PBAs: THE ROUTE TO GENUINE COLLABORATION
Project bank accounts have been with us for well over 20 years. Almost 12 years ago their use was mandated by the government for all departments, agencies and non-departmental public bodies (quangos).They were not required to be used if there were “compelling reasons” not to use them. One of the main reasons for not using them is that the project is of short duration. This policy was repeated in the Construction Playbook published by the Cabinet Office in December 2020.
All the devolved jurisdictions are now using PBAs for projects over £2m ( although they can be used below this threshold).From July legislation in the Australian state of Queensland will require the use of PBAs for all construction projects ( in both public and private sectors) above £640k.
The reason for highlighting PBAs is that they are an essential element within any framework for collaborative working. If it is claimed that a project was a truly collaborative one, my first question is: are you using a PBA and, if not, why not. A PBA is used for all project payments and, if retentions are used (which are anti-collaborative) they can be protected within the trust status attached to the account. All project participants are paid simultaneously out of the same “pot”.
Ensuring speedier and timely payments help create the trust amongst all project participants which is the bedrock of true collaboration.
Over the years countless SME supply chain firms have “sung the praises” of PBAs which have enabled them to be paid well within 20 days. National Highways(NH) have been using PBAs for many years and can attest to the changes in culture and behaviours brought about by PBAs. Every project participant, including consultants, on highways works is paid directly from the PBA. By 2025 NH will have paid for £20 billion worth of works through PBAs. All subcontractors are paid within 19 days of the main contract assessment date. NH has also documented significant cost savings through using PBAs.
The industry is now having to face numerous challenges including a rapidly rising cost base, decarbonisation of its product and an impending building safety regime. PBAs are no longer an afterthought. They are now an essential part of a collaborative culture needed to effectively address these challenges.
Professor Rudi Klein is a member of the CEM Board
Previously, Martyn Jones has called for a new compact between construction clients and their suppliers. This month he argues that Integrative Negotiation – with the key elements of Emotional Intelligence and Co-creation – present a way to shape the new compact. He also sets out what he sees as the main skills and attributes needed to make it work,
In an Integrative Negotiation, often referred to as “win-win”, everyone benefits from the agreement. There is usually more than one issue to be negotiated so there are opportunities for each party to create value and for trade-offs too so that a mutually beneficial agreement can be reached.
Negotiation, a well-established form of procurement amongst private sector clients, is where the client and a preferred contractor enter a contract through direct negotiation. As we saw in the recently published Rider Levett Bucknall (RLB) survey of procurement, around 20% of the projects sampled were procured in this way. However, its use in the public sector is currently problematic because of its procurement constraints – barriers that will need to be removed if the sector is to share the benefits of negotiation.
Negotiation is ideal where the work is of a unique nature and the client is confident that there is only one contractor suitable to undertake the work, or where the client has a strong preference to use a particular contractor who has performed well in previous projects. Here, I argue that “Integrative Negotiation”, is key to fashioning a new compact between client and their advisers and main contractors.
And not just between client and main contractor but along the supply chain too, between main and specialist contractors and manufacturers (what we might dub a “win-win-win-win-win”). The alternative form of negotiation, “Distributive Bargaining”, where both sides try to gain control of a limited amount of resource is considered a “win-lose” negotiation where one side’s gain equals the other side’s loss and is seen as inappropriate in forging our new compact in shifting to a race to the top rather than the bottom.
What skills and attributes do negotiators need for an Integrative Negotiation approach? What are the keys to unlocking mutually beneficial outcomes? Alongside the obvious technical knowledge and “hard” skills, soft skills are very much needed too, including Emotional Intelligence, listening, persuasion, planning and co-creating. Understanding and deploying these skills and attributes are the first steps to becoming an effective negotiator.
But bear in mind, as in all situations, the specific skills needed will be shaped by the product or service being procured, the operating environment, the intended outcomes, and the culture of the people and organisations involved.
For me, there are two attributes and skills at the core of what I’m proposing: Emotional Intelligence and Co-creation.
Emotional intelligence (EI) because it combines personal competence (self-awareness, self-regulation and motivation) with social competence (empathy and social skills). It provides a means to manage emotions, empathise with the feelings of other parties and raise everyone’s consciousness of the emotional dynamics at play.
And, given that we are looking to establish a new compact, negotiations also need to include innovation. This is where co-creation comes into play, a form of collaborative innovation where ideas are shared and improved together, rather than retained by each party. It provides a shift in thinking from the single organisation as a definer of value to a more participative process where people and organizations together generate and develop meaning and value.
But there are other attributes we need to include too. The ability to build rapport helps establish and sustain relationships where both sides feel comfortable, appreciated and understood.
Listening skills are critical in order to truly understand the people involved, their needs, aspirations and ambitions, and the specificities of the situation.
Integrity or having strong ethical and moral principles are important as being thoughtful, respectful and honest builds trust.
Persuasion, the ability to influence others, can help explain why a party’s proposed ideas and solutions are beneficial to all parties and encourage others to support their point of view. In addition to being persuasive, negotiators should be, where necessary, assertive too to get their views across whilst respecting the perspectives of others.
Patience, doesn’t always fit comfortably in construction’s often gung-ho approach to projects but some negotiations can take a long time to complete, occasionally involving renegotiation and counteroffers. Rather than seeking a quick conclusion, negotiators often practice patience to properly assess the situation and reach the best mutually beneficial conclusions.
Negotiation requires planning, research and strategizing to help parties to determine what they really need and want.
Managing expectations. Just as negotiators should enter a negotiation with a clear goal, the other party will also likely have their own defined expectations. If one party might not be able to agree to each other’s terms, they should try adjusting their expectations and maintaining a balance between being a firm and collaborative negotiator.
We must always bear in mind that construction is project based with a wide diversity of organisations and products so adaptability is an important skill for a successful negotiation as each negotiation is unique, and even the situation within a singular negotiation may change from one day to the next.
However difficult negotiation might be given the specificities of construction, remember the words of Nelson Mandela: “No problem is so deep that it cannot be overcome, given the will of all parties, through discussion and negotiation rather than force and violence.”
The top 100 Influential Women in Construction aimed at showcasing women in the sector to make these role models more accessible
We are proud to announce that CE Midlands CEO, Andrew Carpenter will be a judge at the awards this year
This year marks the start of real change for the Industry, aimed at showcasing women in the sector in order to make female and non-binary role models more visible and accessible.
These nominations help to shine a light on those that are working to support Equality, Diversity, Inclusion and Equity across the Industry through their actions and support of others.
The list and winners will be announced during an exclusive event, on 27 October 2022 in Manchester
Book tickets HERE
The consultation period runs from 21st April 2022 to 6th June 2022
The proposals comprise a solar park covering two separate parcels of land located west of the village of Rosliston, and east of Walton on Trent. The generating capacity of the project is expected to deliver in the region of 160 MW to the electricity grid, which is the equivalent amount required to power nearly all homes in South Derbyshire (Source reference: 42,210 properties in S Derbyshire as of July 2019 -Ref: South Derbyshire Housing Stock Condition Report 2019).
All information relating to the proposals (including the Preliminary Environmental Information Report (PEIR), feedback forms and summary consultation materials) is available to view online on the project website, via a virtual exhibition, at deposit locations around the site, and at public events being undertaken by the developer.
Documents are also available on USB sticks at the following locations (subject to opening times, please check online before you travel):
– Swadlincote Library and Information Centre (DE11 0AD)
– Barton Under Needwood Community Library (DE13 8AX)
– Burton Library (DE14 1AH)
Copies of documents and information may also be requested directly from BayWa, via the following methods:
– Email – info.oaklands-solarfarm@baywa
– Freepost – FREEPOST TC CONSULTATION (no further address or stamp required)
– Freephone – 0800 699 0081 (Monday to Friday 9am to 5pm excluding public holidays)
Consultation events will take place at the following locations:
Walton on Trent Village Hall
34 Main St, Walton-on-Trent, Swadlincote, DE12 8LZ
Friday 6th May 2022
1pm to 7pm
Rosliston & Cauldwell Village Hall
Main Street, Rosliston, Swadlincote, Derbyshire, DE12 8JW
Saturday 7th May 2022
12noon to 4pm
Please check the project website for the latest information.
In the last two years we have seen supply and labour issues impact the construction industry, this was primarily due to the Global Pandemic and Brexit. As we learn to live and navigate with the tail wind of those constraints, we now have a new emerging challenge, the impact of the War in Ukraine and the sanctions on Russia.
Early market intelligence is starting to be released and it’s showing the impacts, both directly and indirectly, on construction materials. We are all aware of raising energy prices, but the shortage of raw natural resources (e.g. iron ore, neon, nickel etc) will also compound the availability, cost, and supply of key construction materials. Russia and Ukraine alone export nearly 45 million tons of steel with the EU being the largest importer of Russian steel, inevitably this will start to impact costs, particularly the M&E market.
So how can we navigate and respond to the challenges? It is my believe that construction projects have a better chance of weathering the storms ahead if there is cross collaboration, continued communication and trust within the project teams. It’s imperative we ensure a collective innovate approach to both the design and construction of projects to help mitigate the risks and challenges that lay ahead.
The construction industry needs to capitalise on the collaborative atmosphere created by this year’s MIPIM in order to meet the key challenges it faces, according to Andrew Carpenter, chief executive of Constructing Excellence Midlands.
Speaking in the wake of this year’s event – which was attended by more than 20,000 delegates from around the world – Carpenter says that while a collaborative spirit is alive and well in Cannes, it risks being wasted if not capitalised on at home.
“MIPIM has always been an ideal opportunity to meet the movers and shakers,” said Carpenter. “You can speak with the whole supply chain in one fell swoop, as well as some of the major policy creators and decision makers.
“The event is the nucleus of the collaborative culture that we believe the construction industry needs to ensure it moves forward at the required pace. However, it is how that is followed up that will make the key difference when it comes to creating a truly integrated supply chain.
“It’s our industry’s version of ‘a dog is for life, not just for Christmas’. It’s all well and good doing and saying the right things at MIPIM, but if that collaborative approach gets left at passport control on the way back into the UK, it’s just lip service and not something that is going to drive us forward.”
Carpenter – who is also chief executive of the Structural Timber Association – hosted a breakfast event during MIPIM, which discussed the use of timber as part of the government’s push for net zero. He believes this is a key example of where collaboration is needed in order for the ambitious targets to be met.
“With an eye on 2050 as the target for decarbonising all sectors of the UK economy, it is clear that this is not going to be anywhere near feasible for the construction industry if we aren’t working in lockstep.
“We as an industry are one of the biggest polluters on the planet, and we are at a crossroads in terms of how we tackle that.
“This is a key conversation that Constructing Excellence is having across its regions. We recently refined our theme groups – at which we discuss and define industry challenges – to create a dedicated workstream that focuses on strategic and collaborative research into how the climate crisis can be addressed. Conversations like this are a vital catalyst for continuous, long-term industry improvement, which is what Constructing Excellence is all about.
“We truly feel that the construction industry is at a critical juncture, and it’s our responsibility to make sure that we move forward together in the right direction.”
If Rider Levett Bucknall’s (RLB) third and latest procurement trends survey ‘Getting Closer to Your Supply Chain’, is anything to go by, no we have not.
This month Martyn Jones argues that the RLB report provides a timely but not hugely encouraging snapshot of procurement approaches from a supply chain perspective. Its publication coincides with a time when the industry is flat out trying to meet demand, with consultants, main contractors, specialist and trade contractor, and suppliers all trying to capture the resources they need to deliver project outcomes.
Securing skills, plant and materials has become very challenging with ongoing illness, low stockpiles, logistical uncertainties caused by the pandemic and Brexit, and the hike in energy prices exasperated by the war in Ukraine. The shortages are leading to problems with programme delivery and sharply increasing prices.
This means traditional procurement- often based on lowest price and the transfer of significant risks down the supply chain – is not just as questionable as ever, but now no longer possible. With a healthy pipeline of work across the industry, main contractors can afford to choose the projects and clients that they see as being more straightforward and less likely to cause them contractual difficulties. Similarly, specialist and trade contractors can be pickier when it comes to working with main contractors. This means that the need to work collaboratively with trusted partners within an effective procurement and supply chain strategy is more necessary than ever.
And that’s before we look beyond our present difficulties and consider the role that procurement will play in shaping the future of construction. As we know, procurement can lead, support and change industry practice for the better in a number of key industry areas and play a significant part in setting our future agenda including procuring:
· for value, including safety and sustainability, and propelling a race to the top rather than the bottom
· to ensure that the full range of design and procurement options – including harnessing the benefits of Modern Methods of Construction (MMC) and platform-based Design for Manufacturing and Assembly (DfMA) – are considered in the early stages of projects
· to create a project environment based with greater openness and efficiency by requiring digitisation and the continuity of BIM usage through the lifecycle
· to embed the ‘Golden Thread’ in design and construction processes by insisting that information is woven intrinsically into procurement strategies so that quality is built in, appropriately resourced and sustained, and verified at all stages of the lifecycle.
The RLB survey provides a timely indicator of what progress we are making in procuring more creatively to meet these challenges. But, does it reveal the transformation in procurement that we need to address the stark challenges we face? Here are some of the main findings from the survey:
· We have an active market with strong pipelines of work
· There is a significant decrease in the fixed price periods offered since the last RLB survey
· The appetite for significant design risk by contractors appears to have waned as they focus on securing profitable and low-risk work
· There has been a noticeable fall in the use of Single Stage routes and an increase in the use of Two Stage and Frameworks. The growth in Two-Stage has outstripped the use of Negotiated routes and this suggests that the increased use of Frameworks by the public sector is partly responsible for this shift. But still, only 27% use Two Stage routes to market
· Only 20% of projects are currently Negotiated.
· In Design and Build, Stage 4 is now the significant part of the tender volume, with 71 % of projects issuing Stage 4 design information with Design and Build information: ‘Thoroughbred’ design and build is now a rarity. Factors contributing to this could be the push from clients towards greater quality and the need to retain design control for longer in the process. Covid uncertainty last year may also have contributed too as clients pushed back on large investment decisions providing them with the opportunity to progress design further than normal. Contractor aversion to design risk is also a likely factor in a market where contractors now face significant price and sourcing risks
· Construction Management and Management Contracting approaches to procurement remain a tiny proportion of surveyed volume but have also decreased in the period since the last survey.
Does this survey reveal the degree of creativity in procurement we need to deal with the challenges we face? Clearly not, although we are seeing some small steps such as an increase in Two Stage but clients and their advisers need to now debate and seriously reconsider their procurement approaches rather than try to get back to the normal way of doing business before the pandemic.
Clients, their advisers and their suppliers need to negotiate and commit to a new compact. Many private sector clients have always been comfortable with the Negotiated route but do public clients have the skilled negotiators with the ability to emulate the private sector and negotiate desired outcomes within a robust business case or investment appraisal? Can they set the parameters of what they need and what they can and cannot concede without tendering?
Surely, there’s a huge role here for skilled and experienced advisors with the necessary knowledge, emotional intelligence and nous to ensure that the negotiated value and risk allocation will prove to be fair and deliverable for all parties.
Construction employers, decision makers, educators and students called on Government to help plug the construction technology skills gap and safeguard the sector’s workforce future, at an event last week.
On Thursday (3 March), Construction Minister Lee Rowley attended Moulton College’s Construction Future Skills exhibition and workshop, in Northamptonshire, where more than 30 employers met to address skills challenges facing the industry – now and in the future.
Their solutions included asking Government to facilitate better on-the-job training, through more work experience opportunities and by making apprenticeships more technology-focused. A better flow of learning between schools, colleges and employers, improved integration of education and industry, and increased emphasis upon – and access to – lifelong learning were also highlighted as vital.
Supported by Constructing Excellence (CE) Midlands and the National Federation of Builders (NFB), the event encompassed an exhibition to showcase new technologies, and a workshop focused on establishing the hard and soft skills construction needs for the future – while exploring how best to deliver them.
Mark Wakeford, Moulton College Governor and Joint Managing Director of Stepnell Ltd, said “I was really pleased to hear lively discussion around our sector’s future training requirements, common ground among delegates, as well as openness and honesty in sharing their own experiences and progression.
“Current students were keen to learn the hard skills they need to succeed in a construction career, while industry leaders highlighted the soft skills also needed to complement these, which will ensure new entrants add well-rounded value. Industry leaders emphasised the importance of lifelong learning – ever-more important in the fast-changing world of our construction industry. However, it is clear challenges with courses and awarding bodies remain to be resolved.”
Speaking after his visit to the Construction Future Skills event, Construction Minister Lee Rowley, said: “It’s been fantastic to meet some of the young people looking to make construction their career and see their enthusiasm for seeing first-hand the technology paving the way for the future of this industry.
“These students could be tomorrow’s leaders of the change we are all trying to enact, so it was truly inspiring to hear some of the discussions, ideas, and creativity from them, as well as industry innovators driving construction forward. It’s so very important that all voices across the sector are heard, and that we come together to provide the right opportunities, education, and inspiration to the next generation to make a real difference to the way we build and achieve our goals of increased sustainability and innovation.”
The workshop encouraged debate, sharing experiences, learning, and networking between attendees. Its findings will be delivered via a report to guide industry, education and government in driving change.
Moulton College Principal & CEO Corrie Harris said: “Our construction industry is always adapting and improving and is embracing innovation faster than ever. At Moulton College, we are in a privileged position to help nurture and grow the sector’s talent coming through, while also speaking to employers regularly about what their current and future skills needs are – so today has been a unique way to bring those two groups together.”
The Construction Future Skills exhibition running alongside the workshop saw innovators and contractors showcase some of the latest construction technology on the market, illustrating how AI, automation, robotics, and other technologies are changing the way we construct.
Exhibitors included 360safeVR’s immersive film and behavioural change programme; Software-as-a-Service platform for Building Information Modelling 3D Repo; KOREC Construction’s mixed reality headset and augmented reality solution; Flannery Plant’s plant simulator; digital construction solution Oculo; geo-spatial technology specialists Ridge & Partners; leading regional construction business Stepnell; free-to-use platform for apprenticeships, traineeships and work experience in construction, Talentview Construction (TVC); Tenstar Simulation’s machinery and training tools simulator; and Winvic’s virtual reality health and safety training.
For more information visit https://www.moulton.ac.uk/
Hello and welcome to March’s newsletter. I have a bit of a mixed bag this month looking forward to our up-and-coming awards, an update on how our diploma is going, of course procurement and acknowledgment of the terrible events happening in Ukraine.
Firstly, to the awards. We are delighted to say that our West Midlands and East Midlands award ceremonies will be taking place again this year at the fabulous Edgbaston Cricket Ground in Birmingham on the 12th May and equally impressive Athena in Leicester on the 9th June. Last years events (one of our first face to face events following Covid) was well attended and received positive praise on how well organised and enjoyable they were so we are really looking forward to this year. There is still time for all the worthy projects out there to get your submissions in for the East Midlands Awards (The Deadline is 25th March 2022 by Midday) and there are also still opportunities for sponsoring award categories for the East Awards if you want to see your name up in lights for all to see.
This month marks the halfway point for our Diploma in Collaboration in Construction. The 14 delegates have already completed modules on Leadership & Team Management, ISO44001, Lean & Continuous Improvement, Process & Value Stream Mapping, and the Value Toolkit and in the second half will learn about Design Team Integration, Design for the Environment, Smart Construction (Digital & offsite), Quality & Compliance, Supply Chain Management and finally Collaborative Forms of Contract. We are now planning our second Diploma so if you or any of your team are interested in gaining the inside knowledge on how to be Collaborative, then please let us know.
Whilst we look to the East and witness the horrific events in Ukraine (and our thoughts go out to all those affected) it became a bit more real for me when asked how this may affect our industry and our delivery programmes at work this week. With Russia being a major producer of Aluminium and copper, cargo ships being halted, or not re-supplied, multiple sanctions being imposed and an expected increase on gas and oil the impact on the industry is likely to be further material shortages and/or longer lead in times, an increase in prices especially in those products from Europe that use high energy to manufacture and any related economical impacts and of course any human factors such as travel or the effects it may have on any of us.
Finally, I’m glad to see that out weekly seminar this week (Friday 11th March at 12:00) is on “Insurance Backed Alliancing: The IPI Model” with the amazing Louise Lado-Byrnes. In my opinion this model is best in class for collaborative procurement. It deals with risk and shared responsibility in a way that no other contract is able and brings the whole team together from day one. It delivers on the Construction Playbook and is named in the Government Construction Strategy so why not join us on Friday and gain an insight on how it can be done.
Thanks for taking the time to read the newsletter and if you would like more information on any of items covered, please do not hesitate to contact us.
AIMING TO enable infrastructure clients to deliver improved outcomes by collaboratively working faster, greener, safer and smarter, Constructing Excellence Midlands has launched its Infrastructure Forum, enhancing the visibility and perspective of infrastructure activities in the region.
The forum aims to assemble businesses from client organisations and supply chains in the Midlands, modernising the methods of industry collaboration through the provision of a forum – utilising digital tools for knowledge sharing to drive efficiency and improved outcomes.
Andrew Carpenter, chief executive of Constructing Excellence Midlands, who has created the Infrastructure Forum, said: “The forum will present a fantastic opportunity for the Midlands infrastructure community to coordinate responses to key industry challenges and collaborate on projects and programmes, ensuring continued infrastructure advancement that is pre-emptive of the demands and opportunities for the region.
“Infrastructure requires a collective planning approach where visibility of the opportunity to collaborate is essential, whether that’s rail, aviation, utilities, roads or power. An infrastructure forum will provide an opportunity to work smarter with collaborative efficacy and prove how we can provide ‘more for less’, while improving safety and sustainability outcomes.” Mark Lyddon, Midlands regional infrastructure lead at Turner & Townsend, said: “I’m delighted to be involved in the conception of the Constructing Excellence Midlands Infrastructure Forum. The Midlands boasts leading global pioneering minds in infrastructure development, working on world class projects and programmes. This forum will enable clients and the entire supply chains to utilise the power of their combined expertise and experience.
“Consultation and collaboration through this platform will help us drive improvement in our industry and deliver better outcomes for customers and the environment. With the current volume of infrastructure construction activity and projects planned to take place in the Midlands region, we must create an improved way of working across clients and programmes.” Alec Gillham, business engagement manager for DIGI-RAIL at University of Birmingham, said: “DIGI-RAIL is thrilled to have been asked to participate in the newly-established Constructing Excellence Infrastructure Forum. Currently working with some of the UK’s most innovative and technologically advanced rail businesses, we are keen to explore the opportunities that the forum will present for collaboration around the themes of connected transportation and infrastructure.
“As we transition towards the creation of the public body Great British Railways (GBR), we are experiencing levels of investment and technology adoption in UK railways not seen for a generation. It is our firm belief the forum will provide a valuable platform to engage with stakeholders working within advanced transportation and infrastructure sectors to reimagine the UK passenger travel experience for the future.”
If you or your organization would like to be involved or to find out more please reach out to Constructing Excellence Midlands: email@example.com