Can there be any other industry that has generated so many reports?
It's 30 years since Sir Michael Latham published his report on the UK construction industry under the title "Constructing the team." It added to a long list of reports going back to the 1940s all saying the same thing - construction is stuck in a time warp using outdated labour intensive processes and delivering poor value for money while at the same time spending more on litigation than R&D. Since the Latham Report there has been at least 15 other reports on a similar theme. Has there been any evolution since 1994? Latham found an industry where teamwork and trust were at very low levels. In a previous blog I outlined the bloody-minded industry that is still construction and that despite legislation late payment still blights many of the 200,000 odd suppliers.
At the time of the publication of the Latham Report construction was in the middle of a deep and dark recession, during which 500,000 people left the industry leaving individuals with time on their hands to consider Latham's recommendations. I remember attending seminars and press briefings at the time and what became patently obvious was that Sir Michael was preaching to the converted. The same personnel from the same top 20 or so contractors and consultancies were at every event leaving the vast majority of the industry unimpressed. Interestingly, Latham had little experience of construction prior to his appointment, in fact he was better known as an ecclesiastical scholar. Perhaps most controversial was his call for a 30% reduction in 'real costs' by 2000 - a statement that went down like a lead balloon.
Latham was an advocate of partnering which was implemented in the North Sea oil industry in the early 1990s as part of the CRINE initiative, an acronym for Cost Reduction In A New Era. The goal of CRINE was to reduce conflict in North Sea oil production and make oil production profitable. Latham recommended that partnering should be introduced in construction in order to reduce disputes and silo working, but while CRINE was successful in the energy sector overall, partnering has not been a silver bullet for construction, primarily due to fluctuating work loads. Incidentally, there was speculation that Latham arrived at his contentious 30% figure from CRINE.
Given the collapse of Carillon and now ISG, it seems that evolution in the industry is still as far away as ever, as contractors, even those thought too big to fail, are forced to accept projects with unsustainable profit margins in order to generate revenue and cash flow.
Duncan Cartlidge
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