As the UK looks to build its way to a brighter future following COVID, construction clients are being told that they hold the key to ensuring the sector emerges from the crisis a more efficient, inclusive and greener industry.
Constructing Excellence Midlands (CEM) – which was created to lead the change agenda and is already backed by many of the region’s key construction industry players – has launched a new guide aimed at all clients procuring construction work and who are therefore positioned to significantly influence the sector’s processes, practices and outcomes.
Central to the Client Commitments Best Practice Guide is the theme of achieving best value over the lifetime of the project and through considering social value. It calls for a move away from the all-too-familiar ‘race to the bottom’ that can be the result of traditional and often wholly unrealistic lowest-price procurement processes.
The Client Commitments Best Practice Guide deals with six main areas of responsibility for clients:
- Emphasising the need for strong client leadership – which is at the heart of delivering change
- Collaborative procurement and integration of the supply chain from an early stage in the project
- A commitment to people and the need for clients to ensure that this culture is embraced throughout the supply chain
- Sustainability and delivering against the net zero carbon agenda
- Quality and compliance, through design, manufacture and installation
- Health, safety and wellbeing.
A guide was first published in 2006 to outline best practice for clients in the build-up the huge level of construction activity anticipated for the London 2012 Olympics.
The newly launched 2021 guide – which we developed in association with Nottingham Trent university – was arguably even more important now in the aftermath of COVID and the need to address the climate emergency.
For the last 12 months we’ve endured the COVID crisis but we now have the Government’s call to ‘Build back better, Build back faster, Build back greener’ and the Construction Leadership Council’s Roadmap to Recovery for the industry, all of which is taken into account in the new guide and which plays alongside the Value Toolkit and the Construction Playbook.
For the first time in many years the construction industry is coming together with one voice through which more people are understanding the concept of value, whole-life building costs and social value, rather than simply focusing on lowest price build cost.
We all live in a society which is accepting that – post-COVID – the construction industry that we look forward to is not the same one we left behind and clients have a major responsibility for shaping this. I would therefore encourage all clients of the construction industry to read this document, take on board its recommendations and work towards driving the change that we all need.
CLICK HERE to view the Client Commitments Best Practice Guide
CLICK HERE to watch CEO, Andrew Carpenter’s video introduction to the guide
CEM leads the change agenda in construction regionally as part of Construction Excellence’s national mission to improve the industry’s performance and produce a better built environment.
It wants a greater collaborative culture within the industry and acknowledges the need for committed leadership and a customer-focused approach in the sector. It wants to work with the client base to encourage a more enlightened approach to procurement that focuses on quality and delivery – not only cost.
Alongside achieving more integrated supply chains and lean processes, the aim is to pave the way for improved productivity, the adoption of new digital and off-site construction technologies, a focus on people and wellbeing and to address the need to attract and recruit the next generation of industry leaders.
CE Midlands has been in existence, in its current guise, for 2 ½ years and during that time we have built membership to more than 80 member companies and over 300 individuals. We have grown not only in membership but also influence and our ground-breaking best practice guides are now used extensively throughout the sector. Please see: Resources – Constructing Excellence Midlands
With lessons learned through Covid-19 and a New Year upon us the time is right to re-assess our goals and objectives reflecting our industry and the Roadmap to Recovery for which we provide the industry dissemination across the East and West Midlands. We are also the official Adoption partners of the Construction Innovation Hub and this involvement will greatly benefit the industry in general and our members when it comes to future influence. Our first project to provide workshops for the Valuation Toolkit is already underway. Please see: https://constructioninnovationhub.org.uk/
In addition we have two significant pieces of work being carried out in association with Nottingham Trent University to:
- Update the Client Commitments Best Practice Guide Client-Commitments-Final_May-2014.pdf (constructingexcellence.org.uk)
- Create a Diploma in Smart Collaboration to deliver the culture and behaviours outlined as necessary in the Dame Judith Hackitt Review following the Grenfell Tragedy.
To allow us to carry out this essential work we require additional resource, both financial and people, and we are writing to you to ask that you consider joining CE Midlands as regional members. Membership offers you the opportunity to learn & share ‘best practice’, use the knowledge created to influence change and network with other leading construction professionals from across the Midlands. Our need is a specific commitment to allow us to continue our direction of travel.
Membership will provide access to our six Thought Leadership Theme Groups.
- Construction Clients Group (Clients only)
- Health & Wellbeing
- Innovation & Sustainability
- Procurement & Productivity
- Quality & Compliance
- Smart Construction (Digital & Offsite Technologies)
It will also give you membership of one of our Best Practice clubs and access to the other five.
- Birmingham & Black Country
- Coventry & Warwickshire (FoRCE)
- East Midlands
- Hereford & Worcestershire
Should you have any queries or require further information please do not hesitate to contact me. In the meantime, please look at our current Annual Report at: https://www.cemidlands.org/assets/Downloads/cem2019annualreview.pdf . A new Annual Report will be launched at our AGM on 21st January 2021 with places available by visiting: CE Midlands Annual General Meeting – Constructing Excellence Midlands
We do hope that you will consider this request favourably and hope to hear back from you shortly. You may join immediately by filling in the application form here: Join Now – Constructing Excellence Midlands
Chief Executive, CE Midlands
This month, Martyn Jones continues his exploration of the changes that can be made to construction’s operating system and delivery methods to combine purpose with profit, and to sustain the spirit of “we’re all in this together” as seen in our response to the challenges of the pandemic.
In December he looked at Two Stage Open Book procurement. He starts the New Year by making the case for project bank accounts (PBAs) in bringing construction clients and lead and specialist contractors together in the spirit of a joint enterprise.
PBSs are not new of course, but they do offer a way to shift the focus away from lowest price procurement/race to the bottom and towards delivering better project outcomes for clients and the whole supply chain.
Back in 2006, Professor Rudi Klein, a leading campaigner and advocate for the interests of construction subcontractors in general and combatting payment abuse in particular, was the guest speaker at the launch of the Bristol Rethinking Construction Club report for the then department of Trade and Industry: Bridging the Gap: Connecting Bristol’s specialist and trade contractors with the Rethinking Construction agenda.
At the event in Bristol, Rudi endorsed the Club’s report and called for the use of project bank accounts to combat payment abuse. This resonated with the findings of the Bristol Club’s investigation, which set out the barriers to specialist contractors’ engagement with the Rethinking Construction movement. These included the onerous payment procedures and retention regimes of many clients and lead contractors.
PBAs work by ring-fencing accounts from which payments are made directly and simultaneously by the client to all parties in the supply chain. Funds in the account can only be paid to beneficiaries, that is, members of the supply chain named in the account (i.e., the lead contractors and supply chain members).
They provide a means of enabling faster payments through the construction supply chain, with payments being made as soon as 5 days from the due date. This is intended to reduce cash flow problems that can lead to the insolvency of supply chain members which, as we know, is potentially catastrophic risks for projects in terms of money and time.
Why use PBAs? Let’s start with the very important but practical advantages. Supply chain members do not have to wait for upstream contractors to process payments as they receive them directly, ensuring certainty, security and speed of payments. It reduces the need for supply chain members to borrow or finance credit and the assets in the PBA are protected from tier 1 insolvencies.
They ensure regular payments within timescales that are much shorter than where cash has to be cascaded down through different contracting layers. Retention monies can be ‘ring-fenced’, providing supply chain members with security that they will eventually be paid when due, Payment-based disputes are reduced, and supply chain members can reallocate the time and energy they spend on chasing payments to more constructive value-adding activities.
But consider this. Even more importantly, in my view, a PBA brings lead contractors and specialists together in a different business relationship, and in the case of the dual authority model of PBAs, bringing clients, lead contractors and specialists closer together.
A PBA places all parties on a more equal footing and sends strong signals that opportunistic behaviour is not acceptable, or indeed needed, as supply chain members are paid fairly and promptly as valued members of a collaborative team. It incentivises lead contractors and supply chains to change their value propositions and move away from providing lowest price solutions. In short, a further step towards unlocking specialist contractor potential to deliver innovative, value-based solutions.
Who is using PBSs? Back in 2010, the UK Government introduced a policy requiring all UK government procurers to use PBAs unless there are compelling reasons not to do so. All the devolved governments also have policies in place requiring the use of PBAs.
Highways England likes them. In their view, “PBAs are now acknowledged to be the most effective method of ensuring secure and regular cash flow, particularly in the wake of recent lead contractor insolvencies. Using them makes [us] the client of choice in an increasingly competitive market and ultimately helps us deliver our programme to improve our road network, and besides efficiencies, they’re also helping us do the right thing for our suppliers.”
However, research by The Specialist Engineering Contractors’ (SEC) Group indicates that the take-up of PBAs by local authorities in England has been slow. Why? Well, there are some challenges including sometimes a lack of transparency along the supply chain regarding their operation and the Cabinet Office hasn’t validated the “compelling reasons” given by a department or agency for not using PBAs.
Occasionally issues have arisen too where the tier 1 contractor has gone into insolvency and there is concern amongst supply chain firms of what happens to disputed sums – although in Highways England projects disputed monies are kept in the PBA until the dispute is resolved. And, perhaps most significantly, lead contractors are reluctant to relinquish their control of the flow of money and the leverage it gives them downstream in the supply chain and which in turn may impact on their profitability. So maybe clients need to show leadership and recognise that their lead contractors should have larger margins and so removing the need for opportunistic behaviour?
It’s the time of year when we think about resolutions for the coming year. Perhaps PBAs should be on your list for changes in 2021?
So here we all are again in lockdown. Thankfully, the Prime Minister, Boris Johnson, recognised the importance of the UK construction industry in his speech when introducing the latest set of rules and regulations. For our sites it is ‘business as usual’ with the rest of us confined to our homes again. I feel very confident however that thanks to the sterling work of the Construction Leadership Council once again the sector will prove how adept we are with dealing with a crisis and assist the nation through this period of uncertainty.
For CE Midlands, our works seems to grow and grow as the need for collaborative working increases with clients looking for innovative solutions to maintain their building programmes. Our work with Nottingham Trent University continues at pace and we were able to provide an update on the Clients’ Commitments Best Practice Guide at the hugely successful Construction Summit on 5th November 2020. At the Summit we were delighted to welcome Andrew Stephenson MP, Minister of State for HS2, to deliver the keynote presentation and this may be viewed by visiting our brand new web site, along with all the other excellent speeches, on our brand new web site at www.cemidlands.org. Our grateful thanks go to Shakespeare Martineau for generously sponsoring the online summit and providing such a thought-provoking presentation that may also be viewed on our new web site.
In addition to Andrew’s keynote presentation and Richard Whittaker and Stuart Grabham updating the guide, excellent presentations followed from Simon Rawlinson of the Construction Leadership Council on the Roadmap to Recovery, Vince Kesterton of Interserve on the building of the Birmingham Nightingale Hospital with all the best practice examples that could and should find their way into everyday behaviour, and Simon Delahunty-Forrest in unveiling the Birmingham City Centre 2040 Future Plan. However I have to say I was most proud of the presentations given by Paul Chatwin, Amrit Sagoo and Noel Street as they unveiled our ‘How to Guide to Mental Health and Wellbeing’, ‘How to Guide to Best Practice Procurement’ and links with the Grid respectively. The hours and hours of effort provided by our members throughout our network of Theme Groups came to fruition and we owe them a huge debt of gratitude. Details of all these new documents again may be found on our new web site.
Our regular Friday webinars continue, although there has been a slight downturn in viewers which is disappointing. Please do support our November and December webinars as we have an interesting line-up of speakers and topics including this coming Friday 13th November 2020 when Steve Clarke covers the all-important issue of ‘getting more for less’ which never seems to go away and is particularly critical during these troubled times. Further topics include required skills for MMC, the Building Safety Bill and of course our eagerly awaited monthly ‘State of the Nation’ sessions.
We have added to our series of podcasts when I interviewed Suzannah Nicholl, Chief Executive of Build UK, so please do listen to that when you have a spare twenty minutes. It may be found by visiting: https://audioboom.com/posts/7719647-suzannah-nichol-mbe-chief-executive-of-build-uk
The big news since our last newsletter however is a complete turnaround in terms of how we intend to run our 2020 Built Environment Awards by taking them online. The ceremony will take place on Friday 4th December at 12.00pm East Midlands and 2.00pm West Midlands and we hope that all members and supporters will tune in to see who has been successful and help celebrate best practice across the region. As it’s taking place online and during the afternoon rather than make it a ‘black tie’ event we’ve decided to make it ‘loud & proud’ and would ask you to watch in your loudest shirts and ensure you use social media throughout the event to publicise both yourself and the event – let’s go viral! Details of how to book may be found elsewhere within this newsletter.
Finally, I would like to thank the increasing number of people actively involved in CE Midlands with the results previously outlined apparent across the region. We continue to be the ‘driving force’ for the improvement agenda across the Midlands construction sector and if you are not yet actively involved please do so now!
ANDREW CARPENTER, Chief Executive CE Midlands
Suzannah Nichol MBE chats to Andrew Carpenter about the moment the idea of working in the construction came to her, setting up Build UK, her love for outdoor activities, achieving her MBE honours and how the industry has handled the Coronavirus pandemic.
CLICK HERE to listen now
By Steve Green – Head of Knowledge Sharing, Bouygues
The construction industry is currently going through significant change as we strive to embrace digital transformation. Arguably, the introduction of BIM has forced our hand as Central Government nudged us to start the journey by embracing level 2. As a result we are told that rolls of drawings and archives full of lever arch files, all suffering water damage, could be thing of the past.
We are now employed to create a digital asset as well as the physical building!
The biggest impact of digital transformation will be felt in the field. It is here on the site, that the majority of the records that we need are created. The clipboard, the duplicate book and the A4 diary are about to become a thing of the past. Such items will be replaced by phones, tablets and laptops that can capture, share and archive a record in an instant.
So how can this new technology help the industry address one of its current key challenges – improving Site Quality?
The CE Midlands Quality & Compliance Thought Leadership Group have attempted to make this transition easier for all, by creating a simple guide to the process of selecting and implementing these digital tools into the day job.
It is a collection of shared experience and lessons learned across businesses both large and small, that will allow new comers to the technology, to make informed decisions, learn by our mistakes and leverage the benefits as early as possible.
One of the advantages of digital records is the ability to easily share, so although the guide is predominantly written for the user in the Field (Contractor and Supply Chain Partners) Clients, Employers Agents and all member of the Project Team can have access to this data, so should read the guide.
Let’s set the scene: Tech @ Housing Conference, Manchester, late June 2019. Andrew Carpenter, Chair of BIM 4 Housing and Chief Executive of Structural Timber Association, caught our attention with BIM.
In Andrew’s presentation, titled, How can technology improve risk management and building safety post-Grenfell?, he highlighted:
- The role of BIM in delivering Hackitt’s ‘golden thread of information’
- Why accurate information is so important for building and fire safety
- The challenge of culture (“we’ve always done it this way”) and why investment is necessary
If you have read any of Kreo’s blogs, you’ll know this is what we’re all about. Most of the audience were from housing associations and local authorities, many of them in facilities management (FM). There were a lot of developers there too. FM professionals are mostly better acquainted with BIM, as the information they get from a BIM model enables them to save time and money. But unfortunately, the BIM process often starts after the building has been built. Developers are usually not as aware of the advantages they can get out of BIM.
It is only since the Grenfell disaster that we have seen significant take-up of BIM across the whole construction industry. Even then, there are many misconceptions about BIM and fears over its perceived complexity.
When we met with Andrew Carpenter after the event, he encouraged Kreo to join Constructing Excellence and, by association, BIM 4 Housing. After doing so, we were able to present on the topic of why BIM is still so hard to other BIM 4 Housing members. We talked about the reasons and excuses we hear from companies for not adopting BIM. It all comes down to BIM being too difficult to take up. We suggested a solution: technology providers should make BIM easy.
Make BIM easy?
Sounds impossible, but that’s what has to happen if we want to see change. One aspect to getting BIM right is creating a BIM model as soon as you can in the project planning process. Currently, most clients and developers don’t feel comfortable with BIM. It is a lot of work, and so, it costs money. You might not even go ahead with the project, or might not get planning permission. So it’s easier to push BIM further down the project’s life cycle. But as Magomed Galaev, Kreo’s CEO & founder, told a Tech @ Housing audience, this is where the problem starts.
Digital transformation in housebuilding: threat or opportunity?
In Magomed’s presentation at Tech @ Housing, he talked about the current housebuilding process. When a project gets planning permission and the work is offered to tender, the BIM model will be, at best, RIBA Stage 2. Usually there is no BIM model at all. BIM or no BIM, the client will have spent weeks, maybe months, getting to this point. They need a basic cost and schedule estimate for main contractors to bid on.
After a contractor wins the bid, they must then reassess cost and schedule in more detail for their own subcontractor tendering process. They might create a BIM model at this point, but the cost and responsibility is shouldered by them. The client loses clarity into what their project will end up costing, how long it will take, and how it will even turn out. Both parties lose out.
Magomed’s presentation went on to highlight the disruption we will soon see to this process. Digital companies in other industries have changed processes so dramatically, they have transformed their respective industries. When this happens in housebuilding, it will be those who are complacent who will fade away. Those organisations who digitalise, or new digital companies, will reap the benefits of industry disruption. They will be the disruptors.
The cunning plan
This was the first year that the board of Homes UK had discussed BIM as an important topic for this annual event. That is why they asked BIM 4 Housing members to exhibit in a BIM Village, where the audience could find out its relevance to them.
So here’s where our plan comes in. Kreo is going to show the Homes UK audience that there are ways to start planning all new build projects with BIM. Finding the right technology is important – but finding the company who will work with them to make BIM easy is the key to success. Once more property developers start catching on to BIM, the market will have been disrupted and we’ll see the real estate and construction industries transform.
Modular design launch at Homes UK
Attendees at Homes UK will be the first to see our brand new solution: generative modular building design. The new product is in line with the topic of Modern Methods of Construction (MMC) being promoted at the event. If companies have their own modules, they can plan buildings to RIBA Stage 4 at record speed, depending on the level of detail of their modules. Plug any module into Kreo, or use Kreo’s own designs, and start planning space-optimised new buildings in minutes.
This kind of technology and manufacturing is the future when it comes to building new homes. This is already leading to lower costs in the longer term, less waste and more high-quality homes being built at speed.
Interested in a demo of the new product? Get in touch to book in time. Come and see us at Homes UK at stand H381.