able to go along to an event organised by Bernie Mitchell in the evening at which Don Ward, CEO of Constructing Excellence, gave a talk entitled ‘Never Waste a Good Crisis’ – a great slogan borrowed from the Obama administration and also the title of Constructing Excellence’s ‘Wolstenholme Report’ published in November 2009.

18 months on and where are we? Things are pretty bad for the construction industry in the UK, and we’re still waiting for commitment on the low carbon economy from the year-old government. Don Ward believes that the improvement of existing stock to meet our carbon reduction targets will be our bread and butter for at least the next 3-4 years, perhaps the next 10.

Don’s argument for collaboration was set out for us on a slide very similar to the one I’d seen at his talk to the AEC Network in July 2009, which I illustrated a blog about Facilities Management with last year. The case still stands, the arguments are clear, and yet the problems with getting buy-in remain. Will it come from funders, from legislation or from the grass roots?

Funnily enough we’ve been having discussions about BIM, Building Information Modelling, earlier in the day and the same question rang out. Collaborative working clearly saves money later, but who wants to pay for it now?

I live tweeted the event, below are a selection of Don’s comments that I shared. Also below is a video that Alex Smith, Web development manager at UBM Built Environment, took and posted up whilst the event was ongoing. Thanks for that Alex.

If I get hold of Don’s slides online I’ll publish a link to them so you can see all the pictures.

In the meantime, I urge you to read the report and see what part you can play in a grassroots solution.

You can do more in a crisis than you can in good times

The recession is providing the incentive for radical change in construction

If you think about it, plans to reform the construction industry began in the last recession.

Constructing Excellence has been benchmarking the construction industry since 1999

e.g 30% safer than 10 yrs ago but 60 people still died on construction sites in the UK last year – long way to go

Cost and time predictability is a problem, but only half of the problem is client variation. The rest is the inefficient industry

High value, high risk sectors of construction recognise the importance of collaboration

When the market turned, focus turned from integration, respect for people, value and sustainability

Collaborative working key principles: 1 Leadership Vision, 2. People issues/soft skills, 3. Process measures (business efficiency)

The construction industry is hugely segmented – 95% of workers work in firms with 5 people or fewer – Don Ward

So… to ensure selection by value not price, need early involvement, common processes, measurement, long term relationships

In construction we are brilliant at destroying teams – what a waste – Don Ward

It makes more sense to have long term relationships and measure performance to get continuous improvement – how?

Allign your contract terms, your values, behaviours through modern commercial arrangements

Three card trick: You’ve paid less for a better building, and I’ve made more money doing it. QED

Threats in the recession: people will start sweating assets and upgrading property instead of rebuilding – for 3-4 or 10 yrs

Don Ward now explaining how and why framework agreements didn’t deliver efficiencies

An industry that needs to sue its client to make money is difinitively dysfunctional

Construction is regressing back to lowest tender price – the place that makes no sense for a client to be

Spend a pound on construction and it injects £2.84 into the local economy

Invest £1m in an office building, costs £5m in operation & maintenance in 20 years. But pales against the business costs of £200m

The value of customer outcomes far outweighs project costs – look at the whole picture and spend more in advance

Improve your staff’s productivity by 1% through a good building well designed and you can get your building for free

Who else is going to save the planet if it isn’t those responsible for the emissions from our buildings?

Discussion about short term views of the estate agency business and property development

Talking about ‘The Secret Life of Stuff’ by Julie Hill

Talking about the materials science debate in construction re carbon reduction targets

Actually the materials issue can be solved simply by good efficient design

Now discussing whether putting up the cost of energy will really result in changes to behaviour

Bob Pinkett is giving a withering description of the effects of price driving down the construction procurement process.

Talking about how to get change from the ‘dive for the bottom’ culture – must be a grassroots movement

How to persuade people to look at the long term outcome? Collaboration must happen throughout the process.