Is it time to start asking whether the traditional main contractor role is still viable? Businesses that often have next to no assets, taking on projects for cash flow, at cut throat margin levels with high risk transfer, and using their supply chain as credit facilities. That model isn’t working so instead of asking for fairer treatment of main contractors who are continually failing because the model is broken, shouldn’t we be seeking procurement reform that protects those who actually perform the construction work: the supply chain. Is this the time where we start talking about alternative delivery models and innovative procurement routes which do not involve a traditional main contractor? It’s controversial and I’m sure my main contracting friends will strongly disagree but we have to be open minded to all possibilities because there has to be another way. I hope all those affected find a way through the situation. Given the demand for skills in the industry, I am hopeful that staff will find new opportunities in time. It’s the supply chain I worry about and the consequential impact this will have - it can’t keep happening.
James Paterson
2 个月
The model of Tier 1 has pretty much never worked in my 15 years in industry. Not all, but the majority of Tier 1 contractors could be labelled as consultancies as they deliver no physical works (excluding setting up a site compound) and rely on the expertise of the supply chain to deliver projects whilst providing management resource. The people on the front line are helpless and are the ones left unpaid or without a job. When contracting I had several instances after preparing competitive tenders to then be told we are going to knock an extra 3% as "we need the work" and the commercial team will need to find these savings.
John Austin
2 个月
Design and build (aka design and dump) has been the death of construction over the last 25 years of construction since I started and has sped up the decline of many main contractors in that time. It’s exacerbated the ‘race to be the bottom’ mentality and significantly impacted and reduced programme times and prelims allowances and % OH&P to beyond the bare minimum. Couple this with adversarial natures, lengthy heavily amended contracts and extreme risk aversion/passing it’s been a death knell rather than an improvement.
Robert Brown
2 个月
Here’s a novel thought. Forget all these alternative procurement methods that only showed their face after Latham and Egan and the arrival of the cancer that is American PMCMs who purported to show how us how to build. None of which has done anything to improve the industry. Maybe it’s time to go retro! You know have a BOQ with a (near) complete design before you start the job. It worked fine (in the main) for a hundred or so years…
There are a few tier ones that come to mind that used to specialise in a particular construction skill, or labour focussed delivery but they seem to be watering down that focussed area with a move towards being more of a PMO style tier 1 and let small specialist teams carry out the technically risky elements. Client organisations take a more prominent role in deciding how things are done too. As well as defining what they want from an asset or project, they influence how it’s done. Is this chicken or egg based on my first paragraph? I don’t know. There’s almost a parallel position to the tier 1 position with a well educated and competent client, like a shadow or opposition - the challenge and counter argument is prolonging decision making that often falls into a difference in opinion between experts as opposed to a technical issue. As an industry we struggle with fast decision making and I can’t help but think that this is part of the cause. It’s a fine line between challenging for better results and disagreeing because you’d have done it a different way.
Robert Tustin
2 个月
"Is it time to start asking whether the traditional main contractor role is still viable? ...Is this the time where we start talking about alternative delivery models and innovative procurement routes which do not involve a traditional main contractor?" I've been saying the same thing for a while. The legal industry, which has leeched off construction like it has an endless supply of blood, has made the general contracting model unviable, or at least unsustainable.
Christopher Kelly
2 个月
"The British spare no expense to get things on the cheap." Focus has to return to quality and the skills required to deliver the quality. We are sleep walking into bigger problems with lack of skills and knowledge to deliver. For me, the solution has to lie in a return to traditional construction contracts, where the design is fully developed before construction begins but we need to address payment mechanisms also.
Simon White
2 个月
Without in any way condoning any of the cash flow behaviours isn't it about time that clients started expecting to pay a fair price for construction? I can't remember the last time a project I worked on came back from tender anywhere close to the cost plan (most of which can only be described as overly optimistic) adding further pressure to the bottom, and that's before we start on risk transfer. The problem can't simply be seen to be about "Tier 1s" - it's about the attitudes of the whole industry from inception right through to completion and beyond.
One of the biggest issues is there being too many main Contractors. It's a race to the bottom with the supply chain getting continually pinched especially in D&B. There needs to be better control around how projects are bids and minimum acceptable margins. I think there will always be a place for 'integrators' but it has to be more in a CM mould.
Project Manager.
2 个月To be honest tier 1 only came about because clients, local authorities, government decided only large construction companies would be added to tender lists I think in late 90's allegedly to obtain better value for money. These larger companies then employed the local construction companies who before would have tendered directly for these contracts, so you then add another cost to the project to cover management costs to oversee project. Having actually worked on an ISG project As a pm for a short while about 8 years ago I could never understand the need for the amount of managers, project managers, on site quantity surveyors etc adding to over 20 managers it took to run what was I considered a medium sized office refurbishment over 3 floors of an 8 floor building. Is it any surprise ISG have gone into administration, unfortunately no, same as Carillon people at top believed they were too big to fail. Until project bank accounts hold funds and sensible budgets and timescales are forthcoming then nothing will change and the supply chain will again be left to shoulder unpaid bills as another tier 1 will no doubt go under in time.