Civil engineering was once an adversarial industry. Today partnering and collaboration are now commonly used terms, but has the sector really changed and what further shifts are needed?
NCE’s 25th anniversary issue – published in May 1997 – included an article predicting that battles between clients, contractors and consultants would be less prevalent when the magazine celebrated its 50th year in 2022.
So, 25 years later, how have things shaped up? Is there still more to be done?
NCE recently teamed up with Atkins to discuss the projects and initiatives that have successfully fostered collaborative working environments and to consider the ongoing challenges and opportunities for change.
While the need to move towards collaboration and away from adversarial relationships has become increasingly clear over the last 50 years, Laing O’Rourke chief executive Ray O’Rourke feels that many of the issues from the past remain.
“Contracting conditions 50 years ago started out as they are today with competitive bidding and a lot of that still exists today,” he says.
“The big issue is that we are fascinated by procurement and procurement is governed by people who know nothing about construction.
“There is no balance from a contracting perspective as to what is a sensible return. We’re pretending things have changed.”
Cost versus outcomes
Infrastructure & Projects Authority chief executive Nick Smallwood agrees that in many ways the industry has gone round in circles without moving on significantly.
He emphasises the need to focus on people, outcomes and capability.
“The degree of adversarial work here is probably as high as anywhere on the planet,” he says.
“It’s what people are taught to do. As a project manager or director, everything we deliver is through a contract, so contract management is how you deliver outcomes.”
We are fascinated by procurement and procurement is governed by people who know nothing about construction
Arup deputy chair Dervilla Mitchell says focusing on outcomes rather than price is a better way forward.
“Construction still has too low margins and clients consider that value is price,” she says. “As long as they buy on price, they are going to get the cheapest result. We need to move to outcome-based solutions and procure on outcomes, not price.”
The emphasis on cost can exacerbate the adversarial side of the industry, says Buro Happold UK managing director Sarah Prichard. “We’re set up to be adversarial, that is the premise on which we operate. If you want low cost, get people who will give you that but know it’s going to be an adversarial contract.”
Cabinet Office new hospitals programme commercial director programme Emma-Jane Houghton also believes “outcomes are the way it needs to go”, with commercial models incentivising behaviours the industry wants to see and disincentivising the bad behaviour.
The low cost approach is different from many other industries. O’Rourke explains that when he had open heart surgery in 2015 he “wouldn’t have dreamed of going to competitive bidding over the cost” because he had decided that the surgery was important to him.
“The consultants and advisors were able to work out what the cost should be within a range,” he says. “If we [construction] cut the nonsense out, we’d find the marketplace would find its own level.”
Meanwhile, Atkins chief executive Richard Robinson suggests that the industry should stop blaming procurement people.
“They tend to execute well what they’re given to do and protect the organisation from risk and work within a horrific set of terms,” he says. “In a lot of ways, we’re getting what we deserve.”
When it comes to the legal side, the reason companies end up in court comes back once again to issues with contracts, margins and scope.
Robinson says it boils down to a simple issue: “fixed price and loose or no scope”.
nPlan chief executive Dev Amratia adds: “I think the root cause is a poor understanding of risk and who owns what amount of risk. A contract in its simplest form is a mechanism to apportion risk to one party or the other.”
We need to move to outcome-based solutions and procure on outcomes, not price
Mitchell adds that quantity surveyors often focus on how to get the “cheapest material cost without thinking about execution”. But she says the Heathrow Terminal 5 project did see a change to this. She says the main roof was very expensive and Arup worked with the client, architect and engineer to report on how these costs were being reduced.
“We increased the tonnage of the roof significantly to get a reduced cost,” she says. “In a typical project, we would have been penalised for that but we worked together to get the right overall solution.”
Ferrovial UK managing director Karl Goose views the contract as “a bookend” to the actual construction work, which includes damages if needed, and payment terms and can act as a vehicle for dispute. Ultimately, he says, how you operate as a team during the build is important.
Overall, Faithful & Gould regional director Nelly Twumasi-Mensah feels the industry has a public relations problem which has a knock-on impact.
“Our PR problem is partly because our industry is seen as ‘you go on the tools’ and it is all manual labour,” she says. “There is never discussion of the breadth and what is in the industry. It’s not just the fact that people think we don’t deliver to time and quality.”
Mitchell also emphasises the importance of the respect and regard in which the industry is held.
“We need to demonstrate how good we are at what we do, gain that respect and get back to a point where we have decent margins,” she says. “Then we can invest and innovate.”
We need to demonstrate how good we are at what we do, gain that respect and get back to a point where we have decent margins
Twumasi-Mensah does think that climate challenges could drive more collaboration. “If we are going to solve these big issues, we’re going to have to collaborate in and outside of the industry,” she says. “There is an African proverb that says: ‘If you want to go fast, go alone. If you want to go far, go together’. As an industry, if we want to go far, we’re going to have to go together.”
Mitchell has a similar view of net zero and decarbonisation and calls it “a greater order objective which will help transform the industry”.
She adds: “We need to ride that wave and use it so that engineers, constructors and their role in decarbonisation is better recognised and then we will emerge as a better respected industry.”
Despite these challenges, the collaborative potential of the industry is massive, according to Houghton. This is because it is made up of engineers, project managers and quantity surveyors who are focused on problem solving.
“If there is alignment of outcome and a common purpose, there is collaboration happening all the time because it is necessary to build,” she says.
Mitchell identifies many positive changes in the industry – it is no longer as male-dominated, has moved from pen and paper to machine and is multi-disciplinary and more inclusive. This provides greater capability to solve problems. In addition, there is a much greater focus on health and safety.
Prichard also emphasises the step change in health and safety improvements in recent years.
If we can grapple with our people and culture – from skills through to diversity, to not be adversarial and collaborate – we could attract the brightest people
“We said this is important and we made that change,” she says.
Meanwhile, Houghton highlights the commitment from the National Infrastructure Commission and the government to provide a workload pipeline. Policy, intent, people and skills, flexibility of suppliers and commitment to build in a different way all form part of collaboration, she says.
Involving all parties early in the contract process could also make a big difference. Twumasi-Mensah explains that, in the development of digital products for example, everyone is involved from the outset.
“It’s always struck me as crazy that [in construction] we develop scopes, design and go to planning and maybe a constructor gets involved at some point, but they dip in and out,” she says.
“Why on earth is everyone not around the table?”
There are many recent examples of projects where collaboration has led to success.
“Heathrow Terminal 5 was delivered on time, the Olympics finished a year early in terms of the infrastructure and £1bn went back to government,” O’Rourke says. “It can happen.”
Robinson highlights East West Rail as another positive example. “You just have to listen to the staff – on East West Rail the attitude is ‘there’s a problem, we’re going to solve it’,” he says.
“They don’t talk about which company they’re from or putting in an early warning or claim. Their energy and happiness is different. It’s an alliance but it doesn’t have to be an alliance to achieve that.”
Amratia, whose company nPlan has also worked on the project, agrees. “You can hear it from the types of questions the team ask – they are asking the questions for the betterment of the project, not an individual’s balance sheet,” he says.
Meanwhile, Mitchell holds up the Infrastructure Strategic Alliance (ISA) at the Sellafield site as an example of a true alliance with risk sharing delivering real value.
The ISA is an integrated partnership between Sellafield and the Morgan Sindall Arup Joint Venture to deliver and maintain infrastructure across the site. A key ISA objective is to deliver infrastructure asset risk reduction across the Sellafield estate. In the nine year period to date, projects undertaken by the ISA have led to a reduction in asset risk worth over £1.6bn, for a cost of £550M. But she adds that collaboration is not easy because it often requires bespoke arrangements among a group of individuals, making good leadership important.
Looking ahead, Twumasi-Mensah says it is within [the industry’s] gift to change things in terms of people and culture to encourage better collaboration.
“If we can grapple with our people and culture – from skills through to diversity, to not be adversarial and collaborate – we could attract the brightest people,” she says. “In what other industry can you say: ‘I built that’?”
Smallwood also sees a “once in a generation opportunity to do really good things” with the National Infrastructure Strategy’s £650bn investment pipeline, digital innovation, post-pandemic opportunities, collaboration through the Construction Leadership Council and the existence of the Construction Playbook and a robust pipeline of work.
“There’s never been a more positive time to say we can do this,” he says. “The answer is with us.”
At the debate
This report is based on a round table discussion held in March 2022. The discussion was held in association with Atkins.
Contributing to the discussion were:
Dev Amratia chief executive, nPlan
Karl Goose managing director, Ferrovial UK
Emma-Jane Houghton new hospitals programme commercial director, Cabinet Office
Dervilla Mitchell deputy chair, Arup
Ray O’Rourke chief executive, Laing O’Rourke
Sarah Prichard UK managing director, Buro Happold
Richard Robinson chief executive, Atkins
Nick Smallwood chief executive,
Infrastructure & Projects Authority
Nelly Twumasi-Mensah regional director,
Faithful & Gould
Claire Smith editor, New Civil Engineer
Published in association with Atkins
Like what you've read? To receive New Civil Engineer's daily and weekly newsletters click here.