Making Sense of Construction Improvement [1 ed.] 1032311142, 9781032311142

Citation preview

Making Sense of Construction Improvement

Making Sense of Construction Improvement provides a critical evaluation of the construction improvement debate from the end of the Second World War through to the modern era. The book offers unique insights into the way the UK construction sector is continuously shaped and reshaped in accordance with changes in the prevailing political economy. This second edition brings the book up to date by including coverage of key trends from 2010–2023. The book has been substantially revised and reworked to include new material relating to the ‘age of austerity’ and the subsequent period of political uncertainty initiated by the Brexit referendum. Changes in the political economy are positioned alongside the rise of the sustainability agenda and the advent of ‘zero carbon’. Particular attention is paid to the ongoing skills crisis and the over-hyped advocacy of modern methods of construction (MMC) as the latest supposed panacea of industry improvement. Coverage includes the Farmer (2016) report Modernise or Die and the Construction Playbook (HM Government, 2020). However, perhaps the most important addition is a focus on the Grenfell disaster (2017) and the subsequent revelations from the public inquiry. Further intermediate milestones include Building a Safer Future (Hackitt, 2018) and the Construction Sector Deal (HM Government, 2018). The emerging consensus points towards a systemic failure involving not only the construction sector but also the entire system of regulation and compliance. Tracing the failings back over time and scrutinising the role played by previous generations of policymakers, Stuart Green ultimately argues that Grenfell was a disaster entirely foretold. The insightful and critical analysis of the industry contained within these pages is essential and timely reading for anyone who wants to understand how the construction sector arrived at where it is today, and with that knowledge, give further thought to where it might go next. Stuart D. Green is Professor of Construction Management at the University of Reading and former Head of the School of the Built Environment. He has an extensive track record of policy engagement with the UK construction sector and writes from the conviction of personal experience. He is an accomplished researcher and continues to be actively involved in consultancy both in the UK and internationally.

Making Sense of Construction Improvement Second Edition

Stuart D. Green

Designed cover image: © Busà Photography/Getty Images Second Edition published 2024 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2024 Stuart D. Green The right of Stuart D. Green to be identified as author of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. First Edition published by Wiley-Blackwell 2011 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Green, Stuart, 1958- author. Title: Making sense of construction improvement / Stuart D. Green. Description: Second edition. | Abingdon, Oxon ; New York : Routledge, 2024. | Includes bibliographical references and index. Identifiers: LCCN 2023032313 (print) | LCCN 2023032314 (ebook) | ISBN 9781032311142 (hardback) | ISBN 9781032301334 (paperback) | ISBN 9781003308133 (ebook) Subjects: LCSH: Construction industry--Management. | Economic history. | Building--Superintendence. Classification: LCC HD9715.A2 G698 2024 (print) | LCC HD9715.A2 (ebook) | DDC 690.068--dc23/eng/20231020 LC record available at https://lccn.loc.gov/2023032313 LC ebook record available at https://lccn.loc.gov/2023032314 ISBN: 978-1-032-31114-2 (hbk) ISBN: 978-1-032-30133-4 (pbk) ISBN: 978-1-003-30813-3 (ebk) DOI: 10.1201/9781003308133 Typeset in Times New Roman by KnowledgeWorks Global Ltd.

The book is dedicated to all those who work in the construction sector. They too often work in appalling conditions and all they get in return is criticism. They deserve better from those responsible for construction sector policy.

Contents

List of Figures List of Tables and Boxes Preface to First Edition (2011) Preface to Second Edition (2023) 1 Construction in the Age of the Planned Economy

viii ix x xviii 1

2 The Dawn of Enterprise

20

3 Leanness and Agility in Construction

43

4 The Improvement Agenda Takes Shape

67

5 Rethinking Construction

92

6 From Business Process Re-Engineering to Partnering

119

7 Lean Construction

150

8 From Enterprise to Social Partnership

176

9 Dilemmas Unresolved

210

10 The Age of Austerity

239

11 A Prevailing Sense of Permacrisis

270

12 Unfulfilled Dreams of Technological Optimism

304

Epilogue Index

335 337

Figures

1.1 Output in the construction industry for Great Britain (all agencies), 1955 to 2008 12 1.2 Number of working days lost due to industrial action (1946–2009) 15 2.1 Housing tenure in the UK (1961–2000) 23 2.2 New homes completed by private companies, housing associations and local authorities in the United Kingdom (UK) from 1949 to 2010 (in 1,000s) 24 2.3 Great Britain construction output by contractors and DLOs (1955–2009) 25 3.1 Main trades’ employment by types (1979–2009) 44 3.2 Private contractors: Percentage of firms by trade (1972–2009) 45 3.3 Private contractors: Percentage of firms by size (1971–2009) 49 3.4 Great Britain construction manpower: Percentage of employees and self-employed (1969–2007) 56 5.1 Rethinking Construction: Annual targets for construction 105 5.2 KPIs for benchmark performance 110 8.1 Better construction performance – What is needed? National Audit Office analysis of Latham, Levene and Egan reports 188 8.2 Principles of integration 201 9.1 Rate of fatal injuries to workers in Great Britain in 2021/22, by industry (per 100,000 workers) 226 10.1 Gross value added (GVA) of the construction industry in the United Kingdom (UK) from the 1st quarter of 1997 to 4th quarter of 2022 (in billion GBP) 263 11.1 Critical symptoms of failure and poor performance 272 11.2 Percentage of self-employed in the United Kingdom as of 1st quarter 2022 by industry sector 274 12.1 New homes completed by private companies, housing associations and local authorities in the United Kingdom (UK) from 1949 to 2020 (in 1,000s) 308 12.2 Construction output in England, Scotland and Wales from 1997 to 2022, by industry segments 315 12.3 Imports of prefabricated buildings or modular construction in the United Kingdom (UK) from 2002 to 2021 323

Tables and Boxes

Tables 4.1 5.1 6.1 8.1 8.2

Membership of the Construction Clients’ Forum 84 Targets for improvement 102 Seven pillars, seven paradoxes and seven deadly sins 145 Strategic Forum membership 192 M4I demonstration project performance compared to all construction for 2001 194 12.1 Seven MMC categories proposed by MHCLG (2019) working group 321

Boxes 5.1 Members of the Construction Task Force 95 5.2 Business improvement themes of the Construction Best Practice Programme 115 7.1 Lean model 1: Waste elimination 169 7.2 Lean model 2: Partnering 169 7.3 Lean model 3: Structuring the context 170

Preface to First Edition (2011)

This book is about construction improvement. More specifically, it is about making sense of the construction sector improvement debate. It is based on 30 years’ experience working in, or interacting with, the UK construction sector. In many respects, the book is an account of a personal journey. My engagement with construction firms commenced in 1979 following my graduation from the University of Birmingham with a degree in civil engineering. Following several years’ experience with a national contracting firm, I returned to academia in 1985 to study an MSc in Construction Management at Heriot-Watt University in Edinburgh. Thereafter, I was fortunate enough to stumble into a research career in the School of Construction Management and Engineering at the University of Reading. Initially, I looked at construction management as most engineers tend to look at it. My primary interest was in developing tools and techniques which could improve construction management practice. This remains a worthwhile aim for many, but it is not the primary focus of this book. In contrast to other textbooks, the aim of the current book is not to offer advice on how to manage construction projects more effectively. What the book does attempt to do is to understand the forces that have shaped the construction sector improvement agenda over time. The book was initially predicated on a sense of unease with the way fashionable improvement recipes such as business process re-engineering (BPR), partnering and lean construction were promoted in the construction sector. Particular motivation was derived from the publication of Rethinking Construction (Egan, 1998). Perhaps it was the iconoclast within me which caused me to question what it seemed everybody else was taking for granted. Senior colleagues at the time even warned me that to go against the grain of the accepted orthodoxy would have an adverse impact on my career. But it rapidly become apparent that many industry leaders shared my reservations about the so-called ‘Egan agenda’, even if they were not at the time willing to say so in public. There is of course an argument that I have myself become unhealthily preoccupied with Rethinking Construction, and am hence guilty of the same obsession as that which I accuse others. But it remains the case that the construction improvement agenda continues to be linked back to the Egan report with little recognition of what had gone before. It is almost as if what happened prior to 1998 to shape the current industry is of no importance. Recognition is occasionally also given to the contribution of Constructing the Team (Latham, 1994), but often the role of Latham is reduced to ‘paving the way for Egan’. Recurring arguments The motivation to write the current book was also derived from the disinclination of many sources on construction management to place the advice offered in the broader context of industry change. The overriding tendency is to point towards the latest new management panacea, and then to advocate its application to the construction sector as an essential component of ‘best practice’. Such

Preface to First Edition (2011) xi recipes are invariably sourced from other industrial sectors and all too often are promoted as generic instrumental solutions that are universally applicable (Bresnen and Marshall, 2001). There is a repetitive pattern to the arguments mobilised that is nothing if not predicable. The tendency is for the advocates of any new improvement recipe to claim – usually with great rhetorical flourish – that it has an established theoretical base and an outstanding track record in other sectors. The case would then be made for its application to construction, with particular emphasis on the ‘barriers’ which need to be overcome. A commonly cited barrier is the construction sector’s fragmented structure, which is invariably seen to present significant challenges to the implementation of the latest management thinking. But an even greater challenge is presented by the construction sector’s supposedly ingrained ‘regressive attitudes’; otherwise presented as its ‘adversarial culture’. In other words, construction practitioners are out-of-touch with the latest management thinking; they are rooted in an old-dated paradigm; they are old-fashioned; they are generally somewhat ill-informed and backward (see Fernie et al., 2006). Such an interpretation categorically does not accord with the author’s personal experience. The people who work in construction are the same people with whom we socialise every weekend. They have the same strengths and the same weaknesses; they have varying levels of education, and they possess the same diversity of political opinion as can be found within broader society. From the outset, we should therefore be wary of interpretations which rest on the assumption that the people who work in the construction sector are inherently different from those who work in other sectors. We should be even more wary of claims that the construction sector has an ‘adversarial culture’ which can be changed simply through the adoption of advanced management techniques. Management fashions It will be argued throughout the current book that many of the improvement recipes which are directed at the construction sector owe more to management fashion than to scientific endeavour. While the notion of ‘fashion’ is undoubtedly pejorative, this does not mean that management fashions can be dismissed as irrelevant to ‘real world’ issues. The way managerial discourses are mobilised and diffused impacts directly upon the material reality of the construction sector. This is because they provide the narratives which practitioners use to shape their working lives. But such narratives are only persuasive if they provide practitioners with the means of making sense of the changes they observe happening around them. The contention is therefore that fashionable management improvement recipes often reflect and reinforce pre-existing dynamics of change within the sector. Rather than viewing each improvement recipe as a new panacea for the industry’s problems, the aim is to understand why such recipes become fashionable at different times. Hence the book searches for a broader understanding of the construction improvement debate which strays beyond the boundaries of narrowly defined instrumental rationality. The overriding message is the need to understand construction management improvement recipes in the context of ongoing sectoral structural change. Of particular importance is the need to understand how the debates of the present are inexorably shaped by the events of the past. Precisely what constitutes ‘good management’ is further shaped and conditioned by the prevailing political consensus. Discourses of management only become fashionable if they concur with the mood of time. For example, BPR became popular during early 1990s because it reflected and reinforced the prevailing belief that organisations were over-sized and needed to be slimmed down. But in truth, downsizing and outsourcing were already part of the corporate landscape prior to the ideas of Hammer and Champy (1993). BPR was persuasive because it provided middle managers with the means of making sense of what they observed happening around them. Even more importantly, it provided them with a means of bolstering their own self-identities in a threatening and

xii  Preface to First Edition (2011) increasingly uncertain environment. Simply put, it was far better to become an advocate of BPR than to be a victim. All other things being equal, middle managers who are open to management fashions have a propensity to remain in gainful employment for longer than those who habitually dismiss such ideas as short-lived fads. It tends to be much better to be part of the ‘groovy gang’ who are seen to be advocating enlightened management ideas, rather to be perceived as a ‘dinosaur’ standing in the way of progress. The ebb and flow of management fashions also points towards the highly transient nature of ‘best practice’. The very idea of best practice is suggestive of the ‘one best way’ promoted by the advocates of scientific management in the early 1900s (Taylor, 1911). To have any expectation of finding optimal ways of working irrespective of context is to deny the influential ideas of contingency theory (Burns and Stalker, 1961; Lawrence and Lorsh, 1967). In short, notions of best practice are inevitably time and context specific. Hence universally accepted definitions of ‘best practice’ will forever remain elusive. In the construction sector, continuously shifting policy objectives renders any fixed interpretation of best practice especially challenging. Even within relatively localised contexts, the existence of multiple interest groups further undermines the idea that there can be a model of best practice which serves the needs of all interest groups. ‘Best practice for whom?’ is the question which must be continually asked. Throughout the course of this book, it will become apparent that arguments in support of best practice are invariably rhetorical devices which are mobilised by different interest groups in a continuous competition for power and influence. This again points towards the need for the infrastructure of industry improvement to be an essential part of any analysis. The position adopted throughout the current book is that best practice is a concept which is socially negotiated and continuously contested over time. Indeed, the very idea of best practice is best understood as a management fashion. An unfolding story In seeking to understand the context within which construction improvement is enacted, it is clearly also necessary to understand the structural characteristics of the construction sector. Unfortunately, management improvement recipes are invariably considered entirely separately from economic analyses of industry change (and vice versa). This has more to do with the institutional separation of management scholars from economists than with anything which occurs in practice. Following Pettigrew (1997), management practice is not only shaped by the structural characteristics of a particular industry sector, but it is also actively engaged in shaping those same structural characteristics. Popularised construction improvement recipes frequently act to inform action, which in turn acts to create the constraints within which practitioners operate. This immediately conjures up the idea of a continuously unfolding interaction between industry structure and management practice. One cannot consider one in isolation of the other. Hence attention is given to the way in which events have unfolded over time, and the language within which the debate has been conducted. Acknowledgement is given to the active role played by key individuals at different points in time. But attention is also afforded to the evolving infrastructure of construction improvement within which the debates about construction improvement are situated. At the same time, it is clear that debates within the construction sector at any particular point in time cannot be understood in isolation from the prevailing socio-political consensus. It has therefore been necessary to chart the way in which the discourse of construction improvement has been continuously influenced by political shifts within government. General election results have frequently had a profound subsequent impact on the construction improvement debate. Governments of course tend to change on very specific dates immediately following general elections, whereas political discourses are in a state of continuous flux.

Preface to First Edition (2011) xiii At any one point in time there are several counter discourses competing for attention. Likewise there are invariably several differing discourses of industry improvement plying for the attention of practising managers. In pointing to the relationship between management discourses and the broader socio-political consensus, it is important to avoid any argument of causality. Political and management discourses are to a large extent mutually constituted, and both to no small extent rely on counter discourses against which they can be positioned. Discourses can further be seen to comprise a complex web of institutions and policy initiatives with direct material consequences, as well as rhetorical components. Hence it is possible to perceive structural change in the form of outsourcing and downsizing as part of the same discourse as the justifying narrative of BPR. Political shifts are in turn frequently influenced by global events, coverage of which is limited to those which are considered essential for the purposes of telling the story. The essential problem with construction improvement is that it is forever chasing a moving target. Even if the multitude of interest groups within the sector were to effectively focus their attention upon a single set of shared objectives, they are likely to be rapidly replaced by some other set of imperatives as a result of a shift in the broader policy environment. The construction sector has long-since been central to government policy objectives in housing, health, education and transport. Any shift in policy in any of these areas inevitably has implications for the construction sector. More recently, construction has found itself at the centre of society’s aspirations for social, economic and environmental sustainability, and hence prone to any shift in emphasis between these three often conflicting agendas. Arguments beyond efficiency In light of the construction sector’s sensitivity to subtle shifts in government policy, it is striking how much of the improvement debate remains focused on narrow issues of cost efficiency. To focus on improving efficiency is of course no bad thing. Few people in the construction sector (or elsewhere) argue in favour of inefficiency. But to focus on efficiency alone – to the detriment of all other considerations – is undoubtedly a bad thing. Yet it is not cost efficiency that the sector’s senior managers spend the majority of their time worrying about. They tend to be much more concerned with continuity of workload, and in consequence most successful companies have learned to expand and contract rapidly in the face of fluctuating levels of demand. Contracting firms tend to privilege structural flexibility over narrowly defined efficiency; the risks of being inefficient can always be delegated to sub-contractors, who in turn very often delegate them to their own sub-sub-contractors. It is possible for individual firms to become very efficient while at the same going out of business. The defining issue here is often an inability to develop new responses to changing circumstances. For example, there is little point in becoming very efficient at providing a service for which there is a diminishing demand. A rather more sophisticated storyline would seek to balance the need for efficiency in the operation of current activities while at the same time developing effective responses to emerging opportunities. Strangely, the construction improvement agenda rarely engages with the real world day-to-day challenges faced by managers in the construction sector. It is much easier to advocate supposedly generic instrumental solutions with track records of success in other sectors. There is also a recurring assumption that if individual firms can be made to be more efficient the benefits will aggregate to the sector as a whole. Unfortunately, there is little evidence to support this belief. Such arguments tend to take it entirely for granted that there is a common understanding about what the construction sector is for. In truth, such a consensus has never existed, and never will. Different interest groups will always articulate different objectives for

xiv  Preface to First Edition (2011) the construction sector. Clients consistently struggle to find common ground with the aspirations of general contracting firms, which in turn rarely have shared interests with specialist suppliers. Even clients can hardly be characterised as a single coherent group with a shared set of interests, and public sector clients frequently utilise procurement as means of achieving broader government policy objectives. The latter tendency was less evident during the 1980s when the ‘enterprise culture’ was dominant but was very much in evidence under the New Labour government of Tony Blair. Contracting firms are nothing if not resourceful, and responding to ever changing sets of requirements has become an undoubted strength of the sector. Definition of construction sector It must be conceded at the outset that the construction sector is not a homogeneous entity. The author is well aware of the continuing debate about boundary definition (e.g. Pearce, 2003) and the contention that the construction industry is not a single industry, but several separate subindustries each with its own distinguishing characteristics (Ive and Gruneberg, 2000). The most notable distinction lies between building and civil engineering. Yet even here there is considerable overlap in the use of materials, labour and plant, and the activities of many contractors span across both building and civil engineering (Hillebrandt, 1984). Pearce (2003) differentiates between narrow and broad definitions of the construction sector. The narrow definition limits itself to on-site assembly together with repair and maintenance activities carried out by contractors. This interpretation concurs with the definition of construction enshrined within Division 45 of the Standard Industrial Classification (SIC) developed by the Office for National Statistics (2003). This narrow interpretation excludes those involved in professional services such as surveying, architecture and engineering. It also excludes those who are involved in self-build and those who are directly employed by organisations whose main business is something other than construction. Further confusion has been caused as construction companies have also become increasingly diversified in terms of their operations. Some have even had cause to re-list themselves on the Stock Exchange as service companies. Reports such as Emmerson (1962) and Banwell (1964) tended to refer to the ‘construction industries’ in the plural, whereas Latham (1994) and Egan (1998) both refer to the ‘construction industry’ as if it were a single homogeneous entity. The modern practice is to refer to the construction sector. It will be seen that the construction improvement agenda up until, and including Rethinking Construction (Egan, 1998) was commonly limited to Pearce’s (2003) narrow definition. However, more recently there has been a tendency within the improvement debate to include the professional services sector within the boundary of the construction sector, and even to some extent the construction materials suppliers. The position adopted in the current book is that the boundary which is drawn around the ‘construction sector’ is not a matter of fact, but is something which is continuously renegotiated. The book therefore does not set out to confine itself to any particular false boundary, but rather to follow the coverage of the construction improvement debate in all of its glorious imprecision. It must also be recognised that even the idea of a ‘national’ construction sector is increasingly challenged by globalisation. The cutting edge of the modern UK construction sector undoubtedly bears little resemblance to the ‘construction industry’ of popular perception. The leading design and engineering consultancy firms increasingly compete highly effectively across global markets at the forefront of the knowledge economy. Even relatively modest local construction projects increasingly rely on globally distributed networks of value-adding services. The construction improvement debate has yet to engage with this end of the construction business. But we must also remind ourselves that construction still requires labour to work on site in conditions which are invariably

Preface to First Edition (2011) xv much less than perfect. In the final analysis, construction is a people business. Even if the narrow definition is adopted, the UK construction sector employs more than 2 million people and comprises approximately 8.5% to GDP. If the broader definition is adopted to include the whole construction value chain (i.e. architecture, engineering and construction products) the respective figures rise to 3 million and 10% (LEK, 2009). In short, construction matters. Timeline To tell the story of how the debate about construction improvement has evolved over time, it is clearly necessary to select a starting point. In many respects, the choice of when to start the description is somewhat arbitrary. It is always possible to argue that the selection of a particular date excludes important historical precedents. What is clear is the debate about construction improvement is not new; humankind has debated how to improve the building process ever since we gave up on cave dwelling. A case could be made for beginning the story with the development of the general contracting system during the industrial revolution. Arguments could also be made that the modern structure of the construction sector owes much to the craft guilds which were established during the 15th and 16th centuries. However, the present book is not intended to be a work of history, but to offer a contextualised account of the contemporary construction improvement debate. The concern is with the modern construction sector, and its relationship with the modern economy. For this reason the story commences in the immediate aftermath of the Second World War. Structure of the book Chapter 1 charts the various influences on the construction improvement debate from the aftermath of the Second World War through to the election of Margaret Thatcher in 1979. Attention is given to the industrial unrest of the 1970s and the collapse of the post-war social consensus. Chapter 2 charts the rise of what has become known as the ‘enterprise culture’ in the UK, both in terms of its constituent policies and its impact on management practice. Chapter 3 addresses the material manifestation of the enterprise culture in the construction sector, giving particular attention to the diversification of client demand and the emergence of the hollowed-out contracting firm. Chapter 4 analyses the way in which the construction improvement agenda took shape during the course of the 1980s and 1990s. Consideration extends to the extent to which the improvement agenda both reflected and reinforced the discourse of enterprise. Particular attention is given to Constructing the Team (Latham, 1994) and the resultant infrastructure of industry improvement. Chapter 5 is dedicated entirely to a critical review of Rethinking Construction (Egan, 1998), with due acknowledgement of the context within which it was produced. As with the preceding chapter, consideration is extended to the organisational infrastructure subsequently tasked with implementation. It will be argued that Rethinking Construction deserves special consideration because of its pivotal position in the modern improvement debate. Chapter 6 directs critical attention at two of the most popular management improvement recipes of the 1990s: BPR and partnering. Both are critiqued in terms of their vagueness of definition and also in terms of their underlying metaphors. It is argued that both are best understood in the context of structural change in the form of privatisation, downsizing and outsourcing. Chapter 7 directs similar critical attention at lean construction, another improvement recipe that had been advocated by Rethinking Construction. In common with BPR and partnering, lean construction is also found to suffer from an essential definitional elusiveness. The discourse of lean thinking is further argued to have been popular because of the way it reflected and reinforced ways of organising which had already been adopted.

xvi  Preface to First Edition (2011) Chapter 8 extends the discussion to the shifting policy objectives of the New Labour government from the election of Tony Blair in 1997 through to the uncontested succession of Gordon Brown in 2007. Particular attention is given to the policy objective of combining enterprise with aspirations of social democracy and its implications for the improvement debate in the construction sector. Coverage includes a review of Modernising Construction (NAO, 2001) and Accelerating Change (Strategic Forum, 2002). Chapter 9 brings the discussion up to date with a review of the current ‘dilemmas unresolved’. Attention is given to the changing infrastructure of construction improvement together with the disconnected agendas which characterise the current debate. Consideration is also given to the improvement discourses which flourished during the New Labour years, especially those relating to the quality of design and the notion of a value-creating built environment industry. Coverage is concluded with a consideration of health and safety in the construction sector and a brief review of the Wolstenholme (2009) report, Never Waste a Good Crisis. Acknowledgements In writing a book such as this, I have undoubtedly been influenced by many of the colleagues with whom I worked alongside at the University of Reading. Professor Brian Atkin, Professor John Bennett and Professor Roger Flanagan in no small way acted as role models for how one should behave in a university environment. But perhaps I have learned most from the researchers with whom I have been fortunate to work. Their ideas inevitably over time became my ideas, and in return I can only hope that some of my ideas also became theirs. The following are especially deserving of mention: Dr Scott Fernie, Dr Chris Harty, Dr Chung-Chin Kao, Dr Graeme Larsen, Dr Roine Leiringer, Susan May and Steph Weller. Several of these have since progressed to bigger and better things; some will undoubtedly go on to write better books than this one. But in citing the contributions of others, it is also necessary to make it clear that the responsibility for any faults and misconceptions lie clearly with the author. Notwithstanding the contributions of colleagues, my main thanks must lie with my family for staying with me as I have struggled towards completion. For the benefit of readers who have followed my work over the years, it should also be acknowledged that sections of the text are in part based on previous work. The discussion of business process re-engineering in Chapter 6 adapts material from Green (1998) and the section on partnering in the same chapter similarly updates material previously published as Green (1999a). Finally, the discussion of lean construction in Chapter 7 likewise draws from polemics previously published as Green (1999b; 1999c) and from empirical research previously presented in Green and May (2005). References Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Bresnen, M. and Marshall, N. (2001) Understanding the diffusion and application of new management ideas, Engineering, Construction and Architectural Management, 8(5/6), 335–345. Burns, T. and Stalker, G. M. (1961) The Management of Innovation, Tavistock, London. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Fernie, S., Leiringer, R. and Thorpe, T. (2006) Change in construction: A critical perspective, Building Research and Information, 34(2), 91–103.

Preface to First Edition (2011) xvii Green, S. D. (1998) The technocratic totalitarianism of construction process improvement: A critical perspective, Engineering, Construction and Architectural Management, 5(4), 376–386. Green, S. D. (1999a) Partnering: The propaganda of corporatism? Journal of Construction Procurement, 5(2), 177–186. Green, S. D. (1999b) The missing arguments of lean construction, Construction Management and Economics, 17(2), 133–137. Green, S. D. (1999c) The dark side of lean construction: Exploitation and ideology, in Proc. of the 7th Conference of the International Group for Lean Construction (IGLC-7), (ed. I. D. Tommelein) University of California, Berkeley, USA, pp 21–32. Green, S. D. and May, S. C. (2005) Lean construction: Arenas of enactment, models of diffusion and the meaning of ‘leanness,’ Building Research & Information, 33(6), 498–511. Hammer, M. and Champy, J. (1993) Re-Engineering the Corporation, Harper Collins, London. Hillebrandt, P. M. (1984) Analysis of the British Construction Industry, Macmillan, London. Ive, G. L. and Gruneberg, S. L. (2000) The Economics of the Modern Construction Sector, Macmillan, Basingstoke. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Lawrence, P. R. and Lorsh, J. W. (1967) Organization and Environment, Harvard Press, Cambridge, Mass. LEK (2009) Construction in the UK Economy: the Benefits of Investment, L.E.K. Consulting, London. NAO (2001) Modernising Construction. Report by the Comptrollor and Auditor General of the National Audit Office, The Stationery Office, London. Office for National Statistics (2003) UK Standard Industrial Classification of Economic Activities 2003, Stationery Office, London. Pearce, D. (2003) The Social and Economic Value of Construction: the Construction industry’s Contribution to Sustainable Development, Davis Langdon Consultancy, London. Pettigrew, A. M. (1997) What is processual analysis? Scandinavian Journal of Management, 13(4), 1–31. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. Wolstenholme, A. (2009) Never Waste a Good Crisis, Constructing Excellence, London.

Preface to Second Edition (2023)

It is twelve years since the first edition of this book was published. Much has happened since. The first edition ended with the conclusion of the New Labour years. My focus of interest at the time lay with the extent to which the pivotal Egan (1998) report had been successful in encouraging radical change within the sector. I still find it amazing that so many construction practitioners took the Egan report so seriously, while seemingly missing its most important message. The primary purpose of Rethinking Construction (Egan, 1998) was to reassure the construction sector that the newly elected New Labour government would not revert to the command-and-control policies favoured by previous Labour governments. In other words, the enterprise culture would continue to provide the primary guiding ethos of construction sector policy. The Egan report was further notable for advocating a range of beguilingly clever management techniques presented in the cause of modernisation. But the Egan report was also notable for its emphasis on standardisation and pre-assembly, coupled with a recurring insistence on radical change. It was influenced in this latter respect by the prevailing narrative of business process reengineering (BPR). In short, the advocacy in support of the ‘Egan principles’ can be seen to share many characteristics with that more recently mobilised in support of modern methods of construction (MMC). It seems that there is forever an appetite for potted technological solutions in response to the supposed crises of the construction sector. That industrialised building methods were previously advocated as a solution to the housing crisis of the 1960s seemingly did little to deter the UK Government’s subsequent presumption in favour of offsite construction. If the previously advocated technological fix had not lived it to its promise, the solution was simply to advocate a more technologically advanced alternative. Technological utopia is seemingly forever just over the horizon if only the barriers to implementation can be overcome. But arguably the biggest myth of all is that the construction sector is immune to change. It is perhaps understandable that each generation of supposed change makers should wish to lay claim to the slogan of ‘modernisation’. The self-appointed champions of industry change invariably see themselves as foot soldiers in an ongoing conflict between the modern and the traditional. That such labels routinely defy definition is seemingly of little concern. The reality is the construction sector is continuously changing in response to the policy environment within which it operates. Furthermore, the modern and the traditional have always been closely intertwined and always will be. It must further be recognised that the meaning of such terms is continuously renegotiated. This remains is a consistent theme throughout the updated book. The previously mentioned Egan (1998) report continues to be cited as the point at which the debate about construction modernisation began. This remains a bizarre interpretation of a sector which is of such central importance to the UK economy, and to society at large. An alternative view credits the Egan report with an important role in legitimising the changes that had already happened. Over the preceding 20 years contractors had become highly adept at expanding or

Preface to Second Edition (2023) xix contracting in response to fluctuations in demand. The focus of main contractors slowly-butsurely shifted towards the off-setting of risk and responsibility to the euphemistically named ‘supply chain’. And crucially, this off-setting of responsibility included that which related to training and skills development. Major projects became increasingly characterised by multitiered chains of subcontract, often culminating in a workforce where more than 40% are nominally self-employed. Yet the official statistics consistently tend to underestimate the proportion of self-employment on large construction projects. In major cities such as London, it is by no means unusual for 90% of the workforce on major sites to be nominally self-employed (Donaghy, 2009). Such fragmentation is routinely lamented as one of the construction sector’s defining characteristic, yet it is rarely conceded that the extent of fragmentation has been exacerbated by previous policy choices. The Wolstenholme (2009) report was typical of many subsequent reports in that it offered no criticism of the Egan report (1998), preferring instead to attribute its lack of impact to a failure of implementation. Wolstenholme was however notable for emphasising that the era of client-led change was over. The gauntlet was very firmly thrown down to the supply side to demonstrate how it could improve. But there was no emphasis on the construction labour model. There was seemingly an assumption that the reserve army of migrant labour would forever make itself available in times of need. In essence, the construction worker remains forever invisible other than being viewed through the lens of the recurring skills crisis. Subsequent policy development under the Cameron government was curtailed by the global financial crisis and the prolonged years of austerity which followed. In short, the debate about construction improvement was reduced to a minimalist focus on cost reduction, with occasional lip service to the imperative of low carbon. Building information Modelling (BIM) was just about the only other show in town. Many public sector clients at the time were feeling disgruntled because of what they saw as profiteering by the construction sector under the PFI arrangements which were rapdly expanded during the New Labour years.. There was hence an element of payback involved in the surreptitious reimposition of public sector low-cost tendering. But more broadly, government could not seemingly decide if it wanted to adopt an industrial strategy or not. The Construction 2025 strategy (HM Government, 2013) was undoubtedly stuffed with beguiling soundbites, but ultimately lacked any serious content. Nevertheless, the government continued to be clear on the need for further deregulation, and this was a path that would lead the industry into dangerous places. Following the general election of 2015, the Brexit referendum intervened such that the construction sector was largely left to fend for itself. Enter the diagnosis of the Farmer (2016) review that the industry was a ‘sick and dying patient’ in urgent need of treatment. If this diagnosis is taken even remotely seriously, it must also be accepted that the industry has been seriously let down by those leading previous change agendas. The Farmer review was nevertheless an important point of reference for those advocating modern methods of construction (MMC) as the solution to the industry’s problems. The new gestalt of construction sector improvement was seemingly a naïve belief in technological optimism. This continues to be fuelled by hubristic notions of the fourth industrial revolution. Yet events were once again destined to intervene to challenge the accepted narrative, not least in the form of the Grenfell Tower tragedy of 2017 and the subsequent collapse of Carillion in 2018. Such events are of central importance in understanding what was to follow, not least the 2022 Building Safety Act and the Construction Playbook (HM Government, 2020). Meanwhile the hype around MMC was notched up ever higher as a means of promoting prefabrication as a panacea for the industry’s problems. Concerns about the construction labour model have seemingly disappeared on the basis that the problem is too difficult to solve without fundamentally rethinking the way the UK political economy operates.

xx  Preface to Second Edition (2023) Hence policymakers continue to put their faith in radial innovation. Much easier to talk about ‘digital and manufacturing technologies’ than it is to engage with the adverse consequences of previous policy initiatives. Three new chapters The first nine chapters of the new edition remain largely unaltered from those published previously. I remain broadly comfortable with the way these tell the story as far as the 2010 general election. The one chapter that I have omitted in its entirely is the previous Chapter 6 which described how clients might usefully be understood based on organisational metaphors. I still personally find these ideas appealing, but the chapter was never entirely consistent with the adopted timeline. The material which is new to the second edition commences with Chapter 10 which picks up from where the previous edition left off. It describes ‘the age of austerity’ which prevailed from the general election of 2010 through to the Brexit referendum of 2016. Some would argue that the age of austerity is still ongoing at the time of writing in 2023. I would have much sympathy with such an argument, but any sense of continuity with what had previously prevailed was rudely interrupted by the political machinations associated with Brexit. Coverage also includes the Construction 2025 industry strategy (HM Government, 2013). The second new substantive addition is Chapter 11. This is entitled ‘A Prevailing Sense of Permacrisis’ to reflect the mood which prevailed at the time. Coverage commences with the Farmer (2016) review and progresses through to the Grenfell Tower disaster of 2017. It then addresses the Edinburgh Schools collapse of 2016 prior to closing with the demise of Carillion in early 2018. The events described comprise a devastating indictment of the choices made by previous generations of construction sector policy makers. The third and final new chapter, Chapter 12, is entitled ‘Unfulfilled Dreams of Technological Optimism’. It commences with a commentary on the Construction Sector Deal (HM Government, 2018). Further coverage is given to the Covid pandemic which commenced in 2020 and the subsequent publication of the Construction Playbook (HM Government, 2020). However, the core of this final chapter comprises a critique of MMC. At the time of writing there is increasing concern that the over-enthusiastic promotion of MMC is sowing the seeds of the next building safety crisis. In the preface to the first edition included above, I named several colleagues from whom I learned during the earlier stages of my career. In writing this second edition, it is appropriate to name a few younger colleagues who have inspired and informed me in equal measure. Previous PhD students from whom I have learnt much include Dr Dilek Ulutas Duman, Dr Beibei Qin and Dr Natalya Sergeeva. Also deserving of mention is Dr Hiral Patel, with whom I worked closely in the years immediately following the completion of her PhD when she was employed as a postdoctoral research fellow. The future of the discipline is in good hands with researchers such as these. Finally, the material on MMC and the Construction Playbook included in Chapter 12 had its origins in a series of invited commentary pieces for the interdisciplinary journal Buildings & Cities. If only all journal editors were like Richard Lorch. References Donaghy, R. (2009). One Death is Too Many. Report to the Secretary of State for Work and Pensions, Cm 7657. The Stationery Office, London. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London.

Preface to Second Edition (2023) xxi Farmer, M. (2016) The Farmer Review of the UK Construction Labour Model: Modernise or Die, Construction Leadership Council, London. HM Government (2013) Construction 2025: Industrial Strategy for Construction – Government and Industry in Partnership, Department of Business, Innovation & Skills, London. HM Government (2018) Industrial Strategy: Construction Sector Deal, Department for Business, Energy and Industrial Strategy, London. HM Government (2020) The Construction Playbook: Government Guidance on Sourcing and Contracting Public Works Projects and Programmes, Cabinet Office, London.

1

Construction in the Age of the Planned Economy

1.1 Introduction This chapter begins with the election of Clement Attlee as prime minister on the 5 July 1945 in the final weeks of World War II. This was the first Labour administration to be elected with a sizable majority and to its full term of office. Britain at the time was essentially bankrupt and was faced with a huge legacy of challenges as it commenced demobilisation of its armed forces. Housing was a top government priority together with the modernisation of British industry. The Attlee Government is further credited with creating the British Welfare State, the legacy of which prevails until the present day. Attlee’s government was followed by a series of Conservative governments which did little to unpick the broad political consensus which characterised the immediate post-war era. The Labour Party returned to power in 1964 under the leadership of Harold Wilson with a renewed commitment to a planned economy. The post-war years were marked by Britain’s dramatic decline as a global power. Increasing exposure to global competition exposed the long-term structural weaknesses of British industry which was hampered by decades of under-investment. Nevertheless, the domestic standard of living at home improved dramatically as the worse excesses of poverty were eliminated. But by the late 1960s, the post-war social consensus was starting to crack causing Britain’s industrial decline to be progressively exacerbated by widespread industrial unrest. In the early 1970s, strikes became part of the fabric of industrial life as militant trade unionism became more widespread. Many actions were undoubtedly driven by overtly political agendas, but many others were caused by justifiable grievances and poor management. The national building strike of 1972 left a legacy of bitterness within the construction sector and was undoubtedly a turning point in the industry’s development, with significant long-term implications for patterns of employment. Things were never quite the same after the national building strike as they had been before. The early 1960s saw two important government-commissioned reports which will be referred back to on numerous occasions throughout this book. The Emmerson report of 1962 presented on a ‘survey of problems before the construction industries’, whereas the Banwell report of 1964 was primarily concerned with the placing and management of contracts. Many of the recommendations of these two reports are as valid today as they were when they were published. It is certainly possible to trace back the antecedents of subsequent exhortations in favour of partnering and teamwork to these early reports. But at the same time the Emmerson (1962) and Banwell (1964) reports are indicative of a world which no longer exists. They were written in an era of relative stability characterised by a widespread faith in government intervention. At the time it was commonly accepted across the political spectrum that there was a ‘mutually of responsibility’ for construction sector development which extended across government and industry. There was much talk of demand management to ensure the steady and predictable flow of work which was seen to be essential if the private

DOI: 10.1201/9781003308133-1

2  Construction in the Age of the Planned Economy construction sector was to invest in efficiency improvement. But the world was changing, and the carefully crafted construction improvement debate of the 1960s was soon to be overtaken by events. 1.2  An inherited legacy 1.2.1  The task of nation building

The election of 1945 was undoubtedly a pivotal turning point in Britain’s modern political history. Britain’s wartime leader, Winston Churchill, had been voted surplus to requirements as the electorate put its faith in a new beginning. Middle Britain was perhaps unsure whether it really wanted the socialism that was on offer, but it was sure that it did not want a return to the unemployment and social insecurity of the 1930s. The incoming government was committed to an extensive programme of nationalisation, a significant expansion of social welfare and the achievement of full employment. Jobs, housing and social security were seen as a just return for the sacrifices made during the war. The policy agenda was in no small way shaped by the experience of massive government intervention during the war. Centralised state planning had been instrumental in defeating fascism and overcoming the malaise of the Great Depression. The organisation of resources necessary for a successful war effort had been deemed to be beyond the means of the private sector with the result that large swathes of the British economy had been under de facto government control. The interventionist philosophy prevailed beyond the war by means of the Beveridge settlement in the UK and Roosevelt New Deal in the USA. The post-war social consensus on both sides of the Atlantic derived its theoretical support from Keynesian economics, which questioned the validity of the classical economic doctrine of laissez-faire and emphasised the need for government intervention. The task of the newly elected government was seen in terms of nation-building. The Attlee administration is best remembered for laying the foundations of the welfare state. But it was also committed to the modernisation of British industry, which had been starved of meaningful investment for decades. Long-term economic advantage had been sacrificed in favour of short-term military imperatives. The legacy of victory included obsolete capital equipment, an exhausted labour force and massive damage to the housing stock (Tomlinson, 1997). But perhaps the biggest legacy was a huge balance of payments deficit. The problems faced by the building industry were a microcosm of the problems faced by the British economy at large. It was outdated, inefficient, under-financed and hugely fragmented. Yet at the same time the building industry was of central importance to the government’s agenda across a range of policy areas. Education, health and, most importantly, housing – all depended upon an efficient building industry 1.2.2  Homes for heroes

The expression ‘homes fit for heroes’ was originally coined in the wake of World War I. It was the Housing Act 1919 which first required local authorities to provide housing with the help of central-government subsidies. The housing shortage returned to the top of the political agenda following World War II. Britain at the time was not only struggling to recover from the economic cost of the war but was also struggling to come to terms with its loss of status as a global power. A succession of former colonies were progressively granted independence throughout the 1950s, with the consequent loss of protected markets for British manufactured products. Britain remained heavily indebted to the USA as a result of the wartime lend-lease scheme, and in consequence lacked the capital to modernise either its infrastructure or its manufacturing base. Relative to its major global competitors, Britain was undoubtedly in decline. But in absolute terms, the economy enjoyed steady growth and society became increasingly affluent. The late 1950s saw

Construction in the Age of the Planned Economy 3 the beginning of the consumer revolution as Britain slowly shrugged off the austerity of the immediate post-war period. The building industry was of central importance to the government’s economic policy, and there was widespread concern among policymakers in respect of its fitness to perform. In terms of industry structure, little had changed since the recommendations of the Simon report in 1944. The Labour government of the immediate post-war period was especially obsessed with housing. Half a million homes had been destroyed or rendered uninhabitable by the Luftwaffe. Overall, a staggering 25% of the housing stock had been damaged during the course of the war (Marr, 2007). Urban landscapes throughout Britain were blighted by derelict and uninhabitable houses. The post-victory demobilisation of the armed forces added a sudden and unprecedented demand for family accommodation which was in stark short supply. Many major cities still possessed the social legacy of the industrial revolution. The aspiration was ‘homes for heroes’; the reality was semi-derelict urban areas and dilapidated slums inherited from a previous era. Inner-city areas were characterised by outdated terraced housing which frequently lacked adequate sanitation. Illegal squatting was widespread as homeless families took action into their own hands. Something had to be done. Output expanded rapidly from 1945 with a view to alleviating the housing shortage. In the immediate post-war years relief came in the form of prefabricated factory-assembled housing units, often put together in hastily converted aircraft factories (Finnimore, 1989). From the late fifties and throughout the 1960s emphasis shifted to high-rise tower blocks. Local authority output peaked in 1953 at 198,000 units, although an increasingly vibrant private sector contributed to an overall peak of 352,000 units in 1968. This was a level of housing output which has yet to be surpassed, and in all likelihood never will be. In accordance with the dominant ethos of the day, the commitment to public housing prevailed throughout the 1960s. Modernity had arrived, and Victorian terraces were replaced by symbols of a new age – complete with fitted kitchens and up-to-date bathrooms. Thousands of almost identical tower blocks were built throughout Britain, transforming the urban landscape and severely disrupting social cohesion. Too often it was assumed that communities could be transferred to high-rise accommodation, but problems soon became apparent. Lifts were easily vandalised leaving families stranded in mid-air. Shops and schools were located too far away. In the haste to build high and built quickly, the quality of construction frequently suffered. Too many flats had condensation problems from the outset. Insufficient consideration was given to sound insulation such that occupants were afforded little privacy. One problem family in a single block could rapidly make life unbearable for all. Local authorities were directly incentivised to build high by central government. Corruption flourished as builders shared the available subsidies with dishonest local officials. Quality was widely compromised as the optimism of the 1960s gave way to the realisation that the old-fashioned slums of the 1940s had been replaced by the modern slums of the 1970s. This was not the construction sector’s finest hour. 1.2.3  Ronan Point

The quality problems of high-rise construction were typified by the Ronan Point disaster in London’s East End. A gas explosion on the 18th floor of a newly constructed high-rise residential block in Newham caused a chain reaction resulting in the collapse of an entire corner of the block. The lift had stopped working and families had to evacuate in their nightclothes via the staircases. The building had been occupied for just two months. It had been built by Taylor Woodrow Anglian under contract to Newham Council. Eleven residents were injured and four were killed. The block had been constructed using large panel system (LPS) building whereby prefabricated cladding sections were constructed in a factory environment and then bolted into place on site. The

4  Construction in the Age of the Planned Economy consequent public inquiry concluded that the Ronan Point block had been structurally unsound, and the building regulations were subsequently changed to ensure that the installed concrete panels could withstand explosions. In the case of Ronan Point, the issue was primarily about a lack of restraint ties to withstand an explosive force; problems caused by poor workmanship were not initially highlighted. But poor workmanship and lack of adequate on-site supervision were undoubtedly widespread in the rush to build homes as high, and as quickly, as possible. The Ronan Point block was quickly rebuilt, but its metaphorical shadow hangs over the UK construction sector to this day. The incident led to a major backlash against high-rise residential blocks as a solution to the post-war housing shortage. The emphasis thereafter shifted back to low-rise housing with a consequent drop in the rate of output. In a microcosm of the broader trend, Ronan Point itself was knocked down in 1986 and replaced with terraced housing. The high-rise developments of the 1960s tarnished the reputation of prefabricated building systems which in popular perception became synonymous with low quality. There is of course no inevitable link between the use of prefabricated building components and poor quality. But such a link had been created in the public perception. The Ronan Point disaster also left a professional bias against system building which remains largely intact. The real quality problems associated with the high-rise experience of the 1960s owed more to inadequate research prior to the widespread adoption of new construction techniques than to prefabrication per se. Insufficient attention was given to on-site supervision and responsibility for the quality of the finished product was dissipated between too many parties. 1.2.4  The Poulson scandal

The credibility of high-rise tower blocks was further dented by a public perception of widespread corruption. The extent of corruption was personified by the Poulson scandal which came to public light in 1972. John Poulson was an architect who was found to have been involved in the extensive bribery of public officials at all levels in return for the award of building contracts. Poulson was tried for bribery and corruption in 1973 at Leeds Crown Court. He was found to have given away more than £500,000 in gifts in order to win contracts and was sentenced to five years in prison, subsequently extended by a further two years. Also convicted was T. Dan Smith who had been the Labour leader of Newcastle Council in the 1960s. Smith was typical of the ‘local authority barons’ which prevailed at the time. In addition to being leader of the council, Smith also chaired the planning, finance and housing committees. It was Smith who resided over the demolition of the slums of Scotswood and their subsequent replacement by high-rise tower blocks. He was a powerful figure within the North East of England and was exceedingly well-connected within the Labour Party (Osler, 2002); by 1965 he had been appointed chairman of the Northern Economic Planning Council. Poulson meanwhile had built a huge architectural and planning practice on the back of the boom in high-rise construction. He had also been hugely successful in winning work from the newly nationalised industries within which he cultivated powerful contacts. Poulson’s practice eventually went bankrupt in 1972 revealing a range of illegal payments to companies owned by Smith. Poulson’s network of contacts included several major building contractors and extended throughout the political establishment of the day. The list of those who had accepted his favours included several MPs, police officers, health authorities and civil servants. In addition to Smith and Poulson, others to be jailed included Andrew Cunningham, leader of Durham Council, and George Pottinger, a senior civil servant with the Scottish Office. Other notable casualties included Reginald Maudling, the Conservative Home Secretary at the time. Although Maudling was not convicted of any wrongdoing, he was forced to resign on the announcement of the police investigation as a result of his strong connections with Poulson, including the receipt of ‘gifts’.

Construction in the Age of the Planned Economy 5 The Poulson scandal was undoubtedly one of the biggest British corruption scandals of modern times, and had Poulson not spread his favours so evenly across the political parties, the fall-out would have been much greater. The legacy of the Poulson affair continues to hang over the UK construction policy agenda, especially in respect of procedures for the award of public-sector contracts. Subsequent notable cases of public sector involvement in fraud include the Labour-run Doncaster Council in the 1990s, which resulted in the conviction of no less than 21 councillors. Even more notorious was the ‘homes for votes’ scandal involving Dame Shirley Porter, the leader of Conservative-run Westminster City Council in the late 1980s. We all like to think that British society is relatively free of corruption, but there is little room for complacency. 1.2.5  Prefabrication discredited

The wider cause of prefabrication was to suffer a further blow as a result of a World in Action television exposé of prefabricated timber-frame houses broadcast in 1983. The programme focused on the quality problems of a small group of timber-framed houses constructed in the West of England. Reported problems included a lack of fit between the prefabricated timber frame and the conventionally constructed foundations. Related concerns were expressed about the dwellings’ lack of water-tightness and hence their tendency towards subsequent decay and deterioration. The programme received massive publicity and severely dented the market for timber-framed housing. But in truth, the World in Action programme was based on investigative journalism of the worst kind. The extrapolation from a small sample to the industry at large was at best ill-informed and unrepresentative. A subsequent investigation by the Building Research Establishment (BRE) surveyed over 400 timber-framed dwellings and found no evidence in support of the problems predicted by the World in Action team (Ross, 2002). But the damage to the reputation of prefabricated timber frames had already been done. The exposé of timber-framed housing re-awakened memories of Ronan Point and together they discredited the very idea of prefabrication. They also served to sharpen the public’s perception that construction was a cowboy industry which consistently offered low quality. The industry was of course much less than perfect, but the quality problems were undoubtedly grossly exaggerated. But unfortunately mud sticks, and it took the image of prefabricated construction decades to recover before being subsequently re-invented under the label ‘modern methods of construction’ (MMC). 1.2.6  The shadow of nationalisation

Leaving housing aside, and returning to our chronological account of the post-war building industry, for several decades after World War II nationalisation of the British building industry was held by many to be a serious possibility. Throughout the late 1940s and 1950s nationalisation was almost synonymous with modernisation. The coal industry had been nationalised in 1947 putting an end to years of cut-throat competition between private mine owners. The National Coal Board had taken possession of around 800 mines and became responsible for 750,000 employees. The electricity supply industry was also brought under public ownership. Nationalisation of the railways followed in 1948, together with the nationalisation of the long-distance road haulage industry. Both the railways and road transport fell within the remit of the newly created British Transport Commission. A further major nationalisation was that of the steel and iron industry, which was taken into state control in 1948. There was little opposition to the nationalisation of the coal industry and the railways as both were unprofitable. However, the nationalisations of the steel and iron industry and the road haulage sector had both been bitterly contested. But it is notable that when the Conservatives returned to power in 1951, they chose only to return road haulage to the private sector;

6  Construction in the Age of the Planned Economy the three major nationalised industries were retained under public ownership in line with the broad political consensus of the day. There were of course traditionalists within the Conservative Party who continued to equate nationalisation with Stalin’s industrial policy in the Soviet Union. It must also be conceded that many within the socialist movement of the time were open admirers of the Soviet Union. Mainstream opinion fell in between these two extremes in favour of a mixed economy. But the nationalisation of large sectors of the British economy was widely accepted as an essential pre-requisite of modernisation. 1.2.7  Modernisation stalled

The coal industry and the railways had undoubtedly suffered from decades of chronic underinvestment prior to being nationalised. Both also suffered from fragmentation of ownership and damaging cut-throat competition. Much of British industry had of course been under de facto state control during World War II. Hence the transition to nationalisation was not as radical a change as it may now appear. Few would deny that nationalisation improved working conditions in the coal industry and the railways. For example, the National Coal Board introduced paid holidays, sick pay and rest homes for injured miners. Safety also became an increasingly important issue within all the major nationalised industries, and worker fatalities were no longer accepted as an inevitable risk. But nationalisation did not bring the hoped-for harmony in industrial relations. Miners and railway workers continued to agitate for a fairer share of the productivity gains. The coal industry was especially strike prone, with national stoppages in 1972 and 1974. The miners famously played a significant part in the downfall of the Conservative prime minister, Edward Heath. British Rail was somewhat less strike prone, with no national stoppage until the 1980s. So nationalisation did not mean the end of industrial unrest, but strikes were much less common than subsequent myth would have it. The nationalised industries were at the forefront in the application of modern management techniques of the time. Centralising planning was very much in vogue, and the principles of scientific management (Taylor, 1911) were widely implemented in the form of bonus schemes. On a more strategic level, the Operational Research Executive was especially influential within the National Coal Board and is still held in high esteem among operational research (OR) practitioners. The OR profession had cut its teeth on the organisation of the Atlantic conveys during World War II. It was therefore a relatively easy transition to state-controlled enterprises such as the National Coal Board and British Railways. It was sometime later that OR techniques began to be applied within private sector companies. In the 1970s, major contractors such as Laing and Wimpey maintained OR departments with a view to improving productivity. It is further notable that many of the early construction management textbooks were dominated by OR techniques such as critical path analysis, linear programming and statistical sampling (e.g. Barrie and Paulson, 1991; Pilcher, 1992). In today’s climate it is easy to forget that these techniques were initially primarily piloted within the public sector. The discipline of project management was similarly built upon quantitative techniques such as the so-called Program Evaluation and Review Technique (PERT) initially developed by the US Navy on the Polaris programme in the 1960s. It follows from the above that if the UK building industry had been nationalised in the 1950s, it might have made much faster progress in the implementation of modern management methods. Wholesale nationalisation of the building industry was never quite adopted as Labour Party policy. But there were numerous supporters of nationalisation within the Labour Party who continued to argue the case throughout the 1950s and 1960s. Even as late as 1978 official Labour Party policy was advocating a measure of public ownership through the establishment of a national building corporation, and through the development and extension of local authority direct labour organisations (DLOs) (Langford, 1982). The threat of building industry nationalisation was seen to be a

Construction in the Age of the Planned Economy 7 sufficient risk by many employers within the industry to sustain the Campaign Against Building Industry Nationalisation (CABIN) into the late 1970s. During the mid-1980s it was by no means unusual to see strikers on building site huts advocating the importance of ‘saying no to building nationalisation’. Such stickers of course tended to disappear quickly at the hands of UCATT members. But what cannot be denied is that the proportion of the building industry under public control in the form of local authority direct labour organisations (DLOs) continued to decline throughout the 1960s. The rate of decline was to significantly increase throughout the 1980s with a continued steady decline thereafter (see Chapter 2). 1.3  Improving construction 1.3.1  Survey of problems before the construction industry

A useful insight into the construction sector of the early 1960s is provided by the Emmerson (1962) report. The report was commissioned the previous autumn by Lord Hope, the then Minister of Works. The report was commissioned in a context of increasing demand and an ongoing concern about construction sector efficiency (Moodley and Preece, 2003). It was the first major report on the construction sector since the end of World War II and provides an invaluable insight into the construction sector policy debate of the early 1960s. The title of the report was Survey of Problems before the Construction Industry, although Emmerson did note that the industry had recovered well from the disruption of World War II. He further noted that the industry had to date been flexible in meeting demand and had avoided large industrial disputes. Emmerson’s general argument was that the problems that the industry faced were not of its own making. The report explicitly excluded direct labour organisations (DLOs) – presumably on the basis that these were exempt from the problems of inefficiency which prevailed within the private sector. This assumption was of course entirely consistent with the prevailing ethos of the day. Sir Harold Emmerson was a civil servant who spoke with the tone and authority of the establishment which prevailed at the time. It is notable that he considered construction sector efficiency to be a cause worth pursuing in the national interest, rather than a worthwhile end in itself. Emmerson was sympathetic to the much repeated argument that efficiency in the construction sector is dependent upon a steady and expanding construction programme for some years ahead. The repetitive ‘boom and bust’ cycle was cited as being preventive of any investment by industry in its own productivity. Emmerson therefore saw the adoption of a policy by government to alleviate fluctuations in demand to be vital. He emphasised the need for a long-term approach by government; this was seen to be essential in instilling the industry with confidence in its own future. Throughout the 1960s there was of course a much greater faith in the benefits that could be achieved through active government intervention. By the mid-1970s this confidence had been largely replaced by a rhetorical commitment to the mechanisms of the free market. The collapse of the post-war social consensus in the mid-1970s rendered the possibility of an interventionist approach on the part of government unthinkable. However, it is notable that laissez faire seemed to apply to some sectors more than others. For example, the government frequently intervened in the aerospace sector throughout the 1980s in ways that were unthinkable for construction. 1.3.2  Relations and contracts

Emmerson (1962) was especially clear that efficiency was dependent upon effective relations between the building owner, the professions and the contractor. He saw the private sector client as being primary dependent upon the advice of the architect. The concept of the ‘expert client’ was seemingly limited at the time to the public sector. Emmerson placed great emphasis on the need for

8  Construction in the Age of the Planned Economy adequate numbers of quality professionals. He expressed particular concern that many architects worked within small practices, which were seen to lack the necessary skills of organisation, cost control and office management. He therefore advocated consolidation of architectural firms into larger practices. Emmerson was also concerned about the professional restrictions placed upon architects and surveyors, who were barred at the time from working for contracting firms. He saw this as a false separation which was detrimental to closer relations between professionals and building firms. Despite the longstanding recommendations of Simon (1944) in favour of selective tendering, the Emmerson report reveals that open tendering was still widespread in the construction industries of the early 1960s. It was argued that open tendering worked against the interests of firms who sought to compete on the basis of quality. The contention that clients do not achieve best value through lowest-price tendering was much later to become an acclaimed plank of the Egan agenda. Emmerson further argued against the increasing trend within the private sector towards the use of nominated sub-contractors. This was in contrast to practice within the public sector which tended to leave the choice of sub-contractor to the main contractor. The latter policy was judged to be preferable as it afforded maximum control to the main contractor. Emmerson it seems was striving for an ‘integrated team’ who were subservient to the main contractor. Nevertheless, he recognised that some highly specialised elements of construction were best conducted by nominated sub-contractors. Emmerson also identified the growing use of ‘package deals’ through which building contractors took responsibility for design and construction. This was seen to enable better planning thereby resulting in greater cost efficiency. Subsequent concerns about the design quality which could be achieved through design-and-build contracts were not yet seemingly on the agenda. Emmerson further noted the increasing occurrence of serial contracting whereby contractors tendered for one job with the expectation that the successful candidate would be appointed for a continuing programme (Moodley and Preece, 2003). Such methods were seen to require a greater degree of collaboration between contractors and design teams. Emmerson suggested the need for a further study in this area which also engaged with local authorities. This recommendation led directly to the subsequent Banwell (1964) report (see below). 1.3.3  Training and employment

For many involved in today’s construction sector, it seems that the apprenticeship system has always been in crisis. But in the early 1960s such structures were still working effectively. Emmerson (1962) offered a few minor comments, including the recommendation that there should be a fresh look at the optimum length of the various craft apprenticeships. He also observed that building techniques were changing and these necessitated the recognition of new craft skills. Particular mention was made of the differing skills that were required in connection with the use of new materials, prefabrication and industrialised building methods. Emmerson further commented on the increasing number of on-site disagreements which were rooted in demarcation disputes between the different crafts. Of further note is the way Emmerson recorded his satisfaction with the implementation of recommendations by the National Joint Council for the Building Industry and the Civil Engineering Conciliation Board relating to holiday pay, payment for lost time due to inclement weather and a ‘guaranteed minimum weekly pay packet’. These measures had apparently led to a substantial reduction in casual employment, of which Emmerson clearly approved. The corollary of this was that the larger contracting firms increased their reliance on permanent labour, but many were nevertheless still suffering from an unacceptably high turnover of labour. Yet Emmerson was clearly not satisfied and asserted that a great deal more could be done to improve working conditions in the

Construction in the Age of the Planned Economy 9 industry. He was especially keen that a high proportion of operatives within the building industry should be directly employed. 1.3.4  The placing and management of contracts

The ink was barely dry on the Emmerson report before Sir Harold Banwell was commissioned to produce a follow-up. The Banwell committee was established in October 1962 as a direct result of Emmerson’s recommendation that there should be an independent inquiry into the placing and management of contracts. The Banwell report was subsequently published in 1964 with the uninspiring (but predictable) title of The Placing and Management of Contracts for Building and Civil Engineering Work. The Banwell committee had been given a broad remit by the Minister for Public Works, Geoffrey Rippon, but was asked to address two main objectives:

• To review current practices with regard to the placing and management of contracts for building and civil engineering work;

• To improve the overall performance of the industry by [making] recommendations with a view to promoting efficiency and economy.

From the outset Banwell strove to overcome the limitations of Emmerson by consulting as widely as possible. The methodology comprised a widely distributed questionnaire survey together with extensive consultation with interested parties. The Banwell committee met on no less than 30 occasions and collected evidence from some 119 organisations and individuals. The extent of consultation was therefore impressive, but it also reflected the way in which government-appointed committees operated in the early 1960s. Geoffrey Rippon was many years later to find a degree of fame in his role in the downfall of Margaret Thatcher. Hardcastle et al. (2003, 56) offer a useful overview of the Banwell report and provide an especially pertinent description the employment environment which prevailed at the time: [j]ob stability was … a major factor at the time, in that nationalised industries were the norm rather than the exception that they are today. In a very real sense workers expected a job for life rather than the significant turnover of workers seen today. Expectations in the 1960s were indeed very different from those of today, and it is perhaps in the area of employment stability where the biggest contrast lies. In the 1960s, a significant proportion of operatives were employed by public-sector direct labour organisations (DLOs). At their peak, local authority DLOs employed 200,000 building workers (Harvey, 2003). This was indeed construction before the age of enterprise. But the privately-owned contractors of the 1960s were markedly different from those of today in that they typically retained large directly-employed workforces. Modern contracting firms routinely delegate concerns about labour productivity to their subcontractors, but this was much less the case in the early 1960s. At the time, the productivity of the employed workforce was a major concern to main contractors. This caused several of the largest contracting firms to establish their own OR departments with a view to implementing ‘modern management techniques’. It was also the stable employment environment which encouraged investment in training and provided the context for the apprenticeship system which flourished during the 1960s. The Banwell report was especially prescient of more recent government reports in the way in which it discriminated between the industry’s ‘world-class leading edge’ (to use Egan’s terminology) and a much larger rump which was seen to be underperforming. Banwell was especially

10  Construction in the Age of the Planned Economy effusive about the ‘progressive members’ of the industry which he saw to be ‘lively and full of new ideas, willing to experiment and not afraid to change their practices and procedures’. These were perhaps the forerunners of the later much-heralded Movement for Innovation (see Chapter 5). Banwell went on to compare the attitudes of the industry’s progressive members with those of the broader majority, who were found to lack the same level of urgency, enthusiasm and sense of purpose. Indeed, the majority of the industry was found to adhere to ‘inflexible contractual and professional conventions’, which in Banwell’s view were no longer fit for purpose. 1.3.5  The team in design and construction

Banwell was noticeably fond of invoking the team metaphor when describing the parties involved in a construction contract. The committee was especially concerned that construction teams too often failed to invest sufficiently in up-front planning. This was seen to lead to subsequent changes during the construction stage which resulted in variation orders and additional costs. The advice to clients was that they should bring in specialist consultants at the earliest stage. Banwell was especially keen that the main contractor should also be brought into the team prior to design completion. To all extent and purposes this was a call for ‘early contractor involvement’ (ECI) which was to be much later introduced by the Highways Agency to much critical acclaim. Indeed, as one reads through the Banwell report it becomes apparent that many recommendations echo those of more recent reports. In the words of Hardcastle et al. (2003, 59): …if the Banwell committee were to redraft their report using contemporary phraseology, then it is likely that they would emphasise the fact that ‘buildability’ is enhanced by an ‘integrated team’ consisting ‘of multi-skilled, multifunctional’ professionals. It would be easy to conclude that nothing much had changed since the early 1960s. Certainly, the construction industries were not changed by action being taken on Banwell’s recommendations. The changes which did happen could not have been sensibly foreseen in 1964, and they unfolded in direct contrast to Banwell’s recommendations. One of the most notable changes was the complete disintegration of the stable employment environment which prevailed during the 1960s. But at the time of writing the advocates of industry improvement are still calling for integration just as their predecessors had in 1964. The interesting point is that they hardly seem to have noticed the radical changes which took place in the intervening period. 1.3.6  Contract procedures

The Banwell committee was equally clear on the need to integrate subcontractors into the construction team. It was recommended that the same standards of fairness should apply to the selection of subcontractors as were applied to the selection of the main contractor. The report further echoed Emmerson’s concerns about the inefficiencies of open competitive tendering. Local authorities were especially criticised for their rigid adherence to outmoded procedures and for their reluctance to move towards selective tendering or negotiated contracts. Pre-tender administration procedures were further found to be widely inadequate. On the positive side, the Banwell committee encouraged serial tendering as a fruitful way forward, especially in terms of the advantages of improved continuity of employment. The emphasis on the merits of serial tendering is suggestive of later thinking along the lines of ‘strategic partnering’ (see Chapter 6). Of particular interest is the way that local authorities were seen to be stuck in the past along with the regressive majority within the industry. The 1960s would seem to have been characterised by the same mutuality of

Construction in the Age of the Planned Economy 11 distrust which was to be subsequently alluded to by Latham (1994) (see Chapter 4). The Banwell report further recommended that there should be a common form of contract for all construction work in England, Scotland and Wales. However, the report is dated by Banwell’s insistence that there should always be an accurate and comprehensive bill of quantities to militate against claims. This call was entirely consistent with the emphasis on the need for greater up-front planning. Firm price contracts were seen to be paramount, and the emphasis lay with the basic administrative procedures and the need to complete the necessary paperwork. This was at least good news for the embryonic quantity surveying profession. The focus on bureaucratic procedures was in no small way a reflection of the stable economic environment which prevailed at the time. Inflation was not yet a major concern. Finally, it is worth noting the emphasis Banwell gave to payment and retention mechanisms and the importance of cash flow to contracting firms. A recurring concern was that inefficient administrative procedures should not be allowed to delay contractually due payments. There was a recognition that clients could not expect to receive good service if they failed to live up to their obligations for prompt payment. And the importance of prompt payment was seen to apply equally to sub-contractors. This was a theme to which Latham was to return 30 years later, only to be reinforced yet again most recently by the Construction Playbook (HM Government, 2020). Many other things may have changed in the interim, but cash flow remains the lifeblood of the industry. And the case for unamended standard forms of contract is as strong today as it was in 1964. Modernisation seems to work at different speeds in accordance with whose interests are being served. 1.4  Planning for stability and predictability 1.4.1  The changing context

Ive (2003) cites The Public Client and the Construction Industries (Wood, 1975) as a classic case of a report left behind by ‘changes in the macroeconomic and political-economic context’. Big words indeed, but these were big changes. The Emmerson (1962) and the Banwell (1964) reports can sensibly be regarded as two reports in the same series. But there was a third report which ploughed a very similar furrow. The Wood report was published in 1975 and to all-extent-and purposes comprised the third instalment. The Working Party was formed in December 1971 and it set about its work in the same diligent fashion as had characterised the Banwell committee. But the important difference was that between 1971 and 1975 the stable economic context which had been taken for granted by Emmerson and Banwell was rocked by a series of broader external events. The story commences with the election of Edward Heath as Tory prime minister in 1970. Heath was a staunchly pro-business politician who believed that radical treatment was required if the British economy was to be successful. He was committed to free-market economics and of the benefits of ‘small’ government. Influential voices within the Conservative Party were for the first time advocating the wholesale privatisation of the previously nationalised industries. Upon taking power the Heath government immediately cut public expenditure, reduced income tax and abolished the Prices and Incomes Board through which government had sought to manage the economy throughout the 1960s. The industrial relations climate rapidly deteriorated. Heath further refused to intervene in a damaging dock strike and sought to curtail the power of the trade unions through legislation. Plans were also put into place to test the efficiency of public-sector services against private-sector comparators. However, in the face of extensive trade union opposition such ambitions were quickly shelved. The winter of 1971/2 saw the first national miners’ strike since the 1920s. Inflation was rocketing and unemployment exceeded one million for the first time since the Great Depression of the 1930s.

12  Construction in the Age of the Planned Economy In the face of extreme pressure from all directions, the Heath government implemented a stark U-turn and abandoned the commitment to free-market economics and returned to the interventionalist policies which had prevailed throughout the 1960s. The miners’ wage demands were met and large subsidies were granted to struggling private sector business such as Rolls-Royce and Upper Clyde Shipbuilders. Heath strove to implement a fresh tripartite approach to consensual economics involving government, the employers and the trade unions. A statutory Pay Board was established with a view to setting pay levels over a three-year period. But the political and economic climate was to get much worse before it got better. Of particular note was the first-ever national building strike in 1972 (see below). The sense of national crisis was exacerbated by the global economic shock instigated by OPEC’s oil embargo following Israel’s victory in the Yom Kippur War of 1973. Buoyed by their victory the previous year, the executive of the National Union of Miners (NUM) voted for a second national strike in pursuit of higher pay. These were the days before commercial North Sea oil production and Britain was at the time was heavily dependent upon coal. The strike was immediately effective and resulted in phased power cuts and the implementation of a national three-day week. The government found itself subsumed into crisis once again, the U-turn having been widely interpreted as a sign of weakness. In February 1974, Heath called a general election on the issue of ‘who governs Britain?’. The electorate responded with a resounding ‘not you’; although they were clearly not totally convinced by Harold Wilson’s Labour Party either. The election resulted in a hung parliament with Wilson taking office in the midst of a deep and damaging recession. He quickly settled with the miners and proclaimed the ‘social contract’, offering the trade unions a privileged place in government in return for voluntary pay restraint. A second general election in October 1974 secured Wilson a narrow workable majority and Edward Heath was thus confined to history. The 1970s were also difficult times for the construction sector which, as always, suffered even more severely than other parts of the economy. By 1974, the steady growth in output enjoyed throughout the 1960s was a distant memory (see Figure 1.1). The years of declining output caused Constant prices (2000)–£million 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000

Public housing

Private housing

All new work

Figure 1.1  Output in the construction industry for Great Britain (all agencies), 1955 to 2008. Source: Office for National Statistics.

2007

2005

2001

All repair and maintenance

2003

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

1967

1965

1963

1961

1959

1957

1955

0

All work

Construction in the Age of the Planned Economy 13 many contractors to embark upon a trend of shedding direct employees, which was to continue right through until the mid-1990s. 1.4.2  Ignoring reality

In amongst all the political tumult, Wood continued to concentrate on the job in hand. The image which comes to mind is that of Nero playing his fiddle as Rome burned. But Sir Kenneth Wood had been given a job to do, and he was determined to see it through. However, it should be noted that Wood only took over as chair of the working party in 1973, following the resignation of Mr David Morrell. The recommendations of the Wood report, were entirely consistent with the direction previously set by Emmerson (1962) and Banwell (1964). Significant attention was given to the need to reform public sector procurement procedures to realise better value for money. The report demonstrated that 10 years after the Banwell report open competitive tendering was still widespread amongst public sector clients, and that this was still found to be damaging to the cause of industry efficiency. Wood reinforced previous exhortations in favour of ‘alternative methods’ such as twostage tendering, negotiated contracts and serial contracting. However, it must further by noted that the cause of negotiated contracts had not been helped by the Poulson scandal of 1973, which involved the extensive bribery of public officials at all levels in return for the award of building contracts. The Wood report further emphasised the importance of government departments and local authorities maintaining restricted lists of approved contractors. Support was also found for the recommendations of Banwell in respect of providing contractors with continuity of work. Associated advantages were seen to include accumulated learning and a better understanding of clients’ attitudes and policies. The absence of continuity of work for individual contractors was again seen to hamper training and to limit the incentive to innovate. The Wood report was especially characterised by its plea for public sector agencies actively to manage their capital expenditure budgets for the purpose of industry development. A lack of stability and predictability in demand was held to be the greatest obstacle to efficiency and performance. It was recommended that spending authorities should be allowed to develop and adhere to rolling programmes of construction expenditure on a three-year time horizon. It was seen to be vital that such spending profiles were protected from fluctuating macroeconomic conditions if the construction industries were to be able to modernise. As Ive (2003) observes, such recommendations were ‘dead in the water’ at the outset. The British government had already been seen to have been helpless in the face of global economic shocks. The political consensus in favour of macroeconomic management through tripartite institutions had also been largely discredited. Few had much faith in Harold Wilson’s ‘social contract’ as a means of achieving economic stability. The last vestiges of such faith rapidly dissipated during the subsequent ‘winter of discontent’ of 1978/1979 (see below). 1.4.3  Undermined by events

Taking the recommendations of Emmerson (1962), Banwell (1964) and Wood (1975) together, they are characterised by a common concern about the ability of the construction industries to deliver government policy objectives. This was especially true of the 1950s and 60s when there was a national need to build the required ‘homes for heroes’. The reports are further marked by the assumption that ‘expert clients’ were largely limited to the public sector. There was a collective concern about the damaging effects of open tendering, and strong support for ‘alternative’ approaches such design-and-build, negotiated contracts and serial contracting. The reports also complained bitterly about the adverse consequences of the prevailing lack of stability in demand. This was seen to undermine the industry’s capacity to invest in its own efficiency. The reports were notably

14  Construction in the Age of the Planned Economy consistent in their support for direct employment and in their criticism of labour casualisation through the ‘lump’, which was seen to be highly damaging. But perhaps the most striking commonality between the three reports was the assumed mutuality of responsibility for industry improvement between the industry itself and its clients. Emmerson took it entirely for granted that government had an important role in shaping performance improvement in the building industry. But it was a vision of partnership between government departments and industry rather than one of control and regulation. Both Emmerson and Banwell placed great emphasis on the importance of the knowledge and expertise which lay within the works directorates which existed within a range of government departments. They also preempted modern storylines of knowledge management in recognising the benefits of sharing knowledge between the various heads of the departments responsible for major policy areas such as housing, schools and hospitals. All three reports were clear on the need for local authorities and other public bodies to be given ‘strong guidance’ on appropriate procedures. Attitudes and practices within many construction firms were seen to be outdated and regressive, but the same was also seen to be true for many within the public sector. Local authorities were singled out for especially sharp criticism. The Wood report went further than the other two reports in advocating that departments should plan three-year rolling programmes with a view to providing selected construction firms with continuity of work. To a greater or lesser extent, all three reports were shaped by the institutional mechanisms of the tripartite approach to industry development that prevailed throughout the 1950s and 60s. Collectively, they provide a fascinating insight into the state of the construction industries at the time. But the world within which they had been created was already starting to crumble by the time the Wood report was published in 1975. Interventionist approaches to industry improvement were going out of fashion as long-accepted notions of collectivism were to be suddenly cast aside in favour of market forces. Macroeconomic management was yesterday’s news; the enterprise culture was about to be unleashed, with deep and lasting consequences for the construction sector. 1.5  Trouble and strife Prior to describing the tenets of the enterprise culture and its manifestation within the construction sector, it is necessary to backtrack a few years to flesh out a few important details. The legacy of the national building strike of 1972 was to subsequently loom large in the mindsets of building employers. Images of a strike-bound industry holding employers to ransom were to become central to the justification for a shift in employment practices. The latter-day entertainer Ricky Tomlinson was to play a small but iconic role in unfolding events. But previous disputes had also left their mark on both building employers and property developers. 1.5.1  Wild-cat strikes

It should initially be re-emphasised that the 1960s had been a relatively stable and successful period for the British economy. There had been relatively few days lost to strike action and inflation up until 1968–1969 had been kept more-or-less under control. But it was towards the end of the decade when things started to go awry. The 1960s was an era when trade unionism was strong. Closed shops were by no means unusual, and trade unions had the ability to initiate and enforce strikes. Throughout the 1960s days lost due to industrial action progressively increased. Especially disruptive were the so-called wild-cat strikes which were initiated by local trade union officials often in defiance of national trade union bureaucracy. In the construction sector, the most famous such strike was at the Barbican Development at London in 1967.

Construction in the Age of the Planned Economy 15 The dispute at the Barbican was characteristic of the tension that often existed between local shop stewards and office-based union bureaucrats. On the Barbican development many of the local shop stewards were (allegedly) communist party members who created mayhem through a succession of strikes in pursuit of better wages. A secondary, and entirely understandable, concern related to the ‘lump’ and the increasing occurrence of cut-and-run subcontractors. Such sub-contractors had the unfortunate tendency to suddenly disappear leaving unpaid workers in their wake. The Barbican dispute also witnessed sporadic violence between the police and pickets which attracted extensive media headlines. The extent to which such disputes were politically motivated remains a moot point. The devious deeds of Trotskyite agitators provides one explanation; an alternative explanation would focus on such disputes being an extension of the ‘craic’ enjoyed by exuberant young men living away from home in the London of the 1960s. Violence, excessive drinking and wild behaviour have long since been associated with transient building workers (cf. Joby, 1984). Indeed, it has even been argued that young men are attracted to casualised building work by the promise of cash-in-hand payments coupled with minimal responsibilities. But violence, excessive drinking and wild behaviour have never been the sole preserve of working-class men in the building industry. Similar behavioural traits within the Bullingdon Club, and other so-called Oxbridge ‘dining clubs’ do not seem to steer their members towards casualised work in the building sector. But irrespective of the degree of political motivation, it is easy to imagine how the Barbican dispute caused property developers and building employers to suffer numerous sleepless nights. The number of strikes grew steadily throughout the 1960s, with a particular peak at the end of the decade (see Figure 1.2). But the number of days which the UK lost to industrial action during the 1960s and 70s were by no means out of line with our major European competitors. But – as the old cliché states – it is perception which counts. And as the 1970s unfolded, the perception grew that Britain was in crisis and that ‘something had to be done’. 1.5.2  National building strike

Leaving the Barbican dispute to one side, it is the 1972 national building strike which deserves a bigger place in our story. It has already been established that the construction sector of the early 1970s was very different from the construction sector of today. This was still in essence the industry that

Figure 1.2  Number of working days lost due to industrial action (1946–2009). Source: Office for National Statistics.

16  Construction in the Age of the Planned Economy had emerged from World War II. The strike was led by the then newly formed UCATT together with GMWU and TGWU. Construction workers throughout the country went on strike demanding a minimum weekly wage of £30. But an important secondary objective was to seek the abolition of contractors’ use of causal labour. The so-called ‘lump’ referred to the pool of causal labour which was hired on a daily basis and was invariably paid in cash without any deduction for tax. The existence of the lump inevitably undermined the machinery of collective bargaining. It was also widely seen as detrimental to health and safety on site. Members of the lump of course did not tend to be unionised and its institutionalised use acted as a disincentive to investment in training. Nevertheless, in 1972 the majority of construction operatives were directly employed, and the level of trade union membership was such that a coordinated national strike was possible. The strike resulted in a 13-week stoppage which affected numerous major construction sites; ultimately the employers were forced to the negotiating table and many of the strikers’ aims were met. Twenty-four strikers were subsequently investigated for picketing offences, alleged acts of vandalism and sabotage. The resultant trails took place at Shrewsbury Crown Count leading to several convictions for conspiracy to intimidate, unlawful assembly and affray. The ‘Shrewsbury 24’ subsequently became a cause célèbre within the labour movement where there was a widely held view that the convictions were unsafe and politically motivated. Following a long campaign for justice, the convictions were finally overturned by the Court of Appeal in 2021. Those convicted and their families had been forced to wait nearly fifty years before justice was finally done. Several of those initially convicted had died in the interim. However, in 1972 the strikers had few supporters within the boardrooms of the construction sector. The national building strike undoubtedly left a legacy of bitterness on both sides. And the ‘lump’ continued to operate in much the same way that it had previously. In fact, the percentage of self-employed operatives within the construction sector grew significantly from 1975 onwards, eventually reaching a peak in 1995 (see Chapter 2). 1.5.3  Crisis, what crisis?

To pick up the story from our previous account, you will recall that the Labour Party resumed power in 1974. Harold Wilson had achieved an overall majority in the House of Commons (at the second time of asking) and proceeded to enact the ‘social contract’ as an alternative to the failed policies of Heath. Unfortunately, any sense of optimism did not last long. The economy was still suffering from the oil price shock of 1973, unemployment continued to rise, inflation was rampant and the pound sank steadily against the US dollar. The Social Contract did succeed in reducing the number of strikes but was much less successful in delivering wage restraint. Denis Healey was Chancellor of the Exchequer at the time. One of the few policy instruments that were realistically available to him was the taxing of high earners to fund tax cuts for the poor. The Conservative opposition saw this as a direct disincentive to wealth creation; Healey preferred to blame low investment in industry, lack of commitment to training and outdated management practices (Marr, 2007). All three criticisms would seem to be uncontroversial in the case of the construction sector. Wilson then suddenly announced his retirement from politics as sitting prime minister. He was succeeded by James Callaghan who inherited an economy in a mess and was soon to be swamped by images of crisis. The pound was seemingly in free fall, inflation was rampant and unemployment continued to rise alarmingly. The government had already introduced swinging cuts in public expenditure but with seemingly little effect on the downward pressure on the pound. It was against this background that Callaghan, and his Chancellor of the Exchequer Denis Healey, opened negotiations with the International Monetary Fund (IMF) for a huge bail-out loan. In return, the IMF negotiators

Construction in the Age of the Planned Economy 17 demanded a further squeeze on public expenditure. IMF officials at the time were highly orthodox with little sympathy for left-leaning governments (Tiratsoo, 1997). The guiding belief was that too much welfare provision routinely acted to limit economic growth. The IMF insisted that the British economy should be deflated by a further £2.5 billion in return for a loan of US$3.9 billion. In the final analysis, the government only made use of half of the extended credit loan, all of which was repaid by the time the Labour government left office (Turner, 2008). Nevertheless, the enforced shift towards monetarist economic policy by the Labour government of 1976 sowed the seeds for a radical change in direction which was to have lasting structural implications for the British economy at large. And the construction sector was no exception. 1.5.4  Monetarism embraced

It is at this point appropriate to offer a brief explanation of monetarism, although the underpinning economic theory is at best arcane. Monetarism is perhaps best understood as a mixture of theoretical concepts, philosophical beliefs, and economic policy prescriptions. Monetarists argue that the main cause of inflation is ‘too much money chasing too few goods’. Hence tight control of money supply is required to maintain price stability. Markets are seen to work best when left to their own devices; too much government intervention is held to be liable to do more harm than good in the long term. Monetarists advocate that laissez faire is invariably the best advice; small government is argued to be good government. Monetarists had been fighting a running battle with Keynesian economists throughout the 1960s and 70s. In the UK, the introduction of monetarist policy is usually linked with the Conservative government of Margaret Thatcher elected in 1979. But James Callaghan’s Labour government had already taken several steps in this direction, even before the intervention of the IMF. Governments of course are rarely consistent in the policies they follow. History tends to be more characterised by policy fudges than positions of theoretical purity. But our primarily interest here is the way in which monetarism become accepted as the dominant economic doctrine. The renewed respectability of monetarist policy in the mid-1970s was an important catalyst in the initiation of the enterprise culture. The enterprise culture has since had a profound and lasting impact on construction sector best practice. The discourse of the enterprise culture continued to gather strength irrespective of fluctuations in economy policy. It is the discourse of the enterprise culture which provides the storylines for a succession of influential reports on the construction sector throughout the 1980s and 90s. It will be argued that the 1998 Egan report Rethinking Construction represented the high point of the enterprise culture in the construction sector. It will be further argued that the enterprise culture has shaped the structural reality of the sector. Furthermore, the enterprise culture has progressively become central to the self-identity of managers – and operatives – throughout the construction sector. Monetarist economy policy has occasionally given way to notions of ‘quantitative easing’, but at the time of writing the enterprise culture continues to reign supreme – modified perhaps but essentially unabated. 1.5.5  The winter of discontent

The IMF crisis of 1976 undoubtedly played an important role in shaping the legacy of the 1970s, but the subsequent ‘winter of discontent’ (1978–1979) made a deeper and more lasting impression on the public consciousness. The overriding image, still remembered by many, was that of a country rendered inept and helpless by countless prolonged and bitter industrial disputes. Schools were closed, ports were blockaded, rubbish was piled up in the streets and the dead remained

18  Construction in the Age of the Planned Economy notoriously unburied. The overall image of crisis was undoubtedly exaggerated by the right-wing press who were at the time determined to undermine the credibility of Callaghan’s government. But these were real events which left a lasting impression. They were caused in part by the drastic squeeze on public spending in conjunction with tough pay constraints. These in turn were symptomatic of prolonged economic underperformance throughout the 1970s. There is also no denying that disputes were occasionally flamed by irresponsible trade union officials who were actively encouraged by the ‘loony left’. There was a widespread fear that the trade union movement harboured a number of Trotskyite militants who were at the time acting to undermine the machinery of democratic government. Yet on the whole fears about militant activists were grossly overstated. In the construction sector senior trade union officials frequently acted in conjunction with employers to constrain militant industrial action. But images are often more influential than facts, and the images generated during the winter of discontent would be repeatedly mobilised to discredit and marginalise the role of trade unions. 1.6 Summary The primary purpose of this chapter has been to demonstrate that the debate about construction is not immune to political change or unaffected by external events. Any discussion about industry improvement during the 1970s was inevitably different from the discussions which prevailed during the 1950s. And the shift in the nature of the debate had much less to do with construction per se, and much more to do with the broader environment within which construction operates. In the wake of World War II, the construction sector – in common with many other industry sectors – suffered from severe under-investment and was characterised by outdated management practices. It was highly fragmented and in severe need of modernisation. Factions within the Labour Party even flirted with nationalisation as a possible solution. While this was never quite a serious proposition, many within the industry felt it necessary to lobby against the possibility of nationalisation well into the 1980s. Yet the construction sector played a huge and highly significant role in the modernisation of Britain’s housing stock throughout the 1950s and 60s. Output peaked in 1966 at a remarkable 352,000 housing units in a single year. But the boom in housing output was accompanied by recurring quality problems which by the 1970s were already becoming far too apparent. The local authority housing boom had also been accompanied by a succession of corruption scandals. The two exemplars of failure were provided by the Ronan Point disaster and the Poulson scandal. The legacy of these two events still overshadows the construction sector of today. The truth was that modernisation came too quickly, and modernisation was found wanting. The failures were primarily due to inadequate management and poor supervision. The housing sector thereafter retrenched into a reliance on traditional construction techniques which to this day remains highly conservative and highly institutionalised. The poor reputation of prefabricated construction techniques continues to disincentivise investment in so-called ‘modern methods of construction’. The other big change described in this chapter relates to the collapse of the post-war Beverage settlement. The industrial unrest of the 1970s was a symptom of the failure of the social-democratic consensus which had shaped tripartite relations between government, industry and the trade unions since 1945. It is possible to point at a number of contributing causes. Weak government, poor management and radical trade unionism all played their part and any apportionment of blame is inevitably shaped by one’s personal political leanings. The iconic events which consistently figure in any description of the troubles which prevailed in Britain during the 1970s were the intervention of the IMF and the subsequent ‘winter of discontent’ (1978–1979). These events have since taken on mythical proportions in the way

Construction in the Age of the Planned Economy 19 they are repeatedly invoked to justify the subsequent shift to the political right characterised by the election of Margaret Thatcher in 1979. However, it would be a mistake to give Margaret Thatcher too much credit (or blame) for the enactment of the enterprise culture. The reality was that Britain could not remain immune from the creeping onset of globalisation. In many respects, Thatcher just happened to be the political beneficiary of being in the right place at the right time.

References Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Barrie, D. S. and Paulson, B. C. (1991) Construction Project Management, 3rd edn. McGraw-Hill, New York. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Finnimore, B. (1989) Houses from the Factory System Building and the Welfare State 1942–74, River Oram Press, London. Hardcastle, C., Kennedy, P. and Tookey, J. (2003) The placing and management of contracts for building and civil engineering works: The banwell report (1964), in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 55–68. Harvey, M. (2003) Privatization, fragmentation and inflexible flexibilization in the UK construction industry, in Building Chaos: A International Comparison of Deregulation in the Construction Industry, (eds. G. Bosch, P. Philips) London, Routledge, pp 188–209. HM Government (2020) The Construction Playbook: Government Guidance on Sourcing and Contracting Public Works Projects and Programmes, Cabinet Office, London. Ive, G. (2003) The public client and the construction industries, in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 105–113. Joby, R. S. (1984) The Railwaymen, David & Charles, Newton Abbot. Langford, D. A. (1982) Direct Labour Organizations in the Construction Industry, Gower, Aldershot. Latham, Sir Michael (1994) Constructing the Team. Final report of the Government/industry review of procurement and contractual arrangements in the UK construction industry. HMSO, London. Marr, A. (2007) A History of Modern Britain, Macmillan, London. Moodley, K. and Preece, C. (2003) Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 161–177. Osler, D. (2002) New Labour Plc: New Labour as a Party of Business, Mainstream, Edinburgh. Pilcher, R. (1992) Principles of Construction Management, 3rd edn. McGraw-Hill, London. Ross, K. (2002) Non-Traditional Housing in the UK: A Brief Review, BRE, Garston, Watford. Simon, Sir Ernest (1944) The Placing and Management of Contracts, HMSO, London. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. Tiratsoo, N. (1997) ‘You’ve never had it so bad’: Britain in the 1970s, in From Blitz to Blair: A New History of Britain since 1939 (ed. N. Tiratsoo), Weidenfeld & Nicholson, London, pp 163–190. Tomlinson, J. (1997) Reconstructing Britain: Labour in power 1945–1951, in From Blitz to Blair: A New History of Britain Since 1939, (ed. N. Tiratsoo) Weidenfeld & Nicholson, London, pp 77–101. Turner, A. W. (2008) Crisis? What Crisis?: Britain in the 1970s, Aurum Press, London. Wood, Sir Kenneth (1975) The Public Client and the Construction Industries, HMSO, London.

2

The Dawn of Enterprise

2.1 Introduction The immediate beneficiary of the failure of the social contract was Margaret Thatcher. She had taken over from Edward Heath as leader of the Conservative Party in 1975. In 1979 she was elected prime minister with a majority of thirty. Her pitch to the electorate had been distinctly middle-ground with little suggestion of the radicalism with which she was subsequently associated. Indeed, the Conservative Manifesto of 1979 was noticeably less strident than Heath’s had been in 1973. Council-house sales were an important and popular policy, but there was little hint in the manifesto of the large-scale privatisations that were to come. The commitment of Thatcher and her immediate advisors to hard-line monetarism seemed at the time to pass the electorate by. The intricacies of economic policy are of course rarely of interest to the voting public. And in any case they had heard monetarist rhetoric before from the Heath government of 1973 and that had not translated into anything unusual. Heath of course subsequently implemented a dramatic U-turn in the face of widespread resistance to his initial monetarist leanings. This was a mistake which Thatcher was determined not to replicate. Margaret Thatcher remains a very divisive figure in British politics. She is credited by many with the economic miracle whereby the UK economy broke free from restrictive practices and widespread over-manning. Those who adhere to this perspective recall all that was bad about the 1970s. Industry was unproductive, workers were lazy, trade unions were too powerful. The social contract had been tried, and had failed. The contention is that when Thatcher came to power Britain was at its nadir; it was the ‘sick man’ of Europe. The debacle of the three-day week summed up years of weak government and industrial unrest. Britain had been forced to go ‘cap in hand’ to the IMF. Rubbish had piled up in the streets and the dead had remained unburied (Turner, 2008). The legend is that Mrs Thatcher intervened and re-energised the economy. She took on the militant trade unions and won. Enterprise was unleashed, and the flexible economy took over from the outdated and grimy industries of the 1970s. But there is another interpretation. The counter-perspective is that the problems of the 1970s were over-exaggerated by a right-wing press which was determined to oust the Labour Party from power. The number of days lost due to strike action in Britain is held by many to have been no greater than those endured by our major European partners/competitors. Many also point at the way British industry succeeded in maintaining productivity despite the threeday week, and had the Treasury done its sums correctly there would have been no need to negotiate a loan from the IMF. Furthermore, the counter-argument contends that the social contract had very nearly worked, and would have done so had trade union leaders done more to keep their part of the bargain. Arguably, what was needed was a sticking plaster rather than radical surgery. Critics of Thatcher go on to blame her personally for decimating Britain’s

DOI: 10.1201/9781003308133-2

The Dawn of Enterprise 21 manufacturing base and for undermining the nation’s social cohesion. Certainly it cannot be denied that within two years of her election UK unemployment had risen to three million. But had Argentina not chosen to invade the Falkland Islands in 1982, Thatcher would undoubtedly have been defeated by Michael Foot’s Labour Party in 1983. History would then have unfolded very differently. 2.2  Uncertain beginnings Margaret Thatcher from the outset saw herself very much as an outsider who offered a radical break from the established Conservative tradition (Jenkins, 2006). At the time of her election the economy was already plunging into recession. The immediate impact of the new government’s policies was to make things worse. Clumsy attempts to implement a monetarist economic policy resulted in reduced public spending and increased interest rates. High interest rates coupled with high inflation hit manufacturing industry very badly. Output fell dramatically and unemployment soared from 1.2 million in 1979 to 3 million in 1982. The situation was not helped by an artificially strong pound bolstered by the prospect of North Sea Oil which was beginning to flow. The harsh economic climate resulted in the loss of almost 25% of Britain manufacturing capacity. The government maintained that this was medicine which had to be taken; it was presented as a necessary and overdue process of weeding out the inefficient. Tough decisions which had been consistently ducked throughout the 1970s were finally being grappled with, or at least so it was claimed. Thatcher was clear that there was no benefit in bailing out ‘lame ducks’. This was seen to be inflationary and counter-productive. But it must also be said that the rhetoric was much harsher than the reality. The government continued to support nationalised basket-cases such as Rolls-Royce and British Leyland. Nevertheless, the Prime Minister certainly had little appetite for managing demand for the benefit of the construction industry. 2.2.1  Flexibility in the marketplace

Adamson and Pollington (2006) describe the construction sector’s ‘Group of Eight’ visit to the prime minister in October 1982. The Group of Eight was a grouping of the industry’s three main professional institutions: the Royal Institute of British Architects (RIBA), the Royal Institution of Chartered Surveyors (RICS), and the Institution of Civil Engineers (ICE) in association with the Building Employers Confederation (BEC), the Federation of Civil Engineering Contractors (FCEC) and the Building Materials Producers (BMP). The Group of Eight was completed by two trades unions: the Transport and General Workers Union (TGWU) and the Union of Construction Allied Trades and Technicians (UCATT). The Group of Eight had been created with the purpose of presenting a united front to government. It was particularly concerned with lobbying for a greater degree of demand management in accordance with the spirit of the Wood report. When faced with such representation Thatcher must have immediately recalled the failed ‘tripartism’ of the Heath era. She apparently quickly lost patience and ‘sent the group away with a flea in their collective ear’: It was made quite clear that if the UK construction industry was incapable of performing in a modern de-regulated economy, the Government, and the public sector generally, would obtain its construction requirements from overseas sources. (Adamson and Pollington, 2006, 10) The times were indeed a changing. The Group of Eight was quickly sidelined and was replaced in time by the Construction Industry Council (CIC) and the Construction Industry Employers’

22  The Dawn of Enterprise Council (CIEC). It is easy to imagine the message which would have been picked up by construction company chief executives: Blimey, we can forget about notions of a planned economy, we’re going to have to face the endless stop-go demand cycles on our own. Competitiveness from now on is going to depend upon our ability to be flexible in response to changing market conditions. The severity of the recession of the early 1980s would have served to concentrate their thinking even further. The immediate challenge was survival. In such circumstances, investment in training would certainly have been viewed as expendable; likewise any vestiges of research and development activities. In short, contracting firms would have concluded very quickly that they could not afford to carry any excess ‘fat’; ‘leanness’ and ‘agility’ were soon to become the favoured organisational metaphors. 2.2.2  Treasury control and the incubation of the target culture

Other than its commitment to vaguely defined monetarist policies, Thatcher’s first administration initially gave very few indicators of the radical agenda which was to follow. However, there was from the outset a determination to curb local authority spending. This was initially achieved through the imposition of ever-stricter caps on expenditure. Local authorities were for the first time given specific spending targets, and through such mechanisms the Treasury, slowly but surely, started the process of taking public expenditure under its direct control. The grandiose spending sprees by local authority barons which characterised the 1960s were well-and-truly over. Increasing centralisation, coupled with a culture of target-setting and performance monitoring, became established as part of the lexicon of government (Jenkins, 2006). This was a trend which in later years was to reach ridiculous proportions and sat ill-at-ease with the government’s rhetoric of free enterprise and small government. It was also a trend which was to shape the construction sector’s improvement agenda. The price that was paid during the early 1980s was a decline in local democracy and the incubation of a mechanistic culture of performance management. The achieved reductions in local authority spending were undoubtedly real, but they were unfortunately largely counter-acted by the need to provide unemployment benefit for 3 million people. In contrast to her popular image, Thatcher would not entertain radical cuts to the safety net provided by the benefit system. Hence, despite the clampdown on local authorities, public expenditure actually increased from 41% to 44% over the course of her first period of office (Jenkins, 2006). The important change was the shift in public expenditure from local authorities to central government. 2.2.3  The origins of privatisation

The first period of Thatcher’s government also saw a succession of legislation aimed at reducing the power of the trade unions. Each step was hesitant and largely uncontroversial, but the accumulated effect was significant. Of particular note was that unions were now required to hold a ballot ahead of strike action, rather than relying on the traditional showing of hands. The only notable privatisation of the early 1980s was that of Britoil, although even here the government was careful to retain a ‘golden voting share’. The state also sold its shares in Amersham, British Petroleum and British Aerospace. But there was as yet little indication of the mass privatisations which were to follow. Privatisation in the 1980s was still a long way from accepted common sense, and its origins and supposed merits have been carefully researched by Bishop and Kay (1988). Perhaps the most intriguing argument is that privatisation was an ‘accidental policy’ originally devised as a means

The Dawn of Enterprise 23 of reducing the power of public sector trade unions. Bishop and Kay describe how it grew almost surreptitiously from being a little-used mechanism of labour market reform into a core macroeconomic policy. Even more intriguingly, they contend that the headline privatisation of British Telecom grew from a conversation about how to keep the necessary new investment out of the public sector borrowing requirement (PSBR). Privatisation was apparently the conclusion they arrived at rather than being a predetermined policy priority. This of course is not the story which is presented in subsequent political memoirs (e.g. Lawson, 1992; Thatcher, 1993), but it is not unreasonable to suppose that such sources are inevitably prone to a degree of post hoc rationalisation. Irrespective of its origins, the policy of privatisation was soon to blossom to such an extent that it became synonymous with what was to become known as Thatcherism. One of the reasons that privatisation was to gather so much momentum was that it served the interests of several different agendas. Certainly those who were against nationalisation could hardly fail to support its reversal. At the same time, it suited the purposes of those who were concerned about the power of public sector trade unions. It also matched with the espoused monetarist requirement to reduce PSBR and with the vision to widen share ownership. It was to be finally advocated primarily as a means of improving efficiency through the introduction of market competition. But during Thatcher’s first term the justifying arguments were still under development. 2.2.4  Right to buy

If privatisation were an accidental policy, this categorically was not the case with the ‘right to buy’ policy which was extended to council house tenants. The ‘right to buy’ was arguably one of the most radical policies of Thatcher’s first term, and it was implemented against the wishes of local authorities. The sale of council homes was central to the vision of a ‘property-owning democracy’ which the 1979 Conservative government sought to progress from the outset. Almost one million council homes were sold in the period 1979–1983, invariably at less than their market value. The Thatcher years saw a dramatic shift in the balance of housing tenure, with a sharp decline in the percentage of homes rented from local authorities with a corresponding increase in the number of owner occupiers (see Figure 2.1).

Figure 2.1  Housing tenure in the UK (1961–2000). Source: English Housing Survey; Office for national Statistics.

450 400 350 300 250 200 150 100 50 0 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Number of dwellings (thousands)

24  The Dawn of Enterprise

Private enterprise

Housing associations

Local authorities

All dwellings

Figure 2.2 New homes completed by private companies, housing associations and local authorities in the United Kingdom (UK) from 1949 to 2010 (in 1,000s). Source: MHCLG/ONS.

Inevitably it was the better quality houses in the most desirable locations which were more likely to be purchased by their resident tenants. Hence local councils were left with a housing stock which was on average inferior, and thereby became more expensive to maintain in proportion to revenue receipts. Local authorities would have been less adverse to the sale of council houses had they been allowed to invest the proceeds in the construction of new houses. But the rules specified that the revenue generated from sales had to be added to reserves rather than being reinvested. Local authority investment in new housing had been in sharp decline since the mid-1960s, and by the early 1990s had almost ceased (see Figure 2.2). The quality concerns pertaining to public housing which had prevailed throughout the 1960s and 70s had been solved at a stroke; the state simply withdrew from its role as a provider of mass housing. 2.2.5  Demise of the DLOs

At their peak in the inter-war period, local authority direct labour organisations (DLOs) employed 21% of the total building labour force (Ball, 1988). The DLOs had been originally created at the end of the 19th century to offset private sector problems of profiteering through collusion, pricerings, labour casualisation and inadequate training provision (Langford, 1982). Throughout the late 1970s the Conservative Party had campaigned to open up the DLOs to private sector competition. The underlying rationale was made explicit in the 1979 Conservative Party Manifesto: [t]he reduction of waste, bureaucracy and over-government will yield substantial savings…. local direct labour schemes waste an estimated £400 million a year. Following their electoral victory in 1979, the Conservative government acted quickly to introduce legislation which made significant changes to the way DLOs were organised, and the way in which they were required to account for their activities (Kirkham and Loft, 2000). The legislation required important changes to accounting practices with a view to emphasising economic efficiency. In short, the DLOs were increasingly required to operate like private companies. Their

The Dawn of Enterprise  25

Figure 2.3 Great Britain construction output by contractors and DLOs (1955–2009). Sources: Construction Statistics 2012, Office for National Statistics; Digest of Data for the Construction Industry, Department of the Environment.

broader contributions in terms of the provision of training and local employment were no longer to stand in the way of narrowly defined economic efficiency. The legislation relating to DLOs in the early 1980s was the forerunner of the subsequent 1988 Local Government Act, which introduced ‘market testing’ into the delivery of public services in the form of compulsory competitive tendering (CCT). Local authority construction DLOs had been singled out to pilot an approach which was later to be applied to all local authority direct service organisations (DSOs). The construction DLOs also suffered disproportionately from the enforced withdrawal of local authorities from the provision of council houses. The long-term impact of the enacted legislation on the numbers employed by DLOs was to be dramatic. By the mid-1970s they still employed in excess of 200,000 building workers, but by the late 1990s their role in new construction was virtually over (Harvey, 2003) (see Figure 2.3). As an aside, it is worth noting that the DLOs had consistently offered better employment conditions than those which prevailed in the private sector. They also invested more in training and proportionally supported a greater number of apprentices. The immediate effect of the legislation was to force them to adopt the employment practices which prevailed in the private sector. The gradual demise of the DLOs was of course inevitable once they had been opened up to market competition. This may well have been positive in terms of economic efficiency, but it had long-term adverse effects on labour casualisation and training. As an aside, it is interesting to note that the reasons cited by Langford (1982) for the initial establishment of DLOs – collusion, price rings, labour casualisation and inadequate training provision – all remain highly topical concerns in 2023. But strangely nobody is yet advocating the re-instatement of DLOs as a potential solution to the industry’s recurring problems. 2.2.6  Providence intervenes

But in truth Thatcher’s first term of office was very nearly a short-lived failure. Despite her determination to avoid Heath-style U-turns, she surrendered very quickly in 1981 in the face of a threatened coal strike. She came under intense pressure throughout 1981 to change direction and to re-inflate the economy in accordance with the doctrines of Keynesian (Jenkins, 2006). Her response

26  The Dawn of Enterprise was to cut public spending even further, and to deflate the economy by a further £7 billion. The screams of pain from the construction sector can easily be imagined. Several of the cabinet ‘wets’ were close to open revolt and Thatcher’s survival as prime minister was under threat. Interest rates at the time stood at 16% and the economy was deep in recession. The pressure was eased somewhat in 1982 by a modest economic recovery. Inflation had been reduced to 4.6%, but the consensus of opinion at the time was that Thatcher was heading for defeat in the general election of 1983. Fate intervened in the unlikely form of General Galtiari, President of Argentina. Argentina had invaded the far-flung Falkland Islands in the spring of 1982. A navel task force was cobbled together and set sail for the South Atlantic amidst much nationalistic jingoism. In military terms, this was an extremely risky adventure. But luck frequently favours the adventurous, and so it was with the Falklands Task Force. Troops were successfully landed on the Falkland Islands (Las Malvinas) and the reluctant Argentine conscripts were duly evicted. Britain suddenly felt good about itself and Margaret Thatcher was the immediate political beneficiary. Despite the slight economic recovery of 1982, output was still less than it had been in 1979 and unemployment remained stubbornly high. The government’s espoused commitment to monetarism had been close to shambolic from the outset, and the benefits of the harsh medicine remained stubbornly unproven. It was the feel-good factor generated by the Falklands War which propelled Thatcher to electoral victory in 1983 with an improved majority of 144. Some credit for Thatcher’s electoral victory should also be ceded to the Labour Party, which had allowed itself to become increasingly divorced from mainstream opinion. This was personified in the leadership of Michael Foot. The problem was not with Foot’s ability, nor with the conviction of his politics. The problem was that Foot failed to deal with the militant tendency within the Labour Party, and in consequence the Labour Party was no longer seen as a safe pair of hands. Politics was also increasingly conducted in the harsh glare of the media, and sound-bites were becoming more important than well-thought-out policy positions. This was a world for which the duffle-coated Foot was decidedly ill-equipped. 2.3  Enterprise in formation 2.3.1  Milestone privatisations

Thatcher undoubtedly derived considerable confidence from her victory in the 1983 general election. But equally important had been her victory over the ‘wets’ within the Conservative Party. Thatcher’s second term started apace and began to define the parameters of what was to become subsequently known as ‘Thatcherism’. Privatisation was suddenly top of the agenda and the ‘accidental policy’ was soon to be embraced as a central component of policy. Despite the initial uncertainties, the official policy rhetoric increasingly emphasised that privatisation would inevitably secure efficiency increases as a result of exposure to market competition. This was a belief which was subsequently proven to be partially true, at least in terms of narrow definitions of economic efficiency. But the critics argued that the resultant increases in efficiency were primarily derived from the down-trading of employment conditions rather than any private sector innovation. But there is a broader point to be made: not all privatisations resulted in exposure to market competition. This was to be especially true of the privatisations during Thatcher’s third term; inefficient public sector bureaucracies were too often replaced by inefficient private sector monopolies. But the worst examples of this were yet to come. Headline privatisations during Thatcher’s second term of office included British Airways, British Gas, British Shipbuilders, British Leyland, British Telecom and Rolls-Royce. The first privatisation to go through was British Telecom in November 1984. This was rapidly followed by British Gas. The public sensed the possibility of windfall profits and both floatations

The Dawn of Enterprise 27 were heavily over-subscribed. The sale of British Telecom raised £3.9 billion, and British Gas raised £5.4 billion. The figures involved illustrate a further obvious advantage to privatisation: it generated government revenue which could be used to balance the books. Most purchasers quickly cashed in their profits, thereby undermining the objective of increasing wider share ownership. But if privatisation was to be used as a means of generating revenue, the most important challenge was to ensure that the assets were sold for a fair price. In consequence, more care was taken with subsequent privatisations to ensure that the shares were not sold too cheaply. But the under-pricing of British Telecom and British Gas suggests that revenue generation was, at least initially, a side benefit rather than the prime motivation. Perhaps one of the biggest failures of the Thatcher era was that the proceeds of privatisation were not used to invest in industry modernisation, or in the nation’s decaying infrastructure (Hirst, 1997). Most of the funds raised were used to boost current spending. The same was also true of the revenues provided by North Sea Oil. 2.3.2  Confronting the ‘enemy within’

The epochal event of Thatcher’s second term of office was undoubtedly the 1984–1985 miners’ strike. This was industrial conflict at its starkest, and it took on all the trappings of medieval warfare. Thatcher had already backed down to the miners in 1981, and the memory of Heath’s humiliation at the hands of the miners in 1972 doubtlessly fuelled her determination. The National Union of Mineworkers (NUM) was led by the egotistical Arthur Scargill who was consistently demonised by the right-wing press. In truth, he was an easy target and his rabble-rousing rhetoric did little to adhere him to public opinion. The government had been preparing for a showdown with the miners since 1981 and coal stocks had been built up at the power stations in anticipation. Trade union legislation had since outlawed secondary picketing and had ended trade union immunity for damages. Unions were further required to hold a secret ballet prior to going on strike, rather than relying on the traditional showing of hands at mass meetings. Britain was also slightly less reliant on coal as a result of a number of power stations having been converted to burn oil or gas. It was against this background that Ian McGregor, National Coal Board (NCB) chairman, announced a list of uneconomic pits for closure. The response from Arthur Scargill was predictable. He called for a national strike but failed to implement the secret ballet which was now a legal requirement. The NUM strongholds saw high turnouts in support of Scargill. Trade unions such as the NUM were at the time held in great esteem in traditional working class communities. They had played a central role in the creation of their members’ self-identities. Great emphasis was placed on loyalty and solidarity. When the union said ‘out’ the members obeyed. But in some parts of the country, namely Nottinghamshire, this did not happen. The Nottinghamshire miners continued working and formed their own union: the Union of Democratic Miners (UDM). The strike saw medieval-style pitched battles between pickets and the police on a daily basis. It was the first time ever that the police force had been organised on a national level in response to illegal flying pickets. Intimidation and violence were common place, and the police were no less guilty in this respect than the striking miners. Thatcher referred to the need to defeat the ‘enemy within’, the implication being that she had already defeated the enemy without in the guise of General Galtieri. This was a scandalous comparison which the miners ill-deserved. Dirty tricks and illegal tactics were mobilised by both sides. Scargill was even (falsely) accused of seeking funds from Colonel Gaddafi of Libya. The decisive factor was that sufficient coal continued to reach the power stations to enable them to produce electricity throughout the winter of 1984. Substantial stockpiles had been built up at the power stations in anticipation of a showdown with the miners. Many miners’ families suffered considerable hardship, and striking miners were ultimately torn

28  The Dawn of Enterprise between a loyalty to the NUM and a loyalty to their families. Slowly but surely, amidst much acrimony, the miners trickled back to work. The strike finally collapsed in March 1985. The striking miners marched back to work to the accompaniment of their colliery brass bands, with union banners fluttering proudly in the breeze. Thatcher had won. The legacy of bitterness within the mining communities lived on for decades, and the police force was never quite viewed in the same way again. But at least the NCB had been brought under managerial control. Management had won the right to manage, at a price. 2.3.3  Docklands transformed

The following year saw a further bitter and prolonged strike centred upon Wapping in the East End of London. The newspaper industry was long overdue for modernisation and suffered from archaic working practices. Wild-cat strikes were common place. Eddie Shah had been the first newspaper magnet to mobilise the new trade union legislation in the cause of modernisation, and was quickly followed by Rupert Murdoch’s News International. Murdoch had built and clandestinely equipped a new production plant in Wapping. In response to industrial action on Fleet Street, production was unceremoniously switched to Wapping and dismissal notices were served to the striking Feet Street operatives. The Wapping plant saw picketing on a similar scale to that which had occurred during the miners’ strike; and it was met with the same heavy-handed approach to policing. Violence scenes from Wapping became a standing item on the evening news broadcasts. The dispute finally collapsed in February 1987, by which time thousands of workers had survived for over a year with no pay. Looking beyond Wapping, it is easy to imagine how building employers would have followed both the print workers dispute – and that of the miners – extremely closely. But in truth, by the mid-1980s they were probably losing relatively little sleep over the threat of large-scale industrial action in the construction sector. Nevertheless, the government’s industrial relations legislation would have been warmly received and would have helped ease the exaggerated memories of wildcat strikes on the Barbican project and the 1972 national building strike. In reality, the construction sector was already well on the way towards solving its industrial relations ‘problem’ through its own devices. Construction firms were simply withdrawing from the onerous responsibility of employing people (see Chapter 3). The times were indeed a changing. The Wapping dispute coincided with the redevelopment of London’s Docklands, under the guiding hand of the London Dockland’s Development Corporation (LDDC) established in 1981. Much to the chagrin of the local boroughs, the LDDC had been granted full planning powers; another example of local democracy being overridden by centralised government transferring power to non-accountable quangos. The LDDC resided over several iconic construction projects. The Canary Wharf development, with its striking tower at One Canada Square, was completed in 1991. It remains emblematic of the Thatcher years and the lifestyles enjoyed by the much-derided yuppies of the time. The Canary Wharf development was also much criticised for its failure to provide jobs for local people. Other iconic construction projects in Docklands included the development of London’s City Airport which was opened in 1987 and the Docklands Light Railway, which also opened in 1987. 2.3.4  Broadgate breaks the mould

Demand for office space in Canary Wharf had been driven by the financial deregulation of the City of London. The so-called ‘Big Bang’ happened on 27 October 1986. Deals once confined to the trading floor of the Stock Exchange were now allowed to take place by computer screen and telephone. The Stock Exchange’s monopoly on share dealing had ended. Immediately prior

The Dawn of Enterprise 29 to Big Bang Britain had been exporting £2 billion of financial services per year. This expanded almost overnight to £24 billion per year (Marr, 2007) and revitalised London’s position as financial capital of Europe. The booming trade in financial services also counter-balanced the balance of trade in manufactured goods, which had slipped into deficit for the first time in 1983 (Hirst, 1997). Financial services hence became of central importance to the nation’s economy. One of the immediate physical outcomes of the financial deregulation was to shift the centre of gravity of the City of London eastwards. The Canary Wharf development was preceded in this respect by the £800 million-plus Broadgate development adjacent to Liverpool Street Station. The Broadgate scheme was specifically designed to facilitate real-time financial trading between London, New York and Tokyo. The development spanned across 29 acres and set new standards for large-scale urban commercial development. The initial phases of Broadgate were completed in 1992. The vision had been set by a new breed of sophisticated developer in the form of Rosehaugh Stanhope. Under the leadership of Stuart Lipton and Godfrey Bradman, Rosehaugh Stanhope set precedents that have been followed by large commercial developments ever since. Many within the construction industry were at the time looking across the North Atlantic for new ideas. Reported construction times for office developments in the US were significantly faster than those being achieved within the UK (Flanagan et al., 1986). Rosehaugh Stanhope took this one stage further by engaging American designers and construction managers in the hope of forcing change on the UK construction sector. Developments such as Broadgate not only set new standards for architecture, they also set new standards for fast construction (Gray, 2008). The term ‘fast-track’ construction was widely adopted on major projects as a direct result of what was achieved at Broadgate. The client at Broadgate was further notable for pioneering the use of ‘construction management’ in the UK, to the consternation of the major contractors at the time (see discussion in Chapter 4). Central to the Broadgate model were flexible open floor plans unencumbered by disruptive columns. The development also made extensive use of off-site prefabrication, and was especially notable for its pioneering use of prefabricated toilet pods. Following innovations initially developed in the US, completely fitted-out and serviced pods were manufactured off-site and plugged into position as a sealed unit. The commitment to prefabrication on Broadgate resulted not only in fast, efficient construction but also in a quality finished product. It also enabled assembly to take place in non-unionised factory locations in the North of England were wage levels were much lower than those which prevailed in London. London in the latter 1980s was therefore not only an exciting place for those who worked in financial services; it was also an exciting place to be for those who worked in construction. Peter Rogers was at the time the construction director of Stanhope – he was later destined to become chairman of the Strategic Forum (see Chapter 8). Rogers’ reaction to an advertisement by one of the Broadgate trade contractors for a ‘claims surveyor’ has since passed into legend. The response was swift and brutal; firms which employed claims surveyors were unceremoniously declared persona non grata. Developers such as Stanhope undoubtedly enjoyed a significant degree of power in the marketplace, especially in London. But Broadgate was categorically not representative of the industry at large. For most contractors, claims surveyors remained an essential part of the adopted business model. 2.3.5  Labour mobility

Returning once again to the bigger political picture, the gleaming new developments in London were not replicated across the post-industrial landscapes of the North. The London-based boom in financial services served to amplify the fact that Britain in the mid-1980s was a divided nation. The recession of 1979–1982 which had decimated so much of the nation’s manufacturing base was inordinately concentrated in the North. Where once there had been industry there was now post-industrial

30  The Dawn of Enterprise wasteland. The differences between the North and the South were exacerbated by the miners’ strike. The affluent inhabitants of the leafy suburbs of the Home Counties looked to Mrs Thatcher to protect them against the likes of Arthur Scargill. In contrast, the populace of the post-industrial North felt their traditional way-of-life was under attack. The difference was felt as starkly in the construction sector as anywhere. Construction clients in the North of England were few and far between. Clients in Scotland were even rarer. There was a joke doing the rounds at the time about Liverpool’s rush hour routinely taking place on a Friday afternoon at London’s Euston Station. London had always known regional migrant workers, but the 1980s saw a renewed flood of commuting Northerners bent on securing a share of the capital’s prosperity. They stayed in London during the week and they returned to their northern homes at the weekend. They had taken Norman Tebbitt’s (the then Employment Secretary) 1981 advice to ‘get on their bikes’ in search of work. In a previous life the commuting Northerners would have been trade union members; but they were now entrepreneurs contributing to the new enterprise economy. And going on strike was not an option because they were increasingly self-employed. 2.4  Enterprise unleashed 2.4.1  Privatisations gather pace

Thatcher was emboldened by her third electoral victory in 1987 and began to shrug off much of the intuitive caution which had characterised her first two terms of office. Large parts of the country undoubtedly remained set against Margaret Thatcher. But large parts of the country continued to support her. The split was largely along regional lines, but the polarisation also manifest itself in terms of increasing inequality. The increase in UK wage inequality in the 1980s was matched only by the USA (Machin, 1996). There was also a marked growth in part-time working and temporary employment, with a widespread reduction in employment protection. Thatcher’s third term rapidly departed from the monetarist rhetoric which had prevailed previously. The Chancellor, Nigel Lawson, was allowed to initiate a consumerist boom that rapidly ran out of control. Any pretence of monetarist economic policy was abandoned in favour of the ultimate of give-away budgets. The 1988 budget reduced the top rate of tax from 60% to 40% and set the standard rate at 25%. Prudence this was not. Inflation started to rise, reaching 9.5% in 1990. The balance of payments also went from bad to worse, with a deficit of over £20 billion in 1989. The privatisation agenda also picked up pace with British Steel being rapidly followed by the water industry and electricity distribution. The assumption that the privatised companies would become more efficient as a result of the stimulus of market competition was entirely consistent with the spirit of the times. Certainly nobody in the cabinet was brave enough to point out the potentially damaging effects of cut-throat competition. But many of the privatised companies were not exposed to the harsh winds of competition. This was especially the case for the subsequently privatised utility companies which enjoyed quasi-monopolistic positions. In these cases regulation became the norm rather than the espoused aspiration of competition. Hence a host of new public regulatory bodies were created with unlikely sounding names such as Ofcom, Ofgas, Oftel and Ofwat. The regulatory bodies implemented regimes based on detailed targets and were given the powers to invoke penalties when the targets were not achieved. The privatised utility companies went on to become important clients of the construction sector, and their changing procurement policies became subject to continuous analysis. Many more privatisations were to follow. By the 1992 election, 46 publically owned businesses had been privatised, involving the transfer of 900,000 people (Marr, 2007). A further privatisation with important implications for the construction sector was that of British Airports Authority, which in 1987 became BAA plc. This was one of the more bizarre privatisations in that BAA enjoyed a considerable monopoly over Britain’s airports. It owned three

The Dawn of Enterprise 31 of London’s main airports, including the world’s busiest international terminal at Heathrow. Collectively these three airports handled 92% of passengers entering the capital. BAA also took control of Glasgow, Edinburgh, Aberdeen and Southampton airports giving it control of in excess of 60% of flights to and from the UK, including around 80% of those in Scotland. Precisely how the creation of such a huge quasi-monopolistic business was supposed to aid the cause of competition remains unclear. British Airways had been privatised in 1984, and if its customers became dissatisfied with its services they could conceivable transfer their business to another airline. But this was not the case for customers of BAA, especially if you were unfortunate enough to live in London or Scotland. BAA became the epitome of a privatised regulated business whereby market competition was replaced by an all too familiar regime of targets and performance monitoring. BAA was of course a hugely important client of the construction sector, and was destined to play a major role in the ‘best practice’ debate. But it continued to display many of the characteristics of public sector bureaucracy while at the same time adopting the rhetoric of modern management techniques. BAA had of course been subject to much public criticism before its privatisation, and this continued unabated afterwards. But it was a client that construction firms liked to keep sweet because of its inherent stability and continued investment in its infrastructure. It was also a client which was to go on to pilot the use of framework agreements (at least for while). Banwell, Emmerson and Wood would no doubt have approved of BAA, which seemed to echo the mutuality of responsibility which they had advocated so strongly. Privatisation enabled BAA to improve its own technical efficiency despite the misgivings of its many customers. At least this was assumption which prevailed throughout the 1990s. Unfortunately it was not true. Parker (1999) has analysed technical efficiency within BAA both before and after privatisation and concluded there was no discernable difference. 2.4.2  Creeping centralisation

Despite all the rhetoric about ‘small government’, the 1980s saw increased centralised control over a range of policy areas. In 1988 the national curriculum was imposed on state schools together with a centralised testing regime. Extensive creeping institutional centralisation also characterised ongoing reforms within the National Health Service (NHS). Jenkins (2006) opines that the degree of centralisation matched nothing seen outside of the Soviet bloc. The reforms also demanded indicators of demonstrable success, such that the NHS was soon awash with targets relating to waiting lists, referrals, appointments, mortality rates and anything else to which a number could be attached (ibid.) These reforms formed part of a 20-year trend whereby power was consistently taken way from democratically elected local politicians and placed in the hands of centrally appointed quangos. 1988 also saw responsibility for low cost housing shift from local authorities to Housing Action Trusts – again with important implications for construction. Mrs Thatcher really did not like those local authorities. Charitable housing associations were also favoured over local authorities. Despite their charitable status, housing associations received 90% of their funding from central government via the Housing Corporation. The budget of the Housing Corporation grew from £50 million in 1979 to £1 billion by the time Thatcher left office in 1990 (Jenkins, 2006). The Housing Corporation was funding three times as many new houses as were local authorities. But the government’s primary housing policy aim was to encourage home ownership, and the primary policy instrument was mortgage interest tax relief. The 1980s were get-rich-quick times for many in the housing market. Borrowing money to buy houses with the intention of doing them up and selling them on for a profit became a national pastime. The nation’s wealth was gambled on bricks and mortar with a sizable army of ad hoc builders involved in cosmetic renovation. In consequence, the grey economy grew exponentially; at least until the crash came.

32  The Dawn of Enterprise The consumerist housing boom of the late 1980s very quickly turned to recession. The boom-bust cycle imposed itself with ruthless brutality. But the construction sector had by now given up any expectation of a planned economy and had in turn re-organised itself on the model of structural flexibility. The legions of workers from the North, along with other large tracts of the construction workforce, cost nothing to shed because they had never been employed. The growth of self-employment in the construction sector is a topic which deserves particular attention (see Chapter 3). 2.4.3  Poll tax debacle

The credit-fuelled inflationary expansion of the late 1980s did much to dent Thatcher’s credibility for economic management, although Chancellor Nigel Lawson was arguably primarily to blame in respect of the 1988 give-away budget. Many within the Conservative Party were increasingly disgruntled with Thatcher’s autocratic style, and her deep unpopularity across large swathes of Wales, Northern England and Scotland caused many to doubt the possibility of a fourth electoral victory. But the issue which really brought about the end of Margaret Thatcher’s political career was the poll tax debacle. The Thatcher years had seen a long succession of measures aimed at preventing local authorities from spending money. They had also seen numerous measures to limit their revenue-raising powers through the imposition of central government control. The perceived difficulty was that elected left-wing councils were able to implement high spending policies which a relatively small number of local ratepayers had to pay for. The idea was to make local councils much more accountable by making all voters pay an equal amount. This was officially described as the community charge, but was rapidly dubbed by the media as the ‘poll tax’. Although allowance was made for the unemployed and low-paid, the poll tax was essentially regressive in that it bore little relation to peoples’ ability to pay. The poll tax had been originally implemented in Scotland, to much local opposition and resentment. The warnings were not heeded, and the eve of the poll tax’s introduction in England and Wales saw a massive demonstration in Trafalgar Square which deteriorated into a full-blown riot. The events shook the cabinet as the government’s ratings slumped in the national opinion polls. The subsequent political manoeuvrings are beyond the scope of this book, but suffice to say that Margaret Thatcher was forced to stand down and was replaced by the comparatively grey John Major. 2.4.4  Enterprise re-invigorated

When John Major entered Downing Street in 1990 the nation heaved a sigh of collective relief. Even Thatcher’s most ardent supporters had grown tired of her autocratic style. Major’s elevation to prime minister successful boosted the Conservative Party’s ratings in the opinion polls overnight. The stridency of Thatcher was suddenly replaced by images of warm beer and cricket. Major was further buoyed by Britain’s role in the 1990 Gulf War which resulted in Saddam Hussain being ousted from Kuwait. Although Major was very much Thatcher’s preferred successor, he acted quickly to distance himself from his mentor through the abolition of the poll tax which was replaced to general relief by the council tax. Major also inherited the poisoned chalice of having to negotiate the Maastrict Treaty on European political unity. Playing to a large gallery of baleful Conservative Party Euro-sceptics, Major demonstrated that he was no soft touch and famously negotiated an opt-out from the Treaty’s Social Chapter. Many advocates of the enterprise culture perceived the Social Chapter as a regressive step back towards the corporatist structures of the 1970s. The opt-out was to set the UK’s labour market on a very different trajectory from the rest of Europe. Employment protection was categorically rejected in favour of the ‘flexible economy’.

The Dawn of Enterprise 33 The enterprise culture therefore remained firmly in place while its critics pointed towards Britain’s apparent destiny as Europe’s low-wage, off-shore production platform. To almost everyone’s surprise, John Major went on to win the general election of 1992. This represented a fourth consecutive victory for the Conservative Party, a remarkable achievement given the almost continuous upheaval and discord. But those who were expecting a relatively quiet life under the unassuming John Major were to be disappointed. The enterprise culture continued unabashed, and was re-invigorated by Major’s election as prime minister. Hirst (1997) characterises the Major years as ‘Thatcherism on autopilot’. The commitment to privatise British Rail had been made prior to the 1992 election, and at the time there was every reason to assume that the Major government would not get the opportunity to honour its pledge. Certainly had the Labour Party under the leadership of Neil Kinnock been elected in 1992 the privatisation of the railways would not have happened. Thatcher had previously considered the railways as ‘a privatisation too far’; but the Major government rushed in where others had feared to tread. It is perhaps notable that the Major government made the commitment to privatise the railways without expecting to be given the opportunity to put it into practice. This would do much to explain the lack of thought and confusion which characterised this most disastrous of all privatisations. Marr (2007) describes the eventual solution as the ‘Complete Horlicks’ option. In 1993 British Rail was broken up and privatised. Ownership of the track was separated from a series of franchises which were created for operating trains. The privatisation was allegedly done in the cause of promoting competition, but given that different routes were allocated to different operators it was difficult to see how this could result in increased competition. The intricate details of the rail privatisation are beyond the scope of this book, but suffice to say it was heralded by many as an unmitigated disaster. The privatisation cost the taxpayer billions with little visible improvement in performance. The end result was a heavily regulated, and predominantly centrally planned, system that was dominated by targets and performance indicators. This was privatisation for the sake of it; enterprise it was not. Major also embarked upon a programme of pit closures in the coal industry as a precursor to privatising what remained of this once proud industry. Many considered this a major betrayal of the strike-breaking Union of Democratic Mineworkers (UDM), but the enterprise culture seemingly held no truck with honouring previous debts. Change continued at a remorseless pace. The NHS was reorganised along the lines of an ‘internal market’ and the influence of local authorities over state education was reduced in preference to the creation of Ofsted, which became one more quango to add to the ever-expanding list. Parents were now expected to operate as ‘informed consumers’ of the education system and to select the schools on the basis of league tables and publically available reports. The reality was that the best state schools were impossible to access unless one was fortunate enough to live in the pre-assigned catchment area. Progressively, this began to distort local property markets such that housing within the most desirable catchment areas was valued more highly than housing within less attractive catchment areas. Further market reforms were also introduced into the NHS whereby doctors ‘purchased’ the required services from hospitals. Such reforms afforded increased control to the Treasury and established what subsequently became known as the ‘cult of audit’. The end result of the longrunning processes of centralisation is that central government progressively became responsible for activities which had previously fallen within the remit of regional health authorities. Localised decision-making and accountability was replaced by a highly bureaucratic infrastructure of target setting and performance monitoring. Here lay one of the central paradoxes of the enterprise culture: despite the ongoing emphasis on individual responsibility a significant number of managers within the public sector found their personal responsibility to be continuously shrinking. Reforms of the health and education sectors are always of interest to the construction sector because they provide a degree of workload continuity. The notion of ‘performance measurement’ was subsequently to

34  The Dawn of Enterprise have a significant impact on the construction sector improvement debate. However, the advent of the Private Finance Initiative (PFI) was to have much more immediate impact on the structure of the construction market. The evolution of PFI and its implications for the construction sector will be described further in the next chapter, where attention will also be given to other manifestations of the enterprise culture in construction. 2.5  The enterprise culture 2.5.1  The antecedents of enterprise

The current chapter has so far described some of the epochal events which characterised the period 1979–1997 together with the associated shift in the prevailing political consensus. Numerous specific references have been made to the implications of the adopted policies for the construction sector. But at this point it is appropriate to depart from the preceding factual description to focus on the characteristics of what had become known as the ‘enterprise culture’. In Britain, it was Thatcherism which provided the immediate political context for the theory and practice of the enterprise culture, but the two terms should not be taken as synonymous (Keat, 1991). As has already been observed, government policy during the Thatcher years was characterised by several unfolding paradoxes and inconsistencies. State control of the economy increased rather than decreased, and the rhetoric of the free market frequently resulted in regulated private-sector monopolies. The enterprise culture also derived much of its legitimacy from the advent of the ‘New Right’ in the USA. In essence, the enterprise culture was a cultural phenomenon. Although the antecedents of the enterprise culture can be traced back as far as we can find evidence, the expression first entered the political lexicon in the UK around the time of the 1987 general election. Of particular note was a series of speeches and articles by the unelected Lord Young of Graffham who had been appointed Secretary of State for Employment in 1985 (e.g. Young, 1986; Young, 1987). As an ultra-loyalist to the cause, he was chosen to run Thatcher’s 1987 election campaign and was subsequently promoted to Secretary of State for Trade and Industry. The enterprise culture was first-and-foremost a rhetorical slogan aimed at winning the 1987 election. It was further presented as an attempt to change the prevailing political culture in Britain. Sources often refer to the rhetoric of the enterprise culture, focusing on the written and spoken words in which the ideas were communicated. But by the early 1990s authors were referring to the discourse of the enterprise culture to include not only the associated rhetoric but also the underpinning ideas and associated policy initiatives (du Gay and Salaman, 1992; Keat, 1991). Even more broadly, the discourse of the enterprise culture can be taken to include a complex web of ideas, linguistic expressions, policies, social institutions and associated material practices (Green et al., 2008). In this sense, the current chapter in its entirety can be seen to be about the discourse of the enterprise culture. And the remainder of the book can be seen to be about the way the discourse of the enterprise culture has played out over time in the construction sector. 2.5.2  Commercial enterprise

It is appropriate initially to outline the main parameters of the enterprise culture as originally articulated by its proponents in the late 1980s. To start with the obvious, the essential building block of the enterprise culture was a belief in the wealth creation capabilities of enterprise capitalism. Capitalism of course comes in many forms, and is contextualised in different places in different ways (Berger, 1987). In the context of 1980s Britain, the advocated belief in enterprise capitalism was positioned against the perceived (and real) failings of the 1970s. Enterprise capitalism was

The Dawn of Enterprise  35 seen to create wealth, and wealth creation was perceived to be the ultimate measure of success. The desirable ideal was therefore to have privately owned enterprises operating in a free market. Successful firms succeeded, and unsuccessful firms failed. This was seen to be the ‘natural order’ of competition. The role of government was to keep out of the way. Firms’ survival and growth depended upon their ‘leanness’ and ‘fitness’ in dealing with the rigours of the marketplace (Legge, 1995). Certainly there was little perceived merit in subsidising ‘lame ducks’ for the purposes of maintaining full employment. It followed that government intervention in the market was an intrinsically ‘bad thing’. The guiding espoused philosophy was that the market ‘must take its course’. In its ideal form, the free market should of course be unregulated (by definition). And certainly the Thatcher administration did much to reduce the ‘regulatory burden’ which had been placed on industry, although even here the rhetoric was much more strident than the reality. It should be emphasised that although the enterprise culture drew from the lexicon of economics, it was not in itself an economic policy. Over the course of the 1980s the word ‘enterprise’ became elevated to a cultural status (Heelas and Morris, 1990). The enterprise culture was about much more than economics; it was nothing less than an attempt to re-engineer the culture of the nation. As has already been noted, the rhetoric of the enterprise culture was progressively mobilised (albeit retrospectively) throughout the early 1980s to justify the policy of privatisation. The belief was that state-owned industries would inevitably operate more efficiency once exposed to the cold wind of competition. The paradox here was that several state-owned industries and public utilities subsequently became regulated private sector monopolies. The prime example was perhaps BAA plc, which was subsequently destined to play a significant role in the construction industry improvement debate throughout the 1990s. Few at the time were sensitive to the paradoxical position of BAA, although the Competition Commission did eventually catch up with them following their take-over in 2006 by Spanish infrastructure company Grupo Ferrovial. The enterprise culture further provided the retrospective justification for the changes to the operating status of local authority DLOs in the early 1980s as instigated through the introduction of ‘market testing’. This was subsequently expanded to CCT for the majority of public sector services. The deregulation of financial services and removal of currency exchange controls also became constituent parts of the enterprise culture. The most important manifestation of the enterprise culture in the construction sector was the incentivisation of self-employment, but this deserves separate consideration (see Chapter 3). 2.5.3  Individual enterprise

The discussion so far has focused on enterprise in the sense of the ‘commercial enterprise’. But the word ‘enterprise’ can also be understood as a verb in the sense of the ‘enterprising individual’ (Fairclough, 1991; Keat, 1991). From the outset, the enterprise culture gave emphasis to a highly individualistic form of capitalism. Guest (1990) describes how both the Thatcher government in the UK and the Reagan administration in the US emphasised the virtues of ‘rugged entrepreneurial individualism’. The notion of enterprise capitalism is therefore very different from the collectivist ideas that dominated during the 1960s and 70s. The idea of enterprise is also positioned against hierarchical command-and-control corporate cultures. Enterprising individuals are supposed to take risks; they are supposed to challenge the status quo. Above all else, they are supposed to innovate. Enterprising individuals are governed primarily by self-interest; they expect to receive financial rewards for the efforts. There is also an assumption that they are prepared to take control of their own careers and to take personal responsibility for their personal development (Heelas and Morris, 1990). Such characteristics were certainly encouraged throughout the 1980s, and became synonymous with the so-called ‘yuppy’ (i.e. young, upwardly mobile professional). Yuppies,

36  The Dawn of Enterprise stereotypically, lived in gleaming new apartments in London Docklands and worked at Canary Wharf. In the 1980s, the phenomenon was largely limited to the South East of England. It would be some years before yuppification took hold in urban pockets in the North. But the enterprise culture was not directed solely at yuppies; enterprise was for everyone, not just professionals. The advocates of enterprise exhorted society at large to make maximum use of their talents in the cause of wealth creation. It should be recalled that many skilled workers voted for Thatcher in 1979 because of their concern about ‘eroded differentials’ during the years of the social contract. The stereotype here was that of ‘Essex Man’, which is frequently mobilised to explain Thatcher’s electoral successes. The clichéd ‘Essex Man’ can be characterised as a workingclass, and hence slightly coarser, version of the yuppy. In popular imagination, Essex Man would drive a white van and would sport tattoos on both arms. He would also decorate his house with England flags during international football tournaments. Throughout the 1970s Essex Man would have been a union member and would have consistently voted Labour. But somewhere along the line he embraced the enterprise culture, and started to vote for Margaret Thatcher. The stereotype is strangely silent on the voting preferences of ‘Essex Women’. 2.5.4  The cult of the customer

Enterprise reforms aimed at extending and intensifying the role of market forces inevitably mean that ‘consumers’ become increasingly influential (Heelas and Morris, 1990). This translated to an increasing differentiation of demand, with radical implications for the way producers were organised. Previously predominant forms of mass production had been positioned against mass consumption (any colour you like as long as it’s black). However, the exercise of consumer choice led to differentiated forms of consumption thereby requiring flexible production patterns. The 1980s also saw a number of other external pressures for change, including: increased competition from foreign industry, greater quality consciousness within the consumer population; rapidly changing product markets, deregulation and readily available new technologies (Fuller and Smith, 1991). Many such similar lists have been subsequently generated to promote the need for change in the construction sector. But radical organisational change in response to the above pressures was the norm throughout the 1980s, and the re-structuring of the construction sector was in many ways following the same script. Such trends were by no means limited to the UK, which in many respects was following the pattern of change already established in the USA. Justifying narratives came in a variety of forms, but the common denominator was the iconic status of the customer. The onset of consumerism and the ‘cult of the customer’ were by no means limited to the private sector. Previously passive recipients of state services such as housing, education and health were similarly jolted out their apathy and were expected to exercise ‘informed consumer choice’. Such thinking subsequently informed a host of wide-ranging public sector reforms throughout the 1990s. There was no place in the enterprise culture for passive consumers of public services who simply accepted what they were given. And there was of course nothing better than a ‘short, sharp shock’ to jolt ‘unenterprising’ people out of their apathy – or at least this was the advocated storyline. Passengers on the railways were re-defined as customers, and patients within the NHS were similarly re-conceptualised. Students within universities were encouraged to see themselves as customers of educational services who paid fees in exchange for knowledge. Even the unemployed were encouraged to regard themselves as enterprising consumers of the welfare system. But the introduction of the term ‘customer’ into the day-to-day language of managers and workers was about much more than cosmetic window dressing. The promotion of the enterprise culture throughout the 1980s translated directly into extensive organisational restructuring in both the UK and USA (du Gay and Salaman, 1992). Previously dominant bureaucratic forms of organising

The Dawn of Enterprise 37 were progressively replaced by a form of organising based on market relations. Individuals within organisations were required to continuously position themselves in terms of the imperative of the ‘sovereign customer’ (Keat, 1991). The necessity to meet the needs of the sovereign customer did not only apply to relations between the organisation and its external clients, it also permeated the internal organisation of firms. Internal departments became tasked with meeting the demands of internal customers. All organisational units (and individuals) therefore became ‘enterprises’ within an internal marketplace. Of particular note is the way in which relational transactions were reduced to commercial transactions between suppliers and customers. Du Gay and Salaman’s (1992) diagnosis is especially notable for the way they argue against dichotomising between external pressures and internal strategic responses. They contend that these should be conceptualised as if they were part of the same phenomenon, which they label as the discourse of the enterprise culture. The discourse of the enterprise culture promoted the ‘short sharp shock’ as something which was cleansing; an essential cold shower in the cause of improved competitiveness. The empathy of the past whereby individuals could rely on the certainly of the next pay cheque is eradicated. Stability and certainly were replaced by uncertainty and the chaos of the marketplace. Firms in the construction sector had received the message very early: notions of ‘mutually of responsibility’ between the construction sector and its clients were gone. Individual workers picked up the same message. There was no place anymore for the ‘salary man’; they were essentially on their own. They became individual profit centres tasked with ‘adding value’. Even if they were not selfemployed, they were expected to act as if they were self-employed. Boundaries were formed where previously there had been none; every individual was tasked with ‘staying close to the customer’ (Peters and Waterman, 1982). When faced with the chaos of the marketplace, continuous business improvement became the new default position. Innovation was an essentially requirement; only through continuous innovation could individual enterprises remain in touch. Much of this is now accepted as common sense; in the latter 1980s it was heralded as a significant cultural shift. 2.5.5  Enterprise and the prevailing management orthodoxy

The enterprise culture was to have a profound and long-lasting impact on management theory and practice. Many of the iconic management improvement recipes which came to the fore during the 1980s were dependent upon the redefinition of relationships which was central to the cult of the customer (du Gay and Salaman, 1992). Total quality management (TQM) and just-in-time (JIT) systems both depended upon an organisational model which gave primacy to supplier and customer relationships. Such recipes both reflected and reinforced the enterprise culture and can only meaningfully be understood within the broadly context of industry re-structuring. TQM hinges upon a definition of quality in terms of conformance to customer requirements. But this applies to internal customers as well external customers. Each producer is thereby tasked with meeting the specified quality requirements. The model of course assumes that customers are able to predetermine their precise requirements. It further assumes that customers speak with one voice and are consistent in their specification of requirements over time. The idea that the paying customer has sole responsibility for defining the quality of buildings also had significant implications for the architecture of the public built environment. The homogeneous monotony of Britain’s high streets is a direct reflection of the enterprise culture and its longevity. But to see the very worse of British architecture it is only necessary to travel through city centres on the railway to view the endless functional conformity of industrial/retail units designed through design-and-build architecture. Conformity with client requirements is close to perfect; but the quality of the end product is nothing short of depressing. Quality and innovation can be strange bedfellows in the world of the enterprise culture. The problem was to be partially addressed by the subsequent creation of the

38  The Dawn of Enterprise Commission for Architecture and the Built Environment (CABE) and the associated promotion of design quality indicators (DQIs) (see further discussion in Chapter 8). The seemingly endless creation of quangos and various forms of key performance indicators (KPIs) to measure things which the market ignores has been an important part of the story ever since the enterprise culture came to prominence. These are the mechanisms through which the damaging side effects of the enterprise culture are managed and their adverse effects are limited. If all else fails, at least the existence of KPIs gives the impression that ‘something is being done’, even if their material impact is limited. This will be a recurring theme throughout the remainder of this book. The concept of JIT management can also be understood as a constituent part of the enterprise culture. JIT rests on a production process model which involves a series of organisational units in a sequence of interdependent operations. TQM dictates that each unit delivers its output to its immediate customer in accordance with specified requirements. JIT emphasises that the work should be done only when required (Sayer, 1986). JIT improves efficiency because there is no longer any necessity to keep stocks. The timing of the entire production process is hence dictated by the required delivery date to the external client. And the delivery date for the output from each unit involved in the production process is similarly dictated by its immediate internal customer. Control of the pace of work is therefore no longer pre-determined by centralised bureaucratic control but is now delegated to a series of internal customers. Such ideas were later to become inseparable from ‘lean production’ and considerable debate was extended to the extent to which such methods were applicable in construction. This debate will be addressed in some detail in Chapter 7, but for present purposes it is sufficient to note that the advocated methods were constituent parts of the discourse of the enterprise culture. The underlying contention is that management ideas reflect and reinforce the broader discourse of the prevailing socio-political consensus. Management recipes such as TQM and JIT can certainly be understood as constituent parts of the enterprise culture. But, as already noted, it would be a mistake to see the discourse of the enterprise culture as something which was homogeneous or fixed in terms of its content. The enterprise culture was in no small way defined in opposition to the prevailing counter-discourses. And the enterprise culture itself contained a variety of sub-strands that were continuously competing for prominence. Discourses such as the enterprise culture are constantly re-negotiated and their flexibility in this respect is central to their longevity. But there is little doubt that the ‘modern management techniques’ of the enterprise culture progressively displaced the management ideas which had prevailed throughout the 1970s. It was perhaps during the latter 1950s when the optimisation algorithms of operational research and the narrow machine metaphors of scientific management represented the epitome of modernity. In the prevailing conditions of stability and certainty such techniques had much going for them, but their credibility was seriously challenged by the turbulent environment of the 1970s. The emphasis among the cognoscenti progressively switched to ‘systems thinking’ and the need to adapt to the increasingly dynamic business environment (cf. Berrien, 1976; Burns and Stalker, 1961; Rice, 1963). Lawrence and Lorsch (1967) were especially influential in emphasising the interface between organisations and their broader environment. Kast and Rosenzweig (1985, 131; first published in 1970) pulled much of this thinking together to focus on the relationship between businesses and the societal environment within which they operate: [o]rganizations are subsystems of a broader suprasystem – the environment. They have identifiable but permeable boundaries that separate them from their environment. They receive inputs across these boundaries, transform them, and return outputs. As society becomes more and more complex and dynamic, organisations need to devote increasing attention to environmental forces.

The Dawn of Enterprise 39 Operational managers in the construction sector were understandably resistant to this particular brand of ‘systems-babble’, despite its increasing popularity within academic circles. But implicit within the advocated storyline was the assumption that managers were not expected to confine their attention to narrowly construed notions of profit maximisation. Such arguments are of course currently popular once again under the guise of corporate social responsibility (CSR) (Green, 2009). However, in the 1980s the notion that managers should do anything other than meet the requirements of the customer was rapidly marginalised by the advent of the enterprise culture. Satisfying the demands of the customer was accorded an iconic status in the search for effectiveness and profitability. Satisfying the demand of diverse societal stakeholders was ‘old thinking’ in that it constituted inefficiency and waste. And yet stakeholders were to slowly creep back into fashion again along with CSR. The original development of stakeholder theory dates back to the 1970s (Freeman, 1984; Freeman and Reed, 1983). In essence, stakeholders were seen to be groups or individuals who have a stake in the activities of the corporation, i.e. they provide support and in some way the corporation is seen to be responsible for safeguarding their interests. However, there was always an important distinction between the broad and narrow definitions of stakeholders (Freeman and Reed, 1983). In the broad sense, stakeholders were seen as ‘any identifiable group or individual who can affect the achievement of an organisation’s objectives or who is affected by the achievement of an organisation’s objectives’. In the narrow sense, stakeholders were defined as those groups or individuals that the organisation depends upon for its continued survival. In common with systems theory, the wider definition of stakeholders was quickly undermined by the cult of the customer; to expend resources on satisfying the aspirations of anyone other than the ‘customer’ very quickly became synonymous with waste. In the construction sector, this line of thinking reached its highpoint with the 1998 Egan report Rethinking Construction (see Chapter 5). 2.5.6  Dissenting voices

The enterprise culture attracted plenty of influential disciples during the 1980s, but it also attracted plenty of critics. Indeed, it could be argued that the active promotion of the enterprise culture depended upon the identification of suitable sets of ‘fall guys’ who could be cast as the defenders of the previously dominant ‘dependency culture’. Critics were further liable to be labelled as the ‘enemy within’; a jibe which was especially directed at trade union members. Old-style paternalistic Tories (i.e. the ‘wets’) were also frequently cast into the role of the ‘other’. Privileged members of the nation’s professional classes were similarly allocated bit parts as the protectors of vested interests and barriers to progress. The ‘enemy within’ was indeed a broad church, and trade unionists therefore frequently found themselves in good company. In terms of substantive arguments against the enterprise culture, the most obvious one was the argument that the enterprise culture promoted a society based on greed. The counter-argument promoted by the advocates of enterprise emphasised the so-called ‘trickle-down effect’, whereby the mechanisms of wealth creation ultimately also benefit the poor. And for those who were left behind, the Thatcher government was consistent in emphasising the importance of the ‘safety net’ of the welfare system. This of course was scant consolation for those who found themselves stranded within deprived postindustrial communities where job opportunities were few and far between. The danger here was that they would seek to be enterprising in the ‘wrong way’ and turn to quick profits through crime. A further critique of the enterprise culture related to quality of life. Those seeking to live their lives in accordance with the principles of the enterprise culture operated as if they were small, self-contained businesses. The critics of enterprise argued that they hence became obsessed with only a small part of what life has to offer. Fear of failure therefore looms large, incubating stress at

40  The Dawn of Enterprise work. The 1980s saw a boom in the occurrence of chronic fatigue syndrome (so-called Yuppy flu) and other associated ailments. Much discussion therefore concentrated around the ‘human cost’ of competition and the cultural poverty of the ‘loadsamoney’ society (see Chapter 4). The ruthless conceptualisation of individuals as profit-maximising units also de-emphasised the importance of ethical behaviour and eroded long-established notions of social responsibility. The moral and societal implications of the enterprise culture are of course beyond the scope of this book. But the criticisms articulated against the enterprise culture per se were to be frequently repeated in response to the associated managerial recipes. This was to become as true within construction as within any other sector. That the criticisms now seem dated, and largely irrelevant, is indicative of how persuasive the discourse of the enterprise culture has become. Perhaps the most prescient criticism of the enterprise culture relates to its lack of focus on sustainability. The enterprise culture infamously did not recognise the existence of ‘society’, and hence accorded no importance to social sustainability. Environmental concerns were not at the time high on the political agenda, but the ‘green’ lobby was to become increasingly mainstream by the turn of the millennium. As we shall see, the increasing importance accorded to sustainability resulted in several strange contortions in the construction sector policy agenda. Even more strikingly, the enterprise culture proved to be not even sustainable in economic terms. The iconic status of enterprise and the guiding doctrine of monetarism were severely dented by the global credit crunch of 2007–2009. At the time of writing, the future is difficult to predict, but a modified and regulated form of enterprise seems likely to emerge. The task of marrying enterprise with sustainability primarily rests with our political leadership, but the resulting policies will inevitably present new challenges for the construction sector. 2.6 Summary It is of course easy to demonise Margaret Thatcher for the negative consequences of the enterprise culture. But it must be remembered that she was supported by a sustained electoral coalition that enabled her to win three successive electoral victories. Thatcher made herself electable by appealing not just to the property-owning middle classes but also to skilled workers who felt disgruntled by the erosion of differentials brought about by the social contract. These included skilled tradesmen in the construction sector many of whom voted for Thatcher in consecutive elections. There are numerous supporters of Thatcher who continue to argue that she imposed a much needed modernisation on a structurally mis-aligned economy. It must further be recalled that Keynesianism had already been abandoned by the preceding Labour government of James Callaghan at the bidding of the International Monetary Fund (Gray, 1998). The winds of change were already blowing, and Thatcher’s policies were in no small way driven by external forces. The shift to the political right was in part precipitated by the onset of globalisation, driven by time-space compression due to technological change (cf. Harvey, 1989). Ultimately, the managed economy of the post-war period would have expired irrespective of the political opportunism of Margaret Thatcher. The Thatcher years were also instrumental in the transformation of the British Labour Party, which progressively abandoned its socialist heritage in favour of ‘New Labour’ managerialism. The epochal event was the 1984 miners’ strike and the defeat of the NUM which changed the face of British industrial relations forever. It is especially notable that the New Labour government elected in 1997 failed to repeal any of the industrial relations legislation their predecessors had so roundly condemned. Indeed, the New Labour government embraced the discourse of the enterprise culture and perhaps even extended it to new heights. But it would be a mistake to characterise the enterprise culture as something which was ever homogeneous. Neither was it a project which was ever finished; the enterprise culture has been in

The Dawn of Enterprise  41 continuous evolution ever since the constituent ideas were first articulated. Although privatisation became widely recognised as a core component of the enterprise culture, this was by no means clear from the outset. Indeed, it was only during Thatcher’s third term of office that the policy agenda took on any degree of coherence, and even then paradoxes and contradictions continued to abound. The elusive nature of the enterprise culture did not of course prevent it from being pursued even more enthusiastically by the subsequent government of John Major. From 1990 onwards, privatisation was seemingly pursued for its own sake. Whether or not privatisation resulted in increased competition ceased to be important; but in truth the justification of increased competition always was a badge of convenience rather than conviction. The precise definition of the enterprise culture may well be difficult to pin down, but few would argue that it has not had a significant and lasting impact on the UK economy and society at large. Indeed, it can be argued that it was the very elusive nature of the enterprise culture which accounts for its longevity. It is also important to understand that the notion of enterprise was mobilised against other pre-existing discourses. Indeed, there is a school of thought that postulates that it is only ever possible to understand discourses in conjunction with the counter-discourses to which they are opposed. Throughout the 1980s and beyond the discourse of the enterprise culture was consistently positioned against the perceived pre-existing ‘dependency culture’ whereby individuals supposedly looked to the state for free hands-outs. It was also positioned against the collectivist institutions which characterised the social contract of the 1970s. The elusive nature of the enterprise culture is further illustrated by the way in which it has been continuously re-negotiated and re-positioned over time. What cannot be denied is the rhetoric of the enterprise culture became highly persuasive among opinion makers during the latter 1980s, and that its influence continued to prevail throughout the 1990s. It had an especially strong influence on management practice such that many of the constituent ideas became accepted ‘common sense’. It will be argued in the following chapter that the enterprise culture had a particularly profound and lasting influence on the construction sector. It will further be contended that the construction improvement agenda from the late 1980s onwards reflected and reinforced the discourse of the enterprise culture. The improvement agenda also suffered from the same paradoxes and inconsistencies. References Adamson, D. M. and Pollington, T. (2006) Change in the Construction Industry: An Account of the UK Construction Industry Reform Movement 1993–2003, Routledge, Abingdon. Ball, M. (1988) Rebuilding Construction: Economic Change and the British Construction Industry, Routledge, London. Berger, P. (1987) The Capitalist Revolution, Wildwood House, Aldershot. Berrien, F. K. (1976) A general systems approach to organizations, in Handbook of Industrial and Organizational Psychology, (eds. M.D. Duneet) Rand McNally, Chicago. Bishop, M. and Kay, J. A. (1988) Does Privatisation Work? Lessons from the UK, Centre for Business Strategy, London Business School. Burns, T. and Stalker, G. M. (1961) The Management of Innovation, Tavistock Publications, London. du Gay, P. and Salaman, G. (1992) The cult(ure) of the customer, Journal of Management Studies, 29, 615–633. Fairclough (1991) What we might mean by enterprise, in Enterprise Culture, (eds. R. Keat and N. Abercrombie) Routledge, London. Flanagan, R., Norman, G., Ireland, V. and Ormerod, R. (1986) A Fresh Look at the UK and US Building Industries, Building Employers Confederation, London. Freeman, R. E. (1984) Strategic Management: a Stakeholder Approach, Pitman, Boston. Freeman, R. E. and Reed, D. L. (1983) Stockholders and stakeholders: A new perspective on corporate governance, California Management Review, 25, 88–106.

42  The Dawn of Enterprise Fuller, L. and Smith, V. (1991) Consumers’ reports: Management by customers in a changing economy, Work, Employment and Society, 5(1), 1–16. Gray, C. (2008) The role of the professional client in leading change: A case study of Stanhope PLC, in Clients Driving Innovation, (eds. P. Brandon and S.-L. Lu) Wiley-Blackwell, pp 234–240. Gray, J. (1998) False Dawn: The Delusions of Global Capitalism, Granta, London. Green, S. D. (2009) The evolution of corporate social responsibility in construction: Defining the parameters, in Corporate Social Responsibility in Construction, (eds. M. Murray, A. Dainty) Taylor & Francis, Abingdon, pp 24–53. Green, S. D., Harty, C. F., Elmualim, A. A., Larsen, G. and Kao, C. C. (2008) On the discourse of construction competitiveness, Building Research & Information, 36(5), 426–435. Guest, D. E. (1990) Human resource management and the American dream, Journal of Management Studies, 27(4), 378–397. Harvey, D. (1989) The Condition of Postmodernity: An Inquiry into the Origins of Cultural Change, Blackwell, Oxford. Harvey, M. (2003) Privatization, fragmentation and inflexible flexibilization in the UK construction industry, in Building Chaos: A International Comparison of Deregulation in the Construction Industry, (eds. G. Bosch, P. Philips) Routledge, London, pp 188–209. Heelas, P. and Morris, P. (1990) Enterprise Culture: Its values and value, in The Values of the Enterprise Culture, (eds. P. Heelas, P. Morris) Routledge, London, pp 1–25. Hirst, P. (1997) Miracle or mirage?: The thatcher years 1979–1997, in From Blitz to Blair: A New History of Britain Since 1939, (ed. N. Tiratsoo) Weidenfied & Nicholson, London, pp 191–217. Jenkins, S. (2006) Thatcher and Sons: A Revolution in Three Acts, Allen Lane, London. Kast, F. E. and Rosenzweig, J. E. (1985) Organization and Management: a Systems and Contingency Approach, 4th edn., McGraw-Hill, New York. Keat, R. (1991) Introduction: Starship Britain or universal Enterprise? in Enterprise Culture, (eds. R. Keat, N. Abercombie) Routledge, London, pp 1–17. Kirkham, L. M. and Loft, A. (2000) Accounting and the governance of the public sector: the case of local authority direct labour organisations in the UK in the 1970s, paper presented at IPA Conference, London. Langford, D. A. (1982) Direct Labour Organizations in the Construction Industry, Gower, Aldershot. Lawrence, P. R. and Lorsch, J. W. (1967) Organization and Environment, Harvard Press, Cambridge, Mass. Lawson, N. (1992) The View from Number 11, Bantam Press, London. Legge, K. (1995) Human Resource Management: Rhetorics and Realities, Macmillan, Basingstoke. Machin, S. (1996) Wage inequality in the UK, Oxford Review of Economic Policy, 12(1), 47–64. Marr, A. (2007) A History of Modern Britain, Macmillan, London. Parker, D. (1999) The performance of BAA before and after privatisation, Journal of Transport Economics and Policy, 33 (2), 133–146. Peters, T. J. and Waterman, R. H. (1982) In Search of Excellence: Lessons from America’s Best-Run Companies, Harper & Row, New York. Rice, A. K. (1963) The Enterprise and Its Environment, Tavistock Publications, London. Sayer, A. (1986) New developments in manufacturing: The just-in-time system, Capital and Class, 10(3), 43–72. Thatcher, M. (1993) The Downing Street Years, HarperCollins, London. Turner, A. W. (2008) Crisis? What Crisis?: Britain in the 1970s, Aurum Press, London. Young, L. (1986) Enterprise – The road to jobs, London Business School Journal, 11(1), 21–27. Young, L. (1987) Spreading the enterprise culture, The Director, 41(2), 40–43.

3

Leanness and Agility in Construction

3.1 Introduction As highlighted in the preceding chapter, the UK economy saw extensive restructuring throughout the 1980s and early 1990s. It has already been argued that the enterprise culture provided a retrospective narrative for justifying changes which had already been initiated. But the discourse of enterprise also served to accelerate the pace of reform. Of particular note was the way in which the processes of privatisation and outsourcing were progressively extended throughout the economy. This was especially true following John Major’s re-election in 1992 when the policy of privatisation operated largely on auto-pilot. What cannot be denied is that this process of re-structuring had far-reaching implications for the construction sector. Many clients which had previously been part of the public sector had been privatised in the expectation that exposure to market forces would drive efficiency improvement. The shift to the private sector inevitably changed the way these clients engaged with the construction sector. Even those clients which remained within the public sector outsourced many in-house capabilities in accordance with compulsory competitive tendering (CCT) and other associated policy initiatives which encouraged the contracting out of services. Faced with the introduction of yardstick competition, many such clients retrenched into the very worst kind of adversarial contractual practices. These were the same practices which were to be subsequently so lamented by the Latham (1994) report (see Chapter 4). The restructuring of the construction sector’s client base inevitably led to the diversification of client demand. Different clients wanted different things and hence developed different approaches to construction procurement. At the same time, competitive pressures forced construction firms to re-organise themselves in accordance with the principles of leanness and agility. Flexibility in the marketplace became the new dominant doctrine as the construction sector became increasingly dominated by the hollowed-out firm. Progressively, main contractors removed themselves from the physical work of construction, preferring to concentrate on management and coordination functions. This in turn was accompanied by a dramatic reduction in the number of directly employed construction workers and a corresponding increase in the number of self-employed operatives. Such changes cannot easily be explained on the basis of cause-and-effect relationships. The underlying causes were in part economic and in part sociological. They are best understood as a seamless flux of interconnecting changes which collectively characterise the material manifestation of the enterprise culture in the construction sector. The broad sweep of the privatisation programme was described in the preceding chapter. The present chapter commences with a discussion of the factors which shaped the emergence of the hollowedout construction firm during the 1980s. Attention thereafter is given to the issue of labour market casualisation and the government incentivisation of self-employment. The chapter is concluded by a further discussion of the re-structuring of the construction sector’s client base. Particular attention

DOI: 10.1201/9781003308133-3

44  Leanness and Agility in Construction is given to the privatisation of the Property Services Agency (PSA) and to the re-organisation of highways management and maintenance. Coverage also extends to the privatisation of the Building Research Establishment (BRE) and to the initial introduction of the Private Finance Initiative (PFI). 3.2  Towards the hollowed-out firm 3.2.1  The growth of subcontracting

During the late 1970s and throughout the 1980s the demand for construction saw significant diversification. Of particular significance was the demise of the state as the provider of mass housing, coupled with the government’s retreat from any pretence of demand management. Also of note was the emergence of new types of private-sector client organisation who were much more challenging in their demands. Developers such as Stanhope provided one example of a much more demanding client, but there were many more. The onset of the enterprise culture saw a significant re-structuring of the industry’s client base, which was in turn mirrored by extensive structural change within the contracting sector (Ball, 1988). One of the most important changes was a significantly increased reliance on subcontracting. The growth in subcontracting comprised part of a radical industry re-structuring which took place over a twenty-five year period commencing from the early 1970s. Harvey (2003) uses the term ‘flexibilization’ to describe the process of rapid structural change which was seen to include the downsizing of firms and the associated outsourcing of functions. Harvey’s diagnosis finds considerable support in the official statistics which describe the changing structure of the contracting sector. In 1971, 83% of firms employed less than 13 direct employees and accounted for less than 16% of industry output. At the same time the 0.1% of firms which employed more than 1,200 employees accounted for 24% of the total value of output (ibid.). The subsequent 25 years saw a radical degree of restructuring such that by 1997 the number of workers employed by small firms had doubled, and the number of operatives employed by large firms had halved. This is indeed a dramatic structural shift in the construction sector’s employment pattern. The net effect was to shift large number of employees from large firms to smaller firms. The decline in the number of operatives directly employed by contractors declined dramatically from 1979 to 1995 (see Figure 3.1). Especially stark was the declining number of directly 700,000

Number of employees (3rd quarter each year)

600,000 500,000 400,000 300,000 200,000 100,000 0

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Total employment

Operatives

APTC

Working proprietors

Figure 3.1  Main trades’ employment by types (1979–2009). Sources: Housing and Construction Statistics 1980–1998; Construction Statistics Annual 2010, Office for National Statistics, London.

Leanness and Agility in Construction 45

Figure 3.2  Private contractors: Percentage of firms by trade (1972–2009). Sources: Housing and Construction Statistics 1979–1998; Construction Statistics Annuals 2000–2010, Office for National Statistics, London.

employed operatives in proportion to the numbers of administrative, professional, technical and clerical (APTC) employees. The evidence in support of the hollowing-out of contracting firms could hardly be more striking. One of the starkest proxies for the growth in subcontracting lies in the increase in the number of listed private contractors who rely on specialist trades in comparison to those who rely on main trades. In 1971, the percentage of contracting firms listed under specialist trades was only slightly in excess of 50%; by 2008 it was edging ever closer to 80% (see Figure 3.2). However, while the above figures undoubtedly paint a vivid picture of structural change within the sector, they do not necessarily indicate the decline of large contractors in terms of their influence in the market place. What they do point towards is a significant and sustained growth in subcontracting. As Ball (1988) pointed out at the time, the large contractors’ declining share of total output sat ill-at-ease with their company accounts which showed expanding workloads throughout the 1980s. The explanation for this apparent paradox lies in the significant and sustained growth in subcontracting. As a caveat to the above, an increased reliance on subcontracting was not unique to the construction sector. Many industry sectors in the 1980s experienced a significant growth in outsourcing as firms strove to reduce their fixed overhead costs in the face of a more competitive trading environment. What is perhaps unique to the construction sector is that subcontracting occurs at the point of production such that employees of different subcontractors routinely work side-by-side. This frequently results in operatives performing similar jobs in the same location while being engaged on very different terms and conditions of employment. 3.2.2  The rationale for subcontracting

There are of course many good reasons for subcontracting, most of which have been well rehearsed by Hillebrandt (1984). Subcontracting offers an obvious advantage in that contractors can bring in specialist trades when required. Hence the main contractor does not have to worry about providing them with continuity of work, thereby minimising non-productive time and fixed labour costs. Subcontracting is also held to reduce the contractors’ organisational and control costs, and perhaps more importantly shifts the responsibility for working capital to the subcontractor. An additional

46  Leanness and Agility in Construction benefit of subcontracting is that contractors benefit from a secondary competitive tendering process which takes place much closer to the commencement of work. It is important at the outset to distinguish between subcontracting which involves both materials and labour, and subcontracting which involves labour only. In the first case, the main contractor will sub-divide the work into specialist packages which are then put out to tender on a ‘supply-andfix’ basis. All other things being equal, the main contractor would then place the sub-contract with the lowest bidder. M&E work is typically subcontracted in this way in its entirety. This avoids the need for the main contractor to develop the necessary skills in-house, and it similarly avoids the need for the main contractor’s estimators to develop the skills to price such work. Structural steelwork and roofing are also typically subcontracted on a supply-and-fix basis. Indeed, such elements have always been subcontracted by main contractors, and there is little evidence to suggest that this changed over the course of the 1980s. However, the advent of increasingly sophisticated heating, ventilation and air conditioning (HVAC) systems meant that a higher proportion of a building’s value was subcontracted. Cladding systems were likewise becoming much more specialised, and trends towards prefabrication and modularisation required the increased use of off-site factory environments. Buildings also required increasingly specialised control systems. Hence the construction sector become characterised by an increasing diversity of specialist niche markets, which in turn fed the growth in subcontracting. It follows that the growth in subcontracting in the construction sector during the 1980s can in part be attributed to client diversification, greater technological complexity and a generally increasingly competitive environment. But these factors only go some way towards explaining why main contractors were sub-contracting core trades such as brickwork and joinery which had previously been performed by directly employed labour. It should be added that the extent to which such core trades were subcontracted had long been subject to regional differences. For example, in London core traditional trades had been routinely subcontracted for some time. But the tendency to sub-contract core trades undoubtedly became much more widespread throughout the 1980s. Groundwork and concreting work were also increasingly subcontracted on a labour-only basis. Even on civil engineering projects, shuttering joinery which had once been performed by directly employed joiners was now routinely subcontracted. While larger firms increasingly relied on subcontractors, many small firms who had previously tendered for work from clients re-invented themselves as specialist subcontractors. Given market pressure to reduce overheads, it increasingly made sense for such firms to specialise in terms of a single construction activity (or trade). This immediately reduced the required level of investment in specialist plant and equipment; it also simplified recruitment and training in that they were no longer required to carry multiple trades. In many respects, the decision to operate as a specialist sub-contractor can be seen as a risk management strategy in terms of reducing a firm’s exposure to fluctuations in workload; the demand for individual trades is frequently more stable than the demand for individual building types (Ive and Gruneberg, 2000). 3.2.3  Fragmentation in action

The logics in favour of subcontracting apply not only to main contractors, they also apply to firms who are themselves subcontractors. A subcontractor which has secured a supply-and-fix contract frequently finds it advantageous to sub-let the installation work on a labour-only basis. Such logics can accumulate to encourage a multi-tiered system of sub-contracts. The end result is that construction work became increasingly organised through an extended vertical chain of subcontract whereby each sub-contractor in turn parcels out ever-smaller packages of work. The logic of subcontracting continues to apply until the value of the work package is too small to justify the transaction cost.

Leanness and Agility in Construction 47 On major construction sites, five tiers of sub-contract are by no means out of the ordinary. The end result is the main contractor’s responsibilities for employment conditions, training and productivity are passed progressively down the contract chain. Ultimately, such responsibilities too often end up resting with ‘fly-by-night’ firms who are least well placed to deal with them. A further benefit of an increased reliance on subcontracting lay in the way it fragmented the industrial relations context, thereby reducing the impact of any industrial action. Given that throughout the post-war period construction was the most strike-prone industry after coal mining (Evans and Lewis, 1989), the risk of financial loss due to industrial action was by no means insignificant. Even more salient is that the vast majority of strikes in the construction sector were unofficial. The only notable exceptions were the national disputes of 1963–1964 and 1972. In contrast to the coal mining industry, the battle lines in construction were not so starkly drawn between the employers and the trade unions. The real problem faced by employers was not the trade unions, but unofficial strike action which fell outside of union influence. Casting the NUM as the ‘enemy within’ had already stretched public credibility to the limit; UCATT would have been the most toothless enemy ever. The trade union movement within the construction sector has always suffered from fragmentation, and UCATT and TGWU were too busy competing with each other to be considered a threat to anyone. And in the face of ‘wild-cat’ strikes such as those which marred the Barbican project, trade unions leaders were frequently as impotent as the employers. Nevertheless, an increased reliance of subcontracting provided an additional benefit in that the risks of industrial action were shifted to subcontractors. If a subcontractor’s workforce went on strike the subcontract could be terminated. A replacement subcontractor could then be found with a more compliant workforce. Such is the reality of risk management in the construction sector. 3.2.4  Antagonistic relations

An increased reliance on subcontracting progressively enabled main contractors to remove themselves from the physical activity of construction. Rather than being directly involved in production, they increasingly focused their attention on the management and coordination of subcontractors. The shift towards subcontracting also enabled them to operate on the basis of much ‘leaner’ estimating departments. Once invited to tender, the main contractor would plan the overall sequence of work and identify any risks. But beyond this, the primary function of the main contractor was to sub-divide the project into discrete work packages and then distribute the documentation to subcontractors for pricing. The lowest prices for each work package would be added together to form the total cost of the project. The main contractor would add on an allowance for overheads and profit and the tender would be submitted. As already discussed, in an ultra-competitive market the contractor may omit the mark-up for profit with a view to undercutting the competition. But once the contract is secured, the emphasis routinely switches to regaining the profit margin through the aggressive pursuit of claims. In times of recession, contractors may occasionally even submit tenders at below cost for the purposes of maintaining turnover. This in turn would encourage an even more adversarial approach in their dealings with clients. In general, subcontractor relations with main contractors are aptly described as being ‘subordinate, dependent and antagonistic’ (Evans and Lewis, 1989). Contractors would seek to exert control over subcontractors by exploiting their financial vulnerability. It remains common practice to seek to impose onerous contractual conditions heavily stacked in the favour of the main contractor. The general intention would be to pay subcontractors as late as possible, while seeking every possible excuse to withhold certain ‘retention monies’. Some subcontractors were of course more easily exploited than others; it depended primarily on the ease with which the skills on offer could be sourced from elsewhere. Such pressures inevitably encouraged subcontractors

48  Leanness and Agility in Construction to reduce their own costs as much as possible, with the consequence that many would in turn sub-contract to labour-only subcontractors. In times of recession, labour-only subcontractors would be particularly vulnerable to contractual abuse because their capabilities could be so easily replicated. Even in relatively buoyant markets, labour-only subcontractors have limited market power because the barriers to entry are so low. In contrast, specialist subcontractors whose skills were not so easily replicated would tend to have a significantly greater degree of negotiating power. Indeed, leading M&E subcontractors are frequently larger, and more capital intensive, than many main contractors. 3.2.5  Competitive pressures

A particularly invidious practice on the part of main contractors is to engage in ‘Dutch auctions’ following the award of the main contract. Unscrupulous contractors instigate such actions in order to secure their profit level. This is often euphemistically referred to as ‘contract trading’. From the point of view of the main contractor, the process is primarily about risk management; the task is to source the subcontractor on the basis of the lowest possible price subject to an evaluation of the risk of default. But in the case of labour-only subcontractors, the risk of default is close to minimum. Such sub-contractors are invariably paid in arrears, and even if they did default they could easily be replaced within a matter of days. It would not be unheard of for the replacement labour-only subcontractor to arrive onsite with the same labour as had been engaged by the previous labour-only subcontractor. Such is the degree of informality which characterises the construction sector at this level. The bottom line is that for many contractors (and subcontractors) it is too often simply a matter of accepting the lowest price on offer. This exerts an immediate downward pressure on wages and employment conditions, such that bad employers secure a marginal advantage over good employers. Labour sourced through labour-only subcontractors provides a saving of 20-30 per cent over direct labour costs (Evans and Lewis, 1989). These savings result directly from the casualisation of the workforce and the associated downgrading of employment conditions. In consequence, contractors and subcontractors who employ their own workforce struggle to compete. It should be noted that the above-described downward pressure is not dependent on the main contractor instigating the Dutch auction. The process of reverse bidding is often instigated by those subcontractors who initially declined the opportunity to price the work. They would simply make a phone call to the main contractor and offer to complete the sub-contract for less than the lowest price currently on the table. When faced with this conundrum, main contractors frequently consider the ethical response to go back to the original subcontractor and give them the opportunity to match the new price. Hence there is a regressive competitive dynamic which undermines the position of those firms which are resistant to such practices. Even when the main contractor honours the original tender, the processes of reverse bidding may still take place at lower levels of the contractual chain. It is important to emphasise that such processes are not confined to the ‘cowboy builders’ of popular imagination. These are the bidding processes which often characterise the way work is organised on major construction sites presided over by tier 1 contractors which are household names. Such practices are no less prevalent in the construction sector of today than they were in 1995; this is how the industry operates. 3.2.6  Lean and mean in the marketplace

The net result of the processes described above was the emergence of the ‘hollowed-out’ firm whereby no one is employed other than a tight core of managerial personnel. Such trends were driven by the adoption of a competitive strategy based on structural flexibility, i.e. the ability to expand

Leanness and Agility in Construction 49 100% 90% 80% 70% 60% 50% 40% 30% 20% 0%

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

10%

300+ employees (%)

60–299 % employees (%)

14–59 % employees (%)

2–13 % employees (%)

1 employee (%)

Figure 3.3  Private contractors: Percentage of firms by size (1971–2009). Sources: Housing and Construction Statistics 1979–1998; Construction Statistics Annuals 2000–2010, Office for National Statistics, London.

and contract in response to fluctuations in demand (Winch, 1998). Any increase in subcontracting clearly aids flexibility in that it reduces the number of workers who are entitled to statutory redundancy payments. And once numerical flexibility had become established as the dominant model of competitive strategy, most contractors had little alternative other than to follow the pack. Institutional theorists like to refer to ‘isomorphic pressures’ to conform to the structures and strategies adopted by the majority. Firms which retained a large directly employed workforce risked becoming uncompetitive. In a volatile market, contractors which carried too many fixed costs were insufficiently agile. Leanness became a central prerequisite to survival. The increased reliance on subcontracting enabled firms to avoid the need to bear the cost of redundancies; it also enabled them to abrogate their responsibilities in training and human resource development (Harvey, 2003). In consequence, the large monolithic contractors of the 1970s largely disappeared from the landscape, together with the relatively stable employment and training regimes which they previously provided. Especially stark is the structural shift which took place from 1979 through to the early 1990s (see Figure 3.3). The competitive dynamics described above accentuated the problems of fragmentation and directly contributed to labour casualisation. Subcontracting is not the problem in itself; the difficulty is that the employment context dissolves into a casualised ‘twilight zone’ of opaque and localised arrangements. Winch (1998) is clear that labour-only subcontracting is not the same as self-employment; but there is frequently a significant overlap between the two. Indeed, an entirely self-employed workforce is the logical endpoint of subcontracting whereby each individual operative becomes a self-employed sub-contractor. Such a situation would of course be ridiculous, and would be the antithesis of a sustainable industry. But the reality is by the mid-1990s parts of the construction sector were moving irrevocably in this direction. The difficulty is that labour-only contractors frequently rely on labour supply agencies, which vary from legitimate businesses on the one hand to dodgy gangmasters on the other. Such practices become even more impenetrable once migrant workers are added into the mix. Different gangmasters frequently source labour from different geographic localities. In the 1980s the localities in question were cities such as Liverpool and Newcastle. In subsequent years they could equally be localities in rural Poland (cf. Langford and Agapiou, 2007). In either case, an outrageous situation was allowed to develop

50  Leanness and Agility in Construction whereby operatives are reimbursed on the basis of where they come from, rather than on the basis of the job they do. This was the price to be paid for leanness and agility in the marketplace. Such trends developed despite the expressed preferences of the Emmerson (1962) report in favour of direct employment. The situation described is by no means limited to the grey economy of workers who serve the domestic sector. In too many cases this is the situation which prevails on the nation’s major construction sites. The increasing fragmentation of the construction sector directly shadowed the differentiation of client demand. The demise of the state as a mass provider of housing removed significant stability from the marketplace. It thereby challenged the viability of the monolithic contractors which benefitted from the 1960s public housing boom. The newly privatised utility companies likewise had little interest in providing continuity of work for the construction sector. Indeed, the entire philosophy of demand management advocated by Wood (1975) had slipped decidedly out of fashion. An increased reliance on subcontracting was a logical response to the changing environment. Those who were best attuned with the shifting competitive dynamics of the market place had read the runes as early as the mid-1970s. And for those who remained unconvinced, the recessions of the early 1980s and early 1990s provided salutary lessons on the benefits of leanness. Hence the dominant recipe of numerical flexibility established leanness and agility as favoured metaphors long before ‘lean construction’ was promoted as an essential component of best practice. Several long-established national contractors went as far as re-branding (and re-listing) themselves as ‘service companies’. But each incremental increase in the amount of work that was subcontracted also meant a corresponding loss of control over the production process. It is therefore understandable that the new hollowed-out contractors should try to reclaim as much control as possible while preserving the adopted model of numerical flexibility. Hence it is easy to understand how managers were easily seduced by the superficial attractiveness of ‘modern’ managerial improvement recipes such as partnering and supply chain management. Similar mechanisms were also at work within the construction sector’s client base. This was certainly true of newly privatised clients such as the utility companies, Railtrack and BAA plc. It was also equally true for large influential retail clients such as Tesco, Sainsbury’s and Asda. Even collectively, such clients admittedly account for a small proportion of the construction sector’s workload. But, as we shall see, from the late 1980s onwards these were the very same clients which became increasingly active in the cause of ‘industry improvement’ (see Chapter 4). 3.3  Intensifying labour casualisation 3.3.1  The incentivisation of self-employment

It has already been argued that an increase in the level of self-employment is a logical consequence of the growth in subcontracting. This would not necessarily follow if it were only the main contractors which were increasingly resorting to subcontracting. But it does follow from an increased tendency to subcontract work throughout the supply chain. An increased reliance on labour-only subcontracting encourages a climate of self-employment. The major contractors which characterised the 1970s had previously offered a significant degree of stability in terms of employment regimes. This was frequently combined with a strong commitment to training, coupled with an active interest in the development of productivity improvement techniques. The major contractors had also previously employed large numbers of tradesmen (and occasionally, tradeswomen) who were supported by a full complement of apprentices. It is notable that the apprentice system was commented upon with broad satisfaction by Emmerson (1962) and Banwell (1964), both of

Leanness and Agility in Construction 51 whom were firm believers in the benefits of direct employment. However, self-employment did not increase solely as a result of deregulation and the ‘hidden hand’ of market forces; it was actively incentivised through government policy. The primary mechanisms for the incentivisation of self-employment lay within the taxation and national insurance regimes, the foundations of which were initially introduced during the early 1970s. Of particular importance was the 714 certificate launched in 1971. Possession of a 714 certificate was accepted by the Inland Revenue as proof of self-employed status, and thereby made workers responsible for submitting their own tax returns. An alternative route to self-employment was subsequently provided by the ‘subcontract 60’ (SC60) certificate, whereby tax is deducted at source by the main contractor. Access to 714 certificates was initially relatively tightly controlled, but from the late 1970s onwards the criteria for qualification were progressively relaxed. Selfemployed tax status in accordance with SC60 was consistently an easier option because in this case the authorities were less concerned about tax evasion. Prior to engaging with the substance of the discussion, it must be conceded that the official statistics relating to the level of self-employment in the construction sector are notoriously unreliable (Briscoe, 2006; Cannon, 1994). Many of the difficulties relate to issues of definition; it is surprisingly difficult to derive any consistent test to determine whether an individual is selfemployed or directly employed. Tax status alone cannot be taken as the determinant of whether an individual is genuinely self-employed or not. Even qualitative data are difficult to realise in that construction operatives are often understandably reluctant to provide information on their employment status. The situation is further complicated by the way in which self-employment is routinely conflated with labour-only subcontracting and the use of agency labour. Gangmasters are also frequently active in the provision of migrant labour to major construction sites. The interactions between these various forms of ‘contingent’ labour comprise significant analytical difficulties. Despite the statistical difficulties, the broad consensus of opinion is that the percentage of self-employed operatives in the UK construction sector grew from around 30% in 1980 to over 60% in 1995 (Harvey, 2001; ILO, 2001). 3.3.2  Employment status: Difficulties of definition

The legal employment status of construction workers has long been a matter of controversy, and despite a string of court cases it remains an issue of considerable complexity (Barker, 2007). Within the British legal system, the distinction between employment and self-employment rests on precedents established within case law. In essence, individual judgements rest on assessing whether there is a ‘contract for services’ (i.e. self-employment), or a ‘contract of service’ (i.e. employment). Yet the way in which the two parties label the relationship, or what they consider the relationship to be, is not in itself conclusive. It is the reality of the relationship that is important, although the intention of the parties can be decisive in circumstances where the relationship is ambiguous, or where the other factors are neutral. Factors which are routinely taken into account in determining the relationship between two contracting parties include: (i) the degree of control exercised by the employer; (ii) the provision of tools and equipment; (iii) the arrangements made for tax, national insurance, value-added tax (VAT), statuary sick pay; and (iv) the presence or absence of ‘mutuality of obligation’. These are derived from a list of thirteen factors produced by Selwyn (2008), which it is recommended should be taken into account by employment tribunals. A further important consideration is the allocation of financial risk between the contracting parties; employees are not normally expected to risk their own capital. Part of the difficulty is that there is little consistency in either the contractual basis

52  Leanness and Agility in Construction of, or the employment conditions which prevail within, catch-all categories such as labour-only subcontracting. The contractual reality of who is engaged by whom and on what basis becomes especially opaque when labour-only subcontracting becomes conflated with the use of labour agencies. What is clear is that many operatives who are routinely declared as self-employed within the construction sector could not be said to be in ‘business on their own account’. In other words, many operatives who are nominally self-employed would fail any sensible ‘economic reality test’, and are hence more accurately classified as falsely self-employed. An independent report commissioned by UCATT (Harvey, 2001) suggested that there were between 300,000 and 400,000 thousand workers who were falsely classified as self-employed within the UK construction sector. At the time, this comprised between 30% and 41% of the directly employed workforce as recorded by the official statistics. There are of course many bona fide self-employed tradespeople in the construction sector. Many work in the domestic sector and undertake work directly for individual clients. As such, they legitimately act as entrepreneurs who are ‘in business on their own account’. They negotiate a fixed price for the work, and they risk making a loss if unforeseen difficulties arise. Such circumstances account for a significant number of self-employed operatives in the sector. But there is also a significant grey economy at work whereby some projects ‘go through the books’ and others are performed on a ‘cash-in-hand’ basis. Homeowners frequently collude in tax evasion through their willingness to pay cash in return for avoiding VAT. The self-employed builders in turn also frequently use cash to pay others who help out with particular specialist trades. The informal economy in the domestic sector should in no way be condoned, but it is not the focus of this book. Of primary concern are the informal employment regimes which too often prevail on major construction sites, under the so-called management of major contractors. Of particular interest is the way contractors and clients alike consistently turn a ‘blind eye’ to false self-employment while at the same time advocating the benefits of ‘integrated teams’ and ‘collaborative working’. 3.3.3  The benefits of self-employment for firms

The benefits of subcontracting have already been discussed. It has further been argued that in the UK context an increase in self-employment is an inevitable consequence of an increase in subcontracting. Given the increased reliance on subcontracting, the ‘choice’ between directly employed workers or self-employed workers is effectively pushed down the supply chain. Smaller main contractors may sometimes engage individual self-employed tradesmen directly, but they are more frequently engaged by subcontractors. The point has already been made that individuals may often be unclear whether they are self-employed or not. The financial benefits of self-employment to the ‘employer’ are on the surface reasonably clear. An operative who is declared self-employed immediately removes the employer’s obligation to pay their share of the national insurance contribution with an immediate estimated saving of around 12% (Harvey, 2003). A shift to self-employment further removes the employer’s obligation to provide statutory employment benefits such as holiday and sick pay. It also removes the obligation to contribute to the operative’s pension scheme, the responsibility for which is transferred to the operative. It should be noted that such savings are achieved solely through changing the employees’ tax status; it does not depend upon any productivity gain as a result of the operatives ‘working for themselves’. A reliance on self-employed operatives therefore directly enhances the competitiveness of subcontractors. This raises the possibility of a symbiotic relationship between subcontracting and self-employment. Not only does an increased reliance on subcontracting encourage self-employment, but the incentivisation of self-employment also encourages an increased reliance on subcontracting.

Leanness and Agility in Construction 53 But it must also be recognised that the cost benefits of self-employment are rapidly dispersed if contract labour has a higher unit price than the directly employed. And genuine self-employed workers are frequently able to earn enhanced rates – otherwise there would be no incentive for them to become self-employed. The price of contract labour is of course primarily dependent upon market mechanisms relating to supply and demand. In essence, labour-only subcontractors derive their profit from the difference between the price at which they supply labour and the cost at which they can secure it. Whilst reliable data is in scarce supply, the base rates for contract workers are undoubtedly routinely suppressed as a result of low barriers to entry. Regional imbalances and high unemployment throughout the 1980s meant that there were always significant numbers of transient workers who were seeking work. Even during periods of relatively high demand, a reliance on self-employed operatives can still serve a useful purpose in confining inflationary pressures to specific trades. The overriding issue is that the wages of directly employed operatives tend to be relatively stable, whereas the cost of contract labour is prone to significant fluctuations. The cost of labour supplied through labour-only subcontractors frequently declines dramatically during times of recession; this in itself is a significant benefit to those firms who base their competitive strategy on leanness and agility. Consideration should also be given to the possibility that the widespread use of self-employed labour provided a useful strategy of off-setting the risk of industrial action (cf. Druker, 2008). Harvey (2003) is especially bold in attributing the origins of the growth in self-employment to the industrial unrest of the 1960s, which he characterises as: [a] period of major industrial strife, especially in the City of London where unionization and union power reached a high point. This period stirred employers and government to contemplate the encouragement of self-employment as a means of counter-balancing union power. (Harvey, 2003, 201) Conspiracy theorists of course always like to imagine groups of powerful plotters making secret deals in smoke-filled rooms. But the reality invariably tends to be much more prosaic, and the growth of self-employment is perhaps best read as an emergent characteristic of the enterprise culture. The major contractors had already insured themselves against industrial action through an increased reliance on subcontracting, and it is unlikely that the relatively transient labour-only subcontractors retained memories of industrial disputes from previous decades. The major contractors further insured themselves against industrial action by securing the services of illegal blacklisting agencies who maintained records of individuals who were even suspected of militant track records. Such services of course were hardly necessary in the case of self-employed operatives, whose summary dismissal requires little justification. 3.3.4  Enterprising individuals

The preceding discussion sheds light on the reasons for the increased reliance on subcontracting, and for the way in which subcontractors made themselves more competitive through the use of self-employed operatives. It has been argued that the primary reason lies in the adoption of structural flexibility as the dominant model of competitive strategy. This was spurred by the increased volatility of the market, encouraged in part by extensive client diversification. An additional factor was the realisation amongst chief executives that the Thatcher administration of the 1980s was not interested in managing demand for the benefit of the construction sector. This led inexorably to the emergence of the hollowed-out firm as the dominant organisational model. Contracting firms placed a premium on leanness and agility in the market place. The shift to self-employment was

54  Leanness and Agility in Construction often kick-started by the immediate cost savings which could be secured through the avoidance of employers’ national insurance contributions and other statutory costs associated with direct employment. A contributory factor has also been the recurring lack of clarity in the legal definition of self-employment, although this is by no means unique to the construction sector. Rather more tentatively, it has been suggested that government and employers sought to incentivise selfemployment as a means of emasculating trade union power. What remains to be explained is the attractiveness of self-employment to the operatives themselves. The financial incentives for workers to become self-employed were certainly not as strong as the incentives on offer to employers. For those seeking self-employment on the basis of a 714 certificate there was a possibility of tax evasion. Ever since the scheme’s initial introduction there has always been a thriving black market in 714 certificates, which may suggest a tendency towards tax evasion. However, the possibility of tax evasion only ever applied to a small minority, and was not even an option for those who were self-employed on the basis of SC60. Operatives shifting to self-employment benefit from a small reduction in the level of national insurance contribution, although this is hardly likely to be significant (Harvey and Behling, 2008). Those who are truly in business on their own account are also able to claim increased allowances against running costs, but this again would not account for the majority of those who opted for self-employment within the context of labour-only sub-contracting. One of reasons that labour-only subcontractors are able to attract higher rates of remuneration relates to the absence of fixed overheads. However, the point has already been made that such factors are easily overridden by the mechanisms of supply and demand, much beloved of course by the advocates of the enterprise culture. It therefore follows that the additional earnings on offer during times of boom were sufficient to entice many into self-employment. This would certainly seem to have been the case during the latter 1980s. Winch (1998) cites a calculation reported in the Contract Journal (6/8/97) which suggests a mark-up of 50-100% for a self-employed operative in comparison to an operative employed on the rates set by the National Working Rule Agreement (NWRA). Such an up-lift may indeed offer compensation for the loss of employment benefits such as holiday pay, sick pay and statutory pension contributions. This would be especially true for those who were willing to sacrifice long-term benefits for the sake of additional cash-in-hand. The stereotypical image of building workers as a slightly irresponsible bunch who value autonomy and enjoy the craic is one which continues to prevail. Given the pre-existence of such a culture, the argument is frequently promoted that self-employment is attractive because it offers a greater degree of autonomy. It might equally be argued that young men (and women) join the ranks for the British Army because they value the structure and discipline offered by military life. In both cases, a more convincing explanation hinges on the absence of attractive viable alternatives. Many workers during the 1980s boom years were undoubtedly tempted to transfer to selfemployment by the prospect of significantly higher cash-in-hand payments. And having opted for self-employed status, they then found it difficult to transfer back into direct employment. Indeed, they would only likely to be motivated to return to direct employment when the attractiveness of self-employment became eroded by a shift in the balance of supply and demand, i.e. by the onset of recession. And this of course would be the worse time possible to seek direct employment in the construction sector. In either case, work would be consistently easier to secure on a self-employed basis as a result of the sustained systemic bias towards self-employment among contractors. Word-of-mouth introductions to labour agencies would become a much more viable route to finding work on major building sites than submitting speculative applications to main contractors. The demise of the DLOs further served to reduce the opportunities

Leanness and Agility in Construction 55 which were available for direct employment. Such workers arguably benefitted from the greater degree of flexibility which self-employment offered in comparison to direct employment. They could frequently work four-day weeks in London returning every Thursday evening for a long weekend at home. This does not necessarily mean that they preferred to remain self-employed. It was more often a case that self-employment was the only basis upon which work was available, and very often such workers were falsely self-employed. Many such workers made no conscious choice to become self-employed, and neither were they self-aware of their employment status. They just followed their mates. On the basis of any economic reality test they should have been directly employed. 3.3.5 Loadsamoney

The growth in self-employment undoubtedly exacerbated the pre-existing problems of industry fragmentation. It is hence striking that workers were positively encouraged by the rhetoric of the enterprise culture to think of themselves as individual enterprises (see Chapter 2). Of further note is the way in which the policy dimensions of the enterprise culture specifically targeted skilled workers, many of whom willingly traded in their trade union membership card for a mobile phone and a 714 certificate. The values being exhorted by government and industry leaders alike were the values of rugged entrepreneurial individualism. This was a significant shift from the worldview previously espoused by the likes of Emmerson (1962) and Banwell (1964), both of whom specifically warned against the dangers of labour casualisation. But the advocated benefits of direct employment gave way to the ideas of the ‘flexible economy’. Where once there had been employment stability there was now a euphemistic commitment to flexibility and innovation. The enterprise culture therefore undoubtedly legitimised the shift to self-employment, and served to bolster the self-identities of many construction operatives in the new, flexible economy. The individuals who were tempted into self-employment were those who fitted the ‘Essex Man’ stereotype; they were probably also exercising their ‘right to buy’ at the same time as they were opting for self-employment. The culture on offer was memorably parodied by comedian Harry Enfield in his 1988 hit song Loadsamoney. Collectivist structures such as trade unions, council housing and direct employment were held to represent the failed values of the 1970s. Self-employment was also viewed by many skilled workers as a means of restoring eroded differentials, and many undoubtedly benefited in the short-term. But the financial benefits on offer were severely reduced by the recession of the late 1980s, during which many selfemployed workers experienced severe reductions in their take-home pay (Harvey and Behling, 2008). Others became self-employed workers without any work, and in consequence many were lost to the construction sector forever. The discussion above has focused on the reasons for the growth of self-employment from the mid-1970s through to 1997, when the partial re-imposition of barriers saw some success in shifting 185,000–210,000 workers back into direct employment (Harvey, 2003). However, the correction was shortlived (see Figure 3.4). The discussion of self-employment will be re-visited and brought up to date in Chapter 9, when particular attention will be given to the conflation of self-employment and migrant workers. In reading Figure 3.4, it should be borne in mind that the official statistics on the number of self-employed are widely held to underestimate the true level by approximately 200,000 (Cannon, 1994). Hence the accepted assertion that at its peak in 1995 the majority of the construction workforce in the UK was nominally self-employed. This was a bizarre situation for a major industrial sector to find itself in; the fragmentation of the construction sector is frequently cited as a major barrier to improvement. Yet there remains little will to address the fragmented nature of the construction workforce.

56  Leanness and Agility in Construction

Figure 3.4  Great Britain construction manpower: Percentage of employees and self-employed (1969–2007). Sources: Housing and Construction Statistics 1980–1998; Construction Statistics Annuals 2000–2008, Office for National Statistics, London.

3.3.6  Illegal blacklisting

It has been suggested that the primary reason for the systemic shift away from direct employment among contractors was the collective commitment to competitive strategy based on structural flexibility. More tentatively, it has further been suggested that a contributory factor was the collective memory of industrial unrest from the 1960s and 70s. The national building strike of 1972 left a legacy of bitterness and many employers resented having been being ‘held to ransom’. It is this background which goes some way towards explaining the widespread blacklisting of ‘militant’ trade unionists through a private enterprise blacklisting organisation initially known as the ‘Economic League’ (Hollingsworth and Tremayne, 1989). The Economic League was originally established in 1919 to fight ‘bolshevism’ and remained shrouded in secrecy until subject to scrutiny by a House of Commons Select Committee in 1989 (Green, 2009). It habitually interfered in British industrial relations throughout the 1970s and 1980s, before being finally abolished in 1994. In its latter years the League regularly attracted the attention of civil liberty campaigners who claimed that it illegally held information on individuals (Hencke, 2000). At its peak, the League was engaged by more than 2,000 companies to weed out active trade unionists, or those who were suspected of being active trade unionists. Ironically, this was a system which would not have looked out of place in Erich Honecker’s supposed socialist state of East Germany. The penalties of being exposed as a deviant in East Germany were undoubtedly more severe, but illegally blacklisted workers in Britain undoubtedly suffered significant economic hardship. During the 1980s, the majority of the major contracting firms subscribed to the Economic League, and relied on its services for screening potential employees. The League had files on as many as 45,000 people it considered to be ‘leftwing subversives’ (Evans et al., 2009). Individuals frequently found themselves blacklisted for entirely legal involvement in trade union affairs with no rights to appeal or other forms of redress. Some found themselves blacklisted simply for keeping company with trade unionists. Even complaining about safety standards or employment rights at work was enough to qualify for the blacklist. To be clear, it is not being suggested that the Economic League was a contributory cause of the growth of self-employment. But the fact that the majority of chief executives of major contractors

Leanness and Agility in Construction 57 signed up to such an organisation is indicative of the mindset which prevailed. Direct employment was seen as a source of risk, and membership of the Economic League was a means of risk mitigation. But blacklisting did not end with the demise of the Economic League. It continued to operate at a reduced scale from 1993 under the auspices of The Consulting Association (TCA) which operated from a suburban house in Droitwich. One of the leading instigators of TCA was Sir Robert McAlpine, although there were at least fourteen major construction companies involved. The TCA was operated by Ian Kerr who had previously been involved with the Economic League. It employed broader the same approach as had prevailed under its predecessor. Members would submit the names of identified ‘trouble makers’ or ‘militants’ to the TCA for inclusion on the blacklist. Many were listed as a result of legal trade union activities or perhaps being too vocal in criticising health & safety. The operation was eventually closed down following a raid by the government’s Information Commissioners Office (ICO) in 2009. The ICO subsequently listed over 40 companies as having been members of TCA, including Balfour Beatty, Carillion, Costain, Kier, Laing O’Rourke, Sir Robert McAlpine, Skanska and Vinci. Collectively, these were the biggest names in the UK construction sector (Smith and Chamberlain, 2015). In October 2013, eight named construction companies apologised for their actions and agreed to pay compensation to those involved in an out-of-court settlement. Estimates of the sums involved range from £50 to £75 million. The demise of TCA however is unlikely to have seen the end of corporate participation in blacklisting. In October 2013, the Crossrail project in London faced fresh accusations of illegal blacklisting. In the time of writing, there are also rumours of past trade union complicity in blacklisting, often as part of the ongoing conflict between so-called ‘moderates’ and ‘militants’ within the trade union movement. 3.4  Re-structuring in the client base 3.4.1  Demise of the Property Services Agency (PSA)

The preceding chapter described the wave of privatisations which characterised the 1980s and early 1990s. From the point of view of the construction sector, the privatisations of the public utilities, BAA and British Rail were especially significant. Privatisation was almost inevitably followed by extensive restructuring coupled with the reengineering of long-established processes. Procurement was no exception, and privatisation frequently foresaw a radical shift in practice. In some cases, the newly privatised client organisations were liberated from the constraints of public sector lowest-cost tendering and moved towards procurement based on value and quality. Others chose a more cost-driven approach to reengineering their processes which resulted in a reliance on design-and-build architecture which prioritised efficiency of construction over design quality. But the privatisation which arguably did most damage to the accumulated procurement expertise was that of the PSA. Prior to privatisation, the PSA played a mediating role between government departments and private sector suppliers (Burnes and Coram, 1999). Its demise therefore represented a significant change in the established mode of engagement between public sector clients and the construction sector. The intention to privatise was announced in 1989, although the process only started in earnest in 1992 under the stewardship of John Major. The privatisation of the PSA attracted little public attention at the time; the media was understandably fully occupied trying to make sense of the shambolic privatisation of the railways. The origins of the PSA can be traced back to the Ministry of Works, formed in 1943 to take responsibility for the wartime procurement of property. After the war the Ministry of Works retained responsibility for government building projects. In 1962 it became the Ministry of Public Buildings and Works and was subsequently merged with the works directorates from within the Admiralty,

58  Leanness and Agility in Construction War Office and Air Ministry (Burnes and Coram, 1999). The PSA formally came into being as an autonomous agency in 1972 following the creation of the Department of the Environment (DoE) in 1970. Its stated remit was to ‘provide, manage, maintain, and furnish the property used by government’. Creeping privatisation had been underway since 1981 through the enforced contracting out of construction services to the private sector. However, throughout the intervening period the PSA had retained an overall supervisory role, and it was this function which was to be effectively lost with full privatisation. The PSA had also been uniquely placed to adopt a through-life perspective on the management of the government’s property stock, although attempts to strike an appropriate balance between capital and revenue were consistently hampered by Treasury rules. Following the 1992 general election the PSA was split into separate operating companies which were then sold as going concerns to private sector construction firms. The break-up and privatisation of the PSA potentially provided the opportunity for much closer, and more innovative, procurement relationships between government departments and the construction sector. But the downside was that the public sector lost much of its accumulated expertise in property procurement, including PSA’s much heralded database on construction and maintenance costs. The acquisition of the privatised regions of the PSA by private sector firms offered the means of developing significant additional business streams based on the provision of facilities management (FM) services. It was in this context that the privatised operating companies began to emphasise the importance of ‘partnerships’ between themselves and public sector clients, with a particular emphasis on the benefits of long-term relationships. However, central government directives on competitive tendering and market testing continued to act against the possibility of long-term service contracts with the private sector (Erridge, 1996). While the rhetoric of ‘partnership’ prevailed on both sides, the reality was that any shift towards a long-term service ethos was heavily mediated by a continued insistence on short-term contracts. The prospect of formulating cosy partnership relationships with the privatised regions of the PSA was not helped by memories of the corruption scandal of the early 1980s. Evidence of corruption in PSA District Works Offices had prompted the appointment of Sir Geoffrey Wardale to conduct a formal enquiry (Department of Environment, 1983). The enquiry resulted in the removal of the PSA Chief Executive, Montague Alfred whose views were deemed to be ‘contrary to government policy’ (Doig, 1997). The Wardale report undoubtedly revised memories of the Poulson scandal of 1973. Corruption in public procurement may be relatively rare in Britain, but when it is exposed it casts a very long shadow. To this day the shadow of corruption continues to undermine the persuasiveness of those who argue in favour of ‘collaborative working’. As an aside, the notion of ‘collaboration’ brings with it unpleasant connotations of the collaborationist Vichy regime in France during World War II. Others may recall Norwegian ‘quislings’ from the same era. Returning to the central argument, it is further notable that since the break-up of the PSA many government departments have chosen to take responsibility for estate management back in-house, thereby establishing their own property management departments. By far the largest of these is the Defence Infrastructure Organisation (DIO) (Defence Estates prior to 2011), which continues to look after the military facilities operated by the Ministry of Defence (MoD). Defence Estates was destined to play its own role in the construction sector improvement debate, especially through the much heralded project known as Building Down Barriers (see Cain, 2003). 3.4.2  Highways management and maintenance

The predessor of the government-owned company currently known as National Highways was originally founded as an executive agency known as the Highways Agency (HA). The HA played a pivotal role in the development of the enterprise culture in the civil engineering

Leanness and Agility in Construction 59 industry. The ‘trunk road’ system in Britain dates from the 1930s and from the outset was deemed to be the responsibility of central government rather than local government. The same applies to the motorway system which dates back to the opening of the first section of the M1 in 1959. From the outset government was much more willing to invest in the infrastructure of the nation’s road system than it was in the railways. This was especially the case in the 1980s when the individualistic nature of the enterprise culture resonated much more strongly with private car ownership than with public transport. The HA was established as single executive agency of government in 1994 with a remit of managing and maintaining the motorway and trunk road network and delivering a programme of improvement works (Haynes and Roden, 1999). Its role subsequently evolved into that of network operator with the declared mission of enabling ‘safe roads, reliable journeys and informed travellers’. Since its formation, the HA progressively adopted a regional procurement policy whereby they contracted with fewer and fewer contractors (Leiringer et al., 2009). Initially, there were 91 so-called agency agreements, of which 85 were with local highway authorities. By 1996 the number of agency agreements had been reduced to 24, with a phased programme of further reductions thereafter. The decreased reliance on local authority highway agencies equates in no small way to the progressive privatisation of the nation’s highway maintenance capability. At the same time, central government pressures towards market testing and CCT encouraged local authorities to outsource their local highway maintenance work. Such trends frequently resulted in highway maintenance divisions within major contractors being comprised entirely of personnel who had been transferred on mass from local authorities. The expression which is commonly used is that of ‘TUPE-transfer’. The acronym ‘TUPE’ relates to the Transfer of Undertakings (Protection of Employment) Regulations 1981 (subsequently superseded in 2006). The TUPE regulations ensured that the employees were engaged by the new employer on the same terms and conditions, thereby offering an important degree of employment protection. The TUPE legislation thereby ensured that private operators did not make efficiency gains at the cost of employment conditions. Or at least this was the case in the short term. Critics such as Sachdev (2001) argue that in the longer term private contractors tend to gravitate towards a two-tier workforce. The first tier comprises those who have been TUPE-transferred from local authorities, and the second comprising those who have been subsequently recruited - invariably on reduced terms and conditions. Hence the ‘efficiency gains’ claimed by private sector operators are arguably achieved through the downgrading of employment terms and conditions, rather than by cunningly clever ‘innovative practices’. The relative size of the first-tier workforce has inevitably reduced over time through retirements and resignations, and their replacements have swelled the ranks of the second-tier workforce. There was also a tendency for the first-tier workforce to be much more heavily unionised. The difference is that between a stable employment environment and an unstable employment environment. This is the enterprise culture in action; employment terms and conditions are set by the market. Hence, even in civil engineering, where the proportion of direct employment remains much higher than in building construction, mechanisms are continuously at work to undermine the possibility of a stable employment regime. The situation within highway maintenance contractors is further complicated by the legacy of acquisitions. The tendency of the HA to seek ‘partnership’ with a smaller number of national contractors encouraged growth through acquisition. The larger contractors are therefore juggling with discrepancies between the employment conditions within different operating companies as a result of the ongoing legacy of acquisitions. Such discrepancies invariably require a disproportionate amount of attention from the contractors’ ‘human resource’ (HR) departments such that they rarely progress much beyond short-term fire-fighting. As an aside, the re-branding of personnel

60  Leanness and Agility in Construction departments with the ubiquitous HR badge can in itself be read as a manifestation of the enterprise culture (Legge, 1995). 3.4.3  Best value runs riot

At risk of jumping ahead of ourselves, it is worthwhile charting more recent trends within the highways sector. In common with other executive agencies within government National Highways has increasingly seen itself as the enabler and regulator for the private sector provision of services. The private sector has in turn increasingly aligned itself with the the stated mission of providing ‘safe roads, reliable journeys and informed travellers’ thereby creating opportunities for incentivised performance-based contracts (Leiringer et al., 2009). The Highways Agency (2005) was notable for adopting the Blairite notion of ‘best value’ whilst at the same time emphasising its commitment to ‘collaborative partnerships’. However, in common with the experience of other government departments involved in the procurement of new buildings (post-PSA) the development of collaborative working remains curtailed by a lack of trust between public and private sectors. Once again, a key inhibiter is the public sector’s inability to initiate long-term contracts as a result of the centrally imposed need for recurrent market testing. The HA did however win many plaudits for its Early Contractor Involvement (ECI) initiative. At least the Wood (1975) report’s recommendation in this respect eventually found a client willing to listen. Other procurement initiatives within the HA included the Managing Agent Contractor (MAC) contract which sought to promote a more service-orientated engagement between public and private sectors. MAC contracts were typically awarded for 5-year periods, and these were latterly supplemented by Extended Managing Agent Contractor (EMAC) contracts which could be renewed for a further two years (subject to performance) (Leiringer et al., 2009). The increasing emphasis on service provision within the HA also invoked a need to take a range of criteria into account over-and-above cost. This led firstly to the development of the Capability Assessment Toolkit (CAT) rapidly followed thereafter by the Culture Assessment Framework (CAF) (Highways Agency, 2005). The emphasis throughout lay with the stated desire to promote a ‘best value’ culture based on partnerships. Consultants of course continued to have a hay day advising contractors on how such assessments should be completed. Performance measurement and continuous improvement were of central concern But given the history of prioritising agency agreements with private contractors rather than local highway authorities it would seem strange that the HA found it necessary to measure characteristics which were once seen as axiomatic. Had so-called ‘soft-issues’ such as employment terms and conditions, commitment to training and sustainability been prioritised in the mid-1990s, a greater proportion of motorway and truck road maintenance might still be undertaken by local highway authorities. But the net result of the HA’s various initiatives squeezed-out local authority DLOs while at the same time concentrating highways maintenance contracts with a small number of large contractors. Smaller independent regional contractors seemingly had no place in highways maintenance other than as sub-contractors to the big players. They then become subject to the rigours of supply chain management which, as has already been demonstrated, is frequently a commercially uncomfortable place to be. 3.4.4  The privatisation of research

It is appropriate at this point to transgress slightly from the theme of re-structuring in the industry’s client base to consider the implications of the enterprise culture for the industry’s research base. In contrast to the privatisation of British Rail, the privatisation of the BRE in 1997 attracted little

Leanness and Agility in Construction 61 in the way of media attention. Nevertheless, it constituted an important shift in the landscape of the construction sector, especially for those with an interest in research and development (R&D). The changing status of BRE also provides an interesting microcosm of institutional change in the construction sector at large. The BRE story commences with the Building Research Station (BRS), which was founded in 1921 the wake of World War I. Lansley (1997) describes how BRS was one of several governmental research organisations with ‘a mission to bring industry into the modern world through the influence of applied science’. There was much evidence at the time to support the view that private industry lacked the capacity to innovate (as it might be phrased in today’s terminology). Concerns about the ‘damaging effects of competition’ grew significantly as a result of the 1930s depression. It was this world view that subsequently made nationalisation synonymous with modernisation. In the early years of BRS, research focused on the performance of building materials before soon expanding into geotechnical and structural engineering, building physics and various aspects of fire performance (Courtney, 1997). During World War II, BRS contributed to the allied war effort in a range of areas, including the design of air-raid shelters and the effects of fire and explosions on structures. In addition to the main site at Garston, near Watford, a subsidiary location was opened near Edinburgh in 1949. The BRS originally fell under the wing of the Department of Scientific and Industrial Research, but in 1965 government re-organisation brought it under the wing of the Ministry of Public Buildings and Works. In 1970 BRS found itself part of the newly created DoE where it was combined with the Fire Research Station and the Forest Products Research Laboratory, to form the BRE (ibid.). Throughout this period, BRE enjoyed a high reputation for technical excellence. It is difficult to avoid the imagery of a stable (and staid) governmental bureaucracy populated by research scientists with bowler hats and clipped moustaches. BRS was very much rooted in the same era as the Banwell and Emmerson reports, and BRE at its peak in 1975 was fully commensurate with the worldview projected by the Wood (1975) report. But from 1976 the world started to change, and government departments came under sustained pressure to reduce costs, which invariably translated to reductions in jobs. At its peak in 1975 BRE had a staff of 1350, by 1989 this had reduced to 654 (Courtney, 1997). The 1980s of course had seen much change in the construction sector, not least those led by property developers such as Stuart Lipton of Stanhope. The Building Britain 2001 reports also did much to articulate an industry research agenda which was consistent with the enterprise culture (see Chapter 4). BRE remained largely isolated from these developments as it stuck to its traditional science base. Lansley (1997) further describes the emergence of new research organisations which understood the changing needs of industry in a way which the BRE did not. The new organisations frequently grew from newly formed links between leading industrialists and a new generation of industry-friendly academics. These collaborations were to lead to the establishment of bodies such as the European Construction Institute (ECI), the Centre for Strategic Studies in Construction (CSSC) and Construct IT; born respectively from the universities of Loughborough, Reading and Salford. The CSSC subsequently spawned the Reading Construction Forum which was to play a pivotal role in the industry improvement agenda through the 1990s. These bodies and the associated universities piloted a model of collaboration between academia and industry which still prevails today. However, none has ever evolved into a self-funding research organisation, and one of the reasons for this is that the dominant industry recipe of structural flexibility does not encourage investment in R&D. Gradually a new model of research emerged whereby funding from the research councils and/or the Construction Sponsorship Directorate within DoE was matched with ‘resources-in-kind’ contributions from industry. Such collaborations invariably invoke a tension between industry’s need

62  Leanness and Agility in Construction for knowledge which can be applied in the short-term and the needs of academics to contribute to the international knowledge base as codified in refereed journals. In the context of construction management, such tensions have given rise to a model of research which is increasingly referred to as ‘co-production’ (Green and Harty, 2008). But such developments in research remained largely alien to the BRE during the 1980s. However, in accordance with government policy elsewhere, the BRE was soon to receive its ‘short, sharp shock’. In common with the PSA, in 1990 BRE became an Executive Agency and was hence accorded a higher degree of managerial independence. In essence, it was required to operate much more along the lines of a business, although it was still subject to annual targets agreed with DoE. In the years following 1990, BRE increasingly focused on environmental issues. The launch of the first version of the BRE Environmental Assessment Method (BREEAM) took place in 1990. BREEAM subsequently cornered the market for environmental assessment and became a significant income generator. The increasing commercialisation of BRE necessitated the need to target non-governmental clients. It was therefore required to re-orientate itself towards more instrumental research which was ‘relevant to industry’. Courtney (1997) portrays the transition as moving from a centrally funded organisation essentially concerned with scientific research to one which provided a range of professional services for a variety of customers. The cult of the customer seemingly knew no bounds. BRE was subsequently privatised in 1997 although at the time it continued to derive in the region of 85% of its income from government sources. It continued to receive guaranteed income streams from the DoE for five years beyond privatisation. BRE used much of this income to develop its expertise in near-market construction process research, presumably with a view to expanding its consultancy services. 3.4.5  Private finance initiative

John Major’s Conservative government started to promote the use of private finance for public sector projects in the early 1990s. The PFI was formally announced by the then Chancellor, Norman Lamont, in his 1992 Autumn Statement. PFI was born from the Treasury and was advocated as a means of reforming the delivery of core state activities which did not lend themselves to outright privatisation. It took time for PFI to gain momentum and less than a billion of capital investment from the private sector had been secured by 1995 (NAO, 2009). Understandably, private sector firms were deterred by the high costs of bidding and were cautious of the risks they were being asked to take on. The early PFI contractors priced accordingly and were subsequently criticised for earning excessive profits, although these became much more normalised as the PFI market gradually matured. PFI was undoubtedly an integral component of the re-energised ‘enterprise culture’ and was indicative of Major’s willingness to push privatisation beyond the boundaries previously deemed acceptable by Margaret Thatcher. It is notable that PFI was born from an increasingly dominant Treasury, where John Major had previously spent the formative part of his political career. The PFI initiative under the Conservatives was underpinned by an ideological belief that private sector provision is more efficient than public sector provision. In essence, PFI combined the procurement of capital assets with the services associated with their operation. PFI involved the private sector in the designing, building, financing and operating (DBFO) of a particular facility in accordance with an ‘output’ specification devised by the public sector. PFI was most widely adopted in the procurement of schools and hospitals, although it was applied across a wide spectrum of public projects including the Second Severn Crossing and the Birmingham

Leanness and Agility in Construction 63 Northern Relief Road. There were also numerous other non-construction examples, including several IT-based projects. Under PFI, the public sector does not own the asset, but commits to pay the PFI contractor a stream of revenue payments for the use of the facility over the life of the contract. Thereafter, ownership of the asset would remain with the private sector contractor, or revert to the public sector according to the terms of the contract. Contract durations typically varied from 25 to 35 years. From its inception PFI has always been a controversial and hugely politicised issue. The advocates of PFI contended that it allowed for more investment in public services than would otherwise take place. They also contended that the private sector was able to offer improved efficiency both in the delivery of new facilities and also in their operation. However, PFI attracted extensive public criticism (Gaffrey et al., 1999; Monbiot, 2000; Pollock et al., 2001; Public Services Privatisation Research Unit 1997). One of the main arguments against PFI was that it was primarily motivated by the need for off-balance sheet financing. The price for avoiding public sector capital borrowing in the short term was the commitment to guarantee revenue payments over the life time of the contract. This was seen to be a process akin to the mortgaging of public assets. Critics also pointed towards the consultancy gravy train associated with complex PFI deals. Fees for legal and financial advisors on a £25m PFI could easily exceed £500,000. The argument was made that the private sector cannot borrow money at the same preferential rates as the public sector, thereby increasing the overall cost of borrowing. A further concern related to workforce issues, and the erosion of staff terms and conditions. It is notable that PFI was repeatedly criticised by Labour politicians Tony Blair and Gordon Brown while they were in opposition. Strangely, these criticisms were to be forgotten following the election of the New Labour government in 1997, which proceeded to implement PFI with even more enthusiasm than the Tories (see Chapter 8). There were also many reservations about the architectural quality of PFI schemes, a cause subsequently adopted by the Commission for Architecture and the Built Environment (CABE). Given the politicised nature of the debate regarding the merits of PFI, it is difficult to offer a neutral evaluation. Interested parties are best directed towards the plethora of reports produced by the National Audit Office. The public sector trade union, Unison, ran a sustained campaign against PFI, supported by a succession of commissioned reports (e.g. Unison, 1997; Unison, 2001; Unison, 2002). For many critics, PFI provided an invidious extension of previous initiatives such as CCT and ‘Best Value’. The common themes are privatisation, outsourcing and the introduction of market mechanisms into the provision of public services. Ultimately, such initiatives were seen to erode employment conditions, thereby leading to an increasingly casualised and vulnerable workforce. The counter argument of course is that too many public sector workers under-perform because there are sheltered from the invigorating influence of competition. The debate is therefore not really a debate about the technicalities of PFI, but is more about the benefits and dis-benefits of the enterprise culture. As already noted, the momentum of PFI significantly picked up following the election of New Labour in 1997. The further development of PFI under New Labour will be described in Chapter 8. 3.5  Summary This chapter has focused on the radical restructuring which characterised the UK construction sector throughout the 1980s and early 1990s. These changes are best understood in terms of the material manifestation of the enterprise culture. However, it would be mistake to attribute these changes entirely to Thatcherism; there were broader forces at work. Many of the trends were

64  Leanness and Agility in Construction already apparent prior to the election of 1979. What cannot be denied is that the construction sector inherited by the Blair government in 1997 was very different from the sector bequeathed by the Callaghan government in 1979. Of particular note was the rapid and unprecedented growth in self-employment from the late 1970s through until the mid-1990s. During the latter 1990s there was much talk of a ‘return to direct employment’, with firms such as Laing O’Rourke claiming to take a lead. In the region of 200,000–300,000 workers did indeed shift back into direct employment from 1996 to 1998, but this was largely in response to a half-hearted clampdown on tax evasion by the Inland Revenue. Such occasional clampdowns must be understood within the context of a more sustained incentivisation of self-employment through the tax and national insurance system. Furthermore, the acclaimed return to direct employment was as exaggerated as it was short-lived. There was never any danger of a return to the levels of direct employment which prevailed during the 1970s. It is important to emphasise once again that self-employment has a legitimate role in the construction sector. However, it is difficult to defend a system whereby such a sizeable proportion of the industry’s workforce is nominally self-employed. The extent of fragmentation of the construction sector is consistently cited as a barrier to industry improvement. But the extent of fragmentation increased dramatically over the period 1979–1996 with significant implications for the construction workforce. The reasons for this increase have been seen to be complex. In part, it relates directly to the diversification of client demand and an associated increase in subcontracting. A further contributory factor was the adoption of numerical flexibility as the dominant competitive strategy within the contracting sector. This in turn was stimulated by the retreat of government from any pretence of demand management for the benefit of long-term planning in the construction sector. A reliance on self-employment has been argued to have been a risk management strategy in response to a perceived threat of industrial action. A further important part of the story is provided by the demise of public sector DLOs, which had previously provided an important degree of employment stability within the sector. In times of economic growth selfemployed operatives enjoy increased financial returns and a greater degree of flexibility to work as and when they prefer. It would be easy to suggest that the growth of self-employment was a direct consequence of the enterprise culture. However, it is perhaps more realistic to see the growth of self-employment as a constituent part of the discourse of enterprise whereby causes and effects are not so easily isolated. References Ball, M. (1988) Rebuilding Construction: Economic Change and the British Construction Industry, Routledge, London. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Barker, J. C. (2007) Self-employment: Legal distinctions and case-law precedents, in People and Culture in Construction, (eds. A. Dainty, S. Green, B. Bagilhole) Spon, London, pp 56–69. Briscoe, G. (2006) How useful and reliable are construction statistics? Building Research & Information, 34(3), 220–229. Burnes, B. and Coram, R. (1999) Barriers to partnerships in the public sector: The case of the UK construction industry, Supply Chain Management, 4(1), 43–50. Cain, C. T. (2003) Building Down Barriers: A Guide to Construction Best Practice, Spon, London. Cannon, J. (1994) Lies and construction statistics, Construction Management and Economics, 12, 307–313. Courtney, R. (1997) Building research establishment: Past, present and future, Building Research and Information, 25(5), 285–291.

Leanness and Agility in Construction 65 Department of Environment (1983) Fraud in the Property Services Agency; System Controls in District Work Offices. Twenty-sixth report from the Committee of Public Accounts. (The Wardale report), HMSO, London. Doig, A. (1997) The privatisation of the property services agency: Risk and vulnerability in contract-related fraud and corruption, Public Policy and Administration, 12(3), 6–27. Druker, J. (2008) Industrial relations and the management of risk in the construction industry, in People and Culture in Construction, (eds. A. Dainty, S. Green, B. Bagilhole) Spon, London, pp 70–84. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Erridge, A. (1996) Innovations in public sector and regulated procurement, in Innovations in Procurement Management, (ed. A. Cox) Earlsgate Press, Boston. Evans, R., Carrell, S. and Carter, H. (2009) Man behind illegal blacklist snooped on workers for 30 years, The Guardian, Wednesday 27 May. Evans, S. and Lewis, R. (1989) Destructuring and deregulation in construction, in Manufacturing Change: Industrial Relations and Restructuring, (eds. S. Tailby, C. Whitston) Blackwell, Oxford, pp 60–93. Gaffrey, D., Pollock, A. M., Price, D. and Shaoul, J. (1999) PFI in the NHS - is there an economic case? British Medical Journal, 319, 116–119. Green, S. D. (2009) The evolution of corporate social responsibility in construction: Defining the parameters, in Corporate Social Responsibility in Construction, (eds. M. Murray, A. Dainty) Taylor & Francis, Abingdon, pp 24–53. Green, S. D. and Harty, C. F. (2008) Towards a co-production research agenda for construction competitiveness, in Proc CIB Joint International Symposium, 15–17 November, Dubai. Harvey, M. (2001) Undermining Construction, Institute of Employment Rights, London. Harvey, M. (2003) Privatization, fragmentation and inflexible flexibilization in the UK construction industry, in Building Chaos: An International Comparison of Deregulation in the Construction Industry, (eds. G. Bosch, P. Philips) Routledge, London, pp 188–209. Harvey, M. and Behling, F. (2008) The Evasion Economy: False Self-Employment in the UK Construction Industry, UCATT, London. Haynes, L. and Roden, N. (1999) Commercialising the management and maintenance of trunk roads in the United Kingdom, Transportation, 26(1), 31–54. Hencke, D. (2000), Left blacklist man joins euro fight. The Guardian, September 9. Highways Agency (2005) Delivering Best Value Solutions and Services to Customers - HA Procurement Strategy Review 2005, Highways Agency Publications Group, Wetherby, UK. Hillebrandt, P. M. (1984) Analysis of the British Construction Industry, Macmillan, London. Hollingsworth, M. and Tremayne, C. (1989) The Economic League: The Silent McCarthyism, National Council for Civil Liberties, London. ILO (2001) The Construction Industry in the Twenty-First Century: Its Image, Employment Prospects and Skill Requirements, International Labour Office, Geneva. Ive, G. L. and Gruneberg, S. L. (2000) The Economics of the Modern Construction Sector, Macmillan, Basingstoke. Langford, D. and Agapiou, A. (2007) The impact of eastward enlargement on construction labour markets in European union member States, in People and Culture in Construction, (eds. A. Dainty, S. Green, B. Bagilhole) Spon, London, pp 205–221. Lansley, P. R. (1997) The impact of BRE’s commercialization on the research community, Building Research and Information, 25(5), 301–12. Latham, Sir Michael (1994) Constructing the Team. Final report of the Government/industry review of procurement and contractual arrangements in the UK construction industry, HMSO, London. Legge, K. (1995) Human Resource Management: Rhetorics and Realities, Macmillan, Basingstoke. Leiringer, R., Green, S. D. and Raja, J. (2009) Living up to The value agenda: The empirical realities of through-life value creation in construction, Construction Management and Economics, 27(3), 271–285. Monbiot, G. (2000) Captive State: The Corporate Takeover of Britain, Macmillan, London.

66  Leanness and Agility in Construction NAO (2009) Private Finance Projects: A Paper for the Lords Economic Affairs Committee, National Audit Office, London. Pollock, A., Shaoul, J., Rowland, D. and Player, S. (2001) Public Services and the Private Sector: A Response to the IPPR. Working Paper, Catalyst, London. Public Services Privatisation Research Unit (1997) Private Finance Initiative: Dangers, Realities, Alternatives, PSPRU, London. Sachdev, S. (2001) Contracting Culture: From CCT to PPPs, Unison, London. Selwyn, N. (2008) Selwyn’s Law of Employment, 15th edn., OUP, Oxford. Smith, D. and Chamberlain, P. (2015) Blacklisted: The Secret War between Big Business and Trade Union Activists, New Internationalist Publications, Oxford. Unison (1997) PFI: Dangers, Realities, Alternatives, Unison, London. Unison (2001) Public Service, Private Finance, Unison, London. Unison (2002) Understanding the Private Finance Initiative, Unison, London. Winch, G. (1998) The growth of self-employment in british construction, Construction Management and Economics, 16, 531–542. Wood, Sir Kenneth (1975) The Public Client and the Construction Industries, HMSO, London.

4

The Improvement Agenda Takes Shape

4.1 Introduction The increased reliance on subcontracting coupled with the growth of self-employment was undoubtedly the big story in the construction sector during the four successive Conservative administrations. The growth in the number of self-employed over this period was unprecedented, and by the mid-1990s the situation had arisen whereby the majority of operatives in the construction sector were nominally self-employed. But strangely these were not the things which the advocates of industry improvement were talking about. The industry’s leadership were at the time much more focused on the relative merits of different procurement methods. This was in itself indicative of a broader and prolonged trend whereby attention was increasingly directed away from the construction workforce towards the industry’s interface with its clients. As the enterprise culture unfolded, the ‘customer’ was afforded an increasingly iconic status. The construction sector was seen to be characterised by outdated working practices which were insufficiently customer-focused. Much of the debate centred around the limitations of the traditional procurement method and the need to select the most appropriate procurement approach to suit the needs of individual clients. Design-and-build surged in popularity on the basis of single-point responsibility. It was also increasingly attractive to clients because it offered improved ‘value for money’ by subjugating design quality to the cause of functional efficiency. The rhetoric of value engineering was especially persuasive for clients who were uncomfortable with the way architects seemingly prioritised aesthetic design over customer satisfaction. Construction professionals at the time still defined themselves as having broader responsibilities to society at large. Such notions of professional elitism were of course anathema to the enterprise culture. Of particular importance to the improvement debate during the early 1980s were the so-called management procurement methods. These were seen to offer the opportunity for much faster construction, while at the same time apportioning risk in a more appropriate way. Such approaches were also seen to be better at engendering teamwork than the traditional approach. At the same time, the major contractors were understandably keen to ensure that as much money as possible continued to pass through their books. Construction was – and still is – a cash flow business. Of particular interest is the heated debate which took place between the relative merits of management contracting and construction management, although neither ever accounted for more than a tiny proportion of the construction market. The current chapter commences with a discussion of management procurement methods and the pivotal role played by the Broadgate development in London. Many of the firms – and individuals – who played key roles on Broadgate subsequently became central figures in the improvement debate. Thereafter, attention is given to a succession of reports which were published during the years when the enterprise culture was radically reshaping the construction sector.

DOI: 10.1201/9781003308133-4

68  The Improvement Agenda Takes Shape Building Britain 2001 (University of Reading, 1988) was especially notable for the way in which it pre-empted many of the recommendations which were to subsequently appear in Rethinking Construction (Egan, 1998). Attention is also given to Faster Building for Commerce (NEDO, 1988), Partnering the Team (Latham, 1994) and Progress through Partnership (OST 1995). Of particular note is the way these reports became increasingly reliant upon the managerialist discourse of the enterprise culture. Progressively, the construction improvement debate became less interested in the realities of what was happening on the ground and more interested in the restorative powers of modern management techniques. Career prospects were much more positive for those who focused on the latter. And those who insisted on talking about the former were progressively cast in the role of dinosaurs. The Latham report was especially notable for spawning new networks whereby the advocates of change could come together to swop ideas and fashionable buzzwords. Such networks can themselves be understood as essential components of the discourse of enterprise. 4.2  The rise of management procurement methods The 1980s were characterised by a proliferation of different building procurement methods together with endless debates regarding which was ‘best’ (Masterman, 1992). Concerns regarding the increasing fragmentation of the construction sector were reflected in an increased interest in the integration mechanisms offered by project management (CIOB, 1982; Walker, 2002). Project management techniques such as work breakdown structure (WBS) encouraged projects to be managed as a hierarchy of sub-projects. Each sub-project comprised a dedicated work package which would routinely be sub-contracted. The hierarchical structure of the WBS further encouraged multi-tiered sub-contracting such that the project manager had little interest in the employment status of those who were ultimately engaged to do the physical work of construction. This applied as much to the project manager employed by the contractor (previously known as a site agent), as it did to the project manager employed to act on behalf of the client organisation. Hence multiple tiers of management strove to keep themselves up-to-date with the latest management thinking, while at the same time becoming more and more divorced from the physical processes of construction. The tendency of construction contractors to increasingly see themselves as project managers was reflected in the rise in popularity of management procurement methods. However, the shift directly reflected the increasing focus on client satisfaction. The criteria which were used to decide which procurement method was ‘best’ primarily related to satisfying the needs of different clients (cf. Masterman, 1992). The long-term needs of the construction sector, or the aspirations of the construction workforce, were seemingly no longer relevant. The age of customer responsiveness had arrived. 4.2.1  Management contracting

Management contracting was probably at the peak of its popularity in the mid-1980s. In 1984 it accounted for 10% of new non-housing work, with over half of this being secured by the top 10 firms (CCMI, 1985). Management contracting had originally been championed by Bovis Construction (latterly Bovis Lend Lease), especially in terms of their long-standing relationship with Marks and Spencer (Franks, 1996). By the early 1990s management contracting had become almost synonymous with fast-track construction. If clients wanted fast construction, they were encouraged to go for management contracting. At the time, almost all the major construction companies were operating a management contracting division. The collective shift to management contracting evidenced the major contractors’ progressive retreat from the physical activities of construction. It also enabled many contractors’ staff to shed their muddy-booted image and to redefine themselves as sharp-suited management consultants. McAlpine (1999) was one of the few voices to speak

The Improvement Agenda Takes Shape 69 against the trend towards management contracting, which he saw as turning contractors into nothing other than agencies for marshalling bids from a plethora of smaller firms. McAlpine (ibid.) further lamented the way in which the new breed of manager sought to distance themselves from the workforce. Contractors were seen to be following the whims of influential clients to the detriment of any long-term responsibility for the workforce. The McAlpine in question was a former chairman of the Conservative Party, and hence cannot easily be dismissed as a member of the ‘loony left’. And the more management contractors focused their attention onto management and co-ordination the more they divorced themselves from any responsibility for training and what had by then become known as ‘human resource development’. But the trade contractors within management contracting were invariably accorded the same lowly status as sub-contractors. They were still in a subordinate position to the management contractor, and they were still treated like second-class citizens. Even more importantly, they were still directly in contract with the management contractor. Hence, they were still prone to being paid when the management contractor deemed it appropriate. Management contracting therefore acted in part to legitimise the increased reliance on subcontracting. Of particular note is the way employers refused to modify the working rule agreement to allow for site-wide trade union shop stewards on management contracts (Evans and Lewis, 1989). Clearly, the employers considered it to be in their interests to fragment the industrial relations context. This was especially ironic, given the oft-repeated complaints about industry fragmentation from industry leaders. In amongst all the exhortations about integrated teams, it seems that the favoured strategy vis-à-vis industrial relations has long since been divide-and-rule. Management contracting therefore may well have succeeded in bringing managers from within the large contractors into line with increasing client expectations. But at the same time it increased the isolation between clients and the construction workforce. It also increased the distance between contractors’ management and those who were ultimately engaged to perform the physical work of construction. This collective lack of interest in the construction workforce exacerbated established trends towards labour market casualisation. 4.2.2  Construction management

But management contracting was not the only show in town. The late 1980s saw the rise in popularity of the procurement approach known as ‘construction management’ (CM). Its introduction into the UK was associated with a small number of sophisticated developer clients who had been inspired by US-style fast construction. The key characteristic of CM is that the trade contractors are in direct contract with the client and are hence afforded a more privileged position. Perhaps most importantly, they are paid directly by the client, and in consequence are less likely to be subject to contractual abuses on the part of the main contractor, such as pay-when-paid. Most of the major main contractors had of course already retreated from the material activity of construction, preferring to limit themselves to the organisation and coordination of subcontractors. As has already been discussed, this accorded with the dominant strategy of structural flexibility and enabled the main contractors to avoid the overheads associated with a directly employed workforce (see Chapter 3). For the major contractors, the shift from management contractor to construction manager was less about the function performed, and more about cash flow and the allocation of risk. In common with management contracting, CM lent itself to ‘fast-track’ construction such that construction work could commence on earlier work packages without the need for all design details throughout the project to be entirely finalised. The approach also enables detailed design work to be undertaken by the trade contractors, thereby realising significant benefits in terms of buildability. However, a crucial distinction with management contracting is that the construction manager becomes part of the professional team who provides management services in return for a fee. CM also demands a

70  The Improvement Agenda Takes Shape much more hands-on approach from the client, who is required to accept a much greater degree of risk in terms of time and cost certainly. However, it must also be conceded that the time-andcost certainty offered by traditional contracting was frequently false certainty. This was especially true given the main contractors’ prevailing propensity towards claims. In the context of CM, the supporting argument is that managerial personnel are released from the need to worry about cash flow management and hence are better able to concentrate on managing the works on behalf of the client. Construction managers are further released from the competitive need to document (or fabricate) claims in order to realise a profit. Hence they are much more able to concentrate on the organisation and co-ordination of the trade contractors in the interests of the client. It can therefore be argued that CM became even more client focused than management contracting. Gone is the role of the architect as an independent ‘professional’ arbitrating between the interests of the client and the contractor. The construction manager became totally focused on meeting client requirements, constrained only by the client’s commitment to treat the trade contractors fairly. Indeed, the prevailing approach to total quality management (TQM) served to define the responsibilities of all parties solely in terms of meeting client requirements. This is not to say that such a shift in emphasis was not badly needed, but it also served to undermine any sense of the need to maintain a balance between the conflicting needs of multiple stakeholders. The enterprise culture had arrived, and issues which fall outwith the remit of ‘client requirements’ became defined as externalities. Notions of sustainability and corporate social sustainability (CSR) found no place in the lexicon of CM. 4.2.3  More lessons from Broadgate

It was the iconic Broadgate development which paved the way in the implementation of CM in the UK. Broadgate is still widely acclaimed as setting new performance standards for UK construction. The client was committed to instigating change in the UK construction sector, and the experience of Broadgate provided others with an exemplar of what could be achieved. As already noted, Peter Rogers, Stanhope’s construction director, was subsequently to play an important role as chairman of the Strategic Forum (see Chapter 8). Broadgate therefore provided an important influence on the unfolding story of industry improvement. Some of the success of the Broadgate development was undoubtedly due to the strong leadership provided by the client. Of equal importance was the climate of collaborative working created by the CM procurement team. However, Broadgate was not representative of the industry at large, and from the outset there were doubts regarding the extent to which the achievements of Broadgate could be more widely replicated. But there is also an argument that the Broadgate experience served to legitimise industry fragmentation and the decline of the main contractor. Certainly the Broadgate experience did little to prevent the growth in sub-contracting and the rise of self-employment. The CM appointment for the first phase of the Broadgate development was secured by a Bovis-Schal joint venture on the back of their extensive previous experience of large, fast-track projects. As outlined above, the contractual arrangement enabled the CM team to concentrate on management and co-ordination without being distracted by the commercial risk of cost escalation. The construction managers were therefore able to concentrate on problem-solving, rather than having to allocate time and resources to demonstrate why problems were not their fault. Stanhope certainly placed great emphasis on the trade contractors being accepted as an integral part of the ‘construction team’, although they were still predominantly required to tender for each work package competitively. It should also be emphasised again that the CM procurement approach is heavily dependent upon a knowledgeable hands-on client who is willing to take on board a significant degree of price uncertainty. Stanhope undoubtedly lived up to this role with

The Improvement Agenda Takes Shape 71 spectacular success. But clients of this nature are few-and-far between and are also crucially dependent upon their ability to raise the required capital. Lenders are likely to impose their own constraints on the degree of risk which such clients can accept; rarely are they faced with a free choice between procurement methods on the basis of their own assessment. While the rhetoric of construction ‘teamwork’ has become a little jaundiced in recent years, there is little doubt that the adoption of the CM approach on Broadgate was highly successful in incubating a team approach. But as shall be explored at length, there is always a degree of ambiguity as regards who is included in the construction ‘team’ (see Chapter 8). Under CM, the trade contractors are recognised to be central to the construction team, but the construction workforce is no less marginalised from the overall management of the project than was the case under management contracting. In both cases, the fragmented employment regime cannot be talked away by warm words about teamwork and the instigation of mandatory induction days. There is of course no reason to suggest that the choice of CM as a procurement method on Broadgate was influenced by memories of the Barbican dispute. But the adopted approach nevertheless served well as a divide-and-rule strategy for containing industrial relations problems. One of the rarely acknowledged characteristics of CM is that neither the client nor the construction manager is required to take responsibility for industrial relations. Such issues, along with many others, were conveniently delegated to the trade contractors. For the contracting sector at large, the transition from management contracting to CM might on the face of it seem an attractive proposition. But in reality the attractiveness of CM is significantly diluted by the fact that the money no longer passes through the main contractor’s books. At the time, this presented a direct challenge to the contracting sector’s established business model which was based on efficient contract trading coupled with cash flow management. Main contractors’ profitability may well be notoriously low if measured as a percentage of turnover, but it becomes much more attractive if measured as ‘return on capital employed’ (ROCE). Profitability in this respect can be dramatically improved by the imposition of onerous retention practices and delayed payments to subcontractors. Such an approach, coupled with the ‘claims game’ was central to the business model of many (arguably even most) main contractors throughout the 1980s. The subsequent Latham (1994) report was primarily about the eradication of such practices (see below). Many main contractors may well have been seduced by management contracting, but they were much less keen on switching to CM. This would have resulted in a huge reduction in turnover which was unlikely to have been well received by City analysts. It would also have meant a correspondingly dramatic reduction in the opportunity to ‘work’ the cash flow long recognised as the industry’s life-blood. 4.2.4  Schisms and distractions

The debate about the relative merits of CM and management contracting may well have caused a conundrum for the contracting sector at large, but it caused a particularly damaging schism within Bovis Construction. The directors of Bovis’s ‘B Division’, largely as a result of their experience on Broadgate, were convinced that ‘professional’ CM was the way forward. Others within Bovis were less convinced and were unwilling to give up on management contracting and the advantages it offered in terms of feeding turnover through the books. The outcome was a damaging split whereby the directors of ‘B’ Division, under the leadership of Ian Macpherson, broke away from the parent grouping in 1990 to form a specialist CM firm. The newly launched CM firm was named ‘Mace’, and it duly secured the CM contract for Phase II of the Broadgate development. Mace went on to be extremely successful and has since grown to become one of the UK construction sector’s most influential firms. Closeness to the client, and closeness to the supply chain, is still central to their espoused philosophy. Bovis soon recovered from the schism and went on to espouse

72  The Improvement Agenda Takes Shape similar values, which rapidly become ubiquitous in accordance with the exhortations of the enterprise culture. However, the formation of Mace is of particular interest as the business was born from CM and was explicitly built on a commitment to collaborative working. It also aligned itself closely with the so-called ‘can-do’ attitude which had been central to Stanhope’s philosophy of CM. To this day, Mace still enjoys a close working relationship with commercial developers who espouce similar values to those of Stanhope. But their business has diversified extensively and is now much more broadly based than CM. Mace progressed from offering CM for a fee to offering generic project management on behalf of the client. At the time of writing of they are one of the UK’s leading tier 1 contractors. Throughout all of this change the espoused need to satisfy the requirements of the client remained paramount. Yet it is important to recognise that the evolution of firms such as Mace did little to stem the structural shift within the industry towards the hollowedout firm. Neither did it act to counter the increasing casualisation of the industry’s workforce. Broadgate can rightly be credited with providing some credibility to the claims made in favour of ‘collaborative working’. But this was collaborative working in a highly unusual context, presided over by a highly unusual client. Even at its peak of popularity in the early 1990s, CM accounted for less than 5% of the total market (Bond and Morrison, 1994) This was a London-centric community which was largely divorced from the competitive realities experienced by the majority of clients. It should be further noted that Mace’s origins did not prevent it from evolving into a tier 1 contractor focused on maximising ROCE. Equally ironically, Bovis reversed their initial animosity towards CM, and went on to be involved in numerous successful CM projects, including Legoland and EuroDisney. On the latter project one of Bovis’s construction managers was interviewed on television, famously emphasising that it was categorically not a ‘Mickey Mouse’ project. But all of the above is a long way from the issues faced by the industry at large. While the construction cocktail circuit in London were engaging in extravagant ‘topping-out’ parties and debating the merits of CM, the rest of the industry was facing a more prosaic reality. The industry as a whole was observing a huge increase in demand for design-and-build contracts, because this was what clients were demanding. They wanted price certainty and they wanted single-point responsibility. They also wanted designs which were functional; they were not interested in paying to enhance the quality of the public built environment. Neither were they interested in promising continuity of work so that contractors could invest in training and development. In response, contractors did what the increasingly influential diktats of TQM required them to do; they orientated their businesses towards satisfying their clients’ requirements. But the impact of CM was not limited to the extent of its use. Despite only ever accounting for a tiny percentage of industry turnover, the promotion of various ‘management’ procurement routes intensified the growth in sub-contracting. The occasionally heated debate about the relative merits of CM vis-à-vis management contracting disguised the fact that they both legitimised the main contractors’ retreat from the physical activities of construction. Indeed, the progressive shedding of responsibility for the physical work of construction meant that main contractors frequently have little left to do other than engage in the rituals of ‘supply chain management’. 4.3  Bridging between eras 4.3.1  Building Britain 2001

Building Britain 2001 was published by the Centre for Strategic Studies in Construction (CSSC) at the University of Reading in 1988. The CSSC subsequently spawned the Reading Construction Forum, which went on to play a significant role in the quest for industry reform through a succession of influential reports (Bennett and Jayes, 1998; Flanagan et al., 1998; Gray, 1996; Saad and Jones,

The Improvement Agenda Takes Shape 73 1998). In many ways, Building Britain 2001 (University of Reading, 1988) was a direct forerunner of Rethinking Construction (Egan, 1998), with a similar remorseless emphasis on modernisation. But in contrast to Rethinking Construction, Building Britain 2001 was essentially a manifesto for change written on behalf of the major contractors. The report had been commissioned by the National Contractors Group, which at the time comprised the eighty largest UK building contractors. The brief was to provide a stimulating and thought provoking report on where the industry then stood, and what it needed to do to remain competitive. Building Britain 2001 was authored by an academic team led by John Bennett and Roger Flanagan. The report was directly informed by a two-day seminar held at Burnham Beeches which included 19 senior industry practitioners, together with representatives from the Building Employers Confederation, Department of the Environment (DoE) National Contractors Group and the Union of Construction, Allied Trades and Technicians (UCATT). Clients were represented by Capital & Counties and Nationwide-Anglia. It should be noted that Building Britain 2001, unlike other reports, was specific to the building sector, rather than construction per se. Building Britain 2001 was well-received by the industry and succeeded in stimulating debate. It seemed to tap into a mood for change, while at the same time offering a snapshot of the issues which were then considered important. The report emphasised the building industry’s contribution to output and employment. It was further held to compare favourably with its international competitors; this was a view to which few clients subscribed 10 years later when Rethinking Construction was published. But Building Britain 2001 captured the essence of the construction sector from the perspective of the main contractor. The dominant pattern of fragmented professional practice was perceived to be out of date, and it was predicted that this would be replaced by large, multidisciplinary practices. Attention was also drawn to the way the contracting sector was characterised by relatively few large contractors and a very large number of small, often one-person firms. This diagnosis is still broadly true of today’s industry, and the basic structural characteristics are shared with many other building sectors internationally. 4.3.2  A backcloth of change

In contrast to many subsequent reports, Building Britain 2001 made specific reference to the UK building sector having had to adapt to extensive change over the preceding two decades. One significant change was the shift in the source of demand from the public to the private sector. In 1970 over 51% of new work was publically funded; by 1986 it was claimed that this had declined to 29%. Particularly significant was the decline in public sector housing over the preceding decades, together with the significant increase in the proportion of repair and maintenance work. These trends were considered previously in Chapter 3, but for current purposes it is sufficient to note that they were soon to be commonly ignored by the industry improvement agenda. Notwithstanding the shift towards private sector demand, Building Britain 2001 also noted the dramatic change within the private sector itself. Reference was made to the increasing levels of direct foreign investment in the UK, thereby creating domestic clients with very different experiences, priorities and cultures. Reference was also made to the foothold gained in the UK market by foreign contractors, although subsequent trends in the globalisation of construction companies would soon render the presence of ‘foreign’ contractors entirely uncontroversial. Building Britain 2001 further observed a shift in the types of buildings that were being demanded. Offices, leisure complexes and hotels were increasingly taking over from manufacturing facilities, again bringing new client organisations to the fore. Other observed trends included the increasing technological complexity of buildings, especially in terms of

74  The Improvement Agenda Takes Shape M&E services. Building Britain 2001 also noted the increasing economic dominance of the South East of England. Indeed, there was an element of truth in the joke in circulation at the time that Liverpool’s rush hour took place at London’s Euston station on a Friday afternoon. Such jibes should not deflect from the extensive social deprivation caused by the decline of the UK’s manufacturing heartlands throughout the 1980s. The issue of industry fragmentation was to be repeatedly cited as a problem which needed to be addressed through improved integration. The ‘integration’ storyline was especially prominent in the Strategic Forum (2002) report Accelerating Change (see Chapter 8). What was unusual about Building Britain 2001 was the way in which it acknowledged the processes through which the industry was becoming increasingly more fragmented. Reference was made to the massive increase in the number of small firms at a time when the number of people working in the industry was falling. Building Britain 2001 was also remarkably frank about the reasons for the growing shortage of skills in 1988, which was attributed in part to the industry’s failure to invest in training. Other contributory factors included the supposedly new skills required as a result of the emergence of fast-track construction, although the report was unclear on the precise nature of the ‘fast-track’ skills which it considered to be short supply. 4.3.3  Employment and training

The level of construction employment was noted to fluctuate with the industry’s workload. Building Britain 2001 also noted the shift from direct labour to self-employment. This trend was seen to have been accelerated by the early 1980s recession when contractors turned to labour-only subcontracting as a means of reducing costs. This shift was seen to go some way toward explaining the dramatic increase in the number of small firms since 1975. In a sense, it is re-assuring to learn that the industry was complaining about skills shortages in 1988. Even then, it was hardly a new complaint; the industry had also been complaining about skills shortages in 1908. Nevertheless in 1988 the economy was in danger of over-heating. Apparently in 1987 a survey by the Federation of Master Builders revealed that 70% of firms in the South were reporting difficulties. Warning was given that the skills shortage may constrain market growth, but this was not a warning that came to fruition. The authors had not factored in the increase in migrant workers from Eastern Europe that followed from the fall of the Berlin Wall in 1989. Nor had they factored in the onset of the subsequent recession in 1990. The authors of Building Britain 2001 also expressed concern at the fall in the number of apprentices. The decline of training was linked to cuts made during the recession of 1981 as firms attempted to reduce their overheads. The shedding of directly employed labour was further seen to be a contributory factor in that this reduced the number of workers of skilled workers with whom apprentices could be placed, thereby indicating a degree of support for the diagnosis offered in Chapter 3. In the expanding market that prevailed during 1988, the poaching of skilled labour was seen to provide a further disincentive to investing in training. Why train your own workers when you could simply recruit those trained by others? Such was the dominant prevailing mentality of free-loading. While Building Britain 2001 was clear on the negative impact on training caused by the growth of self-employment, the authors were also quick to celebrate the flexibility of successful contractors. Of particular note was the ability of contractors to adapt quickly to severe fluctuations in demand. Flexibility was seen to be enhanced by the widespread reliance on specialist sub-contractors. And even for core operations, contractors were able to reduce overheads through the increased use of labour-only subcontractors. These trends were perceived to have resulted in contractors increasingly filling a higher-level managerial role, which the authors of Building

The Improvement Agenda Takes Shape  75 Britain 2001 saw to be a sensible response to changing circumstances. The National Contractors Group would not of course have sanctioned any support for CM, because this would have been detrimental to the interests of its members. But there is no denying the shift towards wholesale sub-contracting. 4.3.4  Changing client requirements

Building Britain 2001 noted the increased sophistication of construction clients coupled with their increased focus on certainty of performance and value for money. Clients were seen to be especially keen on single-point responsibility, which was held to account for the growth in the popularity of design and build. Clients were further seen to be in favour of a radical change in roles and responsibilities within the industry together with the introduction of a stronger capital base. The study notably foresaw the increase in client power that was to dominate much of the subsequent industry improvement agenda. Many expert clients were seen to despair of the industry putting its own house in order: [t]oday, many such clients seek to dictate what is built. They determine the details of the technology used, the timing and sequence of its work, its costs, and the terms and conditions on which they will do business with the industry. (University of Reading, 1988, 40) The seeds of the client movement were therefore already in place in the 1980s. Not only were major clients increasingly more sophisticated, but they also displayed a greater willingness to flex their muscles in the marketplace. Building Britain 2001 also referred to the emergence of new types of contracting firm which were more sensitive to client needs. They could have been referring to Mace. But the message of conformity to client requirements was destined to become widespread, at least in terms of rhetoric if not in reality. Of further note was a reluctance to criticise clients for the way they engaged with the industry, and also for their retreat away from the previously accepted ‘mutuality of responsibility’. In 1988 the doctrine of customer responsiveness had already rendered criticism of clients out-of-bounds, even if many contractors still relied on their well-tuned skills of ‘claimsmanship’ to return an honest profit. Building Britain 2001 also looked east towards Japan and the way in which the supposedly unique Japanese approach to business had shaped their approach to the management of construction projects. The major long-term clients in Japan were especially seen to have had a significant influence in shaping the adopted approach: [a]lthough the building industry has not directly copied manufacturing, its principles of planning in detail, of disciplined, controlled work, and of maintaining a pattern of work throughout each day are a direct reflection of manufacturing’s requirements for certainty and reliability. (University of Reading, 1988, 49) Comparisons with supposed Japanese practices were therefore already part of the construction industry improvement debate some ten years before Sir John Egan advocated ‘lean thinking’ as a central component of Rethinking Construction. The antecedents were already in place within Building Britain 2001.

76  The Improvement Agenda Takes Shape 4.3.5  Recommendations for action

Building Britain 2001 set out an extensive list of actions which were held to be necessary if the UK building industry was to prosper. There were 18 detailed recommendations in total. It was seen to be essential that the industry continued to improve its productivity by the adoption of new technologies and by investing in plant and equipment. Better public relations and marketing were advocated to attract more school leavers into the industry; there was seen to be a particular need to target careers teachers and local authority careers officers, as well as students. It was also seen to be important to attract more women into the industry. The needs of clients received considerable emphasis, especially in terms of single-point responsibility, quality assurance and after-sales care. The industry was also criticised for valuing short-term profits rather than long-term relationships. Especially strong words were reserved for loss-and-expense contractual claims which were seen to have ‘attacked British industry like a cancer’. The sponsorship of the report by the National Contractors Group did not prevent the authors of Building Britain 2001 from offering some strong criticisms. Clients were argued to need much greater certainty, and the industry was exhorted to stop regarding the tender price as merely another stage of the negotiations. Further pleas were made in support of maximising the potential of information technology and for a greater investment in R&D. All of these recommendations were to be repeated by numerous other construction reports over the subsequent decades. The antecedents of both the Latham (1994) and Egan (1998) reports are readily observable within Building Britain 2001. But the final recommendation of Building Britain 2001 was seemingly directed at government. The building industry was seen to require a stable economic environment to bolster business confidence. Reference was again made to the industry’s remarkable ability to adapt in response to fluctuations in the size and nature of demand. But this flexibility was also seen to have caused great weaknesses. Yet the authors seemed to sense the pointlessness of demanding that the government should manage the economy in the interests of industry development. Building Britain 2001 was published in an era when the doctrine of the free market was firmly in the ascendancy. The report therefore ended with a recognition that the industry’s future was in its own hands and resisted making any special plea to government. Pleas for government policies in support of stability and growth continued to be made at every opportunity. But the bottom line was the recognition that industry could not depend on any real assistance from government. 4.3.6  A disrupted legacy

A follow-up report to Building Britain 2001 was subsequently published in 1989. Despite boasting a foreword by the prime minister of the time, Margaret Thatcher, Investing in Britain in 2001 (University of Reading, 1989) never quite generated the same debate as its predecessor. The debate about industry improvement was in any case severely curtailed by the onset of recession in 1990. Certainly what Building Britain 2001 lacked was any subsequent commitment to implementation. In this respect, it had much in common with many similar such reports on the construction sector. Margaret Thatcher had of course beforehand made it quite clear that it was up to the construction sector to sort out its own problems. There was therefore never any prospect of a precursor to the Construction Industry Board (CIB) which followed the Latham (1994) report. There was even less chance of government support for a predecessor of the evangelical Movement for Innovation which followed Rethinking Construction. But it was not only the recession which curtailed enthusiasm for change within the construction sector. The prevailing political uncertainty distracted attention as the industry worried about the implications of Thatcher being ousted by John Major in 1990. The real concern of course was the prospect of a Labour government under the leadership of Neil Kinnock rolling back the free-market policies which had prevailed since 1979. Others within the industry had very different concerns. The trade unions were predominantly concerned

The Improvement Agenda Takes Shape 77 with declining membership and the damaging side-effects of labour casualisation. As such they would have warmly welcomed a Kinnock victory in 1992. But the electorate made its choice. Much to everyone’s surprise John Major was elected and the enterprise culture moved forward as if on autopilot. It did not take long however for the Conservative Party to lose what remained of its tarnished reputation for economic management. The final blow was sterling’s ignominious exit from the European Monetary System (EMS). Ironically, the unplanned 20% devaluation of sterling did much to benefit the economy in general, and the construction sector in particular. But by the time construction output returned to its previous level in 1993, Building Britain 2001 was already five years out-of-date. In part its legacy was to live on in the form of the Reading Construction Forum which was formed as an independent industry think-tank in 1995. In conclusion, Building Britain 2001 was an important report for several reasons. It provided a quasi-neutral space for interested parties to come together to discuss issues of industry improvement. This was an approach which was to be subsequently championed by the Reading Construction Forum and the Design Build Foundation (DBF), also spawned from within the University of Reading. But Building Britain 2001 was notable for the way in which it bridged between two eras. Its advocacy for new technologies and state-of-the art management practices – especially Japanese management practices – pre-empted Rethinking Construction by a decade. Yet the report also carried forward concerns from a previous era, especially those relating to labour-only subcontracting and the declining level of apprentices. The report was written at the height of consumer-led boom presided over by Chancellor Nigel Lawson. The London skyline was rapidly being re-shaped as a direct consequence of the financial deregulation of the City of London. The Broadgate and Canary Wharf developments were to stand as epithets to the changing requirements of clients for fast-track construction. Building Britain 2001 also acknowledged the backcloth of rapid industry change. In contrast to subsequent reports, it did not assume that the industry had essentially remained unchanged for decades. 4.3.7  Faster Building for Commerce

But Building Britain 2001 was not the sole voice advocating change in the late 1980s. A further report worthy of mention is Faster Building for Commerce, published by the National Economic Development Office (NEDO, 1988). Faster Building for Commerce was notable for the way it referred to customers rather than clients. The authors were especially clear that the ‘customer’ had a key influence on the outcome of building projects, thereby offering a contrast with the subsequent dominant view that buildings could be procured in the same way as any other manufactured commodity. The report also noted that regular and major customers received better service, and that such customers considered expertise in building procurement to be an important component of their in-house capability. This observation sat starkly ill-at-ease with prevalent trends towards outsourcing and the subsequent privatisation of the Property Service Agency (PSA) (see Chapter 3). Faster Building for Commerce noted the substantial increase in specialist participants, but did not see this to be a particular problem provided there was a collective spirit of confidence and partnership. Briefing was seen to comprise a dialogue between the customer and the construction team, although it was also noted several experienced customers were making use of standard briefs to cover aspects of procurement policy as well as design issues. It was further noted that many customers required last minute changes to meet market demands, and that very few projects have sufficient flexibility in design and procurement method to enable change without time and cost implications. The so-called management procurement methods such as CM and management contracting probably perform best on flexibility, whereas design-and-build makes in very difficult for clients to implement late changes.

78  The Improvement Agenda Takes Shape Faster Building for Commerce was perhaps most striking in its observations relating to subcontractors: Subcontractors carried out all or most of the work on site and were in one way or another responsible for supplying to the site most labour and materials. On site, they were expected to be self-contained in their operations. (NEDO, 1988, 8) Of particular note is the recognition given to the growing tendency of sub-contractors to sub-let work to labour-only sub-contractors (LOSCs): Many subcontractors let most of their fixing to labour-only operatives because of the difficulties of coping with their variable workload and the need to reduce overheads. Supervision and quality control were often inadequate. (NEDO, 1988, 8) The above sentence describes with almost perfect succinctness the arguments promoted in Chapter 3. It also links a reliance on LOSCs with inadequate supervision and poor quality control; a connection that was to be systematically ignored in subsequent reports. Faster Building for Commerce further observed that many LOSCs claimed to have initially been driven into this form of employment because of the difficulty of ‘finding work on the cards’. But LOSCs saw themselves as workers capable of high output, and in consequence they expected to be supported by the main contractor’s directly employed labourers. In light of the ever-increasing reliance on sub-contractors, it is notable the report specifically linked good performance with a smaller number of subcontractors. Perhaps most telling of all was the observation that: Labour-only subcontractors form a significant part of the workforce, exacerbating the problem of operatives working together on a site having different employers and variable terms of employment. Over half the workforce is now self-employed. Shortages of skilled labour are not infrequent. Control over the quantity and quality of labour supply is diffuse. (NEDO, 1988, 8) The high proportion of labour-only contractors was further observed to be creating tensions within the workforce. Directly employed operatives were held to feel increasing marginalised and often felt they were only there to support the self-employed operatives. These were the very same concerns which caused Emmerson (1962) and Banwell (1964) to argue in support of direct employment, but they of course were writing in an age which preceded the onset of the enterprise culture. What is so notable about Faster Building for Commence is that it was published in the wake of the 1987 general election, just at the time when the enterprise culture was starting to be defined as a retrospective justification of government policy (see Chapter 2). NEDO was of course very much a hangover institution from the age of state planning, and was consistently ignored by Margaret Thatcher before being finally abolished by John Major in 1992. The industry’s cognoscenti briefly feared the recommendations of NEDO might be acted upon by an incoming Labour government. However, by the time Tony Blair was elected prime minister in 1997, New Labour had enthusiastically embraced the enterprise culture such that Faster Building for Commerce could safety be forgotten.

The Improvement Agenda Takes Shape 79 Given the ongoing fixation with lean thinking (see Chapter 7), it is pertinent to point out that the interpretation of ‘lean’ in Faster Building for Commerce was entirely consistent with the diagnosis offered in Chapter 3: [c]ustomers should be wary of ‘lean’ resourcing in calibre and members of site staff and economies in overhead costs. (NEDO, 1988, 7) Unfortunately, neither customers nor industry leaders were wary enough of the dangers associated with lean resourcing, which was soon embraced as an essential component of ‘best practice’. This provides a good example of the way best practice is entirely dependent upon the prevailing dominant discourse, thereby discounting the possibility of neutral, quasi-scientific objectivity. Faster Building for Commerce is further dated by the recommendation that trade unions and employers should cooperate to rationalise the grading and pay structure of operatives. This is a proposal which might had been met with some acceptance in the previous decade. But in 1988 it was a recommendation which had already been bypassed by events. The only surprise is that Thatcher had not seen fit to abolish NEDO earlier. The closing comment is perhaps best left to Male (2003), who observes that the rise of the selfemployed contractor can be linked to the entrepreneurial spirit espoused by Margaret Thatcher: what is clear, however, is that it shaped the industry then and continues to shape the industry today, As such, the Faster Building for Commerce report highlighted a fundamental shift in the management of site operations and defined or at least re-defined new roles in the industry…. The new role of the main contractor set out in the report is the forerunner of the ‘prime contractors’ and principal supply chain managers of today. (Male, 2003, 142) In short, the industry was already changing and ‘best practice’ was being formulated on the ground. This is an observation which is direct contradiction with the commonly held assumption that it was the Egan report which galvanised an outdated industry into change. The truth of course is much more complex; one possible counter argument is that Rethinking Construction served only to legitimise changes which were already happening. Some of the changes were not necessarily for the better. 4.4  Constructing the Team 4.4.1  Latham in context

Latham was charged with ‘making recommendations to Government, the construction industry and its clients regarding reform to reduce conflict and litigation and encourage the industry’s productivity and competitiveness’. In reviewing Constructing the Team (Latham, 1994) we should remind ourselves that the early 1990s comprised a severe and prolonged recession. Following the boom in development activity during the late 1980s, construction sector output peaked at £55 billion in 1990. By 1993 it had fallen to £46 billion before recovering to almost £53 billion in 1994 (ONS, 2010). The recession had undoubtedly forced many contractors to batten down the hatches in order to survive. It is unlikely that contractors which had previously competed on the basis of ‘bid low, claim high’ had many opportunities to break the mould during the early 1990s. Many contractors continued to bid for work below cost with the specific intention of subsequently

80  The Improvement Agenda Takes Shape realising a profit through claims (Cahill and Puybaraud, 2003). Latham (1994) specifically acknowledged the consequences of the flow of work being less than available capacity. These were seen to include uneconomically low tender prices, a lack of investment in training and education and a lack of funds for research and development. Latham (1994) further observed that there were at the time around 200,000 contracting firms of which 95,000 were private individuals or one-person firms. The declining influence of the public sector was also noted, together with the dramatic reduction in local authority housing. Of particular interest is the following observation: [p]rivatisation has also involved the transfer of many professional services to the private sector which were previously carried out “in house” by Government departments or local authorities. (Latham, 1994, 7) Latham stated unequivocally that the industry remained dependent upon wider economic stability. But he was equally clear that it was not within his remit to advise the government on economic policy. This would have been anathema to the mood of the time. But it must also be stated that the government’s reputation for economic management had been destroyed by the events of 1992, and the industry saw no escape from the seemingly endless cycle of boom-bust. Few at the time would have predicted that from 1994 the construction market would enjoy 14 years of continuous growth. And a continuously expanding market provided a rich context for Latham’s recommendations relating to teamworking and partnering. 4.4.2  Key recommendations

Latham highlighted from the outset that many clients do not always get what they ask for. But the report also conceded that clients need better advice on how to approach the construction process, especially in respect of briefing. There was no acknowledgement that the privatisation of the PSA and the widespread outsourcing of professional services had contributed to the perceived lack of expertise on the part of the industry’s clients. Few could argue that the construction industry in 1994 needed to focus more on satisfying its customers. But Latham also made clear that clients have responsibilities as well, and that government should commit itself to being a best practice client. Public sector clients were seen to have a responsibility to commission projects which contributed to the quality of the built environment. Good design was seen to be crucial to the provision of value for money, both in terms of total cost and cost-in-use. Energy and maintenance issues were further stressed as being important. Latham was therefore not quite as focused on short-term customer responsiveness as the subsequent Egan (1998) report. Government departments were even exhorted to use their spending power to assist the productivity and competitiveness of the construction industry, although the report was much vaguer on the responsibilities of private sector clients. Of further note was the recommendation that private sector clients should come together to form a Construction Clients’ Forum (CCF) (see below). Constructing the Team was prescient of future trends in the way it advocated the integration of designers and specialists. Also of note was the endorsement of knowledge-based engineering (KBE). Rather more prosaic was the recognition of the need for common standards for the exchange of electronic data. Latham also provided a strong endorsement of CM, although this was seen to be dependent upon a level of close engagement by the client. It was further conceded that not all clients would wish to accept the associated financial risks.

The Improvement Agenda Takes Shape 81 The main thrust of Constructing the Team related to the choice of contract and selection/ tendering procedures. Latham noted that many clients and contractors either heavily amended or did not use standard forms of contract such as JCT. The endless refining of existing forms of contract was not seen to be the way to address adversarial practices. A call was made for a set of basic principles upon which an interlocking family of documents could be based. The New Engineering Contract (NEC) was seen to be a good starting point and public and private sector clients were exhorted to use it. It was further recommended that the DoE should develop a quality register of approved main contractors and sub-contractors interested in bidding for public work. On the same theme of quality, it was recommended that tenders should routinely be evaluated on quality as well as on price. Particular emphasis was given to the selection of subcontractors, with a recommendation that sub-contractors should be engaged in accordance with the same principles as main contractors. The same recommendation was extended to the engagement of sub-sub-contractors. The use of Dutch auctioning was ruled out explicitly. It was also advocated that subcontractors should co-ordinate their activities effectively with each other to assist in the achievement of the main contractor’s programme. This can be read as a further legitimisation of the main contractors’ retreat from the physical activities of construction, with an onus on the subcontractor to expand their remit to include co-ordination and planning. Latham strangely had nothing to say on the corrosive effects of labour-only sub-contracting, or on the growth of self-employment. These issues were presumably beyond his scope of interest. Constructing the Team should also be remembered for its enthusiastic endorsement of partnering, which was defined as: …a contractual arrangement between two parties for either a specific length of time or for an indefinite period. The parties agree to work together, in a relationship of trust, to achieve specific primary objectives by maximising the effectiveness of each participant’s resources and expertise. It is not limited to a particular project. (Latham, 1994, 62) Whether contracting parties are entities which are capable of forging a ‘relationship of trust’ was not addressed (see Chapter 6). For some reason, process and power station projects were seen to be especially suitable for partnering, although there was also seen to be potential in building. However, it was notably emphasised that the principal aim of partnering should be improving performance and reducing costs for clients. From the very outset it seems that the benefits of partnering where mainly orientated towards clients; this was an emphasis which was to become increasingly apparent as time went by. In the age of customer responsiveness, partnering was destined to become a central component of construction best practice, and was subsequently strongly endorsed by the Egan (1998) report. But Latham was responsible for flagging several themes which were subsequently more commonly accredited to Egan. It was Latham who pre-empted Egan in promoting unflattering comparisons between construction and the automotive sector. It was also Latham who advocated the use of benchmarking, together with off-site prefabrication and modularisation (later to be rebranded as ‘modern methods of construction’). The examples of Stanhope and McDonald’s restaurants were both cited in respect of prefabrication. In the case of McDonald’s they had apparently reduced cost and time of construction by 60% over a five year period. But calls for a greater degree of prefabrication had a much longer track record and for many still carried the stigma of Ronan Point and timber-framed housing (see Chapter 1). And McDonald’s of course were building repetitive buildings and as such were hardly a typical client.

82  The Improvement Agenda Takes Shape But there was much within Constructing the Team to be admired. Latham deserves considerable credit for consulting widely across the sector and especially for taking care to understand the divergent views of multiple interest groups. In no small way, the review was driven by a vision of a dispute-free industry. Latham listened sensitively to the frustrations of the industry’s clients, but was acutely conscious that the subjugation of specialist sub-contractors to the traditional main contractor was no longer appropriate in a modern industry. This was especially true given the increasing technological complexity of M&E services which were already routinely accounting for in excess of 50% of building cost. He listened to endless complaints from specialist sub-contractors regarding the main contractors’ abuse of power through the use of contractual malpractices such as ‘pay-when-paid’. Further important recommendations from Latham included his plea for a Construction Contracts Bill to give statutory backing to the revised standard forms, including NEC. He also called for specific unfair contract clauses to be banned, and that adjudication should become the normal means of dispute resolution. 4.4.3  Main contractors take the hump

When Constructing the Team was published in July 1994 it was met with widespread critical acclaim. It contained 30 recommendations which spanned across a wide range of issues. The main messages to impact upon the industry were that the client should be at the core of the construction process, and that the best route to achieving client satisfaction was through teamwork, trust and co-operation. In truth, there was little that was new in either of these themes; the key role of the client had been repeatedly emphasised in several previous reports (e.g. Wood, 1975; NEDO, 1983; NEDO, 1988). The case for teamwork, trust and co-operation has an even longer heritage, dating back at least to Simon (1944), who argued that ‘efficiency and success are dependent on an honest desire for co-operation’. Phillips (1949), Emmerson (1962) and Banwell (1964) were all equally focused on the need for better teamwork. Buchanan (2000) has referred elsewhere to the ongoing rediscovery of teamworking as a management idea, and nowhere does this apply to a greater extent than construction. And if the label ‘teamwork’ becomes a little jaundiced, a sense of novelty can always be maintained by referring to ‘collaborative working’. Where the Latham report differed from previous reports was that the industry (or at least parts of it) listened, and sought to do something about it. However, Constructing the Team did not by any means receive universal endorsement. Many main contractors felt especially threatened by what they saw as a challenge to their position as the principal agent in traditional forms of contract. They also feared that their ability to control the supply side was in danger of being eroded. In the words of Adamson and Pollington (2006, 23): …the federation of Civil Engineering Contractors (FCEC) and the Major Contractors Group (MCG), within the Construction Industry Employers Council (CIEC), would have been happy to have seen Constructing the Team join Simon and Banwell on the shelf. Despite the reservations of main contractors, the Latham report remains one of the best considered reports of the modern era; it identified real issues, and advocated practical solutions. Constructing the Team is perhaps best remembered for its advocacy for the elimination of unfair contract conditions and the establishment of fair methods of payments together with dispute resolution procedures. The Construction Act of 1988 stands as a legacy to Latham’s endeavour. This of course is not to say that unfair methods of payments are not still a source of discontent among subcontractors.

The Improvement Agenda Takes Shape 83 In summary, the central message of Constructing the Team was that the client should be at the core of the construction process. The general route recommended to achieve the desired client satisfaction was through teamwork and co-operation. Tired clichés perhaps, but this was an age when main contractors’ staff where programmed to search out claims at every opportunity. Latham was also notable for the way he emphasised that clients were an integral part of the team, and that this brought responsibilities on their part if they wanted to get the best from the construction industry. Unfortunately, clients were less interested in being reminded about their responsibilities, and rather more interested in procuring construction at minimum cost. Of particular significance was Latham’s clarion call for a 30% real cost reduction by the year 2000, coupled with an agreed benchmarking system. This last recommendation was especially prescient of Rethinking Construction, which was to launch seven targets together with an extensive benchmarking system. Of course, by 2000 everybody had forgotten about Latham’s target of 30% cost reduction. There were new and much more complicated targets to learn about by then. 4.4.4  Construction Industry Board

The CIB was established as a direct result of the Latham (1994) report with the mission of providing ‘strategic leadership and guidance for the development and active promotion of the UK construction industry’ (Adamson and Pollington, 2006). The CIB sought to improve efficiency and effectiveness throughout the construction and procurement process. Of particular note was its ambitious aim to secure ‘a culture of co-operation, teamwork and continuous improvement in the industry’s performance’. Its principal objectives were to implement, maintain, monitor and review the recommendations of Constructing the Team. The CIB was born of Latham’s consultative style, and claimed for a while to represent the interests of the sector at large. In essence, it comprised six member bodies:

• • • • • •

the Construction Industry Council representing professionals and consultants; the Construction Industry Employers’ Council representing main contractors; the Constructors’ Liaison Group representing subcontractors and specialist trade contractors; the Construction Clients’ Forum representing regular and occasional/one-off clients; the Alliance of Construction Product Supplies representing the materials and product suppliers; the Government with the Department of the Environment as the lead department and including the DTI, the Scottish Office and the Health and Safety Executive.1

Adamson and Pollington (2006) describe in detail the political machinations that led to the eventual demise of the CIB. Its main problem was that it was never really supported by the major clients. Perhaps the most important legacy of the CIB is the set of reports produced by its twelve working groups. These stand as a lasting record of the way in which ‘best practice’ is negotiated by disparate interest groups and thereafter legitimised and constituted within inter-organisational networks. This will be a recurring theme throughout the remainder of this book. And if the Latham report itself was largely free of the influence of popularised management fashions, this was not true of the reports produced by the twelve working groups. Simply put, the working groups were looking for ideas to demonstrate their worth, but they needed ideas which did not threaten the delicate alliance that constituted the CIB. They essentially needed ideas that preserved the status quo, while at the same time positioning themselves as being harbingers of change. The working groups of CIB therefore provided the networks within which a range of management ideas became constituted as an essential part of best practice. They were not of course the only networks which prevailed at the time; another concurrent example was provided by the networks

84  The Improvement Agenda Takes Shape which supported the 1995 Technology Foresight report Progress through Partnership (see below) The concurrent existence of more than one network raises a further challenge to the participants: not only must they appear progressive without disturbing the status quo, they must also align their outputs with those of other similarly constituted networks. Clearly there is no benefit in disagreement; if best practice is to be persuasive, it must be unequivocal. 4.4.5  Construction Clients’ Forum

In common with the CIB, the CCF was established at the end of 1994 as a direct result of Latham’s recommendations. The CCF sought to bring together both public and private sector clients so that they could achieve a better collective impact on construction sector policy. The Forum was also interested in encouraging change in the construction sector through the influence of the buying power of its members. The benefits which could be achieved through pro-active client leadership had already been demonstrated by Stanhope plc on the trailblazing Broadgate Development. In essence, the Forum operated as a loosely organised grouping of large clients who wished to exchange information and experience of how to get the best from the construction sector. It strove to offer an advice service to its members together with examples of how value for money could be obtained through ‘new approaches’. In the longer term, it proposed a Which-type approach to the review of the construction industry’s performance. This was an idea which was subsequently picked up by the authors of Rethinking Construction and is indicative of the trend among clients to think of construction projects as if they were consumer goods traded in the marketplace. This is a further telling indication of the way the enterprise culture had incubated the construction improvement debate. Although the formation of the CCF was initiated as a direct result of the Latham report, the antecedents of the Forum lay in years of client dissatisfaction with the services offered by the construction sector. The publication of the Latham report, coupled with the easing of the early 1990s recession, renewed the appetite for change among the industry’s major clients. The CCF was funded through client subscription with office space and support services provided by the British Property Federation (BPF) at preferential rates. The original membership of CCF is listed in Table 4.1. In is notable that most members comprised pre-existing representative bodies. Private-sector clients with a direct involvement in the procurement of construction were limited to BAA, National Power, Northumbrian Water and British Telecom. These were all relatively recently privatised companies striving to shrug off the vestiges of public sector bureaucracy. In other words, they were striving to become much ‘leaner’ organisations in the way they procured construction work. The pressure to improve efficiency resulted Table 4.1  Membership of the Construction Clients’ Forum British Property Federation Capital Projects Clients’ Group Central Unit on Procurement (later to become the Office of Government Commerce) Chartered Institute of Purchasing and Supply Committee of Vice Chancellors and Principals Confederation of British Industry Construction Round Table Highways Agency Ministry of Defence (MOD) National Housing Federation NHS Estates Department of the Environment (observer) Source: Adamson and Pollington, 2006.

The Improvement Agenda Takes Shape  85 in part from the need to compete in the marketplace, but in practice performance targets were frequently dictated by the respective regulators. The existence of such clients owed much to the government’s ideological preference for private-sector enterprise over public-sector bureaucracy. And yet the environment within which such firms operated remained highly regulated, and certainly fell a long way short of perfect competition. The subsequent omnipotence of ‘key performance indicators’ on the policy level owed much to those clients being used to having such indicators imposed upon them by their respective regulators. The CCF subsequently became fond of claiming to represent 80% of identified client expenditure on UK construction. In reality it never really progressed beyond a loose grouping of preexisting representative bodies. According to Adamson and Pollington (2006), the CCF struggled from the outset to engage client organisations which were directly involved in the procurement of construction. Influential clients such as McDonald’s restaurants, Marks & Spencer, Tesco and Sainsbury’s remained aloof and only engaged indirectly through the pre-existing Construction Round Table (CRT). The major clients seemed to prefer to consult with each other in the informal environment provided by the CRT and were much less willing to commit themselves to a more formal structure. Attendance at CCF meetings was apparently in serious decline by 1996. Many clients remained stubbornly resistant to paying the membership subscription. One function that the CCF did provide was the formal structure through which the clients provided an input into the guidance documentation produced by the CIB, although whether this is anything to be especially proud of is a moot point. 4.5  Progress through Partnership 4.5.1  Realising our potential

The Technology Foresight report Progress through Partnership (OST, 1995) was published as a direct consequence of the UK Government White Paper Realising our Potential issued in 1993. The aspiration was to replicate the perceived success of ‘Japan plc’ by developing a much stronger sense of mutual dependency amongst industry stakeholders (Green, 2003). Realising our Potential can be read as an important component of the enterprise culture, with significant implications for research and innovation policy in the UK. One of its key messages was the need for a greater alignment between government, industry and academia. The construction Panel of the Technology Foresight Programme was one of 15 sector panels that reported to an overall steering group. In contrast to the CIB working groups, it was not primarily concerned with offering advice to industry on how to improve its performance. Technology Foresight was a higher-class game altogether and was first and foremost concerned with guiding government and industry decisions on research funding and development. Nevertheless, Progress through Partnership serves as a good example of how research agendas are shaped by popularised management fashions. It also illustrates the recurring tendency among construction sector policymakers to ignore the radical structural changes which were already underway. 4.5.2  Outdated attitudes and the need for culture change

Despite the above criticisms, Progress through Partnership provides a useful summary of the UK construction industry’s strengths and weaknesses as they were perceived at the time. The UK was said to benefit from some of the lowest input costs in Europe in terms of labour, while at the same time suffering from some of the highest output prices. It therefore becomes immediately apparent that the authors were primarily concerned with reducing the cost of construction rather

86  The Improvement Agenda Takes Shape than improving working conditions for the industry’s workforce. Reference was also made to the decline of the UK’s national competitiveness relative to its competitors – a decline which the much vaulted enterprise culture notably failed to reverse. A recurring assumption throughout the report seemed to be that British managers had failed to keep up-to-date with the latest management techniques. Certainly there was little sympathy with broader arguments that trace the UK’s decline in productivity to structural factors rooted in the 19th Century. Advocates of the enterprise culture are rarely interested in historical analysis, preferring instead to focus on the need to eradicate outdated attitudes through ‘culture change’. Progress through Partnership is indicative of many subsequent sources in that it seemingly assumes that the UK construction sector is a static entity. The need for change is advocated without any recognition of the pre-existing dynamics of change which characterise the sector. In light of the extensive re-structuring which was in full swing at the time, this was a significant failing. The Technology Foresight report followed a further well-established grove in criticising the low level of investment in R&D in the UK construction sector, which was contrasted unfavourably with the off-shore oil & gas industry. Again, the implication is that the UK construction sector is in some way characterised by outdated attitudes which can be overcome by a culture change. However, the comparison between the construction sector and the off-shore oil & gas industry made no reference to the different structural characteristics of the two sectors, or to their respective degrees of capitalisation. Neither was any consideration given to the differing relationships that exist between different sectors and central government. Such institutional issues are consistently ignored in favour of culture change. This vague reliance on ‘culture change’ was to become a recurring feature of the industry’s improvement agenda. Each of a seemingly endless succession of improvement recipes was held to be dependent upon a culture change. This was as true for business process re-engineering (BPR) as it was for partnering and lean thinking. The underlying theme was that culture is some sort of independent variable which is subject to managerial manipulation. If only life were so simple. 4.5.3  Identified key challenges

Progress through Partnership was notable for setting out six key challenges that the construction sector was seen to be faced. The report could be construed to be ahead of its time in advocating a ‘holistic’ approach whereby the industry needs to be seen to be acting responsibly in terms of its effect on the environment, society and the workforce. But others might argue that the emphasis on social consequences was harking back to the policy agendas of the previous era. As with many such documents, there is a sense of a struggle taking place between different agendas. The emphasis on social implications certainly sat ill-at-ease with the uncritical acceptance of the prevailing ‘processorientated’ approach. The latter was undoubtedly influenced by the fashionable status of BPR, which certainly paid scant attention to the social externalities of efficiency improvement (see Chapter 6). The following summary of the six key identified challenges in Progress through Partnership is adapted from Green (2003): 1 To reduce costs, add value and sharpen international practice The mantra of cost reduction can be seen to be an ever-present element of construction sector policy. Exhortations for ‘major improvements in productivity, cost and quality’ seem almost obligatory. Calls for greater efficiency are always uncontroversial, but the difficulty comes in identifying precisely how the advocated efficiencies are to be achieved. What is apparent throughout Progress through Partnership is the repeated rhetorical device of linking ‘reduced costs’ to ‘added value’. Such a linkage serves to deny use of the word ‘value’ to those who might

The Improvement Agenda Takes Shape 87

2

3

4

5

6

have felt uncomfortable with the relentless focus on cost reduction. The discourse of enterprise had appropriated the word ‘quality’ in a similar way. To pay greater heed to environmental and social consequences The authors of Progress through Partnership were indeed ahead of their time in advocating the need for the industry to pay greater attention to environmental and social consequences. The representation of these issues is indicative of the success of Technology Foresight in escaping from the immediate constraints of the dominant enterprise culture. Nevertheless it was to be several years before such issues found their way into the mainstream debate on construction improvement. To strengthen technological capability The recommendation to strengthen technological capability was entirely predictable, given the remit of Technology Foresight. The report duly noted the increased technological intensity of the industry in terms of the automation of construction processes and the extended use of IT. The authors also called for a greater convergence between construction and manufacturing in the cause of ‘modular and prefabricated components and subassemblies’. The call for increased modularisation was of course not new, but such debates were destined to continue unabated through to the present day. Interestingly enough, no mention was made of the potentially adverse social consequences of pre-assembly in terms of de-skilling local communities. To improve education and training The need to improve education and training is always an easy call, and the publication of Progress through Partnership coincided with a period of relentless educational reform. For the champions of the enterprise culture, the professions in general were held in low esteem. This was especially true of university academics, who were seen to be ‘out of line’ with the economic needs of UK plc. The precise details of the required reforms were vague, beyond a plea for more versatile people who are able to draw on a wide range of technical specialisms. Elsewhere in the report, reference was made to the need to change education and training programmes to ensure improved effectiveness from those entering the industry. This again was prescient of an increasingly instrumental view of education which would become progressively more dominant. To upgrade existing buildings and infrastructure The report referred to the decay and obsolescence of the UK’s infrastructure, and the corresponding need to upgrade buildings, structures and infrastructure in an affordable manner. Certainly in 1995 the UK possessed an infrastructure which had suffered through a systemic long-term failure in public investment. The failure to invest in the nation’s infrastructure was one which had been repeated by a succession of governments since World War II, and it was a failure which was to be repeated by future governments. Upgrading existing buildings of course depends more upon traditional skills and is much less prone to efficiency improvement through modularisation and pre-assembly. To re-engineer basic business processes The authors of Progress through Partnership were confident throughout in their advocacy of the need ‘to re-engineer basic business processes to provide lean, rapid and effective performance improvement’. Such practices were seen to be commonplace throughout other industries, although it was contended that they rarely occur in construction. The introduction of such ‘advanced business techniques’ was exhorted as a matter of urgency. There was an obvious influence of the mantra of BPR, which at the time was at the height of its popularity (see Chapter 6). The focus on ‘lean, rapid and effective performance’ was also strikingly prescient of the rhetoric of the subsequent Egan report.

The above challenges were seen to be facing a number of obstacles to progress. In common with many previous reports, the industry’s fragmented structure was lamented whereby a large number

88  The Improvement Agenda Takes Shape of small firms are routinely organised into project coalitions. However, industry fragmentation was predominantly cast as a static condition; there was no explicit recognition of the extensive re-structuring which had taken place over the previous two decades. Brief reference was made to the industry’s casualised workforce, but there was no acknowledgement that this was in part a direct result of government policy since 1980 in providing tax incentives to the self-employed (see Chapter 2). The espoused purpose of Progress through Partnership was to look to the future, but there was little recognition of the extent to which the future is shaped and constrained by the past. 4.5.4  Engines of change

In addition to the identified ‘key challenges’ and ‘obstacles to progress’, Progress through Partnership identified four ‘engines of change’ which were also discerning of future directions:

• • • •

 Promoting learning and learning networks  Reaping the benefits of the information revolution  Establishing a favourable fiscal regime  Creating a culture of innovation

Maximum enthusiasm was reserved for the last of the above topics. The need to create a ‘culture of innovation’ was destined to become central to the mantra of construction sector improvement. Especially notable was the perceived relationship between innovation and research together with the importance of a continuous stream of fresh ideas: [a] flourishing resource base needs to be built up in the UK, which is constantly refreshed and enriched by research and cross-fertilised by ideas from different disciplines and cultures. OST (1995) This indeed was a very different style to the measured language which dominated in previous reports, including Latham’s Constructing the Team. Innovation was increasingly being accorded an iconic status, undoubtedly deriving its legitimacy from the prevailing rhetoric of the enterprise culture. Industry bodies were exhorted to provide a culture that was more conducive to innovation, and companies were encouraged to appoint innovation directors. Clients were further tasked with evaluating companies’ ‘innovation profiles’ as part of their supplier assessment profiles. Clients of course would have preferred an off-the-shelf Which report rather than trouble themselves with innovation profiles. Nevertheless, innovation had arrived as a preferred alternative to the slow-to-change bureaucratic procedures of the past. Particular emphasis was given to the importance of ideas derived from different disciplines and cultures. Unfortunately, such arguments in favour of diversity were soon to be replaced by an overriding emphasis on commitment and compliance. 4.5.5  Opportunities for wealth creation and the quality of life

Progress through Partnering was concluded by a list of key opportunities for increasing wealth creation and the quality of life. The focus on wealth creation was straight from the lexicon of the enterprise culture. Given the emphasis of the discussion, the reference to the quality of life would appear to have been added as an afterthought. Among the opportunities identified were ‘huge potential savings’ to be achieved through the adoption of customised solutions from standardised components. Innovation was also seemingly favoured on the basis of cost reduction, with little emphasis on the less tangible aspiration of ‘added value’. But the most striking opportunity

The Improvement Agenda Takes Shape 89 highlighted within Progress through Partnership relates to the application of ‘business processes’. The authors directly paraphrased the mantra of BPR in calling for a ‘step change’ in industry performance. Certainly there was little sympathy with the notions of incremental improvement advocated by TQM. The reliance of Progress through Partnership on the language of BPR is indicative of the way in which policymakers were increasingly tapping into the rhetoric of the latest management fashions for up-to-date ideas. The extent to which the expressed faith in ‘business processes’ was justified shall be examined at length in Chapter 6. Other suggested opportunities for increasing ‘wealth creation’ included adopting a ‘constructing for life’ approach, which was seen to hinge on the importance of operating costs as opposed to capital costs. Further emphasis was given to the need for a more holistic approach to assessing the impact of construction on the environment and society. Such calls were indeed ahead of their time, and it would be several years before they became mainstream. At the time, they were strangely out-of-line with the discourse of the enterprise culture with its monotonous emphasis on business processes and the need to eliminate activities which do not add value to the narrowly construed customer. The fact that these two discourses co-exist within Progress through Partnership illustrates the pragmatic accommodations that frequently need to be made between seemingly contradicting positions. Indeed, it could be argued that the ability of the two discourses to co-exist is essential for the longevity of both. But the report undoubtedly owes much more to the discourse of the enterprise culture than it does to the discourse of sustainability. This is especially notable on the topic of competitive infrastructure, where the emphasis strangely lies on developing countries and the associated export opportunities for British companies. Although not without its merits, the real points of interest within Progress through Partnership lay more in what was omitted, rather than what was included. Certainly the authors had little interest in reviewing the dynamics of change which had already radically re-shaped the construction sector over the previous two decades. They noticeably failed to mention the privatisation of the utility companies in the 1980s, or the even more disastrous privatisation of the railways in 1993. The possibility that government policy had a direct and negative impact on the nation’s ‘competitive infrastructure’ did not even seemingly enter consideration. The overriding tendency was to ignore the implications of important policy decisions in favour of the supposed healing powers of ‘modern management techniques’. 4.6 Summary Rethinking Construction (Egan, 1998) is frequently credited with initiating the quest for radical change in the construction sector. But in truth, the calls for radical reform which appeared within the Egan report were predated by those which appeared in Progress through Partnership (OST, 1995). And the calls within Progress through Partnership were at least in part predated by those which appeared in Building Britain 2001 (University of Reading, 1988). There is undoubtedly a very real sense of continuity in the rhetoric which characterises these three reports. For example, the following sentence is taken from Progress through Partnership but would have been equally at home within Rethinking Construction: [a] vibrant and up-to-date modern construction industry providing a comprehensive ‘bestin-class’ (with low cost but high value) service to clients in the UK and throughout the world. (OST, 1995) Faster Building for Commerce (NEDO, 1988) was perhaps less in tune with the spirit of enterprise and in many ways was more reflective of the social contract which prevailed during the 1970s.

90  The Improvement Agenda Takes Shape But even here there was a strong emphasis on the need to satisfy customer requirements. Faster Building for Commerce was more notable for its observations on the negative implications of the growth in subcontracting. It was especially critical of the role of labour-only subcontractors in exacerbating the fragmented nature of the construction workforce. Even more notable was the way Faster Building for Commerce warned against the trend towards ‘lean’ resourcing. Such arguments were not what the government wanted to hear at the time, nor were they of any interest to industry leaders who had already committed themselves to a competitive strategy based on leanness and agility in the marketplace. Hence Faster Building for Commence sank quickly into obscurity prior to the abolition of NEDO in 1992. The only surprise was that it had not been abolished earlier. In contrast, the Latham report of 1994 had a significant impact on the industry improvement debate – at least until it was outflanked by the Egan report in 1998. Latham echoed the prevailing emphasis on customer satisfaction, but he also emphasised that customers have responsibilities as well. This was decidedly off-message from the diktats of the enterprise culture, and perhaps reflected Latham’s position on the left wing of the Conservative Party. Constructing the Team (Latham, 1994) is best known for its enthusiastic endorsement of partnering, although Latham was probably surprised by how influential the rhetoric of partnering would subsequently become. He was ostensibly unworried by the rapid expansion in labour-only subcontracting and selfemployment. It seemed that by 1994 these had become part of the landscape, and their corrosive side effects could seemingly be talked away by warm words about teamwork and partnering. The Latham report also led to the formation of the CIB and the CCF, neither of which were to be long-lived. Given the long-running criticisms of clients about the fragmented nature of the construction sector, it was especially ironic that the clients themselves were unable to maintain a stable representative structure. Progress through Partnership (OST, 1995) also noticeably ignored the way in which the industry had been radically re-shaped by the strictures of the enterprise culture. But the report readily adopted the rhetoric of enterprise; the endorsement of the ‘re-engineering of business processes’ readily distinguished it from the more gentle language of Constructing the Team. Modular and prefabricated components were also seemingly in fashion once again, and their recommendation was subsumed into a broader discourse of enterprise and innovation. But the most notable achievement of Progress through Partnership was the way it combined an emphasis on re-engineering with a plea to pay greater heed to environmental and social consequences. The authors even managed to bring together a focus on wealth creation with a consideration of the quality of life. This combination was prescient of the embryonic discourse of New Labour whose leader at the time, Tony Blair, was working hard to distance the Labour Party from the discredited policies of the 1970s. Note 1 Descriptions taken from original CIB publicity material.

References Adamson, D. M. and Pollington, T. (2006) Change in the Construction Industry: An Account of the UK Construction Industry Reform Movement 1993–2003, Routledge, Abingdon. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Bennett, J. and Jayes, S. (1998) The Seven Pillars of Partnering, Thomas Telford, London. Brady, T., Davies, A. and Gann, D. M. (2005) Creating value by delivering integrated solutions, International Journal of Project Management, 23(5), 360–365. Buchanan, D. (2000) An eager and enduring embrace: The ongoing rediscovery of teamworking as a management idea, in Teamworking, (eds. S. Procter, F. Mueller) Macmillan, London, pp 25–42.

The Improvement Agenda Takes Shape 91 Cahill, D. and Puybaraud, M.-C. (2003) Constructing the Team: The Latham Report (1994), in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 161–177. CCMI (1985) Survey of Management Contracting, Centre for Construction Market Information, London. CIOB (1982) Project Management in Building, Chartered Institute of Building, Ascot. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Evans, S. and Lewis, R. (1989) Destructuring and deregulation in construction, in Manufacturing Change: Industrial Relations and Restructuring, (eds. S. Tailby, C. Whitston) Blackwell, Oxford, pp 60–93. Flanagan, R., Marsh, L. and Ingram, I. (1998) Bridge to the Future: Profitable Construction for Tomorrow’s Industry and Its Customers, Thomas Telford, London. Franks, J. (1996) Building Procurement Systems, 2nd edn., The Chartered Institute of Building, Ascot. Gray, C. (1996) Value for Money, Reading Construction Forum, Reading. Green, S. (2003) Technology Foresight Report: Progress through Partnership, in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 161–177. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. McAlpine, A. (1999) Fashion victim, Building, 23 April, p 33. Male, S. (2003) Faster building for commerce: NEDO (1988), in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 130–144. Masterman (1992) An Introduction to Building Procurement Systems, Spon, London. NEDO (1983) Faster Building for Industry, National Economic Development Office, HMSO, London. NEDO (1988) Faster Building for Commerce, National Economic Development Office, HMSO, London. ONS (2010) Construction Statistics Annual 2010, Office for Natiuonal Statistics, London OST (1995) Technology Foresight Report: Progress through Partnership, Office of Science and Techjnology, London. Phillips (1949) Working Report to the Minister of Works, HMSO, London. Saad, M. and Jones, M. (1998) Unlocking Specialist Potential, Reading Construction Forum, Reading. Simon, Sir Ernest (1944) The Placing and Management of Building Contracts, HMSO, London. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. University of Reading (1988) Building Britain 2001, Centre for Strategic Studies in Construction, Reading. Walker, A. (2002) Project Management in Construction, 4th edn., Blackwell, Oxford. [first published in 1984] Wood, Sir Kenneth (1975) The Public Client and the Construction Industries, HMSO, London.

5

Rethinking Construction

5.1 Introduction The general election of 1997 brought New Labour to power after many years in the political wilderness. John Major’s government had ultimately run out of ideas. New Labour politicians had been working hard to create links with business leaders, and it was therefore no surprise that they should select somebody like Sir John Egan to chair a review of quality and efficiency in the construction sector. First and foremost it was important to keep business leaders, and especially the City of London, firmly on board with the New Labour project. Quality and efficiency were therefore safe topics for debate, and it was certainly important to signal that there was to be no return to the interventionist policies of previous Labour governments. The construction sector was held responsible for implementing its own reforms, and the role of government was limited to encouraging progress through an endless succession of annual improvement targets. This was of course the New Labour way, and the construction sector was happy to play along provided it was left alone to enjoy the opportunities of steady economic growth. The Egan report – otherwise known as Rethinking Construction – was published in July 1998. This was a very different kind of report from those which had gone before. Rethinking Construction made no attempt to balance the needs of different interest groups – this was a client-led agenda for change. And the clients involved were already fully signed up to the enterprise culture. Certainly, there was little hint of the rhetoric of the ‘Third Way’ which characterised New Labour’s first term in office. Rethinking Construction was the enterprise culture applied to construction. Its focus was on efficiency improvement, with little recognition of the way the industry worked. Great faith was placed in the quest for wide-scale culture change implemented through fashionable management techniques. The overall tone was strident; this was not a call for incremental improvement – this was a call for radical change. Rethinking Construction was nothing short of an agenda for reengineering the UK construction sector on a big scale. The messages within Rethinking Construction went way beyond the managerialism advocated by previous reports. It took the construction improvement debate into entirely new territory. Perhaps even more interesting than the messages within Rethinking Construction were the actions which were taken to implement the report’s findings. These again were entirely unlike anything which had gone before. The institutions set up in the wake of the Latham report were rapidly abandoned in favour of a new set of improvement bodies. Many of the new agencies were tasked with promoting ‘best practice’ in the absence of any supporting evidence. Private sector enterprise had apparently not been enough to encourage the construction sector to become more customerfocused; it was seemingly also necessary for government to promote the benefits of new ways of working. It is of course a strange kind of enterprise which requires government support.

DOI: 10.1201/9781003308133-5

Rethinking Construction 93 5.2 Background 5.2.1  Tories exit stage right

The Conservatives would almost certainly have suffered electoral defeat in 1992 had Margaret Thatcher not been ousted from power by the proverbial ‘men in grey suits’. The electorate seemed to like John Major because he wasn’t Margaret Thatcher. But equally important was that he wasn’t Neil Kinnock, who had the misfortunate to succeed Michael Foot as leader of the Labour Party. As described in Chapter 3, John Major had initially succeeded in injecting new life into Thatcherism. Ultimately, however, his government ran out of ideas. Thatcher had resided over a period which saw extensive centralisation of power within the corridors of Westminster. Many within local government felt themselves to have been under a state of siege as they were consistently starved of funds and responsibilities (see Chapter 2). As local government became weaker, central government become stronger. The Treasury became especially powerful, and held sway over the spending plans of all government departments. Jenkins (2006) describes how the Treasury was positioned at the centre of a new governmental ‘cult of audit’. Enterprise it seems was fine when applied to industry and the workings of business. But for government departments, and public services which could not be tested through market competition, the fall-back position was audit – often relentless audit. John Major had previously served as Chancellor of the Exchequer and his appointment as leader of the Conservative Party was in part due to Thatcher’s personal patronage, but he was also dependent upon the patronage of the Treasury. Major was a weak prime minister, with a small parliamentary majority. Some would give him the credit for reinvigorating Thatcherism and pushing privatisation policies into areas where Thatcher feared to tread; others would say he followed the course previously set by Thatcher because he lacked his own policy directions. In either case, Major’s election victory in 1992 was rapidly followed by sterling’s ignominious exit from the European Monetary System (EMS). Some £5 billion had been wasted in a vain effort to defend an unsustainable exchange rate. Ironically, the enforced 20% devaluation of sterling undoubtedly benefited the economy throughout the mid-1990s. Nevertheless, the Conservative government’s reputation for economic competence had been destroyed. Norman Lamont was unfortunate to be Chancellor of the Exchequer at the time. He is perhaps best remembered for facing the cameras in Downing Street, flanked by a youthful David Cameron, in the wake of the UK’s humiliating exit from the ERM. Cameron was destined to become leader of the Conservative Party more than a decade later. John Major’s weakness was undoubtedly due in part to his small parliamentary majority. His reputation had also been severely damaged by the EMS debacle. But his biggest problem was his colleagues in government. The Conservative Party at the time was riven by divisions over Europe, and Major had to cope with constant carping about his leadership style, forcing him to resign the leadership in June 1995 and to stand again for re-election under the slogan of ‘put-up, or shut-up’. John Redwood stood as the only challenger and was soundly beaten in the leadership ballot. But Major’s victory did little to stem the constant moaning amongst his parliamentary colleagues. The Major government was also rocked by a series of scandals involving sex and money changing hands in brown envelopes. Tory ministers became synonymous with sleaze as scandal followed upon scandal. The Conservative Party seemed to have grown tired of power as Major’s government limped tamely to electoral defeat in 1997. The only surprise was the extent of his defeat. The Labour Party won a landslide victory with 418 seats, the most seats the party has ever held. The Conservatives in turn ended up with 165 seats, the fewest seats they have held since the general election of 1906, and with no seats at all in Scotland or Wales. John Major withdrew immediately to watch cricket and drink warm beer. His relief was almost palpable.

94  Rethinking Construction 5.2.2  New Labour takes charge

Tony Blair was elected prime minister on the 2 May 1997. The election ended the Conservative Party’s run of four consecutive electoral victories spanning across 18 years. People struggled to remember what life was like under a Labour government. For the first time ever, a serving British prime minister wore jeans and played the guitar. Britain it seemed was fashionable once again over the ‘Cool Britannia’ summer of 1997 as a succession of rock stars visited No. 10 Downing Street. Even the invitation extended to Margaret Thatcher failed to dampen the prevailing climate of optimism. But this was a very different Labour government from those in power during the 1970s. This was a New Labour government. Tony Blair undoubtedly deserved credit for making the Labour Party electable once again. Neil Kinnock also warrants recognition for confronting the quasi-Trotskyite Militant Tendency within the party which previous leaders had chosen to ignore. John Smith was elevated to party leader in the aftermath of Neil Kinnock’s disastrous electoral defeat in 1992. Smith also won important battles in the quest to return the Labour Party to the mainstream of British policies. It should also be said that the mainstream of British policies had moved significantly to the right following the election of Margaret Thatcher in 1979. The Labour Party therefore had a long way to move. Of particular note was Smith’s success in breaking the bloc vote of the trade unions, achieved with the crucial support of John Prescott. Left-wingers such as Tony Benn maintained a different version of events. In their view the Labour Party was hijacked by so-called ‘entryists’ such as Tony Blair, Gordon Brown and Peter Mandelson, credited collectively as the prime creators of New Labour. Blair was elected party leader in 1994 following the premature death of John Smith. His vision was to create a modern European-style social democratic party. After four electoral defeats the view was taken that the Labour Party’s lingering commitment to ‘old style’ state socialism had rendered it unelectable. The aim was to make the party less threatening to the voters of middle England by ditching left-wing policies such as nationalisation, high taxation and unilateral disarmament. The totemic singing of the socialist anthem the ‘Red Flag’ was also dropped from the annual party conference. At the heart of the New Labour project was the campaign to repeal Clause IV of the constitution which committed the party to the ‘common ownership of the means of production’. Blair, Brown and Mandelson assiduously courted big business while at the same time weakening the party’s links with the trade union movement. The party’s links to the trade union movement had previously placed Neil Kinnock in an impossible position during the 1984 miners’ strike. The discourse of New Labour progressively embraced the rhetoric of enterprise. The previous emphasis on wealth distribution was replaced by a new emphasis on wealth creation, and a new era of political history began. A revised version of Clause IV, without the offending commitment to common ownership, was accepted at a special Easter party conference in 1995. The way was clear for the Labour Party to be re-elected, and the electorate at large was relieved at last to have a viable alternative to the sleaze on offer from the Conservative Party. There was, however, no denying that power within the Labour Party had become significantly more centralised. Party conferences were increasingly stage-managed to avoid any embarrassing policy reversals. Many of Labour’s core voters felt alienated, but the electoral calculation was made that they had nowhere else to go. Old-style trade unionists became ‘dinosaurs’ who were resisting progress, albeit a different species of dinosaur from those who were perpetuating adversarial practices within the construction sector. Notwithstanding the above, Tony Blair cut a reassuringly presidential figure as he grinned for the cameras on the steps of 10 Downing Street on 3 May 1997. Gordon Brown was appointed as Chancellor of the Exchequer, and Peter Mandelson accepted the role of Minister without Portfolio in the Cabinet Office, where his job was to co-ordinate policy messages within government. A few months later, Mandelson also acquired responsibility for the Millennium

Rethinking Construction 95 Dome. John Prescott was appointed Deputy Prime Minister, acquiring responsibility for a large portfolio which included the newly created Department for Environment, Transport and the Regions (DETR). Prescott at least looked and spoke like a trade unionist, and was never quite programmed to deliver Mandelson-approved soundbites. But the former full-time official of the National Union of Seamen had cultivated his own contacts amongst senior industrialists, one of whom was Sir John Egan. 5.2.3  Construction Task Force appointed

Although there was never any prospect of a return to the ‘planned economy’ of the 1960s, New Labour were nevertheless well aware that the construction sector lay at the nexus of their various policy initiatives relating to health, education and transport. Housing also remained at the top of the political agenda, and short of re-creating the direct labour organisations (DLOs) of the past, the provision of new housing depended upon the private sector. Prescott was further aware of an underlying concern regarding the ability of the construction sector to deliver value for money, and wasted no time in setting up a ‘Construction Task Force’ (CTF) to review the state of the industry. Sir John Egan was approached to chair the Task Force. Egan at the time was chairman of BAA plc, previously British Airports Authority which had been privatised in 1987. In 1997 BAA was one of the construction sector’s largest and most influential clients. Egan’s background lay in the automotive sector with an impressive reputation as the saviour of Jaguar Cars. He was a declared New Labour supporter and his appointment as chair of the CTF reflected Prescott’s enthusiasm to demonstrate their business-friendly credentials. The CTF was tasked with reporting on the scope for improving quality and efficiency in UK construction. The members of the Task Force (see Box 5.1), were primarily chosen for their expertise as construction clients, or for their experience of other industries which were seen to have improved their performance. It is notable that there was no attempt to represent the different interest groups within the construction industry; neither did any of the participants have any previous involvement with the working groups of the Construction Industry Board (CIB), or with any other such pre-existing groupings (Adamson and Pollington, 2006). Contractors were especially noticeable by their absence. The inclusion of a trade union representative would appear to have been a sop to the Labour Party’s traditional support base, although it is nevertheless difficult to see any trade union influence in the text of the final report.

Box 5.1  Members of the Construction Task Force. (Source: Egan, 1998.) Sir John Egan (Chairman), Chief Executive, BAA plc. Mike Raycraft, Property Services Director, Tesco Stores Ltd. Ian Gibson, Managing Director, Nissan UK Ltd. Sir Brian Moffatt, Chief Executive, British Steel plc. Alan Parker, Managing Director, Whitbread Hotels. Anthony Mayer, Chief Executive, Housing Corporation. Sir Nigel Mobbs, Chairman, Slough Estates and Chief Executive, Bovis Homes. Professor Daniel Jones, Director of the Lean Enterprise Centre, Cardiff Business School. David Gye, Director, Morgan Stanley & Co Ltd. David Warburton, GMB Union.

96  Rethinking Construction The Egan report claimed to be building upon the foundation laid by Latham, but in truth it provided a significant break from what had gone before. This was a very different kind of document to its predessors, produced in almost total isolation of the existing machinery of industry consultation. In essence, this was a view from influential private-sector clients on how they wished the construction sector to respond. The message was customer responsiveness writ large; the cult of the customer was given full vent. 5.3  The Egan report Following its publication in 1998, the Egan report dominated the improvement debate in the construction sector for almost a decade. At the time of writing, Rethinking Construction continues to be heavily cited and the ‘Egan agenda’ remains synonymous with industry improvement. The report begins on an up-beat note by stating: [t]he UK construction industry at its best is excellent. Its capacity to deliver the most difficult and innovative projects matches that of any other construction industry in the world. (Egan, 1998, 3) But this opening compliment was not the sentiment which drove the rest of the report, and was rapidly followed by a heavy caveat: [n]onetheless, there is deep concern that the industry as a whole is under-achieving. It has low profitability and invests too little in capital, research and development and training. Too many of the industry’s clients are dissatisfied with its overall performance. (Egan, 1998, 4) Given these opening statements it might have been expected that the CTF was focused on spreading the acclaimed excellence of the construction industry’s leading-edge throughout the sector at large. But it was clear from the outset that members of CTF were rather more interested in learning from other industries, especially from what they saw to be striking improvements in the automotive sector. 5.3.1

The need to improve

The need for the construction industry to improve was justified on the basis of client dissatisfaction, and the contention that it rarely provides best value for clients and taxpayers. Reference was made to the sector’s low level of profitability, and alleged 80% decline in in-house R&D investment since 1981. Further reference is made to the prevailing crisis in training, with a 50% decline in trainees since the 1970s. Discussions with City analysts had apparently indicated that effective barriers to entry coupled with ‘structural changes’ could result in higher share prices. Fragmentation was seen to be a barrier to performance improvement, and the extensive use of subcontracting was held to have brought contractual relations to the fore. There was no diagnosis of the reasons for the growth in subcontracting, or of its broader implications beyond ‘contractual relations’. Notwithstanding the above, the report also cited a number of promising developments, including the Pact with Industry published by the Construction Clients’ Forum (CCF) and the Construction Best Practice Programme (CBPP) (which following the 1997 election now fell within the DETR). Praise is also reserved for trends towards standardisation and pre-assembly and new technology such as 2-D object orientated modelling. Certainly there was little here to challenge the conclusions of Progress through Partnership. Partnering and framework arrangements were also praised, and were seen to be used by the ‘best firms’ in place of traditional

Rethinking Construction 97 contract-based procurement. Explicit reference was made to the Reading Construction Forum’s best practice guides to partnering Trusting and Team (Bennett and Jayes, 1995) and the Seven Pillars of Partnering (Bennett and Jayes, 1998). The CTF was especially impressed that partnering when used over a series of projects could account for 30% savings. Tesco was cited as having reduced the capital cost of their stores by 40% since 1991 through partnering. The report further recorded its approval of: increasing interest in tools and techniques for improving efficiency and quality learned from other industries, including benchmarking, value management, teamworking, Just-in-Time, concurrent engineering and Total Quality Management. (Egan, 1998, 9) Sir John Egan’s enthusiasm for instrumental improvement techniques seemingly knew no bounds. As can be imagined, the above sentence was seized upon by a plethora of management consultants seeking to sell the advocated techniques to an allegedly backward construction sector. Management consultants were of course awarded an especially privileged status within the enterprise culture. If management consultants were advocating a particular improvement this in itself was seen to be evidence of its potency. 5.3.2

Drivers for change

Perhaps the biggest legacy of the Egan report lies in its advocacy of performance targets for the construction sector. The mania for performance targets subsequently led to an ongoing obsession with key performance indicators (KPIs) within construction sector quangos, thereby reflecting wider trends amongst government policymakers. The increased use of centralised performance targets had long since become an established component of the ‘cult of audit’ as cultivated by Treasury. The trend towards performance targets was evident across the full range of government policy areas, including health, education and crime. Such trends continued to characterise the government’s approach to privatised sectors such as the utilities, telecoms and the railways. Public sector bureaucracy had given way to private sector enterprise held subject to monitoring through the use of ubiquitous performance indicators. The centralising tendencies of New Labour were perhaps even stronger than those of the preceding Tory administration. The approach advocated within Rethinking Construction was the epitome of this broader trend. The argument emphasised the need to drive dramatic performance improvement through the use of clear measurable objectives. The focus on the need for ‘dramatic’ improvement reflects the strident tone throughout the Egan report; this was not a call for incremental continuous improvement; this was a call for a step-change in industry performance. The plea for dramatic improvement seemed to have been inspired by business process re-engineering (BPR). Yet the accompanying emphasis on performance measurement against pre-determined targets was a direct manifestation of the ‘cult of audit’ as championed by Treasury. The enterprise culture contained many such paradoxes which enabled different versions of the discourse to be played out differently in different contexts. BAA plc of course was still subject to performance indicators at the hands of the regulator. But the authors of Rethinking Construction were not overtly interested in performance measurement as advocated by government-controlled bureaucracies. They set out their ambition for the construction sector by noting the increases in efficiency and transformations of privatesector companies within the manufacturing and service industries. They believed that the observed radical changes within these sectors had been driven by a series of five fundamentals, the first of which comprised the need for committed leadership. It was emphasised that management needed to be totally committed to driving the improvement agenda forward if the required

98  Rethinking Construction ‘cultural and operational changes’ were to be made. The second fundamental was held to be a focus on the customer: [i]n the best companies, the customer drives everything. These companies provide precisely what the end customer needs, which the customer needs it and at a price that reflects the products value to the customer. Activities which do not add value from the customer’s viewpoint are classified as waste and eliminated. (Egan, 1998, 13) The above definition of waste prevailed throughout the Egan report, and serves to undermine those who were to subsequently claim that Rethinking Construction was compatible with the principles of sustainability, to which the report contained only two fleeting references. The third expressed fundamental concerned the need ‘to integrate the process and the team around the product’. This was a plea against the tendency within the construction sector towards fragmented processes. The point was made that the most successful companies work back from the customer’s needs and focus on the product and the value it delivers to the customer. There is a strong echo here of the same allegiance to the diktats of BPR previously expressed by the authors of Progress through Partnering. Certainly the lack of integrated teams had been a longstanding criticism of the construction sector. One problem was main contractors’ arms-length management of subcontractors previously alluded to by Latham (1994). Within the professional team, difficulties were further exacerbated by the longstanding existence of different professions. Each profession has its own sense of self-identity, continuously reinforced by the respective professional institutions together with their separate educational frameworks. The fourth fundamental set out by Rethinking Construction related to the need for a quality driven agenda, which was taken to imply not only zero defects but also delivery on time and to budget. Quality was further seen to include stripping out waste, after-sales care and reduced costs in use. Prevailing industry concerns about the difficulty of providing quality when designers and contractors are routinely appointed on the basis of lowest cost were explicitly recognised. But the industry was exhorted to understand what clients mean by ‘real quality’. It is of course the cult of the customer which dictates a client monopoly when it comes to defining quality; the role of the construction sector is to doth its cap and deliver customer requirements. Societal requirements visà-vis sustainability were not yet (quite) on the agenda. The fifth and final stated fundamental of success concerned the need for the sector to demonstrate a commitment to people. This was taken to imply not only decent site conditions, but also fair wages and attention to the health and safety of the workforce. Training and the development of capable, committed managers and supervisors were further flagged as important. In addition, reference was made to the need to ‘respect all participants in the process and to involve everyone in sustained improvement and learning’. The overriding espoused aspiration was for a no-blame culture based on mutual interdependence and trust. The above fundamentals were seen to provide the basis for the required dramatic improvement in the construction industry’s performance. If this is to be achieved, Rethinking Construction advocated that the construction industry should set itself qualified targets, milestones and performance indicators. It is further advocated that the industry should put in place a means of measuring progress towards its objectives and targets. Such an industry-wide performance measurement system would, it was contended, provide clients with the means of differentiating between the best firms and the rest. Emphasis was placed on the industry producing its own structure of objective performance measures. Nevertheless, it is notable that the proposed structure ultimately had to be agreed with the industry’s clients; clearly, the industry was not to be entirely trusted to set its own performance targets. It was further advocated that construction companies should share

Rethinking Construction 99 their performance data with clients and with each other to aid an ongoing process of performance improvement through benchmarking. The fashionable status of benchmarking was already assured (Pickrell et al., 1997) and was to become even more popular within the context of partnering (see Chapter 6). 5.3.3  Improving the project process

The CTF claimed to have learnt much from its visit to Nissan UK in Sunderland. The visit also seemingly included a number of construction industry representatives, one of whom enthused: we see that construction has two choices: ignore all of this in the belief that construction is so unique that there are no lessons to be learned; or seek improvement through re-engineering construction, learning as much as possible from those who have done it elsewhere. (Egan, 1998, 21) The construction industry representative in question had undoubtedly picked up on the language of BPR, previously given vent in Progress Through Partnership (OST, 1995). The term ‘re-engineering construction’ was to become much repeated in subsequent years. If the required end was to be achieved, the Task Force believed that the industry had to re-think the process through which it delivered its projects. It was maintained that up to 80% of its inputs into buildings are repeated. The parallel was drawn not with the building of cars on the production line, but with the design and planning of a new production model. The plea was made for the definition of an integrated project process in construction, thereby giving rise to much ensuing enthusiasm from the construction research community about the benefits of process modelling (cf. Cooper et al., 2005). The observed tendency towards largely separate processes for planning, designing and constructing projects was seen to reflect the fragmentation of the sector and to sustain the contractual culture previously targeted by Latham (1994). The authors of Rethinking Construction were especially critical of the propensity of construction clients towards choosing a new team of designers, contractors and suppliers competitively for every project. In making this recommendation, they were undoubtedly mindful that the leading clients at the time were leaning towards the use of framework agreements, which was certainly true of Sir John Egan’s very own BAA plc. The key premise of the CTF’s integrated project process was that teams of designers, constructors and suppliers work together throughout a series of projects, continuously developing the product and the supply chain, eliminating waste in the delivery process, innovating and learning. The benefits of serial contracting had been previously espoused by Emmerson (1962) and Wood (1975) during the age of the planned economy. BAA had relatively recently escaped from public ownership and at the time it enjoyed the certainty of stable investment plans. Especially telling was Egan’s stark observation that most clients of construction were interested only in the finished product, its cost, whether it had been delivered on time, its quality and functionality. There was little sense of the assumed joint responsibility for industry improvement between the construction sector and its clients that had characterised the Emmerson (1962), Banwell (1964) and Wood (1975) reports (see Chapter 2). Such assumptions had been ruthlessly cast aside by the enterprise culture, and the ideas of corporate social responsibility (CSR) had yet to become fashionable. CSR was certainly ignored by Sir John Egan and his acolytes. The overriding message was to concentrate on the needs of the customer; other stakeholders in the construction process did not figure in the analysis. Given subsequent developments in respect of the Commission for Architecture and the Built Environment (CABE), it is notable the CTF accorded no emphasis to the need to maintain the quality of the built environment. Any notion of design quality beyond satisfying the business needs of the client would again have been classified as waste, and eliminated.

100  Rethinking Construction The CTF further divided the overall project process into four complementary and interlocked elements: i product development, ii project implementation, iii partnering the supply chain, and iv production of components. The first of the above was seen to relate to the means of developing a generic construction product – such as houses, roads, offices or a repair and maintenance service – to meet and inform the needs of clients and customers. This was seen to parallel the research into customer needs that was characteristic of most other industries. Particular emphasis was given to listening to the voice of the customer and understanding their needs and aspirations. Much of what is described would seem to align with the established practices of client briefing, although the implication is that construction firms should develop dedicated business streams around the needs of targeted clients. Reference was made to the existing tendency to do this in response to opportunities provided by the private finance Initiative (PFI), and the plea was that such arrangements should be available to all clients. The second of the listed elements – project implementation – concerned the task of translating the generic product into specific projects to suit the needs of specific clients. The use of computer modelling was advocated to test the performance of the end-product, and to minimise the problems of construction on site. This is an area where parts of the industry have since made significant progress through the use of building information modelling (BIM), although the impact of such technologies will always be limited in the absence of associated changes in embedded working practices (see Eastman et al. 2008; Harty, 2010). Appeals were also made for greater use of standardised components and pre-assembly; the CTF had not yet learnt the newspeak trick of labelling such ideas as ‘modern methods of construction’ (MMC) to avoid previous connotations of poor quality. The third element of the proposed process – partnering the supply chain – was seen to be critical to driving innovation and sustained improvement in performance. It was emphasised that partnering is not an easy option, and that it can be more demanding than conventional tendering. Tesco would certainly not have approved of approaches that approximated towards an easy option. Reference was made to open relationships and an ongoing commitment to improvement. The effective measurement of suppliers’ performance was given further emphasis. Performance measurement was held to be central to the advocated notion of partnering; there were therefore obviously limitations to relying on a no-blame culture based on mutual interdependence and trust. Mention was however made of the importance of sharing the rewards of improved performance. Partnering might not be an easy option, but at least construction firms could take solace from the willingness to share the benefits, subject of course to the effective measurement of performance. The final element to be addressed in the quest to improve the project process related to the production of components. The construction sector was exhorted to follow the example of leading manufacturers of consumer products. The slogan here called for detailed planning, management and sustained improvement of the production process. The overall stated aim was to eliminate waste (repeated yet again) and to ensure the right components are produced and delivered at the right time, in the right order and without any defects. These are all classic messages derived from the Toyota manufacturing system and its just-in-time (JIT) principles. Retail and distribution, together with vehicle manufacturing, were further cited as exemplar industries with extensive experience of effective logistics management. The implied sub-text was that if only the construction sector had kept up to date with the latest management thinking, quality would be much better and clients would be much happier.

Rethinking Construction 101 5.3.4  Targets for improvements

Despite the expressed preference that the industry should set its own targets, the authors of Rethinking Construction were not shy in setting out seven targets as an illustration of what they would like to see. The targets were offered with the caveat that they were based on an assessment which was necessarily ‘impressionistic and partial’. Strangely, this caveat was rapidly forgotten as the suggested seven targets subsequently become the accepted drivers for industry change. The targets comprised annual performance measures for seven indicators. The expectation of ‘dramatic’ increases in efficiency and quality is articulated once again, although the authors go on to suggest that in their experience the greatest value is obtained through significant sustained improvement rather than one-off advances. There would seem to have been something of a battle going on here between the advocates of two different philosophies; one derived from TQM and one derived from BPR. But the advocates of BPR won the day more often than not, with a corresponding repeated emphasis on the need for ‘dramatic’ improvements. The targets specified in Table 5.1 raise a number of important questions. They contain repeated references to improvements achieved by ‘leading companies’, but none of the claims are supported by any evidence. The New Labour government went on to be much criticised for commissioning research in support of pre-determined policy, and Rethinking Construction was indicative of this broader trend. Claims made in respect of capital cost and construction time seem especially dubious, given that they are so dependent on the initial baseline adopted for comparison. Many of the achievements quoted appear to be based on hearsay rather than any objective assessment. For example, it is impossible to verify the claim that ‘leading UK clients and design and build firms in the USA are currently achieving reductions in construction time for offices, roads, stores and houses of 10%-15% per year’. But even more starkly, it is appropriate to ask for how many years the suggested targets could be achieved. For example, if capital cost were to be reduced by 10% for 5 years, the overall reduction in cost would be 33.26%. This would seem to be an implausibly high target to be achieved through the removal of inefficiencies. Improved efficiency had previously been assumed to be a direct derivative of private-sector competition. This had at least been the espoused motivation for opening-up the DLOs to private-sector competition. But if Rethinking Construction is to be believed, this had not been successful enough in improving industry efficiency. Returning to the suggested targets, it is perhaps coincidence that the compounded reduction over 5 years accords roughly with the target of 30% improvement in productivity previously set by Latham (1994), which was of course equally unsubstantiated. In respect of defects, the case is again made that ‘there is much evidence to suggest that the goal of zero defects is achievable within five years’. Given that so much evidence was available, it is notable that an annual target of 20% reduction per year for five years would still leave nearly 33% of defects unaddressed. Either the authors’ skills of compounding were underdeveloped, or the evidence in favour of zero defects within five years was not as convincing as had been suggested. The target of increasing turnover and profitability was undoubtedly welcomed by many in the contracting sector, and yet it seems strange to combine them into a single measure. In an expanding economy, it might feasibly be possible for all firms to expand turnover by 10% per year, but even this would depend upon an economic growth rate of at least 10% coupled with the imposition of significant barriers to entry. But the target of 10% growth in turnover for all construction firms would clearly be unachievable in the context of a stagnant or declining economy. Such issues are clearly beyond the control of the contracting sector. As a further comment, it is worth pointing out that the CTF measured profitability as a percentage of turnover. On this basis, contractors are not especially profitable; many indeed operate in the region of 2–4% profitability. But there is another measure of profitability which is rather more significant for contracting firms: return on capital

102  Rethinking Construction Table 5.1  Targets for improvement The scope for sustained improvement Indicator

Improvement per year

Current performance of leading clients and construction companies

Capital cost All costs excluding land and finance.

Reduce by 10%

Leading clients and their supply chains have achieved cost reductions of between 6% and 14% per year in the last 5 years. Many are now achieving an average of 10% or greater per year.

Construction time Time from client approval to practical completion.

Reduce by 10%

Leading UK clients and design and build firms in the USA are currently achieving reductions into construction time for offices, roads, stores and houses of 10–15% per year.

Predictability Number of projects completed on time and within budget.

Increase by 20%

Many leading clients have increased predictability by more than 20% annually in recent years, and now regularly achieve predictability rates of 95% or greater.

Defects Reduction in number of defects on handover

Reduced by 20%

There is much evidence to suggest that the goal of zero defects is achievable across construction within five years. Some UK clients and US construction firms already regularly achieve zero defects on handover.

Accidents Reduction in the number of reportable accidents

Reduce by 20%

Some leading clients and construction companies have recently achieved reductions in reportable accidents of 50–60% in two years or less, with consequent substantial reductions in project costs.

Productivity Increase in value added per head

Increase by 10%

UK construction appears to be already achieving productivity gains of 5% a year. Some of the best UK and US projects demonstrate increases equivalent to 10–15% a year.

Turnover and profits Turnover and profits of construction firms.

Increase by 10%

The best construction firms are increasing turnover and profits by 10–20% a year, and are raising their profit margins as a proportion of turnover well above the industry average.

Source: Egan, 1998

Rethinking Construction 103 employed (ROCE) (Gruneberg and Ive, 2000). If ROCE is used the contracting sector becomes much more attractive. On this measure, many contractors record profitability levels of 25–30%. The need to maximise ROCE also says much about contracting as a cash-flow business. Hence it offers a better explanation of the competitive behaviours of construction firms. For example, viewing contractors through the lens of ROCE explains the long-standing allegiance to the late payment practices previously targeted by Latham (1994). It also explains the industry’s reluctance to give up management contracting in favour of construction management (see Chapter 4). Comment must also be made in respect of the Rethinking Construction target for accidents. Firstly, it should be noted that the specified target relates to the number of reportable accidents, thereby ignoring longstanding problems of systemic under-reporting (Gyi et al., 1999). The reporting rate for reportable (non-fatal) injuries has been estimated to be as low as 40 per cent. Reporting rates are especially low among the self-employed who have little incentive to comply with statutory procedures. Furthermore, there is a general consensus that prevalent subcontracting arrangements have negative implications for health and safety as a result of blurred responsibility demarcations (Gyi et al., 1999; Haslam et al., 2005). Clarke (2003) goes further and argues that the possibility of a positive safety culture is seriously undermined by workplaces that comprise a reduced number of permanent employees supplemented by contract and contingent workers. Needless to say, none of these issues were addressed by Rethinking Construction. This reflects a recurring theme whereby issues of substance are ignored in favour of a managerialist process of target setting. Reference was made to a number of unnamed clients and construction companies who had apparently achieved reductions in reportable accidents of 50–60% in two years or less. Such achievements of course do not deserve to be denigrated, but the authors of Rethinking Construction notably found it necessary to emphasise that the reductions were achieved with consequent substantial reductions in project cost. The inference here is that the industry would not be motivated by a reduction in accidents alone; it seemingly has to be convinced that any such reduction would also result in reduced costs. Advice to this end was apparently provided by the Health and Safety Executive, whose morale had undoubtedly suffered as a result of 15 million pounds’ worth of budget cuts instigated between 1994 and 1996 (Beck and Woolfson, 2000). The discourse of the enterprise culture consistently railed against government regulation of business practices, and health and safety was no exception. The preferred alternative to regulation was to emphasise the importance of self-regulation, whilst at the same time continuing to incentivise a reliance on self-employment. In reviewing the seven targets as a whole, it is useful to remind ourselves that one of the suggested fundamentals was a ‘commitment to people’. Unfortunately – other than the target for reducing the number of reportable accidents – this fundamental commitment does not filter through into the targets for improvement. For example, there was no target for improving site conditions despite the observation that the facilities made available to workers on site were ‘typically appalling’. Tesco Stores was cited as an exemplar of how enlightened clients could act to improve conditions on site. Tesco was further described to have introduced visitor centres, on-site canteens, changing rooms and showers on all its construction sites. Workers were apparently required to wear branded overalls with both Tesco and their employer’s name. These innovations had seemingly engendered team spirit and commitment, which in turn contributed to Tesco’s achievement of a 40% reduction in construction cost. As was the case with health and safety, it would seem that improving site conditions alone is not enough. It has to be justified in terms of the extent to which such improvements contribute towards reducing cost. Such is the omnipotent nature of arguments in favour of the ‘business case’ for change. Western commentators in the 1970s used to (quite rightly) poke fun at the need within the Soviet Union for policy decisions to be compatible with Leninist/Marxist doctrine. And yet the enterprise culture incubated a similar effect within the UK such that new initiatives must always be justified with reference to the ‘business case’. Keeping

104  Rethinking Construction people alive on construction sites and the eradication of appalling site conditions should not be dependent upon arguments relating to cost reduction. It is further notable that Rethinking Construction lacked any specific target for ensuring fair wages. Given the emphasis on improving profitability, it could feasibly have been expected that a share of the gains would have been apportioned to the workforce through increased bonus payments. This is especially pertinent given the statement that the Task Force wished to see: [a]ll the players in the team sharing in success in line with the value that they add for the client. Clients should not take all the benefits: we want to see proper incentive arrangements to enable cost savings to be shared and all members of the team making fair and reasonable returns. (Egan, 1998, 33) There is of course a slight ambiguity about who is included within the ‘team’; but given the expressed emphasis on commitment to people it is difficult to believe that the Task Force were purposely excluding building operatives from the accrued benefits. Unfortunately, the subsequent 2002 Strategic Forum report Accelerating Change (see Chapter 8) specifically limited membership of the ‘integrated project team’ to those firms judged to be ‘pivotal’ in meeting the client’s requirements. Hence all those firms not deemed to be pivotal would presumably be denied a fair share of the success. By extension, employees not judged to be pivotal would similarly fall outside the ‘proper incentive arrangements’. Hence the bogusly self-employed stood no chance; they would remain entirely subject to market mechanisms relating to the cost of labour, in isolation of any assessment of ‘added-value’ to the client. Of further note is the absence of any targets relating to environmental impact, or any other aspect of sustainability. Training and development were similarly not judged sufficiently important to warrant an improvement target. When training was addressed within Rethinking Construction, emphasis was given to the need for top management to display the right balance between technical and leadership skills. A plea was also made in favour of multi-skilling; modern building methods were judged to require fewer specialist craftsmen. The view was also expressed that training would only be given the recognition it deserved if major clients gave preference to firms who could demonstrate the use of trained workers. In this respect, Rethinking Construction endorsed the Construction Skills Certification Scheme, although it nevertheless stopped short of setting a target for the number of trained workers. It would of course be unfair to be too critical of the suggested targets; they were after all only based on an ‘impressionistic and partial assessment’. Unfortunately, this was quickly forgotten as the suggested targets soon acquired an iconic status in the forms of the ‘5-4-7’ diagram shown in Figure 5.1. This provided a pictorial representation of the supposed linkages between Egan’s suggested five drivers for change, the four identified elements of the project process and the seven annual targets for improvements. Although this diagram did not appear in Rethinking Construction, it was widely used following publication to illustrate the key principles. It was subsequently published in the 2002 Strategic Forum report Accelerating Change (see Chapter 8). Irrespective of the feasibility of the targets suggested, the use of industry-wide targets seems strangely at odds with the New Labour government’s stated committed to free-market economics. In light of this it seems especially bizarre to be advocating an industry-wide bureaucracy of performance targets that were in many respects reminiscent of Stalin’s five-year plans in the former Soviet Union. But as has already been observed, this constituted a broader paradox which went to very heart of the enterprise culture and its manifestation within government policy. Devotees of free-market economics would have us believe that inefficient firms go out of business due to market forces. But, contrary to the suggestion of Rethinking Construction, contractors survive not

Rethinking Construction 105

Figure 5.1  Rethinking Construction: Annual targets for construction. Source: Accelerating Change, Strategic Forum, 2002.

only through satisfying their clients, but also through effective risk management. Well-managed construction firms avoid becoming over-reliant on a limited number of clients, and hence limit the amount of turnover which is dependent upon partnering arrangements with single clients. The limitation of risk exposure is one of the key skills of contracting, and is of central importance to being successful in the marketplace. Contractors who bought into Egan’s suggested regime of performance management too enthusiastically for the purposes of securing work from a limited number of clients would therefore ironically put themselves directly at risk. As a final comment, it is worth noting that it was an ideological belief in the benefits of the ‘cold wind’ of market competition that had driven the extensive privatisation programme throughout the 1980s. One of the acclaimed successes of the privatisation programme was British Airports Authority, which became BAA plc in 1987. It must therefore be remembered that in 1998 Sir John Egan was the Chief Executive of a privatised quasi-monopoly which was subject to a regime of performance targets set by a government-appointed regulator. This was hardly the most credible platform from which to preach to the construction sector on the need for dramatic change. But construction sector representatives were of course too polite to raise such concerns at the time. 5.3.5  Endorsement of modern management techniques

The authors of Rethinking Construction demonstrate a consistent faith in the efficacy of modern management techniques. The report was heavily influenced by notions of BPR, as evidenced by the repeated advocacy of the need for ‘dramatic’ improvements. But a broad range of other techniques was also explicitly endorsed, including benchmarking, value management, partnering, TQM, JIT and effective logistics management. These techniques had been seen to have demonstrated their effectiveness in other sectors; all that seemingly remained to be done was to apply them in construction. The commitment to the specified techniques was combined with an overriding commitment to a regime of performance management based on a range of generic targets. Even if the specified targets were to be accepted uncritically, there was still a broad assumption that a single set of targets could be meaningful across the heterogeneous terrain of the construction sector. As previously observed, differences between particular niches within the construction sector are often no less pronounced than differences with firms from within other sectors. The combination of these ideas can in part be understood to be a constituent part of the enterprise culture, but it would again be unrepresentative to portray such storylines as a static and homogeneous discourse. Paradoxes and ambiguities abound.

106  Rethinking Construction But the authors of Rethinking Construction undoubtedly reserved their maximum enthusiasm for the ideas of ‘lean thinking’. Clearly they were in the market for new ideas, and the alleged success of lean thinking in the automotive sector made it an obvious candidate. The endorsement of lean thinking was in no small way due to the web of relationships which surrounded the CTF. Ian Gibson, at the time Managing Director of Nissan UK, had previously worked with Dan Jones, co-author of the hugely influential Machine that Changed the World (Womack et al., 1990). Jones was a highly convincing advocate of the benefits that could be accrued through lean thinking. The CTF also sent a delegation to the USA to attend a conference organised by the Lean Construction Institute (LCI), and to visit some of the US companies that had been championing the application of lean techniques. However, presumably there was a significant amount of additional research which justified the following claim: [w]e have investigated the emerging business philosophy of “lean thinking” which has been developed first in the car industry and is now spreading through the best manufacturers and into retailing and other industries. Lean thinking presents a powerful and coherent synthesis of the most effective techniques for eliminating waste and delivering significant sustained improvements in efficiency and quality. (Egan, 1998, 25) In common with the mantra which recurs throughout the Egan report, primary emphasis was given to lean thinking as a means of eliminating waste which is, seemingly, seen to be separate from its contribution to delivering sustained improvements in efficiency and quality. The elimination of waste could of course be construed as a contribution to efficiency, so the sentence is in part tautological. Presumably the much repeated emphasis on waste elimination was deliberate just to make sure that the reader had indeed got the message. The authors followed sources such as Womack et al. (1990) in describing lean production as the generic version of the Toyota production system. Lean thinking is contended to describe the core underlying principles that can be applied to every other business activity. The advocacy of supposedly universal principles of management which can be applied irrespective of context dates back to the principles of scientific management as advocated by Taylor (1911). According to Rethinking Construction, the key to success lies in defining value from the end customer’s perspective. Once this has been done, all the non-value activities can be targeted for removal. Such a view of course rests on the assumption of a unitary client organisation which has a fixed and uncontested interpretation of value. Such a view was in harsh contrast with much of the prevailing literature on the briefing process, which increasingly conceptualised construction clients as pluralistic entities (cf. Cherns and Bryant, 1984; Blyth and Worthington, 2001; Green, 1996). Where Rethinking Construction differed from Taylor was in the emphasis placed on the need for new relationships to eliminate inter-firm waste and to manage the value stream as a whole. Such storylines are reminiscent of supply chain management (SCM) which consistently emphasises the need to manage efficiency across organisational boundaries. SCM was of course an important part of the Toyota manufacturing system and is frequently cited to be integral component of lean production. Nevertheless, the extent to which practices developed in the highly consolidated automotive sector could be transferred to construction remains hugely contested (see extended discussion in Chapter 7). The Egan report cites two examples of firms who have applied lean thinking to construction. Both were based in the USA. The Neenan Company in Colorado had apparently used lean construction to reduce the time to produce a schematic design by 80% and project times and costs by 30%. Pacific Contracting had used lean construction to increase productivity and turnover by 20% in 18 months. Both companies were at the time active within the LCI which had been founded in 1997. Presumably the authors of Rethinking Construction had been unable to find any exemplary

Rethinking Construction 107 companies of lean construction within the UK, although it is clearly much safer to cite exemplars from elsewhere in that they are much more difficult to discredit. And as with previous exemplar companies cited within Rethinking Construction, there was no attempt to verify the performance figures quoted. Indeed, there is every reason to believe that the figures were sourced from the individuals who were leading the lean construction initiatives within the two cited companies. Clearly the individuals concerned would have a vested interest in ‘talking up’ their achievements. The claims made would of course have been warmly endorsed by others active within LCI, who would have a similarly vested interest in advocating the benefits associated with lean construction. Simply put, the CTF were unlikely to receive an independent assessment of lean construction from the LCI. But of course, an independent assessment was not what they were looking for. Rethinking Construction was undeniably a very different style of report from those published previously. In contrast to the Latham report, the Egan report was not produced on the basis of extensive consultation with a multitude of interest groups from within the construction sector. It was produced remarkably quickly by a small tightly knit cabal of New Labour-friendly industrialists with a remarkable faith in the restorative powers of modern management techniques. The composition of the CTF was heavily biased towards large client organisations and completely bypassed pre-existing industry consultation structures. The report was very much a child of its time; it reflected the institutionalisation of the enterprise culture in construction, but crucially it also reinforced it. The rhetoric of BPR pervades throughout the entire report, with a repeated emphasis on the need for ‘dramatic’ improvements. But there were plenty of recommendations to adopt other management techniques sprinkled right through Rethinking Construction, including benchmarking, value management, partnering, TQM, JIT and SCM. The first three of these had previously been endorsed by the dormant working groups of the CIB. Lean thinking was the big new idea which caught the headlines, and the need for the construction sector to model itself on the Japanese automotive industry. Lean thinking was itself somewhat vague and ill-defined, but can certainly be seen to subsume previously advocated techniques such as TQM, JIT and SCM. There was therefore little in the recommendations which can be understood to be especially new; the antecedents of the recommendations can be found in previous reports including Building Britain 2001, Faster Building for Commerce and Progress through Partnership. There was therefore a direct continuity with what had gone before, even though the strident tone of Rethinking Construction suggested a radical break with previous reports. But what was new were the resources which were mobilised to support the implementation of Rethinking Construction. Likewise the associated emphasis on being Egancompliant. A climate very quickly developed whereby it became commercially impossible to disagree with Egan’s message. If you were not in tune with the Egan agenda you risked being exposed as an outdated dinosaur who was perpetuating adversarial practices. The climate was not dissimilar to that portrayed in the ‘blasphemer’ sketch in Monty Python’s Life of Brian. Client pressure was brought to bear such that contractors and consultants had little choice other than to pledge themselves as ‘Egan compliant’. Such a commitment very quickly became an essential pre-requisite to pre-qualification. It would however be overstating the case to describe this as ‘radical culture change’; in most cases resigned behaviour compliance would have been a more realistic diagnosis. 5.4  Eganites on the march 5.4.1  Commitment to the cause

The final chapter of Rethinking Construction laid out recommendations for moving forward. Despite the title of the report, there was little emphasis given to rethinking, or even thinking per se. The main focus of the recommendations was on harnessing commitment to the way forward, as if the proposed direction had already been universally agreed. The rallying call focused primarily on

108  Rethinking Construction the need for commitment from all parties. The overriding message was that the construction sector should fall into line and concentrate on implementing the Egan principles – in all their glorious ambiguity. The implementation project was seen to require commitment from major clients, the construction and government. The respective requirements were as follows:

• major clients, to fulfil their responsibility to lead the implementation of our agenda for dramatically improving the efficiency and quality of construction;

• the construction industry, to work with major clients to deliver the significant performance

improvements that are possible, and offer these to the occasional and inexperienced clients; and

• Government, to create and sustain the environment that is needed to enable dramatic improve-

ments in construction performance, and encourage the public sector to become best practice clients. (Egan, 1998, 35)

The major clients represented on the CTF pledged their own commitment to improving performance by undertaking ‘demonstration projects’. These were intended to develop and illustrate the ideas set out in the report. It is notable that demonstration projects were not advocated for the purposes of evaluating objectively whether the ideas were worth pursuing; this had seemingly already been decided. Other clients were invited, together with their contractors, designers and suppliers, to offer similar projects on which innovation could be tested and developed. This at least left a little room for innovation which had not been envisaged within Rethinking Construction. The stated ambition was to commence with £500 million worth of projects. The report went on to recommend a ‘movement for change and innovation in construction’. The stated aim was to pool experience, develop ideas and drive improvements in quality and efficiency. This was seen to be the way the construction industry could benefit from the lead being given by the major clients, despite the fact that the industry had not been consulted on whether or not the major clients were heading in the right direction. It was emphasised that the envisaged ‘movement for change’ should be open to all who are able to demonstrate commitment to a range of aspirations, including the advancement of knowledge and of construction best practice. As previously suggested, the notion of ‘best practice’ implies a single best way of performing any particular task, thereby shifting management theory back to the days of Taylor’s (1911) scientific management. The more recent ideas of contingency theory, which advocate the most appropriate way contingent upon the circumstances at the time, had seemingly passed the CTF by (cf. Lawrence and Lorsch, 1967). Rethinking Construction also neglected the possibility that what is ‘best’ for the client may not necessarily be optimal for other parties. Given the long history of factional interests in the construction sector, this assumption is highly dubious at best. But the rhetoric of the Egan report did at least resonate with the ‘win-win culture’ promoted by the discourse of enterprise. The dominant unitary perspective was further emphasised through the plea that participants in the movement for change should develop a ‘culture of trust and respect’ within their own organisations and throughout their supply chains. Following Morgan (2006), it can be argued that such pleas are best understood in terms of their metaphorical connotations, rather than as expressions of literal language. Other qualifying requirements for membership of the ‘movement for change’ included a commitment to ‘training all staff fully and providing them with conditions of employment and facilities that enable them to give of their best’. The expression ‘staff’ seemingly limited the commitment to white-collar employees who were on the direct payroll. There was no corresponding commitment in respect of employees generally, and certainly there was no commitment to self-employed operatives. But we can be clear that the CTF was in favour of benchmarking; participating firms were required to be committed to measuring performance against other member’s projects and project processes, and sharing the results with the wider industry. The clients on the CTF strove for the

Rethinking Construction 109 equivalent of a Which report which they could use to understand the industry’s products and enable them to choose between them. They went so far as to state: [w]e see no other practical strategy that the industry can adopt to escape from the debilitating cycle of competitive tendering, conflict, low margins and dissatisfied clients. (Egan, 1998, 37) The debilitating cycle in question was of course not new; but it had undoubtedly been exacerbated by the enterprise culture. It retrospect, it seems highly naïve to suppose that the competitive dynamics described in Chapter 3 could be unpicked through the use of a Which-style report aimed at clients. At the time of writing, the proposed report which clients could use to inform their choices has yet to materialise. Other recommendations outlined in the final chapter of Rethinking Construction include the establishment of a ‘knowledge centre’ through which knowledge gained from the demonstration projects could be shared with all parties. The DETR’s embryonic CBPP was recommended as the basis for the proposed knowledge centre. With this sole exception the Latham legacy in the form of the CIB was notably ignored. The idea of a ‘knowledge centre’ was seemingly based on an assumption that knowledge can be captured and codified in a form which makes it transferable. This is an assumption which has been repeatedly challenged (cf. Fernie et al., 2003), and needless to say the knowledge centre never quite materialised in the form envisaged. The authors of Rethinking Construction clearly did not rate the universities as suitable hubs for the proposed knowledge centres, presumably because the CTF could not easily control the knowledge that was on offer. Universities at the time were lagging behind the enterprise culture and had not yet completely subjugated the generation of knowledge to the cause of enterprise. But the New Labour government continued to pursue this course of action with perhaps even more vigour than the preceding Major administration. At the time of writing ‘enterprise’ has become established as a central component of academic life, and relatively few academics remain resistant to its imposition. The final call to action within Rethinking Construction worth noting is that which was directed at public sector clients. In 1998 the public sector remained the largest client of the construction industry, despite the preceding two decades of privatisation. The CTF exhorted government to commit itself to ensuring that public sector bodies adopted best practice. Particular attention was given to the need to improve public sector procurement, with public-private partnerships and PFI being cited as examples of government’s ability ‘to make radical and successful changes in its procurement policies’. Emphasis was given to the need to define precisely what is required and then to allow the construction industry to respond in innovative ways. After having directed so much criticism at the construction sector it comes as a surprise so late in the report to learn that the sector’s ‘rich seam of ingenuity’ had been previously stifled by traditional processes of prescriptive design and tendering. 5.4.2  Movement for Innovation

Following the launch of Rethinking Construction in July 1998, attention immediately shifted towards implementation. Latham-style consultation across the industry’s representative structures was not on the agenda. It was quickly agreed that existing industry representative bodies, such the CIB, could not be tasked with moving forward the change agenda. This was largely due to lobbying by the industry’s large repeat clients. The overriding framework was provided by the prevailing cult of customer responsiveness; clients were no longer interested in the ‘mutuality of responsibility’. When they shouted ‘jump’, they expected the construction industry to jump. They no longer felt able to support an improvement agenda which, in their view, had more to do the construction

110  Rethinking Construction industry’s interests than their own. The task of initiating the £500 million programme of demonstration projects fell to the Movement for Innovation (M4I) which was specifically created for the purpose. At the behest of the Construction Minister, Nick Raynsford, Alan Crane agreed to help establish a set of KPIs relating to the Rethinking Construction targets (see Table 5.1). From this point onwards, performance measurement through the use of KPIs was to be a central component of the agenda for change. The slogan became ‘if you can’t measure it, you can’t manage it’. The adopted approach aligned directly with the Treasury instigated ‘cult of audit’, but at the same time sat ill-at-ease with the notion of private sector enterprise. Government was now investing significant sums of money in the infrastructure of construction improvement and the head of the DETR Construction Directorate, John Hobson, would have been crucially aware of the need to demonstrate impact to Treasury. However, from the outset, there seemed to be a fundamental confusion of purpose. Were the KPIs primarily intended to aid individual companies to improve their performance through benchmarking? Or were they primarily intended to measure the extent of improvement across the sector at large? Ironically, neither of these objectives seemed to relate to the clients’ expressed desire for a Which-style report to help them discriminate between the industry’s products. If the construction sector really did possess a ‘rich seam of ingenuity’, the imposition of a generic set of KPIs would seem to have been a good way of stifling it. Adamson and Pollington (2006) describe how the importance of clarity in presentation became fully recognised, leading to the development of the spider’s web chart (or radar chart) as illustrated in Figure 5.2. At least there was a general agreement on the importance of clarity in presentation, if not on clarity of purpose. The industry’s clients however were not satisfied with the original seven targets specified in Rethinking Construction. They demanded the addition of an eighth target relating to client satisfaction. Apparently improvements in capital cost, construction time, predictability and defects were not enough; they also wanted a measure relating to ‘client satisfaction. The possibility of conflicting or transient views

Figure 5.2  KPIs for benchmark performance. Source: Constructing Excellence, 2006.

Rethinking Construction 111 within the client organisation was not acknowledged; this was characteristic of the impoverished conceptualisation of organisations which characterised Rethinking Construction as a whole. The KPIs were launched with much fanfare in November 1998, after which Alan Crane took over the leadership of M4I. The government pledged £500,000 in financial support for the first year. The M4I team was formed, and a programme of work was outlined. Many firms were keen to be involved, recognising the commercial importance of being seen to be an active supporter of the Egan agenda. The M4I also provided important networking opportunities; contacts were made and reputations were forged. Representatives of different organisations came together to share ideas with a common commitment to innovation. Within many organisations there was undoubtedly a genuine enthusiasm to support the M4I mission. Particularly notable is the way many contractors signed up to the Rethinking Construction agenda despite having been marginalised by the CTF. The industry’s major clients had flexed their muscles to push forward their own agenda for change. They made it quiet clear that they only wanted to work with construction firms who were ‘Egan compliant’. Culture change also remained on the agenda, and the 5-4-7 model was seen to be the instrument through which it would be achieved. But few were clear on how this was going to work in practice. Notwithstanding the buying power of the major clients, Alan Crane also deserves significant credit for engaging with the construction sector. Alan Crane was a convincing advocate for change who was not disinclined to air his own opinions. He was also seen by the contracting sector to be ‘one of their own’. The task of engaging support was especially tough in the regions, which were naturally suspicious of yet another initiative emanating from London. For the more critically inclined, the M4I started to accumulate the trappings of evangelistic cult (Murray, 2003). The portfolio of demonstration projects continued to grow, although there were consistent doubts about the rigour with which some of the improvements were being measured. Claims were made that the demonstration projects consistently outperformed the rest of the industry, supposedly on the basis of applying the ‘Egan principles’. An alternative explanation is that the demonstration projects were a self-selecting group and were hence likely to out-perform the rest of the industry irrespective of the principles being applied. Arguably, it is the very process of engagement which creates a lived reality of improved performance. Demonstration projects which were seen to be under-performing could always be quietly dropped, thereby maintaining the supposed performance gap. There was also a prevailing suspicion that neither the DETR nor M4I were looking for an objective evaluation of the Egan principles; what they were looking for was evidence in support of the Egan principles. The New Labour government was subsequently to apply the same approach of policy-based research to promote the dangers of weapons of mass destruction (WMD) in Iraq. The Blair administration became increasingly orientated towards spin, and the implementation of the change agenda in construction was no exception. Spin consistently overshadowed substance. Meanwhile, the CIB looked increasingly marginalised and moribund. 5.4.3  Shifting alliances

The marginalisation of the CIB from the task of implementing the Egan agenda undoubtedly undermined its credibility. Its demise was subsequently ensured by the withdrawal of support by the Construction Clients’ Confederation (CCC). The CCC was launched in December 2000 and was the successor organisation to the Construction Clients’ Forum (CCF) and the Construction Round Table (CRT). The unfolding politics of the client movement are described in detail by Adamson and Pollington (2006). But beyond all the politics is the stark reality that the clients collectively struggled to hold any alliance intact for any significant period of time. The prime difficulty lay in the fact that construction was not their prime business activity. In-house property and construction departments were at the time being consistently downsized in accordance with the principles of BPR. Ironically, the clients were themselves the victims of the same doctrines they were seeking to

112  Rethinking Construction impose on the construction sector. In consequence, many clients struggled to justify the time and resources which were necessary to keep representative bodies intact. Certainly the major clients had no interest in supporting a successor body to the CIB. Such support was too easily judged as peripheral to core business. Exceptions did occur during periods when particular clients were focused on major infrastructure investments, as was the case with BAA plc and Terminal 5. The public sector offered slightly more coherence in the form of the Government Construction Clients Panel (GCCP), established in March 1997 with a membership drawn from some 50 government departments, executive agencies and non-departmental public bodies. Similarly the Local Government Task Force was launched in March 2000 under the auspices of the wider Rethinking Construction initiative to promote innovation and best practice. But the public sector client movement was hugely fragmented with a deeply embedded commitment to the procedural policies recommended by Banwell (1964) and Emmerson (1962). Many within the public sector remained deeply suspicious of partnering in respect of a perceived potential for corruption. Considerable procurement expertise had also been lost through the privatisation of the Property Services Agency (PSA) (see Chapter 4). Public sector clients were much leaner than they had been in previous decades, with a consequently reduced capacity for absorbing new ideas. And adversarial attitudes were by no means limited to the private sector. The public sector had its own share of dinosaurs who saw their prime purpose in terms of preventing private contracting firms from making a profit. The challenges of ‘culture change’ were spread evenly across supply and demand. Nor should it be assumed that the self-appointed ‘enlightened’ clients of the private sector were paragons of virtue (see Chapter 6). 5.4.4  Constructing Improvement

The tortuous existence of the CCF has already described in brief in the preceding chapter. In common with the CIB, CCF was a child of the Latham era. As such it was rapidly marginalised by Rethinking Construction and the long march of the Eganites. Tangible outputs from the CCF were few-and-far between, but it did manage to produce a short document entitled ‘Constructing Improvement: The Clients’ Pact with the Industry’ (CCF, 1998). Despite the CCF being a ‘Latham organisation’, Constructing Improvement echoed many of the themes of the Egan report which had been published the previous year. In truth, the reports were largely concurrent and the evidence points towards a degree of collusion. Constructing Improvement commenced with the oft repeated claim that clients are too frequently let down by cost and time overruns, poorly performing technical solutions and contractual disputes. It was conceded that clients had not previously been well enough organised collectively to call for better service from the construction industry, but the CCF was seen to provide them with the necessary platform: [r]ecognition of the clients’ strong influence, resulting from their purchasing power and the increased focus in business generally on customer requirements, allows them to press for rapid change in the industry to achieve the world class solutions that they seek. The above quote does of course rather overstate the ability of CCF to exert a strong collective influence. The CRT had continued to pursue its own agenda and the retail sector clients, increasingly acknowledged as lying at the forefront of the best practice agenda, consistently kept their distance. The clients of the CCF nobly committed themselves to working with the supply chain to adopt ‘best business, design and construction practice’. They also endorsed the codes of practice produced by the CIB (to which they had formally contributed) and welcomed the industry’s commitment to the CBPP.

Rethinking Construction 113 Other commitments laid out in the Forum’s Pact with the Industry included the following: i Set clearly defined and quantified objectives for each project and realistic targets for achieving them; ii Pool information about construction and benchmark performance across the industry; iii Promote relationships based on teamwork and trust, and work jointly with all our partners to reduce costs; iv Where unanticipated savings in project costs result from innovative thinking, in appropriate circumstances share them with the relevant parties. Constructing Improvement is awash with such warm words, but the evidence that leading clients progressed to put them into practice is less than overwhelmingly strong. The clients represented on the Forum also committed themselves to work together with the supply side of the industry to achieve change in a number of specific areas, including: i Eliminate waste, streamline processes and work towards continuous improvement; ii Working towards standardisation in components where this provides efficiency gains; iii Using a properly trained and certified workforce and keeping skills up to date; iv Improving management of supply chains. Neutral calls to eliminate waste, streamline processes and work towards continuous improvement always go down well with an audience, and in essence they differ little from the core messages of scientific management (Taylor, 1911). What is starkly noticeable is the way in which these challenges were set out in absence of any recognition of the challenges created by a lack of stability in workload. The commitments were sufficiently bland not have encountered any resistance amongst the Forum’s membership, and yet there was a pointed absence of detail on how the specified goals were to be achieved. The endorsement of increased standardisation in the cause of greater efficiency was especially well-travelled ground and was to be much repeated over the following decade (see Chapter 12). While the pledge to favour contractors with a properly trained and certified workforce was to be welcomed, there was little willingness to engage with – or even acknowledge – the underlying root causes for the lack of training in the sector. In practice, there was little evidence that clients would favour a properly trained workforce if it resulted in extra cost. Adamson and Pollington (2006) describe Constructing Improvement as the high point of the client movement. But it should be remembered that the CCF fell a long way short of being representative of the industry’s major clients. Many client organisations could not commit themselves to turn up to the meetings, or even to pay the modest subscription fee. Nevertheless, the sentiments expressed in Constructing Improvement characterise the improvement agenda as advocated at the time. Yet the underlying conceptualisation of the industry’s engagement with client organisations was essentially mechanistic. The overriding message was that objectives should be set at the outset and that all parties should then work together as a team to achieve them. The assumption seemed to be that if all parties were committed to fulfilling their allocated roles then the mutually desirable ends of eliminating waste and reducing costs would be achieved. The dominant mindset of instrumental rationality remained firmly intact, and the more often the mantra was repeated the more it seemingly became unchallengeable. But the text of Constructing Improvement is also notable for what it did not include. There was no mention of the growth of self-employment in the construction sector, nor was there any mention of the proliferation of procurement methods. Previously well-aired arguments about the benefits of flexibility and the disbenefits of fragmentation had also slipped off the agenda. Perhaps most tellingly, Constructing Improvement failed to articulate any

114  Rethinking Construction strategy for sustainability in the construction sector. In retrospect, Latham’s recommendation for a separate Clients’ Construction Forum served to further fragment the debate into ‘demand side issues’ and ‘supply side issues’. The very terminology is demonstrative of the iconic status of the marketplace, where the customer is king. Rather than promoting the client as being of central importance to the task of industry improvement, Constructing Improvement represented a further step towards the legitimisation of arms-length management. There is much commonality between Constructing Improvement and Rethinking Construction, although the latter relies more heavily on the supposed benefits of ‘modern management techniques’. But in truth, the antecedents of both reports can be found in Building Britain 2001 and Faster Building for Commerce. Unfortunately, the industry’s clients could no longer endorse the former because it had been sponsored by the National Contractors’ Group. The latter was equally problematic in that it had been published by the corporatist National Economic Development Office (NEDO). It also made the mistake of pointing out the dangers of labour-only subcontracting and hence was decidedly ‘off-message’. As noted in Chapter 4, NEDO had been consistently ignored by Margaret Thatcher before finally being abolished by John Major in 1992. Throughout the years of its existence there was a further tension within the CCF in terms of whether clients should follow the Latham line of engaging wholeheartedly with the full construction team, or whether they should limit themselves to a one-on-one engagement with the main contractor. Constructing Improvement strove hard to remain true to the Latham philosophy, although there were clearly constraining voices which saw little value in clients engaging with the complexities of the construction supply chain. The latter voices certainly seemed to dominate within the CRT. Ultimately, the dilemma was resolved when the CCF failed to mobilise sufficient support to remain in existence. It was subsequently replaced by the CCC which, in contrast to the CCF, enjoyed the full support of the CRT. The CCC was undoubtedly more aligned with the Egan agenda which saw the needs of the client as paramount. The ‘mutuality of responsibility’ was indeed gone for good, and the advent of New Labour had done little to dislodge the dominant discourse of the enterprise culture. 5.4.5  Construction Best Practice Programme

Although frequently cited as being one of the outcomes of the Egan report, the CBPP was already under development prior to the publication of Rethinking Construction. It had been originally established as a joint initiative between the DETR and the CIB. Nevertheless, in contrast to the CIB, it was specifically endorsed by both Rethinking Construction and Constructing Improvement. The CBPP was hence adopted as one of the main conduits through which the Egan agenda was to be disseminated. The CTF had called for the CBPP to be used as the basis for a national knowledge centre for construction. It was seen to be important that the knowledge centre was ‘objective, impartial and efficient’. It could be argued that such aspirations were unlikely to be achieved given that the recommendations of Rethinking Construction fell significantly short of being either objective or impartial. These words might conceivably be used to describe Latham’s Constructing the Team, but not Rethinking Construction which offered a highly partisan view of how the industry should seek to improve. The CBPP was funded by the DETR to the tune of £2 million per annum and aimed to raise awareness of the supposed benefits of best practice. It further sought to provide guidance and advice to the UK construction sector and client organisations so that they had the ‘knowledge and skills required to implement change’. The programme was nothing if not ambitious. Its main focus was stated to be ‘the transformation of outmoded management practices and business cultures’. Here was a slogan around which the Eganites could unite.

Rethinking Construction 115

Box 5.2  Business improvement themes of the Construction Best Practice Programme • • • • • • • • • • • • • • •

Benchmarking Briefing the Team Choice of Procurement Route Culture and People Health and Safety Information Technology Integrating Design and Construction Lean Construction Partnering and Team Development Risk Management Standardisation and Pre-assembly Supply Chain Management Sustainable Construction Value Management Whole Life Costing

The key objectives of the programme, as stated on its website in October 1999, were to:

• create a desire for improvement by identifying, publicising and supporting the use and benefits of adopting improved business practices;

• offer an initial point of contact for organisations wishing to improve; • facilitate links between such organisations and those with the knowledge of how to improve; • provide tools, techniques, advice and knowledge to those wishing to improve. The programme was supported by the DETR and is commonly attributed to John Hobson, who was at the time head of the construction directorate. The CBPP provided information on the 15 business improvement themes listed in Box 5.2 Each of the themes specified in Box 5.2 was supported by a factsheet together with a plethora of dissemination events. The selected topics were consistent with the Egan agenda, although the influence of Latham is also apparent. The need for targeted advice on briefing certainly owed more to the recommendations of Latham than it did to Rethinking Construction. The choice of the most appropriate procurement route also had a long legacy, and was a topic upon which Egan had made little comment other than endorsing PFI/PPP. Given the reliance of Progress through Partnership and Rethinking Construction on the metaphors and imagery of BPR, it might have been expected that re-engineering would have been included amongst the advocated business improvement themes. But in many respects, the ethos of BPR permeated across all of the themes; the declared focus on the ‘transformation of outmoded management practices and business cultures’ is immediately reminiscent of the doctrines of BPR. The only theme for which this is categorically not true is that of sustainable construction, which displayed a significant divergence from the mainstream improvement agenda of the time. The CBPP factsheet on sustainable construction focused on the application of sustainable development to the construction industry. Emphasis was given to the ‘triple bottom line’ in terms of achieving a balanced performance as measured against economic, environmental and social criteria. Progress through Partnership had previously emphasised the need to pay greater heed

116  Rethinking Construction to environmental and social consequences. Such issues were given scant attention in Rethinking Construction. Indeed, the dominant message of eliminating activities which did not ‘add value’ from the customer’s viewpoint can be seen to be in direct contrast to the principles of sustainability. Notions of CSR had been specifically marginalised by the discourse of the enterprise culture (see Green, 2009). Margaret Thatcher had famously questioned the very existence of society, and the factoring in of so-called ‘externalities’ was anathema to the ‘cult of the customer’. Certainly there was little willingness among private sector clients at the time to leverage construction expenditure to achieve broader social goals. Such arguments were seen to belong to the discredited age of state planning. Aspirations of demand management for the sake of maintaining stable levels of employment were similarly perceived to have perished together with the social contract of the 1970s. Throughout the 1970s and 80s the need for a stable workforce consistently took second place to the perceived advantages of labour market flexibility (see Chapter 3). PostEgan arguments in favour of sustainability were perhaps the first indication that the high point of unadulterated enterprise had been passed. The discourses of enterprise and sustainability have been unfolding in mutual interaction ever since. The subsequent increasing emphasis on sustainability undoubtedly reflects changing values in society, together with undisputable scientific evidence of climate change (see discussion in Chapter 10). But in the late 1990s such debates were in their infancy and sustainability was at best a marginal interest. At least the Eganites could point towards the CBPP improvement theme on sustainable construction as evidence that ‘something was being done’. With this sole and notable example, the rest of the advocated improvement themes were entirely ‘on message’ with the main thrust of Rethinking Construction. Certainly for the more critical observer, the CBPP’s description of sustainable construction appeared starkly out of place with the emphasis on narrowly construed performance improvement which prevailed elsewhere. It should be noted however that the outputs of CBPP never came close to the CTF’s recommendation that it should turn itself into a knowledge centre that provided access to information and learning from the demonstration projects. In truth, the demonstration projects were never that rigorous. The eleventh-hour inclusion of the theme on sustainable construction was perhaps due to a belated recognition by John Prescott and his advisors that Rethinking Construction had failed to portray the Government’s credentials vis-à-vis sustainability. Adamson and Pollington (2006) credit the then Construction Minister, Nick Raynsford, with calling for sustainability to have a much higher profile in July 1999. If true, Nick Raynsford deserves considerable credit for his vision in extending the debate beyond the consensus which prevailed at the time. There is notably little evidence that the inclusion of sustainable construction emerged from within the client movement, nor is there any evidence that at the time it was taken especially seriously within the contracting sector. The members of the CTF did little to promote the cause of sustainability, and arguably set back the prospect of any sensible debate by at least a decade. They were especially blind to prevailing criticisms of lean thinking in respect to its alleged negative impact on sustainability (see Chapter 7). Rethinking Construction similarly did little to promote CSR, and arguably deflected attention away from the dangers of labour casualisation through the power of omission. The CBPP was equally silent on ethical employment practices, despite its supposed theme on ‘Culture and People’. 5.5 Summary This chapter has summarised the main arguments promoted in Rethinking Construction. It has also described the subsequent emphasis on implementing the ‘Egan agenda’ in practice. However, despite the strident nature of the report, it is difficult to be clear on what precisely was being advocated. Ultimately, the message on offer was rich in metaphor, but rather vague in terms of its substantive content. The tone of the report was quite unlike anything that had gone before.

Rethinking Construction 117 Egan and his disciples were not interested in incremental improvement; they demanded dramatic improvement. Words such ‘radical’ and ‘dramatic’ are peppered throughout the report. Progress through Partnership had undoubtedly paved the way in terms of its managerialist rhetoric and its advocacy of ‘leading-edge’ management techniques. However, Rethinking Construction carried both of these tendencies to an extreme rarely observed previously or since. Certainly the tenor of Egan’s message was very different from that of Latham, as was the methodology by means of which the report was produced. It is notable that the 1988 NEDO report Faster Building for Commerce took four years to be researched and published (Male, 2003). In contrast, the CTF was established in October 1997 and Rethinking Construction was published in July 1998. In consequence, it would be unfair to criticise the report for its underpinning lack of research. Rethinking Construction was not a research-based report; neither was it based on extensive consultation across the industry as had been the case with Constructing the Team. The Egan report is perhaps best understood as a clarion call for change issued by the industry’s major clients. Rethinking Construction was especially notable for its emphasis on meeting client needs, thereby reflecting the dominant discourse of customer responsiveness. Activities which did not ‘add value’ for the client were classified as waste; and waste is to be eliminated. In this respect, Rethinking Construction was undoubtedly a product of the enterprise culture. Yet this was a particular interpretation of enterprise which emphasised managerialism much more strongly than enterprise on the part of the individual. Neither was this a plea for the restorative powers of the free market; it was much more of a plea in favour of a ruthless focus on performance measurement. In many respects, Rethinking Construction represents the epitome of managerialism. The authors displayed considerable faith in instrumental improvement recipes such as lean thinking, partnering, value management and benchmarking. Remarkably little attention was given to the need for supporting evidence; these were seen to be the latest management techniques, and hence it was taken as axiomatic that their adoption would be beneficial. It is notable that all these techniques were primarily advocated in terms of their contribution to efficiency; the machine metaphor reigned supreme. The Egan report is further notable for promoting the cause of standardisation and pre-assembly. Once again, such technology-based solutions were evaluated in terms of their contribution to narrowly defined efficiency. There was no attempt to explore the implications of a shift towards pre-assembly on the traditional craft skills within local communities. In summary, the Egan report did much to promote the managerialist discourse of performance improvement within the construction industry. The report also popularised the concept of KPIs, thereby reinforcing the industry’s predilection for instrumental management techniques. It further created an unhealthy climate whereby individuals were afraid to speak out against the advocated approach. If you were not overtly identified as being ‘Egan compliant’ you ran the risk of being classified as a ‘barrier to progress’. The impact of Rethinking Construction is neatly summed up by Murray (2003) as the ‘Eganisation of construction’. Murray further describes how the disciples of Rethinking Construction became known as the ‘Eganites’, who collectively displayed many of the attributes of an evangelical cult. Whatever it was that was being offered, it clearly owed more to rhetoric than it did to science. References Adamson, D. M. and Pollington, T. (2006) Change in the Construction Industry: An Account of the UK Construction Industry Reform Movement 1993–2003, Routledge, Abingdon. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Beck, M. and Woolfson, C. (2000) The regulation of health and safety in Britain: From old labour to new labour, Industrial Relations Journal, 31(1), 35–49.

118  Rethinking Construction Bennett, J. and Jayes, S. (1995) Trusting the Team: The Best Practice Guide to Partnering in Construction, Centre for Strategic Studies in Construction / Reading Construction Forum, Reading. Bennett, J. and Jayes, S. (1998) The Seven Pillars of Partnering, Thomas Telford, London. Blyth, A. and Worthington, J. (2001) Managing the Brief for Better Design, Spon Press, London. Cherns, A. B. and Bryant, D. T. (1984) Studying the client’s role in construction, Construction Management and Economics, 2, 177–184. Clarke, S. (2003) The contemporary workforce: Implications for organisational safety culture, Personnel Review, 32(1), 40–57. CCF (1998) Constructing Improvement: The Clients’ Pact with the Industry. Construction Clients’ Forum, London. Constructing Excellence (2006) UK Construction Industry Key Performance Indicators Handbook, Constructing Excellence, London. Cooper, R., Aouad, G., Lee, A., Wu, S., Fleming, A. and Kagioglou, M. (2005) Process Management in Design and Construction, Blackwell, Oxford. Eastman, C., Teicholz, P., Sacks, R. and Liston, K. (2008) BIM Handbook: A Guide to Building Information Modelling for Owners, Managers, Designers, Engineers and Contractors, John Wiley & Sons, Hoboken, New Jersey. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Fernie, S., Green, S. D., Weller, S. and Newcombe, R. (2003) Knowledge sharing: Context, confusion and controversy, International Journal of Project Management, 21(3), 177–187. Green, S. D. (1996) A metaphorical analysis of client organisations and the briefing process, Construction Management and Economics, 14(2), 155–164. Green, S. D. (2009) The evolution of corporate social responsibility in construction: Defining the parameters, in Corporate Social Responsibility in Construction, (eds. M. Murray, A. Dainty) Taylor & Francis, Abingdon, pp 24–53. Gruneberg, S. and Ive, G. (2000) The Economics of the Modern Construction Firm, Macmillan, London. Gyi, D. E., Gibb, A. G. F. and Haslam, R. A. (1999) The quality of accident and health data in the construction industry: Interviews with senior managers, Construction Management and Economics, 17, 197–204. Harty, C. (2008) Implementing innovation in construction: contexts, relative boundedness and actor-network theory, Construction Management and Economics, 26(10), 1029–1041. Haslam, R. A., Hide, S. A., Gibb, A. G. F., Gyi, D. E., Pavitt, T., Atkinson, S. and Duff, A. R. (2005) Contributing factors in construction accidents, Applied Ergonomics, 36, 401–415. Jenkins, S. (2006) Thatcher and Sons, Allen Lane, London. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Lawrence, P. R. and Lorsch, J. W. (1967) Organization and Environment, Harvard Press, Cambridge, Mass. Male, S. (2003) Faster building for commerce: NEDO(1988), in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 161–177. Morgan, G. (2006) Images of Organization (updated edn.), Sage, Thousand Oaks, CA. Murray, M. (2003) Rethinking Construction: The Egan Report (1998), in Construction Reports 1944–98, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 178–195. OST (1995) Technology Foresight: Progress Through Partnership, Office of Science and Technology, London. Pickrell, S. Garnett, N. and Baldwin, J. (1997) Measuring Up: A Practical Guide to Benchmarking in Construction, Construction Research Communications Ltd., Garston. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. Womack, J., Jones, D. and Roos, D. (1990) The Machine That Changed the World, Rawson, NY. Wood, Sir Kenneth (1975) The Public Client and the Construction Industries, HMSO, London.

6

From Business Process Re-Engineering to Partnering

6.1 Introduction The Egan report undoubtedly had a significant influence on the debate about construction improvement. It was characterised throughout by an overriding obsession with customer responsiveness and efficiency. Yet at the same time it was rather illusive in terms of the substantive content of precisely what was being advocated. This is a characteristic displayed by many so-called management improvement recipes. The present chapter sets out to evaluate the merits of two of the most influential such improvement recipes of the 1990s: business process re-engineering (BPR) and partnering. Each of these will be critiqued in terms of their substantive content prior to exploring other explanations of why they became so persuasive. Constructing the Team (Latham, 1994) and Rethinking Construction (Egan, 1998) had both recommended the wider use of partnering, and the latter drew much of its language and imagery from the rhetoric of BPR. One of the core arguments of Rethinking Construction was that activities which did not add value to the client’s businesses processes comprised waste, and should hence be eliminated. This was an argument inexorably shaped by the prevailing popularity of BPR. At first sight, BPR and partnering would seem to offer very different approaches to construction sector improvement. While re-engineering is commonly associated with a ruthless focus on process efficiency, partnering is more often associated with an emphasis on relationships. The importance of relationships had of course been previously emphasised by Emmerson (1962) and Banwell (1964), but partnering primarily entered the discourse of industry improvement as a result of its endorsement in Constructing the Team (Latham, 1994). Despite their superficial differences it will be argued that BPR and partnering are underpinned by the same metaphors, and hence share similar paradoxes and contradictions. The reliance of BPR on an underlying machine metaphor is apparent from the very idea that organisations can be ‘re-engineered’. The accompanying storyline places a big emphasis on the need to implement efficiency improvement irrespective of the opposition. The language of BPR invariably emphasises the need for radical change. In contrast, the language of partnering is much softer – at least on the surface. The overriding emphasis lies on working together to achieve mutual objectives. By definition, partnering was championed by ‘enlightened’ clients who had grown tired of adversarial relationships. However, as shall become apparent, the industry’s enlightened clients were not pursuing partnering for its own sake; they were interested in partnering because of what it was perceived to offer in terms of improved efficiency. 6.2  Business process re-engineering in construction 6.2.1  Enthusiastic endorsement

The enthusiasm for BPR was in part born from a widespread disenchantment with total quality management (TQM), and its focus on continuous incremental improvement (Fulop and Linstead, 1999). Certainly BPR replaced TQM as the hottest topic in the business press from 1993 onwards DOI: 10.1201/9781003308133-6

120  From Business Process Re-Engineering to Partnering (De Cock and Hipkin, 1997). BPR advocated a much more radical approach to job re-design which clearly appealed to the mood of the time. Having decided that BPR was a ‘good thing’, its advocates seemingly limited their reading to sources that justified their pre-assumption. BPR was originally popularised by Hammer and Champy’s (1993) phenomenally successful book Re-engineering the Corporation. In common with all the best management fashions, BPR was born in the USA. Hammer and Champy either judged the timing of their book very carefully, or they were very lucky. In any case, the rhetoric of BPR resonated perfectly with the mood of the time. Certainly there was no shortage of willing recipients within the UK construction industry; BPR was widely embraced as the solution to the industry’s problems by practitioners, academics and policy makers alike. Here was seemingly a proven ‘advanced management technique’ which offered a radical solution to under-performing industries such as construction. It has already been argued that the imagery and rhetoric of BPR directly influenced both Progress through Partnership and Rethinking Construction. Within the former, the endorsement of BPR could hardly have been more enthusiastic: ….re-engineering of basic business processes to provide “lean”, rapid and effective performance is now commonplace throughout other industries but rarely occurs in construction. (OST, 1995) The introduction of such ‘advanced business techniques’ in construction was further exhorted as a matter of urgency. At least within Progress through Partnership, the emphasis on reengineering was just one theme amongst several. But the dominant argument within Rethinking Construction was entirely consistent with the construct of BPR, albeit freshened up with a sprinkling of lean thinking and sweetened with warm words about partnering. In short, the overriding message of Rethinking Construction was the need to eliminate waste through the elimination of activities which do not add value to the client. Of particular note was the unitary conceptualisation of the ‘client’ and the repeated reliance on simplistic machine metaphors. The advocated technical requirements for achieving the required improvements set out within Progress through Partnership included a plea for a much greater application of ‘business processes’. The storyline of BPR was further reflected in the call for a ‘redefinition’ of information needs and a ‘re-design’ of organisational relationships. Even more striking was the specific recommendation that the UK research councils should fund multidisciplinary research into the application of improved business processes. But the outcome of any such research already seemed to have been predetermined: Business process analysis should be applied more vigorously to improve the efficiency and effectiveness of the construction industry. (OST, 1995) Research was seemingly required to provide support for the approach which had already been decided upon. The UK Engineering and Physical Sciences Research Council (EPSRC) had in any case already committed itself to a ‘business process’ approach through its Innovative Manufacturing Initiative (IMI): Business processes may be viewed as those procedures, practices and methodologies that companies use in employing their assets to gain competitive edge in the translation of raw materials into finished products which satisfy the customer/consumer demand in the market

From Business Process Re-Engineering to Partnering 121 place. This approach is used within the IMI to identify the manufacturing challenges and research priorities. to improve industrial competitiveness. (EPSRC, 1994) The IMI programme accounted for a significant proportion of UK construction management research spending during the mid-1990s. The adoption of a ‘business process approach’ therefore became an essential requirement for university-based researchers if they were to be successful in their applications for funding. Ever resourceful, they quickly became skilled in presenting their research applications in the required rhetoric. Not only was the efficacy of BPR taken for granted by those responsible for funding research, the same was also true for the harbingers of change who populated the networks of industry improvement. The ‘best practice’ reports published by Construct IT (1996, 1998) drew expertise from both industry and academia, but the published outputs were striking in their uncritical acceptance of BPR. Likewise, the sober façade of the Construction Industry Board (1996) did not prevent it from recommending that BPR should form part of the industry’s ongoing programme of continuing professional development. Such tendencies were by no means limited to the UK, but were widespread throughout the English-speaking world. For example, the Building for Growth report (Commonwealth of Australia, 1999) cited process re-engineering as an essential element of process innovation. In the late 1990s it seemed that everyone was in favour of BPR. Only the unreconstructed ‘dinosaurs’ were against. 6.2.2  Lessons from other sectors

The literature advocating BPR for the construction sector adhered to a recognised pattern. Almost without exception the starting assumption was that BPR had already been successful in other sectors. Mohamed and Tucker (1996, 379) were typical in commencing their discussion with the claim that: [m]any industries worldwide have found….BPR to be effective approach in achieving dramatic improvements in production time and cost. Betts and Wood-Harper (1994) also looked towards BPR for new ideas without seemingly taking the care to question the claims made on its behalf. The overriding concern was how to apply Hammer and Champy’s (1993) recipe of ‘business process re-engineering’ (BPR) to the construction industry. It was taken for granted that BPR had already been successful in other industrial sectors that were supposedly more advanced in terms of their management thinking. Given the adopted frame of reference, the task was reduced to implementation. The challenge was to overcome the ‘cultural barriers’ to new ways of working; industry fragmentation was similarly seen to be a barrier which had to be overcome. Other indicative sources within the construction management literature included Construction Management: New Directions (McGeorge and Palmer, 1997) which suggested that ‘re-engineering has the power to change the very structure and culture of the industry’. In fairness, McGeorge and Palmer (2002) were notably much more circumspect in the book’s second edition, once their initial enthusiasm had abated. The early enthusiasm for BPR amongst construction management academics is well illustrated by the proceedings of the 1997 conference on Construction Process Re-Engineering (Mohamed, 1997). A review of the references used in the 60 papers is especially revealing; sources such as Davenport and Short (1990), Hammer (1990) and Hammer and Champy (1993) were all cited extensively. In contrast, there was an almost total absence of reference to the extensive

122  From Business Process Re-Engineering to Partnering critical literature which challenged the assumption that BPR had been successful in other sectors. For example, sources such Grint (1994) and Micklethwait and Wooldridge (1997) were already criticising BPR for its regressive tendencies; both sources also cite a failure rate for BPR implementation projects of 70% whem measured against their own objectives. But this was not a message which the advocates of BPR for the construction sector wanted to hear. That others elsewhere were struggling to implement re-engineering did not fit with the required rhetorical argument that the construction industry was backward and behind the times in its management thinking. 6.2.3  Vagueness of definition

Despite its widespread rhetorical appeal, the essence of BPR remains notoriously difficult to define. The most commonly quoted definition of BPR is probably that of Hammer and Champy (1993, 32): …the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost quality and speed. It is therefore not difficult to see where the authors of Rethinking Construction drew their inspiration from. The above quote fits in perfectly with the core arguments mobilised by Sir John Egan’s Construction Task Force. Enthusiastic support was also pledged for partnering and lean thinking, but as shall be demonstrated these ideas were tailored and shaped to fit the required agenda of meeting clients’ requirements with maximum efficiency. There was little recognition of the needs of broader interest groups; certainly there was no mention of sustainability or of the needs of an increasingly casualised workforce. Sustainability of course was not recognised because this did not fit with the remorseless focus on satisfying narrowly construed ‘client requirements’. The plea within Rethinking Construction to apply ‘business process analysis’ evermore vigorously is indicative of a recurring storyline within the BPR literature; if the medicine is not working it is because it is not being applied with sufficient enthusiasm. Conveniently, the advocates of BPR have an extensive list of reasons to explain why particular implementations have not been successful. Typical examples include (i) poor implementation, (ii) lack of top management commitment and support, and (iii) resistance to change by subordinates. Hammer and Champy (1993, 107) were themselves especially clear that ‘most re-engineering failures stem from breakdowns in leadership’. So if a BPR initiative in the construction sector ends in failure, it is no use blaming Hammer and Champey; it is the fault of weak management within the construction sector for not implementing BPR with sufficient conviction. And if all else fails, it can always be claimed that the ‘so-called BPR failures were not ‘real’ BPR programmes’ (cf. Miers, 1994). Such claims were to become subsequently very common in respect of partnering; if the adopted approach did not work it could not have been ‘real’ partnering. But in the case of BPR, the literature contains so many inconsistencies and contradictions it is difficult to be sure what the key principles are. The preceding argument points towards a deep-seated paradox which lies at the heart of BPR. Despite the prescriptive nature of the rhetoric, there remains an essential vagueness over precisely what BPR comprises, and how it should be implemented. Such a characteristic is by no means unusual amongst ‘new’ management approaches, which frequently lack proper codification in terms of a commonly held set of principles and practices (Bresnen and Marshall, 2001). In the case of BPR, Jones (1995) argues that the terminology is so vague and imprecise that it is impossible to distinguish BPR from other management improvement recipes. The conflation of BPR, lean thanking and partnering within the pages of Rethinking Construction suggests they comprise

From Business Process Re-Engineering to Partnering 123 constituent parts of a broader discourse. Empirical studies of the implementation of supposedly different management techniques frequently highlight a similar conflation of different ideas. For example, De Cock and Hipkin (1997) compare the implementation of BPR to TQM and conclude that the concepts can only really be distinguished in terms of the rhetoric in which there are presented. This shifts the emphasis away from seeking to understand such management techniques in terms of their substantive content towards understanding them in terms of their implicit metaphors. Whereas TQM tends to be dressed up in the humanistic language of teamwork, BPR more often relies on violent metaphors such as ‘breaking the china’. Despite its elusiveness of definition, BPR rapidly earned a reputation for its ‘slash and burn’ approach (Buchanan, 2000). An extensive critical literature very quickly emerged which associated BPR with regressive approaches to human resource management (HRM) (e.g. Grey and Mitev, 1995; Grint and Willcocks, 1995; Mumford and Hendricks, 1996; Willmott, 1995). Indeed, beyond the frequently violent rhetoric, the only aspect of BPR that appeared to be constant was the quest to secure greater output from fewer employees. This of course was of no great concern to the Eganites in the construction sector who were able to point towards the Respect for People initiative as proof of their commitment to enlightened HRM practices. Hammer and Champy’s (1993) claim to provide ‘a radical new beginning’ has also been repeatedly challenged in the literature. Grint (1994) examines the central arguments of BPR and concludes that few, if any, are innovations, let alone radical innovations. Several other authors have suggested that BPR represents nothing other than a return to the simplistic metaphors of Taylorism (Broekstra, 1996; Conti and Warner, 1994; Wood et al., 1995). From this point of view, the supposedly defining principles of BPR are no different from Taylor’s (1911) concept of scientific management. Even some of the consultants who enacted BPR were not convinced by Hammer and Champy’s (1993) claim to provide a ‘radical new beginning’. For example, Johansson et al. (1993) readily concede that the origins of the techniques of process mapping lie within the methods of work study initially developed by Frederick Taylor (1911). Rather than represent a radically new way of thinking, BPR arguably represented a return to a previous era dominated by scientific management. But of course many construction industry leaders retain a deep-rooted commitment to mechanistic management recipes. This perhaps is why BPR-type storylines continue to be popular amongst managers and policy makers in the construction sector; they are popular not because they offer something new, but because they reflect and reinforce how industry leaders already think. The expression ‘old wine in new bottles’ is something of a cliché, but it nevertheless effectively conveys the idea that BPR essentially comprised old ideas dressed up as something which was new. 6.2.4  Shoot the dissenters

There is much reason to suppose that the ‘radical and dramatic’ nature of the Egan agenda drew its inspiration from the rhetoric of BPR. Hammer and Champy (1993) were especially notable for their use of emotive terms such as ‘fundamental’, ‘radical’ and ‘dramatic’. Certainly the advocates of BPR promoted a much more radical approach to organisational change than the advocates of TQM. Part of the remit of BPR was to challenge the very need for particular processes which, at least according to Hammer and Champy (1993), may exist for no other reason than historical precedent. Gentle notions of incremental improvement, as previously advocated by TQM, seemingly belonged to a previous age. In the words of Davenport (1993, 1): Today firms must seek not fractional, but multiplicative levels of improvement – 10 × rather 10%.

124  From Business Process Re-Engineering to Partnering Not only was the language and imagery of BPR often emotive, it was also frequently quite violent. An infamous interview with Forbes Magazine (Kalgaard, 1993) accredits Michael Hammer with the expression ‘shoot the dissenters’. Hammer and Champy (1993) were consistently clear that change ‘must come from the top’ and that BPR is something that must be imposed on a reluctant workforce. They further recognised that middle managers may actively resist change, and that: [o]nly strong leadership from above will induce these people to accept the transformations that reengineering brings. (Hammer and Champy, 1993, 207–208) Throughout the BPR literature, there is a strong recurrent theme that senior management must make an unwavering commitment to radical change. Furthermore, senior management must set ambitious goals and the re-engineering process must be initiated from the top. Frequent references are also made in favour of ‘culture change’, although it would seem to be behavioural compliance which is valued above innovation. Hammer and Champy (1993) also refer to re-designing work into self-managed teams and shifting managerial accountability to the front line. But the teamwork on offer would seem to be constrained within parameters which are dictated from above. Teams are allowed to be ‘self-managed’ provided that they display the appropriate attitude in terms of supporting the top-down prescription. Such arguments understandably played out well in the construction sector where middlemanagers have long since been ascribed with ‘adversarial attitudes’. The repeated calls for ‘culture change’ also directly reflect the lexicon of BPR. Elsewhere, Champy (1996, 49) was remarkably candid: [c]apitalism is a system that quite literally works on fear…the only way to persuade many folks to undertake a painful therapy like reengineering …is to persuade them that the alternative will be even more painful. It is of course possible to share Champy’s (1996) faith in capitalism without sharing his belief that it relies on fear to make it work. There are many variants of capitalism, but most enlightened thinkers would argue that any successful system should rest on aspiration rather than fear. Unfortunately, reengineering programmes too often tended to be advocated without regard for personal or social costs (Grey and Mitev, 1995). In this respect they were the antithesis of enlightened HRM. Certainly there is no room for satisfying the needs of multiple stakeholders, neither is there any room for predicating notions of sustainability over the short-term imperatives of economic efficiency. This was undoubtedly the enterprise culture in full flight; this was Gordon Geeko incarnate. The use of the term ‘re-engineering’ in itself invokes an image that organisations can be treated as machines in need of a ‘technical fix’. In essence, BPR encapsulates a top-down approach to restructuring organisations that concentrates on technical efficiency in isolation of the social aspects of organisations (Tinaikar et al., 1995). The overriding assumption is that organisations are unitary and that corporate objectives can be determined in isolation from the aspirations of the employees. In others words; top management knows what is best and everybody else should just do as they are told. Certainly Hammer and Champy (1993) were clear that BPR did not make people happy and that some employees would inevitably lose their jobs. Despite rather half-hearted attempts to distance themselves from ‘downsizing’, it remains clear that a key characteristic of BPR involves the rationalisation of jobs (Fulop and Linstead, 1999). The hierarchy of the organisation is flattened as middle-mangers give way to self-managed teams. This was a storyline which was especially

From Business Process Re-Engineering to Partnering  125 persuasive in the construction sector of the mid-1990s. It was also a storyline which resonated with the structural changes which managers observed taking place around them. Alvesson and Willmott (1996) did much to pioneer the field of critical management studies (CMS), and from their perspective re-engineering equates to technocratic totalitarianism. They argue that BPR provides one of the means by which top management seek to optimise organisational performance by the imposition of supposed ‘scientific’ solutions. This is once again reminiscent of exhortations in support of the Egan agenda in the construction sector, whereby no space was preserved for any alternative prescription. Such an absolute insistence on conformity, coupled with the emotive imagery of ‘shooting the dissenters’, certainly sits ill-at-ease with the Respect for People initiative. It is of course not necessary to be a devotee of CMS to feel uncomfortable with the way the Egan agenda was imposed on the construction sector. For the more critically aware observer, there would seem to be an inherent contradiction between notions of ‘innovation’ on the one hand, and ‘command and control’ on the other. Too often employees are empowered only to adopt courses of action that fit in with the ‘one best way’ advocated by top management. Given the dominant competitive recipe of structural flexibility, the construction firms of the late 1990s had no real need for employees teeming with innovative ideas; this was not the basis upon which they sought to achieve competitive advantage. But as we shall see, the assumption that BPR necessarily leads to bad outcomes is ultimately as fallacious as the assumption that it necessarily leads to good outcomes. 6.3  The persuasive appeal of re-engineering 6.3.1  Management gurus

Given the doubts expressed above regarding the originality and coherence of BPR, it is pertinent to ask why it became so influential amongst practitioners. Part of the answer is to be found within the literature on management fashion, which will provide a recurring touchstone throughout the remainder of this book. What seems especially clear is that the core messages of BPR captured the attention of practising managers during the mid-1990s for reasons over-andabove the alleged originality of the message. Re-engineering the Corporation (Hammer and Champy, 1993) was reputedly the best-selling management book of the 1990s; Michael Hammer is reported to have charged up to US$50,000 for a one-day seminar. The track record of BPR as an improvement recipe may be questionable, but its success as a management fashion cannot be denied. BPR is frequently held up as an exemplar of a management fashion, and Michael Hammer is similarly very often cited as an exemplar of a management guru. It is clear than such gurus undoubtedly play an important role in the propagation of fashionable management recipes. In seeking to understand why BPR was so persuasive during the mid-to-late 1990s, it is useful to focus on the rhetorical persuasiveness of the arguments which were mobilised. It has already been demonstrated that the popularity of BPR cannot be explained by the originality or coherence of the constituent ideas. 6.3.2  Playing on insecurity

What cannot be denied is that the storylines of BPR found many receptive ears in the mid-1990s. Part of the explanation lies in the way the propagated storylines provided practising managers with a justifying narrative for the changes that they observed taking place around them. Of particular significance was the way BPR offered managers an alternative role other than passive victim. Huczynski (1993) was one of the earlier writers to investigate the phenomenon of the management

126  From Business Process Re-Engineering to Partnering guru, who he saw as deliberately playing on the uncertainties and self-doubts of practising managers. In Huczynski’s view, management gurus offer simplistic and easily digestible models which are seized upon by insecure managers who feel increasingly overwhelmed by complexity. While managers may be cynical of what they sometimes perceive to be the latest fad, they can feel obliged to pursue them just in case they might work. Jackson (1996) went further in comparing the rhetorical devices employed by management gurus such as Michael Hammer, James Champy and Tom Peters to those used by evangelist preachers. The gurus are seen to use fear to attract the attention of managers in the same way that an evangelist preacher might typically begin a sermon by invoking images of hellfire and eternal damnation. The evangelists apparently deliberately create an initial sense of anxiety so that their audience will then be more susceptible to their subsequent message which offers a ‘path to salvation’. According to Jackson (ibid.) the gurus of BPR in the mid-1990s used the same approach. They initially gained the attention of their audience by claiming that re-engineering is a survival issue. Re-engineering is therefore presented as an economic imperative. The only choice offered is between BPR and corporate extinction; in other words, no choice at all. The prime candidates for downsizing were invariably middle managers. The underlying metaphor was one of ‘cutting out the fat’ to make the organisation more lean. The implied threat was that if middle managers did not themselves become the proponents of BPR, then they would become its victims. In simple terms the message was ‘do it to others before they do it to you’. The ambitious young middle-manager hence volunteered to become the BPR champion, and the worldly wise and cynical others very quickly became the barriers that must be overcome. 6.3.3  Playing on patriotism

Jackson (1996) further observes the way in which the rhetoric of Hammer and Champy appealed to the patriotism of American managers. During the early 1990s the USA was finally emerging from its long post-Vietnam hangover, and re-engineering was presented as part of the American dream. Rather than seeking to change the intuitive practices of American managers, the power of BPR was seen to reside in the way it ‘takes advantage of American talents and unleashes American ingenuity’ (Hammer and Champy, 1993). The subtext was that American productivity was in some way hindered by external parties who are by inference ‘un-American’. Therefore BPR was not only a survival issue for individual firms, it was also a survival issue for American industry as a whole. The promotion of BPR hence became a patriotic duty, and the dissenters risked being labelled as wreckers who were holding back the emergence of an espoused new and vibrant America. The increasingly globalised nature of business in the 1990s meant that once management ideas became established in the USA, they very quickly became common currency internationally. Countries such as Germany and France were arguably more resistant to American management gurus than the Anglo-Saxon world, but their resistance was at best a rear guard action. Airport bookshops throughout the world increasingly contain the same prescriptive textbooks preaching identical recipes, irrespective of local customs and culture. And the vast majority of these managerial improvement recipes continue to be sourced from within the USA. The ideas of lean production may have been superficially derived from the Toyota manufacturing system as initially developed in Japan, but the popularised version promoted by Womack et al. (1990) was in essence an Americanised re-interpretation (see discussion in Chapter 7). 6.3.4  Playing on historical significance

A further persuasive technique identified by Jackson (1996) was the way in which the advocates of BPR dramatised its historical significance. BPR was directly equated with modernity on the

From Business Process Re-Engineering to Partnering 127 basis that it represented a decisive break with previous management theory. As alluded to above, particular care was taken to explain why BPR was radically different from TQM. The language used by Hammer and Champy (1993) was the language of revolution; BPR was widely promoted as a ‘paradigm shift’ in management thinking. Johansson et al. (1993) invoked a similar metaphor by referring to the need to ‘break the china’ before embarking upon new ways of working. A recurring theme was the way in which BPR sought to overturn the outdated functional divisions that allegedly emerged from the Industrial Revolution. Much blame was repeatedly laid at the door of Adam Smith. Continued adherence to ‘old thinking’ was promoted as the route to mediocrity and economic obsolescence. To resist BPR was to be out of date, and those unwilling to sign up to its implementation were labelled as ‘dinosaurs’. The metaphor portrays those who are unable to adapt to changing circumstances as being doomed to extinction. Hence the strapline ‘modernise or die’. 6.3.5  Playing on political resonance

Perhaps the most convincing explanation for the popularity of BPR in the mid-1990s was the way the core messages reflected the social and political ethos of the day (cf. Grint, 1994). Few would now deny that the legitimacy of BPR amongst practising managers was derived at least in part from the broader discourse of the enterprise culture, as championed by Thatcher’s Conservative government in the UK and the Reagan administration in the USA. Political discourse throughout this time emphasised the need to be competitive in the global economy. Such narratives provided both a supportive context and a source of legitimisation for management improvement recipes based on ‘cutting out the fat’. The espoused policies sought to extend the domain of the free market throughout the economy in the cause of competition. The shift to the political right denied legitimacy for the continued state support of ‘lame ducks’. National economies and individual firms were increasingly obliged to compete in the marketplace. Factory closures and rising unemployment were considered a price worth paying for improved competitiveness. Popular management discourse on both sides of the Atlantic reflected and reinforced this new emphasis on the ‘survival of the fittest’. The diktats of BPR therefore resonated with the mood of the times. Fulop and Linstead (1999) contend that three key principles drove BPR: customers, competition and change; all of which were central to the broader discourse of the ‘enterprise culture’, and none of which were unique to BPR. There are therefore strong arguments in support of the claim that BPR is inseparable from the discourse of the enterprise culture. Such an argument stands in sharp contrast to the way BPR was presented as a ‘cunningly clever management technique’ in construction management textbooks such as McGeorge and Palmer (1997). 6.4  Information technology and process improvement 6.4.1  Enabling technologies

As persuasive as the preceding diagnosis is, it does not constitute a complete explanation of the popularity of BPR. However, it does emphasise the need to understand the evolution and diffusion of management ideas in a broader context. The focus on the persuasiveness of the rhetoric of BPR provides an anecdote to the instrumental rationality which too often frames the discussion of management techniques. BPR must undoubtedly be understood as a part of broader discourses of economic and political change. But BPR also rode on the wave of technological change. During the 1990s developments in information technology (IT), latterly christened communications and information technology (CIT), undeniably provided firms with ways of working that previously did not exist. So-called enabling technologies did

128  From Business Process Re-Engineering to Partnering indeed provide the basis for a radical re-think of working practices that few could afford to resist. Hammer and Champy (1993) refer to disruptive technologies that were capable of challenging fixed pre-conceptions about the way processes were performed. Repeated references are made to IT as a ‘critical enabler’ that allows organisations to work in ‘radically’ different ways. Examples of so-called disruptive technologies included: shared databases, telecommunications, wireless data communications and portable computers. Few could argue that such technologies have not had a fundamental impact on the workplace, arguably beyond that envisaged by Hammer and Champy (1993). Perhaps of even greater impact on our day-to-day working lives have been e-mail and the internet. Such material changes in working practices cannot simply be dismissed as management hype. They have had a dramatic impact on the workplace and few firms (or individuals) have been able to resist their encroachment. The implementation of these technologies may have disadvantaged some in the short term, and they may even have caused a number of redundancies. But few would argue that their overall impact has been negative. In many respects, such technologies have served to democratise organisations and de-centralise decision-making. In directing critical attention at the over-hyped rhetoric of BPR, it is therefore important not to adopt a Luddite perspective regarding the introduction of new technology. But to advocate the benefits of new technology is one thing; to adopt the heady rhetoric of BPR is another. 6.4.2  Focus on processes

As already noted, the literature on BPR is riddled with contradictions, and for every source that emphasises the importance of IT, there is another that argues it is the processes that are of primary importance. Of particular importance is the focus on core processes, although there is little recognition that there may be disagreement about which processes are core and which are non-core. Johansson et al (1993) emphasise that a core business process creates value by the capabilities it gives the company for competitiveness. They further suggest that there are usually between five and eight core business processes in any industry group, although the evidence for this diagnosis is at best unclear. BPR clearly rests on a unitary model of organisations. It is taken for granted that the objectives of the organisation are clear and shared by everybody, or at least if such a situation does not exist, that it can be brought about through a ‘cultural change programme’. According to Hammer and Champy (1993) a process can be defined as ‘a set of activities, that taken together, produce a result of value to the customer’. Processes are therefore evaluated on the extent to which they ‘add value’ for customers, thereby reflecting and reinforcing the ‘cult of the customer’. Unfortunately, in the context of construction projects, the notion of customer responsiveness is not quite as straightforward as it may be for manufacturing firms. The advocates of BPR invariably adopt a much narrower conceptualisation of the ‘customer’ than those normally mobilised in the construction sector. Construction professionals have long held themselves to have broader responsibilities over and above an allegiance to those who pay their fees. In consequence, the advocates of BPR tend to equate professionals with old-fashioned vested interests which have to be overcome (see below). Even if the conceptualisation of the ‘customer’ is limited to a single client organisation, there is still little reason to assume there is any clear understanding on what constitutes ‘added value’. The briefing literature makes it quite clear that the process of identifying client requirements is by no means straightforward. Client organisations very often comprise several different interest groups, each of which may have a different interpretation of what constitutes ‘good value’. BPR preserves little space for such political metaphors of organisation, neither does it recognise the necessity for organisations to evolve over time in response to changing circumstances. The dominant metaphor

From Business Process Re-Engineering to Partnering 129 within the BPR literature is that of the machine, and the prescribed task is to improve efficiency through the elimination of waste. The unitary model of organisations which underpins BPR has significant implications for the advice on how processes should be mapped. The advice which is offered invariably follows a prescriptive number of stages, and the resultant diagrams are frequently reminiscent of the work-flow diagrams of scientific management (cf. Taylor, 1911). Certainly neither the focus on process, nor the associated process mapping techniques, would seem to constitute little that is new once stripped of the associated rhetoric. The overall sense is that analysts are required to ‘drill down’ to identify the really important processes that are of key importance to maintaining competitiveness. A popular alternative metaphor is the need to ‘cut through the fog’ to see what is really happening. There is of course something of a circular argument here. BPR depends upon ‘clear analytical skills’ for its implementation, and yet it is the techniques of BPR that supposedly provide the required analytical insight. What is clear is that BPR cannot be implemented by anyone. It plainly cannot be enacted by wreckers, dissenters or dinosaurs. The implementation of BPR requires somebody who is in tune with the diktats of the enterprise culture. In the UK construction sector of the late 1990s, the most important qualification for those wishing to implement BPR was to be aligned with the Egan agenda. Only the Eganites seemingly had the rhetorical legitimacy to implement change. But in truth, the most significant changes had already happened as the industry became increasingly lean and agile in the cause of structural flexibility. Perhaps what BPR offered was a means of making sense of changes that were already taking place. BPR was but one part of the broader discourse of enterprise which included the re-structuring of the construction sector coupled with the emergence of the hollowed-out firm. The rousing arguments of Rethinking Construction are best understood as a constituent part of the same discourse. Hence it becomes meaningless to debate the ‘impact’ of the Egan report in isolation from the pre-existing dynamics of industry change. 6.4.3  Generic design and construction process protocol

The popularity of the ‘process approach’ within the research community during the late 1990s is exemplified by the so-called Generic Design and Construction Process Protocol (GDCPP) (Kagioglou et al., 2000). The development of the GDCPP was funded through the EPSRC IMI industry-led research initiative. Hence the adoption of a business process approach was an essential perquisite to the receipt of funding. The justification for the advocated approach commences by rehearsing the frequently repeated arguments that the UK construction industry is ‘plagued by a number of problems, which have not disappeared in the last few decades’. Strangely, no mention is made of the extensive structural changes which re-shaped the construction sector over the preceding twenty years (see Chapter 3). The underlying assumption would seem to be that the construction sector is a static and fragmented entity which is waiting to be improved through the implementation of modern management techniques. Great emphasis is placed on the lessons that could be learned from manufacturing: …a number of very effective philosophies and practices such as Just in Time (JIT), lean production and others have a legacy of optimised production in the manufacturing sector. (Kagioglou et al., 2000, 142) Characteristically, little is offered in the way of evidence to support the above claim. That construction had much to learn from manufacturing was at the time axiomatic. The principle of producing models of the design and construction process was already well established and dates back at least as far as the RIBA Plan of Work (RIBA, 1963). Other influences which were cited include

130  From Business Process Re-Engineering to Partnering Walker (1989) and Hughes (1991). The adopted approach to process mapping within GDCPP was IDEF-0, as originally developed by the United States Air Force in the 1970s. Process mapping was at the time hugely popular amongst IT consultants, and had previously been cited as an ‘indispensable tool in business process reengineering’ (Johansson et al., 1993; p209). The origins of IDEF-0 can be traced back to the tradition of work study as originally developed by Taylor (1911). Work study had previously been exceedingly popular within the British nationalised industries of the 1950s. In this respect IDEF-0 is a strange companion of the enterprise culture. But as has already been outlined, there was little substantive content within BPR that was new. The developers of the GCDCP found IDEF-0 to be effective for modelling ‘as-is’ processes, but it was apparently less useful for the modelling of ‘will-be’ processes. Key principles of the adopted approach included the need to take a ‘whole project view’ together with the need for a consistent process. Such principles are by no means unreasonable, and in many respects would seem to accord with common sense. More intriguing was the notion of ‘progressive design fixity’ whereby phase reviews are conducted at the end of each stage. The classification of ‘soft gates’ and ‘hard gates’ was applied to enable the progressive fixing of decisions throughout the process. This is a useful way of thinking which can be of practical benefit in imposing a degree of control on complex design processes. However, it is notable that the overriding aim is to achieve client sign-off on design elements as early as possible (Cooper et al., 2005). From a production perspective, this of course makes perfect sense. But others with a more organic interpretation of client briefing would tend to emphasise the importance of keeping design options open until the ‘last responsible moment’ (cf. Blyth and Worthington, 2001). This alternative view argues that design decisions are invariably made in conditions of uncertainty, and hence there is little point in making decisions any earlier than necessary. The latter argument has become even more persuasive in recent years as the broader business environment has become evermore dynamic and uncertain. The antecedents of IDEF-0 were rooted in an age when the business environment was much more stable and predictable. Nevertheless, there is a danger in perennially delaying decisions, or in making decisions without the appropriate degree of sign-off from the key project stakeholders. While the overall emphasis of GDCPP was about achieving clarity of structure in the cause of better control and coordination it was also important in terms of its focus on the use of modern IT solutions. The key role of co-ordination within GDCPP is achieved by a ‘process manager’ who is appointed by the client. In common with many other management improvement approaches, process management must seemingly have a ‘champion’ if it is to be successful. Other key principles of the GDCPP include stakeholder involvement and teamwork. Kagioglou et al. (2000) observe that complete project teams rarely work together on more than one project, thereby inhibiting team performance. They further refer to the tendency for key contributors to be included in the process too late. Such pleas in favour of early contractor involvement can be traced back to Banwell (1964) and Emmerson (1962). Kagioglou et al. (2000) further refer to the way the lack of continuity within the team from project to project limits their ability to learn from experience. This is yet another recurring problem with a long heritage. Firms were later to mobilise ‘knowledge management’ as a potential solution, although this too was to prove somewhat elusive. What is interesting is the way in which the rhetoric changes, and yet the key ideas for industry improvement remain essentially the same. One of the supposed novelties within GDCPP is the way in which it extends the boundaries of design and construction into what is referred to as the ‘requirements capture phase of prebriefing client decision-making’ (sic.) (Kagioglou et al., 2000). The notion of ‘capturing requirements’ is immediately suggestive of an underlying machine metaphor. Kamara et al. (2002) also recommend ‘requirements management’ as a more rational approach to client briefing. The influence of 1960sstyle systems engineering looms large within the requirements management literature, which is by no means exempt from criticism (see Fernie et al., 2003). In common with the GDCPP, sources

From Business Process Re-Engineering to Partnering 131 such as Kamara et al. (2002) seemingly lack any explicit recognition that different interest groups within the client organisation may have very different interpretations of what is required. Elsewhere, Green and Simister (1999) suggest an approach to ‘modelling client business processes’ which maps competing perspectives within the client organisation while avoiding any attempt to collapse them into a single ‘holistic’ representation. But there was seemingly little room for such interpretive approaches to client briefing within the GDCPP. The preceding minor quibbles should not detract from the fact that there is much merit to be found within the GDCPP. It remains eminently sensible to seek a clear and consistent model of the design and construction process. The idea of stage gates as a means of implementing control would likewise seem entirely reasonable and is an idea that has subsequently been widely adopted by design managers within the construction sector. It would seem the developers of the GDCPP took advantage of the popularity of ‘process management’ without ever quite being fully convinced by the heady rhetoric of BPR. It may well be possible to argue that the language of BPR reflects and reinforces the construction sector’s pre-existing regressive tendencies, but this argument cannot necessarily be extended to innovations which are only loosely ‘inspired’ by BPR. What does come across strongly within the case studies described by Cooper et al. (2005) is the extent to which practitioners and researchers learned from their collective attempts to implement GDCPP. The process of producing the various process maps stimulated a shared understanding across the project team. This was not therefore a mindless exercise in the application of a heavily prescriptive process model. The process through which the maps are produced accords much more strongly with innovation in action. That the participants found the process to be useful would seem rather more important than the fact it might have been initially inspired by BPR. There is an important point here which will be reinforced throughout the remainder of the book: how improvement recipes are enacted in practice frequently differs from the idealised prescriptions which are described in the literature. It is arguably the very process of rethinking the advocated recipe in a specific situated context which is of prime importance. It would be encouraging to think that this is what Sir John Egan had in mind when he entitled his report Rethinking Construction – although this is probably wishful thinking. Shifting the emphasis towards the process of rethinking GDCPP for each individual application implies that the Generic Design and Construction Project Protocol is not generic, and not really a protocol either. But this should not be construed as a criticism, as the benefits of such approaches often lie in the way they promote localised learning within project teams. The same argument holds equally true for a wide range of management techniques. Perhaps the strongest commonality between GDCPP and BPR is the shared theme of ‘unleashing’ the power of IT. Reference has already been made to the way BPR boosted its credibility through association with so-called enabling technologies. The same is also undoubtedly true of GDCPP, which mobilises a beguiling list of IT solutions, including integrated databases, electronic data interchange (EDI), artificial intelligence, neural networks, visualisation, project extranet and building information modelling (BIM). One of the most acclaimed advantages of the GDCPP is the way it facilitates the use of such new-generation IT support tools (Kagioglou et al., 2000). According to Cooper et al. (2005) the main problem in construction is that most IT systems are purchased to meet operational requirements rather than for any broader strategic purpose. Given the riskadverse nature of the sector, most firms are understandably unwilling to disrupt embedded ways of working for the sake of unspecified potential. Of particular note is the argument that: [t]he effective use and co-ordination of IT, people and culture interfaces should optimise the process performance which leads to eventual customer satisfaction. Cooper et al. (2005, 43)

132  From Business Process Re-Engineering to Partnering Unfortunately, neither people nor ‘culture interfaces’ are so easily manipulated in the rationalistic cause of optimisation. The preceding quote raises a plethora of issues relating to the interaction between new technologies and pre-existing embedded organisational practices. In many respects, the authors of the GDCPP were prescient in predicting the adoption/adaptation of advanced IT solutions in the construction sector. It is striking that BIM is now routinely used on many major construction projects. Of particular note in recent years is the way ‘collaboration’ and ‘integration’ have become increasingly linked with IT solutions. Unfortunately, technologies such as BIM have noticeably failed to rectify the sector’s supposed poor productivity performance. They have also failed to reverse the continued fragmentation of the supply chain. At least self-employed migrant workers can now transfer money home to their families on their I-phones™ as they travel through central London in their ubiquitous white vans. Needless to say, such vans no longer display CABIN stickers exhorting passers-by to ‘say no to building nationalisation’. 6.5 Partnering 6.5.1  Defining characteristics

Of all the management panaceas reviewed in this book it is probably partnering which received the most widespread endorsement as a supposed solution to the ills of the construction sector (Bennett and Jayes, 1995; Bennett and Jayes, 1998; Egan, 1998; Construction Industry Board, 1997). At the time of writing, partnering is more commonly referred to as ‘collaborative working’. The critique which follows is equally applicable to both. From the mid-1990s onwards the very notion of an ‘enlightened’ practitioner became almost synonymous with a commitment to partnering. The adoption of partnering supposedly improves customer-responsiveness and ensures continuous improvement. Critics of partnering have been few and far between. Indeed, following the endorsement of partnering by Rethinking Construction a climate developed whereby to argue against partnering became a (commercially) dangerous pastime. The present author unwisely stepped out of line in 2003 to present a critical perspective on partnering to an audience of civil engineering contractors. The resulting headline in the Contract Journal was ‘Partnering ethos comes under fire’. This was quickly followed by a personal e-mail of chastisement from the chairman of the Strategic Forum, Peter Rogers, spelling out how ‘appalled’ he was that an academic from the University of Reading should be actively undermining the ethos of partnering. To speak out against partnering was at the time almost tantamount to sacrilege; the expression ‘shoot the dissenters’ would appear to apply equally to critics of partnering and BPR alike. It will be argued that the two ostensibly disconnected improvement recipes have more characteristics in common than is generally supposed. McGeorge and Palmer (1997) suggest that formal partnering as a construction management concept dates from the mid-1980s. Several early partnering arrangements were apparently established in the process engineering sector. Specific cited examples include Union Carbide with Bechtel and Du Pont with Fluor Daniel. Without a doubt one of the earliest promoted definitions of partnering was the one offered by the Construction Industry Institute (1991, iv) in the USA: A long-term commitment between two or more organizations for the purposes of achieving specific business objectives by maximising the effectiveness of each participant’s resources. This requires changing traditional relationships to a shared culture without regard to organization boundaries. The relationship is based on trust, dedication to common goals, and on an

From Business Process Re-Engineering to Partnering 133 understanding of each other’s individual expectations and values. Expected benefits include improved efficiency and cost-effectiveness, increased opportunity for innovation, and the continuous improvement of quality products and services. It would seem therefore that partnering is primarily concerned with maximising the effectiveness of resources, hence reflecting the purpose of countless other management improvement techniques. Emphasis is also given to the importance of ‘shared culture’ and the need to base relationships on trust and understanding. It is perhaps the focus on mutuality of objectives coupled with trust and understanding which most notably sets a very different tone from the rhetoric of BPR. The influence of TQM is readily apparent in the reference to ‘continuous improvement’, which is seemingly valued in favour of radical or dramatic change. The tone of the definition offered by the Reading Construction Forum (Bennett and Jayes, 1995, 2) reflects similar themes: Partnering is a management approach used by two or more organisations to achieve specific business objectives by maximising the effectiveness of each participant’s resources. The approach is based on mutual objectives, an agreed method of problem resolution, and an active search for continuous measurable improvements. Mutually of objectives again comes across as being of central importance. But here it is notable that improvements must not only be continuous, they must also be ‘measurable’. The definition offered by Rethinking Construction provides a similar emphasis on continuous, measurable improvement: Partnering involves two or more organisations working together to improve performance through agreeing mutual objectives, devising a way for resolving disputes and committing themselves to continuous improvement, measuring progress and sharing the gains. (Egan, 1998, 9) Rethinking Construction further considers partnering to be a ‘tool to tackle fragmentation’ increasingly used by the best firms in place of traditional contract-based procurement and project management. As was argued at length in Chapter 3, industry fragmentation was exacerbated throughout the 1980s and early 1990s as a direct result of the policy mechanisms of the enterprise culture. The end result was an industry with an institutionalised reliance on bogus self-employment. If partnering offered a tool to tackle the fragmentation of the industry employment context it would indeed be powerful medicine. But ‘fragmentation’ was left undefined as attention was quickly shifted away from the structural characteristics of the sector towards the need to adopt ‘enlightened’ management techniques. The support of the Construction Task Force for partnering was surpassed in its enthusiasm by the Construction Industry Board’s (1997, 3) report on Partnering in the Team: Partnering is a structured methodology for organisations to set up mutually advantageous commercial relationships, either for single projects or in long term strategic relationships, which help people work together more effectively. The above definition is especially notable for the lazy way in which it slips between different units of analysis. It starts off talking about organisations, and ends up talking about people. That there is a direct relationship between the commercial arrangement between organisations and

134  From Business Process Re-Engineering to Partnering the way people behave is seemingly taken entirely for granted. The Construction Industry Board (1997, 3) further suggests that partnering has three essential components:

• establishment of agreed and understood mutual objectives; • methodology for quick and co-operative problem resolution; • culture of continuous, measured improvement. Of particular note is the way that Bennett and Jayes’s (1995) ‘agreed method’ of problem resolution had now been reduced to ‘quick and co-operative’ problem resolution. The Construction Industry Board (1997) was particularly clear in their view that adversarial attitudes ‘waste time and money’. The underlying argument is that efficiency would be much better served if deviant behaviour could be eliminated. The view is further expressed that problem resolution should be based on ‘win-win’ solutions. It is repeatedly contended that ‘all parties’ benefit from partnering, although it is unclear the extent to which the philosophy extends throughout the construction supply chain. 6.5.2  Success requires faith and commitment

A unifying theme throughout the sources reviewed above is the belief that an appropriate ‘culture’ is of vital importance to the success of partnering. Partnering in the Team (Construction Industry Board, 1997) is especially strident in emphasising that the first step towards partnering is to ensure that the culture of the company is conducive to a ‘whole-team co-operative approach’. Once again, there is a degree of ambiguity whether or not ‘whole team’ includes the construction workforce. The overriding inference is that the construction ‘team’ comprises organisations rather than people. The organisations involved are further seen to be unitary in nature and be capable of displaying the very human characteristic of ‘teamwork’. However, it is seen to be important to appoint individual ‘champions’ to promote the partnering concept. It is also made clear that senior management must act as exemplars of the required culture. Of particular note is the way success is continually linked to ‘faith’ and ‘commitment’. This is especially notable within the rhetoric promoted by the Construction Industry Board (1997, 8) who argue that commitment is an essential element of partnering: to succeed requires fundamental belief, faith and stamina. The commitment must start at the top and it must be shared by the senior management. The strident and heavily prescriptive tone of the above quotation would surely have been frowned upon by sober-minded civil servants such as Banwell and Emmerson. The plea for ‘fundamental belief, faith and stamina’ echoes directly the oratory style favoured by the former Italian fascist dictator Benitto Mussolini. The repeated use of the word ‘must’ is especially notable. The manager must have ‘fundamental belief’; the inference is that the manager must not question. There is apparently no requirement for the recipient managers to think for themselves. ‘True knowledge’ is seemingly held by the small technocratic elite within the Construction Industry Board, and the rest of the construction industry is required to act on faith. Dissenters are marginalised as deviants. According to the Construction Industry Board (1997), ‘cynicism and lack of commitment by the few will destroy the efforts of many’. Such a script could easily have been used to justify the Spanish Inquisition, or Mussolini’s Italy, or any other regressive regime with little tolerance for dissent. Despite the warm words about ‘mutual objectives’ and ‘relationships’ the overwhelming tone of much of the partnering literature is heavily prescriptive. Partnering is seemingly a regime which is to be imposed on the construction industry. The ‘partners’ involved are ostensibly limited to commercial entities. There is seemingly no role for independent trade unions or for any

From Business Process Re-Engineering to Partnering  135 individual ‘deviants’ who have objectives which do not accord with those of ‘top management’. Pluralist models of organisation are sacrificed in favour of crude prescription. Writing from a self-consciously critical perspective, Green (1999) has elsewhere equated the arguments in support of partnering with corporatist propaganda. Certainly, the supporting arguments draw heavily from the lexicon of enterprise. The ultimate argument as mobilised by sources such as Partnering in the Team rests with mystical appeals to the ‘customer’ and the imperatives of the global market. The all-pervading nature of the enterprise culture has rendered such ideas unchallengeable. The doctrines of customer-responsiveness and continuous improvement must seemingly be accepted on faith rather than on rational argument. Following on from the above, there would seem to be an uncanny resemblance between the factors necessary for the successful implementation of partnering and those which were previously described in the case of BPR. Both depend upon senior management making an ‘unwavering’ commitment to culture change. Both also require ‘champions’ who are willing to ride roughshod over any criticism. In the circumstances, it is perhaps not surprising that operatives within the construction sector continue to display ‘adversarial attitudes’. The continuous bombardment with mechanistic improvement recipes would probably try the patience of a saint. An obligation to sign up for BPR very quickly morphs into a necessity to demonstrate an unwavering commitment in favour of partnering. Fortunately, for the sanity of all involved, the shift from BPR to partnering is a shift in emphasis rather a dramatic shift in direction. As previously observed, machine and team metaphors are frequently mobilised within the same discourse without any obvious signs of conflict. The combination is undoubtedly much easier if the underpinning model of teamwork is based on compliance. Aficionados of football may recall the all-conquering Liverpool team of the 1980s being compared with a ‘well-oiled machine’. Teamwork and machine efficiency are frequently mutually constituted in football and construction alike. 6.5.3  Transcending organisational boundaries

Notwithstanding the above, partnering does however differ from BPR in at least one important respect – partnering is something which transcends organisational boundaries. In contrast, BPR tends to be applied within organisational boundaries; its origins lie in the prevailing concerns about ‘fat’ organisations which were perceived to be uncompetitive. To repeat the core argument, the imperative was to eliminate waste that does not contribute to the customer. In the case of the UK construction sector, by the mid-1990s the structural changes described in Chapter 3 had in the most part already happened. BPR arrived rather late on the re-structuring scene and was embraced by practising managers because it reflected and reinforced what was already happening. But given the contracting sector’s reliance on subcontracting in the mid-1990s, the popularity of BPR was bound to be short-lived. Simply put, client organisations and contracting firms alike had already become so lean there was little in the way of downsizing which remained to be done. But client organisations still demanded better service from the construction sector, and they were prepared to use their market muscle to achieve it. Hence efficiency through downsizing gave way to efficiency through partnering with the supply chain. Partnering also differs from BPR in that from its very inception it was situated within project environments characterised by multiple organisations. However, partnering was soon to be extended beyond the boundaries of single projects. Several sources make the distinction between ‘project specific’ partnering and ‘strategic’ partnering, the latter phrase being used to denote a situation where the partners work together across several projects (Bennett and Jayes, 1998). Strategic partnering supposedly allows the benefits of improved understanding to be carried forward to subsequent projects. However, at the same time, the philosophy of continuous, measured improvement

136  From Business Process Re-Engineering to Partnering demands that each project exceeds the performance of the previous one. Long-term relationships are not therefore seemingly valued as an end in themselves, they are only valued if they lead directly to improvements in performance. Despite the seductive discourse of ‘empowerment’, ‘working together’ and ‘relationships’, the success of any partnering initiative ultimately seems to hinge on cost improvement. The emphasis on steadily improved performance might perhaps also translate too easily to a regime of management-by-stress. This of course is pure conjecture, although the literature does occasionally hint that something vaguely unpleasant might happen should the advocated targets not be met. 6.5.4  Buying power and the rhetoric of seduction

What cannot be denied is that the cause of partnering was championed by a number of powerful clients who had become dissatisfied with the supposed under-performance of the construction industry. The large UK supermarkets have consistently numbered amongst the most enthusiastic advocates of partnering. As regular clients of construction, they understandably wish to extend the control that they exert over the grocery supply chain to the construction sector. It is by no coincidence that Bennett and Jayes (1998) include exemplar case studies of Sainsbury’s and Asda. The Egan (1998, 9) report also cites the case of Tesco, who have apparently: …reduced the capital cost of their stores by 40% since 1991 and by 20% in the last two years, through partnering with a smaller supply base with whom they have established long term relationships. Tesco is now aiming for a further 20% reduction in costs in the next two years and a 50% reduction in project time. If true, the benefits achieved by Tesco though partnering are indeed significant, although the Egan report neglects to say anything about the corresponding increase in profitability achieved by Tesco’s partners. Other large clients who were strong advocates of partnering included BAA and Whitbread, both of whom were represented on Egan’s Construction Task Force. Other notable UK clients who claimed to be committed to partnering include (the now defunct) Rover Cars and John Lewis Partnership. Given the collective buying power of the aforementioned clients, it is unsurprising that many leading contractors also quickly claimed to be similarly committed to partnering. To do otherwise would have been to risk attracting the label of ‘adversarial’, thereby denying themselves access to a significant part of the UK market. This exercise of buying power is made especially clear by the Construction Clients’ Forum (1998), who at the time collectively accounted for some 80% of the construction market. The CCF document committed its members to promoting relationships based on teamwork and trust, and to working jointly with their partners to reduce costs. They also promised not to unfairly exploit their buying power, but to look to form lasting relationships with the supply side. The overall tone is one of barely disguised seduction. However, they then issued an unveiled threat to those dissenters who remained unconvinced: The message from the Construction Client’s Forum is clear. If this Pact is concluded, clients represented on the CCF will seek to place their £40bn of business with companies that are seen to follow the approach described in this document, and will seek such commitment prior to tendering, commensurate with relevant national, European and international regulations.

From Business Process Re-Engineering to Partnering 137 The message was indeed clear. The CCF was saying to the construction industry that in order to qualify for £40 billion worth of work then their ideas on teamwork and trust must be accepted. An adherence to the language of partnering was seemingly an essential pre-requisite of doing business. This was made equally clear by the Construction Industry Board (1997, 11), albeit on the level of individuals: If it becomes clear that anyone at the workshop is unable to adopt the spirit of partnering, that person should be replaced in the team. It would therefore seem that lurking behind the rhetoric of seduction was an ‘iron fist’. The same implied threat lay behind the Egan (1998) report. Little wonder that dissenters to partnering were so few and far between. 6.5.5  Living up to the rhetoric

The contrast between the rhetoric of seduction and the subsequent enforcing iron fist raises the question of whether the large clients who were advocating partnering lived up to their own rhetoric. The influence of the big supermarkets on the promotion of partnering to construction has already been noted, as has their understandable desire to exercise increased control over the construction supply chain. It is especially ironic that the industry task forces behind the two partnering reports published in conjunction with the Reading Construction Forum (Bennett and Jayes, 1995; Bennett and Jayes, 1998) were both chaired by Charles Johnston of Sainsbury. This was the same Charles Johnston who chaired the CIB working group which produced Partnering in the Team (Construction Industry Board, 1997). Mike Thomas of Whitbread also served on the two working groups that produced The Seven Pillars of Partnering (Bennett and Jayes, 1998) and Partnering in the Team (Construction Industry Board, 1997). For those who enjoy a good misguided conspiracy theory, the raw materials are all in place. But this is not the position which is being adopted here. Messrs Thomas and Johnston are singled out only to illustrate the way in which ideas are mobilised and legitimised across inter-organisational networks. It is categorically not being suggested that they were some sort of devious manipulators who influenced the reports to their own advantage. The point has more to do with the way power and knowledge become subtlety conflated. Charles Johnston and Mike Thomas simply rode within the same flux of ideas that many others rode within, and the present author claims no special immunity. Nevertheless, it remains true that the big supermarkets were frequently cited as exemplars of the partnering ideal. In light of this it is pertinent to recall that in 1999 Sainsbury, Asda, Tesco and Safeway were all under investigation by the Office of Fair Trading (OFT). The investigation followed sustained complaints by farmers and growers that consumers were not benefiting from low farm prices. The outcome of this eight-month inquiry was that the entire £60 billion a year grocery sector was referred to the Competition Commission (previously the Mergers and Monopolies Commission). The OFT’s Director General expressed a particular concern regarding the supermarkets’ buying power and their exploitative influence over suppliers: I have had concerns for some time…that this power may become exploitative and the many responses from suppliers during our inquiry suggests that it is something which needs to be looked at by the Competition Commission. (OFT, 1999)

138  From Business Process Re-Engineering to Partnering Ironically, these were the same supermarkets which were at the time preaching ‘customerresponsiveness’ to the construction industry. The possibility that their supply chain management practices were directed towards earning super-normal profits, rather than serving the interests of their customers strangely had little effect on their perceived legitimacy as ‘enlightened clients’. The subsequent full report from the Competition Commission was published in 2000. It provided a sad indictment of the supply chain management practices implemented by the major supermarkets. The Competition Commission (2000) reported that they had received many allegations from suppliers about the behaviour of the ‘main parties’ in the course of their trading relationships. They further commented that most suppliers were unwilling to be named, presumably in fear of commercial retribution. The Competition Commission report specifically referred to a ‘climate of apprehension’ which seemed to prevail among many suppliers in their relationship with the big supermarkets. The Competition Commission investigators had put a list of 52 alleged practices to the main parties. They found that a majority of these practices had been carried out by many of the main parties. The practices of concern included: ….requiring or requesting from some of their suppliers various non-cost-related payments or discounts, sometimes retrospectively; imposing charges and making changes to contractual arrangements without adequate notice; and unnoticeably transferring risks from the main party to the supplier. (Competition Commission, 2000, 6) The point was further made that Asda, Safeway, Sainsbury, Somerfield and Tesco possessed sufficient buying power such that the practices were not only distorting competition but were also adversely affecting the competitiveness of some suppliers. The Competition Commission’s report was concluded by the recommendation that the most effective way of addressing the adverse effects of the cited practices would be a Code of Practice. Most damningly of all, it was emphasised that a voluntary code would not be adequate. Coming from the notoriously toothless Competition Commission these were strong words indeed. The overriding message was that the big supermarkets were not to be trusted. The impact of the publication of the Competition Commission’s report on the debate about partnering in the construction sector was precisely zero. The perceived legitimacy of the big supermarkets to preach partnering to construction firms remained remarkably intact. It cannot of course be assumed that the supermarkets were consistent in their dealings with different sectors. Neither can it be assumed that contractors would have suffered any adverse effects even if such practices prevailed in their dealings with the construction sector. But if the findings of the Competition Commission are taken at face value, it demonstrates the difficulties of achieving the required ‘culture change’ widely held to be an essential pre-requisite of successful partnering. If the self-proclaimed ‘enlightened clients’ could not incubate the desired culture of teamwork and trust within their own organisations, there would seem to be little chance of any wide scale culture change within the diverse and hugely fragmented construction sector. It should also be reported that ultimately no action was taken to implement the Competition Commission’s recommendation for a compulsory Code of Practice. The issue was very quickly forgotten. The New Labour government continued to nurture their close relationship with big business in the cause of wealth creation. The buying public continued to vote with their feet by purchasing an ever-increasing proportion of their weekly shop in the big supermarkets. Few seemed to care about ‘adversarial practices’ in the retail sector provided the goods-on-the-shelf offered value-for-money. Meanwhile the major clients of the construction sector continued to advocate partnering in the cause of lower costs. Adversarial practices in the supply chain were seemingly acceptable provided they were adversarial practices aimed at others.

From Business Process Re-Engineering to Partnering 139 6.5.6  Exemplar case studies

In light of the above critique of partnering, it is appropriate to offer a brief commentary on three of the exemplar case studies presented in The Seven Pillars of Partnering (Bennett and Jayes, 1998). It is particularly enlightening to focus critical attention on Bennett and Jayes’ case studies of partnering as implemented by Sainsbury and Whitbread. Interest is also to be found in the case study of the now defunct Rover Cars. In many respects, Rover offers a micro-history of the British automobile industry. It had been initially absorbed into the Leyland Motor Corporation in 1967 which was partly nationalised in 1975 to form British Leyland. The British Leyland brand rapidly became synonymous with under-investment, poor management and sour industrial relations. Margaret Thatcher’s predictable solution was privatisation. British Leyland was duly returned to the private sector and re-branded as the Rover Group in 1988. It passed through the hands of British Aerospace prior to being acquired by BMW. Rover benefitted from increased investment during the 1990s and enjoyed a brief revival. It was during the latter stages of the 1990s when Rover was feted as an exemplar of partnering. However, troubled times soon returned and in 2000 BMW sold both Rover and MG to the optimistically named Phoenix Consortium. Rover cars ceased to be produced in 2005 when the MG Rover Group became insolvent. 6.5.6.1  Case Study No. 1: Sainsbury’s

Bennett and Jayes (1998) trace back Sainsbury’s motivation for wanting to reduce the cost of construction to an intense price war with their competitors in 1994. The immediate response of Sainsbury’s management was to down-size their property division from 240 to 80 staff. Although no reference is made to BPR, it would seem that the same logic was at work. The end result was that Sainsbury’s property division had to out-source more of their work, thereby apparently forcing them to work more closely with a limited number of suppliers. At the same time, Sainsbury’s decided that it had to ‘change the attitudes of its own staff by adopting internal partnering’. The remaining 80 employees were therefore ominously ‘instilled’ with the culture of TQM and were required to be ‘more flexible and out-going’. Presumably those who did not want to be ‘instilled’ with the new culture, numbered amongst the 160 who were down-sized. The storyline echoes that of BPR in that there is great emphasis on the way the remaining members of staff were ‘empowered’ to represent the company and to take new initiatives. There is of course a basic contradiction here. Employees and suppliers are expected to submit unquestioningly to the imposed TQM regime, whilst continuing to engage actively in the cause of continuous improvement. It would appear that the desired ‘empowerment’ concerns only means rather than ends. Employees are seemingly only empowered to implement Sainsbury’s objectives more efficiently; they are not empowered to participate in their formulation. Notwithstanding the above, the claims made in support of the success of partnering are impressive. The cost of Sainsbury’s mainstream stores was apparently reduced by 35% and typical construction durations were reduced from 42 weeks to 15. However, these impressive achievements were not enough. Sainsbury’s management thereafter established further ‘tough and steadily improving cost, time and quality targets’. It would seem that the regime of continuous improvement is relentless. The conclusion that continuous improvement in this form equates to management-bystress is difficult to avoid. Inevitably there comes a point when cost, time and quality targets cannot be improved any further. This is the point at which the client euphemistically moves ‘beyond partnering’. The point at which initiatives stall also invariably involves a shift in power within the organisation. Whereas the previous dominant interest group had a vested interest in talking up the benefits of partnering, the succeeding interest group would wish to rest their credibility elsewhere.

140  From Business Process Re-Engineering to Partnering 6.5.6.2  Case Study No. 2: Whitbread

Bennett and Jayes (1998) also include Whitbread amongst their exemplar case studies. Whitbread was a hugely important client and at the time constructed around 100 new projects every year with a budget in the region of £300 million. Prior to the adoption of partnering, Whitbread’s different business units (e.g. Beefeater Inns, Marriot and Travel Inns) had tended to procure construction projects through competitive tendering. The difficulty here was that this resulted in more and more contractors working for the company which resulted in each one being faced with the same learning curve. Whitbread had apparently been impressed by the Latham (1994) report, and had lost patience with the ‘adversarial practices’ displayed by too many of their contractors. It concluded that there was much to be gained from working in partnership with a limited number of contractors. Sixteen contractors were identified as having a ‘compatible culture’ together with the required management and financial strength. All sixteen were asked to price typical projects and the submissions were evaluated on a range of criteria, including suggestions for potential improvements and their understanding of partnering. Presumably it was not expected that the contractors’ understanding of partnering should extend to the inherent paradoxes and contradictions. The list of approved contractors was subsequently whittled down to six, with whom Whitbread agreed fixed contributions for profits and overheads. The contractors apparently quickly recognised that greater efficiency could be achieved by ‘partnering down the line with a number of key specialist subcontractors’ (Bennett and Jayes, 1998). By implication, it would seem that the contractors also recognised that efficiency would not be enhanced by partnering with all their specialist suppliers, even with most of them. The focus was very much on fostering relations with ‘key’ specialist subcontractors. Presumably it was business as usual with the rest of them. The description of Whitbread’s adopted approach is especially interesting in the light of the Construction Industry Board’s (1997) recommendation that partnering is only appropriate between organisations whose top management share the fundamental belief that people are honest. The case study describes how the six contractors selected as Whitbread’s ‘partners’ met on a bi-monthly basis to compare processes and results. However, the following comment illustrates the degree of trust: Whitbread recognises that it must attend these meetings to ensure no hint of a ‘cartel’ emerges. It also accepts that if progress slows it will have to re-target the contractors or seek new partners. (Construction Industry Board, 1997, 15) Behind all the rhetoric, it would appear that Whitbread ultimately does not trust its new ‘partners’. They therefore fail the criterion set by the Construction Industry Board. The second sentence is also telling; once again the ‘partnership’ is clearly dependent upon continuous improvement, otherwise the partners are ominously ‘re-targeted’, or otherwise simply dumped. The value of the relationships would seem to hinge entirely on performance. It would clearly be unwise for the contractors involved to depend upon Whitbread for too much of their turnover; this would not be good risk management. The six contractors most probably continued to price work elsewhere through competitive tendering. They would have been well-advised to have done so. Notwithstanding the paradoxes highlighted in the above description, it is once again difficult not to be impressed with the benefits secured by Whitbread. It is interesting that Bennett and Jayes (1998) cite one of the main benefits as being a reduction in the cost of Whitbread’s in-house team. Although not made explicit, this presumably means that the team was ‘down-sized’ as had been the case with Sainsbury’s. There is therefore some justification for reading partnering as an outcome of a broader BPR-type initiative. Whitbread also seemingly achieved reduced costs and much fewer

From Business Process Re-Engineering to Partnering  141 defects. Apparently £335,000 was saved on Whitbread’s Beefeater and Travel Inn development at The Lydiard in Swindon. This equated to no less than 19% of the capital cost. The benefits to the contractors are described in terms of the continuous flow of reliable and profitable work. The contractors also benefitted from a 40% share (together with the designers) of the cost saving achieved through ‘innovation’. It is not specified how much of this was shared with the identified ‘key specialist subcontractors’. Neither is it specified how much was shared with the other sub-contractors who were judged not to be key. The answer to the first question is probably ‘not much’; the answer the second is almost certainly ‘nothing’. 6.5.6.3  Case Study No. 3: Rover Cars

During the late 1990s Rover Cars was enjoying a brief renaissance prior to being unceremoniously dumped by BMW in 2000. Bennett and Jayes’s (1998) write-up of Rover’s approach to partnering relates primarily to the procurement of the new Group Design and Engineering Centre (GDEC). The new building was needed to re-house the company’s car design engineers and the initial budget was set at £12 million. Bennett and Jayes (1998) make much of Rover’s link-up with Honda in the late 1980s which apparently led to the implementation of new management practices such as TQM, just-in-time and continuous improvement. These practices encouraged Rover’s automotive buyers and suppliers to engage in partnering arrangements. The approach was driven by a new method of purchasing based on the Honda model of Effective Cost Management (ECM). The approach was driven by the purchasing department and apparently ‘empowered engineers and others to innovate and search out the best possible answers within a fixed budget’ (Bennett and Jayes, 1998). Clearly the design engineers had not previously felt so empowered, even though the process of innovating and searching out solutions within given constraints would be central to most accepted definitions of engineering design. According to the description offered, it was the purchasing department which enabled the engineers to really understand their own processes. The resulting new culture was subsequently applied to the construction of the new Land Rover Discovery facility and the new production line for the Rover 800. The Rover team apparently recognised collectively that the traditional way of procuring buildings was unacceptable, so for the GDEC project it was decided to adopt a sole supplier approach in accordance with ECM. The overriding aim was to produce buildings as if they were manufactured products. A further guiding principle within Rover was not to spend money on anything that did not directly contribute to building cars. This was a principle derived directly from the lexicon of BPR, and it resulted in a brief which laid out the specification for a very basic building. Bennett and Jayes (1998) describe how a rigorous selection process was used to assess 35 potential contractors. Four firms were selected to make a presentation and SDC was chosen as the preferred main contractor. In choosing SDC, cost was not apparently a major issue for Rover. Emphasis instead was given to technical competence, cooperation and teamwork. Rover was also looking for an ability to live with changes to the design, and personalities with whom they could partner. However, once SDC were appointed they were soon obliged to learn Rover’s ‘tough cost driven approach to partnering’. Partnering with Rover therefore seemed to follow a familiar pattern. First of all came the rhetoric of seduction, then came the iron fist. Nevertheless, the reported benefits were once again impressive. The final building was occupied 12 months earlier than ‘normal methods would have allowed’ and the cost was allegedly in the region of 40% less than would have been achieved through the traditional contracting process. Unfortunately, there is no justification for these figures and little reason to suspect they were produced independently of Rover’s managers who themselves had a vested interest in ‘talking-up’ the benefits of partnering. Rover further apparently agreed to pay all parties an agreed profit together with their ‘properly incurred direct

142  From Business Process Re-Engineering to Partnering costs’. It is easy to see how such an arrangement could indeed be attractive to contractors trying to ride out a recession. Key motivating factors included the assurance of further work together with the satisfaction of a job well done. However, the associated regime of management-by-stress is once again all too apparent: A very tough cost control and cost audit system was imposed backed up by relentless pressure from the client to look for the best possible value. (Bennett and Jayes, 1998, 42) There would therefore seem to have been little emphasis on ‘mutually of objectives’. The cost control and cost audit system were not only ‘tough’, they were ‘very tough’. Furthermore they were backed up by ‘relentless pressure’ from the client. There is no mention of any reciprocality in the direction of pressure; it was all seemingly one way. The compensation for those who are subjected to this regime of ‘relentless pressure’ supposedly lies in the promise of future work. This would seem a benefit of dubious worth in an uncertain world, and SDC would have been welladvised to avoid becoming too dependent upon Rover. Rover’s lauded commitment to its long-standing suppliers in the automotive supply chain was called into question by an article in the Daily Telegraph on 25 July 1998. Alongside announcing 1500 redundancies, Rover was reported to have started cutting orders with British suppliers due to the high value of sterling. One of Rover’s long-standing ‘partners’, Plastic Mouldings (Cradley), which was dependent upon Rover for a quarter of its £17 million turnover, quickly lost about £2 million of business. In 2000 Rover was sold by BMW to the Phoenix Consortium, who were in no position to honour Rover’s previous commitment to long-standing suppliers even if they wanted to. By 2005 the Rover story had come to a close. Despite the propagation of a new culture they had ultimately been unable to compete in the global marketplace. Perhaps if their designers had not been subjugated to the purchasing department they might have produced more attractive cars. As a final comment, it should be pointed out that SDC still operate very successfully as a privately owned regional contractor. They also possess a long track record of successful projects for automotive sector clients such Austin Martin, Jaguar, Land Rover and BMW. Rover Cars might have been better directed to have spent more time listening to SDC rather than subjecting them to relentless pressure. But we must also bear in mind that Bennett and Jayes’ (1998) primary source for the case study were Rover’s senior managers who were responsible for the implementation of partnering. It is likely that the emphasis of the case study was at least in part targeted at other factions within Rover who thought that partnering was a soft option. Hence the focus on ‘very tough cost control’ and ‘relentless pressure imposed by the client’. The case studies therefore shed more light on the arguments which are mobilised in support of partnering, rather than the realities of what happens on the ground. 6.5.7

Paradoxes expounded

Up until this point, the discussion of partnering has essentially focused on the way partnering is presented in the literature. Initially, attention was given to the essential vagueness of precisely what was being advocated. Thereafter, critical attention was directed at the overly prescriptive nature of the supporting arguments. Of particular note is the way in which large clients mobilised their buying power to impose partnering on a seemingly adversarial construction sector. The possibility has been further raised that some of the major clients closely involved in the propagation of partnering often fail to live up to their own rhetoric. A critique has also been presented on a selection of the exemplar case studies presented in The Seven Pillars of Partnering (Bennett and Jayes, 1998). The case studies were clearly written in support of partnering, and yet upon close examination they readily highlight some of the paradoxes which characterise arguments in support of partnering.

From Business Process Re-Engineering to Partnering  143 Bresnen (2007) also gives critical attention to the Seven Pillars of Partnering, and has offered Deconstructing Partnering in Project-based Organisation: Seven Paradoxes and Seven Deadly Sins as a direct response. The emphasis on ‘seven deadly sins’ is perhaps somewhat tongue-incheek, but the underlying analysis is informed by previous empirical research into the enactment of partnering (Bresnen and Marshall, 2000a; Bresnen and Marshall, 2000b). Despite all the hype and exhortations in support of partnering, it remains the case that there has been relatively little neutral research into its implementation. Bresnen goes to some length to emphasise that his critique of partnering – although provocative – is intended to move towards ‘a more realistic (and hence potentially more useful) understanding of the intricacies and dynamics of partnering in practice’. Several of the paradoxes identified resonate strongly with those highlighted in the preceding discussion, thereby adding weight to the arguments already presented. It is not necessary to repeat the full details of Bresnen’s analysis here; this would simply be to repeat many of points already made. But the chapter would not be complete without giving the flavour of Bresnen’s provocative and telling contribution. Bresnen’s (2007) first paradox relates to what is described as wishful thinking about strategic management and organisational behaviour. He observes that the model of organisation which lies behind the various imperatives relating to the need for commitment is essentially unitary in nature. The assumption is that all parties subscribe to the same goals and objectives and the means by which they can be achieved. Hence the challenge for management is to mobilise enthusiasm and support for a pre-determined strategy. In essence, this is organisation as viewed through the lens of the machine metaphor. There is little recognition of the political nature of organisations, nor of the difficulties of achieving coherent and consistent strategic action. Such difficulties are real enough even within the boundaries of single organisations, let alone in multi-organisational settings such as projects. According to Bresnen, the associated ‘deadly sin’ in that of sloth, otherwise described as a lack of awareness of the needs and perspectives of different groups. Too much of the prescriptive literature on partnering lazily assumes that differences can be wished away on the basis of faith and commitment. The second paradox highlighted by Bresnen relates to membership, i.e. the choice of which firms (and individuals) are judged to be appropriate partners. As we have already seen, the prescriptive literature on partnering goes to great lengths to emphasise the importance of selecting the ‘right’ partners with the appropriate culture. It is also made abundantly clear that those who are unable to adopt the ‘spirit of partnering’ should be replaced in the team (Construction Industry Board, 1997). Bresnen observes that the focus on conformity and the importance ceded to ‘thinking in the right way’ runs counter to the cause of innovation. Certainly the emphasis on conformity within the discourse of partnering runs counter to all that is known about the environments which spawn creativity. Bresnen sees something inherently unhealthy in relationships which are too controlling and obsessive. The potential problems of over-involvement and over-commitment to a relationship are equated to a second deadly sin – lust. The third paradox concerns the issue of equity, which is repeatedly held to be a cornerstone of the partnering philosophy (Construction Industry Board, 1997; Bennett and Jayes, 1998). The desire for equity is frequently the guiding principle in negotiating the various gain-share/pain-share arrangements which lie at the heart of many partnering agreements. Bresnen (2007) points towards the obvious temptation for the more powerful partner to negotiate an arrangement which unduly favours themselves: [w]ith the best will in the world, it is difficult for a powerful client simply to give up their power to dictate terms and conditions in their favour to a smaller contractor who is dependent on them for future work. (Bresnen, 2007, 369)

144  From Business Process Re-Engineering to Partnering Certainly there is little evidence in the case studies reviewed above that any of the clients were tempted to give up any of their power over the contractors they had engaged as ‘partners’. On the contrary, partnering seemingly became the medium through which their commercial power was exerted. The paradox coined by Bresnen (ibid.) is that such relationships bring an inherent danger of encouraging exploitation or opportunism. The associated ‘deadly sin’ is hence presented as avarice. The fourth paradox relates to the issue of integration, and the arguments rehearsed by Bresnen (2007) are relevant to broader debates about ‘integrated project teams’ as promoted by the Strategic Forum (2002) (see Chapter 8). The espoused need for integration can be read in part as a reaction to the increased level of industry fragmentation. The greater the reliance on outsourcing, the greater will be the need to maintain some degree of control across organisational boundaries. It is no coincidence that the Sainsbury case study of partnering commences with a description of the downsizing of the property department and the outsourcing of functions previously performed in-house. A similar subtext is apparent within the Whitbread case study. It is hence possible to argue that partnering became popular as a means of re-asserting some of the control which had been lost as a result of outsourcing. The integration of performance controls across organisational boundaries therefore became an important imperative. The same logic can also be used to justify the popularity of supply chain management, which rests on similar notions of ‘relational contracting’ (Green, 2006). Bresnen (2007) further points out that the need for integration is also seen to relate to internal boundaries within the firm. As was noted in Chapter 3, throughout the 1980s the construction market became increasingly segmented in terms of different types of clients. This in turn caused firms to become increasingly differentiated internally – different business divisions specialising in the needs of different markets. The increased internal differentiation hence requires a greater degree of integration within the firm (Lawrence and Lorsch, 1976). Integrating mechanisms commonly include the use of various IT strategies together with initiatives for cultivating a ‘shared culture’ across disparate operating divisions. Supporting HRM strategies which cut across operating divisions are also often used for the purposes of integration. With reference to integration across organisational boundaries, the partnering literature is especially notable for the emphasis it gives to developing trust. However, the more critical literature highlights the fragile nature of trust within temporary project settings (Bresnen and Marshall, 2002; Dainty et al., 2001). An obvious paradox relates to the emphasis on trust being co-existent with an equally strong emphasis on continuous performance measurement. Bresnen (2007) cites the paradox in terms of a desire for co-operation and trust on the one hand, and the reinforcing of a desire for control on the other. He further associates this as ‘having your cake and eating it’, thereby equating to the deadly sin of gluttony. The preceding description of the first four of Bresnen’s (2007) seven paradoxes is sufficient to portray the essence of his critique. The remaining three paradoxes relate to the use of benchmarks, the tendency to ‘over engineer processes’ and the failure to capture knowledge and learning. The seven pillars, seven paradoxes and seven deadly sins in their entirety are summarised in Table 6.1. The unintended and undesirable consequences of ‘over engineering processes’ have already been addressed in respect of BPR. The fact that the same criticism can be directed at partnering is once again indicative of the impossibility of drawing sharp dividing lines between supposedly different improvement recipes. A commitment to BPR morphs seamlessly into a commitment to partnering, which in turn morphs seamlessly into a devotion to lean construction. This brings the discussion back once again to the idea of management fashions. For those who advocate the cause of industry improvement, to echo the rhetoric of the latest management fashion is seemingly more important than being clear on the substantive content of each successive idea.

From Business Process Re-Engineering to Partnering  145 Table 6.1  Seven pillars, seven paradoxes and seven deadly sins Pillar

Paradoxical effect

Deadly sin

Strategy

Wishful thinking about strategy and behaviour Fostering of relationships built on exclusivity Encouraging exploitation and opportunism Reinforcing a desire for control Setting of inappropriate targets Over-engineering of processes Failing to capture knowledge and learning

Sloth

Membership Equity Integration Benchmarks Processes Feedback

Lust Avarice Gluttony Envy Wrath Pride

Source: Bresnen, 2007.

6.5.8  Trust and power

Prior to closing the discussion on partnering, it is appropriate to address the notion of trust in a little more detail. Sabel (1992) defines trust as the ‘mutual confidence that no party to an exchange will exploit the other’s vulnerabilities’. As has already been discussed, much of the debate is characterised by an assumption that firms are synonymous with individuals. Within the prescriptive literature, trust between organisations is generally seen to be a prerequisite of partnering (Green, 2006). However, others have questioned whether economic co-operation results from trust, or whether trust results from economic cooperation (Gambetta, 1988). Rarely is any attention given to the way trust is shaped by imbalances in economic power between firms in the supply chain and the broader dynamics of the marketplace (cf. Korczynski, 2000). Cox (1999) argues that the nature of any relationship between organisations is inevitably mediated by power differentials between the contracting parties. Yet the dominant assumption within the partnering literature is that trust between individual actors is independent of the pressures imposed by the broader context. In situations where there is a power imbalance between firms, co-operation may be enforced through power rather than trust. In such circumstances, the weaker party will feel exploited and, by definition, will not trust the stronger party. In these circumstances, adversarial relationships may well be suppressed by enforced co-operation. But this has much more to do with behavioural compliance than with ‘culture change’. Furthermore, enforced cooperation is likely to erode whatever trust previously existed. Such instances are further likely to generate patterns of resistance and initiate distinctive counter-cultures that may well pre-condition the response of individuals to any future advocated ‘enlightened practice’. For example, the Construction Clients’ Forum’s (1998) attempt to impose partnering on its members’ supply chains directly undermined its stated commitment to relationships based on trust (Green, 2006). Likewise, the infamous appeals of the Construction Industry Board (1997) to adopt partnering on the basis of ‘fundamental belief, faith and stamina’ are anathema to the concept of the ‘learning organisation’ – a further paradox which could have been added to Bresnen’s (2007) list. There is of course a recurring theme here. Proponents of industry improvement repeatedly adopt a top-down approach to workplace change, and yet seem genuinely surprised that the advocated ideas meet with patterns of resistance. Even more bizarrely, the Egan (1998) report bypassed the entire infrastructure of construction sector engagement to promote a change programme disproportionately biased towards the interests of large repeat clients.

146  From Business Process Re-Engineering to Partnering The legitimacy of large clients such as BAA and Tesco to impose ideas on a construction sector comprising close to two million people was blithely accepted in the cause of ‘customer responsiveness’. The only seemingly acceptable role for managers and employees within construction companies was behavioural compliance. Little wonder that adversarial attitudes were hard to eradicate. Fortunately, construction sector managers have proved themselves to be consistently adept at re-inventing the advocated ideas in ways which render them meaningful in localised contexts. Practitioners may not be able to ‘do’ partnering in any instrumental sense, but they are able to act out a partnering performance when required. The final word on partnering is perhaps best left to Alderman and Ivory (2007, 392): [t]o use the term partnering is to invoke a metaphoric association between relationships in the commercial and personal spheres. At its best, partnering is an earnest attempt to weave together these two worlds in the form of an appeal to work closely together and to share the benefits of so doing. At its worst, it is a discursive smokescreen behind which to conceal ‘business as usual’, while at the same time motivating suppliers and contractors to ‘go the extra mile’. There is of course an endless range of possibilities in between the best and worst case scenarios. In any given context the likelihood is that some actors are earnest in their attempts to enact partnering, and others deliberately deploy discursive smokescreens. Neither of these behaviours is especially stable; nor are they independent of broader contextual influences. 6.6 Summary It is clear from the above that the explanation for the popularity of BPR and partnering does not lie in their respective substantive content. Both manage to combine a strong prescriptive argument with an essential vagueness of definition. It has further been shown to be impossible to draw precise boundaries between BPR and partnering. The two concepts both draw on broader sets of ideas relating to TQM and supply chain management. Rather than being understood in terms of their substantive content, it perhaps makes more sense to understand BPR and partnering as different labels which draw from a common pool of ill-defined managerial storylines. Different storylines are pulled together at different times for different purposes. In contrast to portraying BPR and partnering as discrete management techniques, they are much better interpreted as constituent parts of the enterprise culture. Furthermore, they cannot be understood in isolation of the extensive structural changes which characterised the construction sector throughout the 1980s and 1990s. Notwithstanding the above, the rhetoric of BPR largely preceded that of partnering. The rhetoric of BPR both reflected and reinforced changes which were already happening – especially the accelerating trends of downsizing and outsourcing. The imagery of re-engineering was attractive to practising managing because it gave them a means of making sense of the changes they observed happening around them. As has been seen, the storylines of BPR played deliberately on the insecurity of middle managers. They also resonated with the spirit of the enterprise culture. Large and bureaucratic organisations were cast aside in the cause of becoming efficient, responsive and customer-focused. Hence the increased reliance on sub-contracting, self-employment and an enlarged casualised workforce made perfect sense. BPR was likewise mobilised within client organisations to justify the extensive outsourcing of expertise that had previously been maintained in-house. The downside of the above trends was that clients and main contractors alike suffered from a loss of control. Activities previously performed within the same organisation were now performed by others. Partnering therefore became the means by which organisations sought to maintain

From Business Process Re-Engineering to Partnering  147 control without carrying the overhead costs of performing activities in-house. Partnering can perhaps be understood as the rhetorical antidote of BPR. It is striking that downsizing and outsourcing provides the backcloth to many of the exemplar case studies of partnering. This again points towards the need to understand improvement recipes such as BPR and partnering within a broader context. Both are best understood as constituent parts of the enterprise culture. Partnering was in time to morph into the even vaguer concept of collaborative working. But the inherent contradictions were to remain firmly intact. References Alderman, N. and Ivory, C. (2007) Partnering in major contracts: Paradox and metaphor, International Journal of Project Management, 25(4), 386–393. Alvesson, M. and Willmott, H. (1996) Making Sense of Management: A Critical Introduction, Sage, London. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Bennett, J. and Jayes, S. (1995) Trusting the Team: The Best Practice Guide to Partnering in Construction, Centre for Strategic Studies in Construction, The University of Reading. Bennett, J. and Jayes, S. (1998) The Seven Pillars of Partnering, Thomas Telford, London. Betts, M. and Wood-Harper, T. (1994) Re-engineering construction: A new management research agenda, Construction Management and Economics, 12(6), 551–556. Blyth, A. and Worthington, J. (2001) Managing the Brief for Better Design, Spon Press, London. Bresnen, M. (2007) Deconstructing partnering in project-based organisation: Seven pillars, seven paradoxes and seven deadly sins, International Journal of Project Management, 25(4), 365–374. Bresnen, M. and Marshall, N. (2000a) Partnering in construction: A critical review of issues, problems and dilemmas, Construction Management and Economics, 18(2), 229–237. Bresnen, M. and Marshall, N. (2000b) Building partnerships: Case stidies of client-contractor collaboration in the UK construction industry, Construction Management and Economics, 18(7), 819–832. Bresnen, M. and Marshall, N. (2001) Understanding the diffusion and application of new management ideas, Engineering, Construction and Architectural Management, 8(5/6), 335–345. Bresnen, M. and Marshall, N. (2002) The engineering or evolution of cooperation? A tale of two partnering projects, International Journal of Project Management, 20(7), 497–505. Broekstra, G. (1996) The triune-brain metaphor: The evolution of the living organization, in Metaphor and Organization, (eds. D. Grant, C. Oswick) Sage, London, pp 53–73. Buchanan, D. (2000) An eager and enduring embrace: The ongoing rediscovery of teamworking as a management idea, in Teamworking, (eds. S. Proctor, F. Mueller) Macmillan, Basingstoke, pp 25–42. Champy, J. (1996) Reegineering Management: The Mandate for New Leadership, HarperBusiness, New York. Construction Industry Board (1997) Partnering in the Team. Thomas Telford, London. Commonwealth of Australia (1999) Building for Growth: An Analysis of the Australian Building and Construction Industries, Commonwealth of Australia, Canberra. Competition Commission (2000) Supermarkets: A Report on the Supply of Groceries from Multiple Stores in the United Kingdom, CC, London Construct IT (1996) Briefing and Design. Benchmarking Best Practice Report, Construct IT, Salford. Construct IT (1998) Supplier Management Update. Benchmarking Best Practice Report, Construct IT, Salford. Construction Clients’ Forum (1998) Constructing Improvement, Construction Clients’ Forum, London. Construction Industry Board (1996) Educating the Professional Team, Thomas Telford, London. Construction Industry Institute (1991) In Search of Partnering Excellence, CII, Texas. Conti, R. F. and Warner, M. (1994) Taylorism, teams and technology in “reegineering” work organisation, New Technology, Work and Employment, 9, 93–102. Cooper, R., Aouad, G., Lee, A., Wu, S., Fleming, A. and Kagioglou, M. (2005) Process Management in Design and Construction, Blackwell, Oxford. Cox, A. (1999) Power, value and supply chain management, Supply Chain Management, 4(4), 167–175.

148  From Business Process Re-Engineering to Partnering Dainty, A. R., Briscoe, G. H. and Millitt, S. J. (2001) Subcontractor perspectives on supply chain alliances, Construction Management and Economics, 19(8), 841–848. Davenport, T. E. (1993) Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, Harvard. Davenport, T. E. and Short, J. E. (1990) The new industrial engineering: Information technology and business process redesign, Sloan Management Review, Summer 1990, 11–27. De Cock, C. and Hipkin, I. (1997) TQM and BPR: Beyond the beyond myth, Journal of Management Studies, 34(5), 659–675. Egan, Sir John. (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. EPSRC (1994) The Innovative Manufacturing Initiative, Engineering and Physical Sciences Research Council, Swindon. Fernie, S., Green, S. D. and Weller, S. (2003) Dilettantes, discourse and discipline: Requirements management for the construction industry, Engineering, Construction and Architectural Management, 10(5), 354–367. Fulop, L. and Linstead, S. (1999) Management: A Critical Text, Macmillan, Basingstoke. Gambetta, D. (1988) Can we trust trust? in Trust, (ed. D. Gambetta) Blackwell, Oxford, pp 213–238. Green, S. D. (1999) Partnering: The propaganda of corporatism? Journal of Construction Procurement, 5(2), 177–186. Green, S. D. (2006) Discourse and fashion in supply chain management, in The Management of Complex Projects: A Relationship Approach, (eds. S. Pryke, H. Smyth) Blackwell, Oxford, pp 236–250. Green, S. D. and Simister, S. J. (1999) Modelling client business processes as an aid to strategic briefing, Construction Management and Economics, 17(1), 63–76. Grey, C. and Mitev, N. (1995) Re-engineering organisations: A critical appraisal, Personnel Review, 24(1), 6–18. Grint, K. (1994) Reengineering history: Social resonances and business process reengineering, Organization, 1, 179–201. Grint, K. and Willcocks, L. (1995) Business process re-engineering in theory and practice: Business Paradise regained? New Technology, Work and Employment, 10(2), 99–109. Hammer, M. (1990) Reengineering work: don’t automate, obliterate, Harvard Business Review, 68, 104–112. Hammer, M. and Champy, J. (1993) Re-Engineering the Corporation, Harper Collins, London. Huczynski, A. A. (1993) Management Gurus, Routledge, London. Hughes (1991) Modelling the construction process using plans of work, Proc. International Conference on Construction Project Modelling and Productivity, CIB W65, Dubrovnik. Jackson, B. G. (1996) Re-engineering The sense of self: The manager and The management guru, Journal of Management Studies, 33(5), 571–590. Johansson, H. J., McHugh, P., Pendlebury, A. J. and Wheeler, W. A. (1993) Business Process Reengineering: Breakpoint Strategies for Market Dominance, Wiley, Chichester. Jones, M. R. (1995) The contradictions of business process re-engineering, in Examining Business Process Re-Engineering, (eds. G. Burke, J. Peppard) Kogan Page, London, pp 43–59. Kagioglou, M., Cooper, R., Aouad, G. and Sexton, M. (2000) Rethinking construction: The generic design and construction process protocol, Engineering, Construction and Architectural Management, 7(2), 141–153. Kalgaard, R. (1993) ASAP interview with Michael Hammer, Forbes, 13 September, pp. 69–75. Kamara, J. M., Anumba, C. J. and Evbuomwan, N. F. O. (2002) Capturing Requirements in Construction Projects, Thomas Telford, London. Korczynski, M. (2000) The political economy of trust, Journal of Management Studies, 37, 1–21. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Lawrence, P. R. and Lorsch, J. W. (1967) Organization and Environment, Harvard Press, Cambridge, Mass.

From Business Process Re-Engineering to Partnering  149 McGeorge, D. and Palmer, A. (1997) Construction Management: New Directions, Blackwell, Oxford. McGeorge, D. and Palmer, A. (2002) Construction Management: New Directions, 2nd edn., Blackwell, Oxford. Micklethwait, J. and Wooldridge, A. (1997) The Witch Doctors, Mandarin, London. Miers, D. (1994) Why do BPR initiatives fail? Workflow and Re-Engineering International Association) Newsletter, 1(2), 1–2. Mohamed, S. (ed.) (1997) Construction Process Re-engineering, Proc. of International Conference, Gold Coast, Australia. Mohamed, S. and Tucker, S. (1996) Options for applying BPR in the Australian construction industry, International Journal of Project Management, 14(6), 379–385. Mumford, E. and Hendricks, R. (1996) Business process re-engineering RIP, People Management, 2nd May, pp 22–27. OFT (1999) Bridgeman Refers Supermarkets. Press Release PN 11/99, Office of Fair Trading, London. OST (1995) Technology Foresight: Progress Through Partnership, Office of Science and Technology, London. RIBA (1963) Plan of Work for design Team Operation, Royal Institute of British Architects, London. Sabel, C. (1992) Studied trust: Building new forms of co-operation in a volatile economy, in Industrial Districts and Local Economic Regeneration, (eds. F. Pyke, W. Sengenberger) International Institute for Labour Studies, Geneva, pp 215–250. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. Tinaikar, R., Hartman, A. and Nath, R. (1995) Rethinking business process re-engineering: A social constructivist perspective, in Examining Business Process Re-Engineering, (eds. G. Burke, J. Peppard) Koran Page, London, pp 107–116. Walker, A. (1989) Project Management in Construction, 2nd edn., BSP Professional Books, Oxford. Willmott, H. (1995) Will the turkeys vote for Christmas? The re-engineering of human resources, in Examining Business Process Re-Engineering, (eds. G. Burke, J. Peppard) Kogan Page, London, pp 306–315. Womack, J., Jones, D. and Roos, D. (1990) The Machine That Changed the World, Rawson, NY. Wood, J. R. G., Vidgen, R. T., Wood-Harper, A. T. and Rose, J. (1995) Business process redesign: Radical change of reactionary thinking? in Examining Business Process Re-Engineering, (eds. G. Burke, J. Peppard) Koran Page, London, pp 245–261.

7

Lean Construction

7.1 Introduction The preceding chapter engaged with the topics of business process re-engineering (BPR) and partnering. The purpose of this chapter is to extend the discussion to lean thinking and the way it is enacted in the construction sector. Lean construction started to attract interest from academics in the early 1990s. But it was only with the publication of Rethinking Construction (Egan, 1998) that the discourse of lean construction became central to the quest for industry improvement amongst industry practitioners. At the time of writing, there continues to be much debate regarding the definition of lean construction and what it means to be ‘lean’. The antecedents of the concept lie in the ideas of lean production, as originally developed in the Japanese car industry (Womack et al., 1990). The definition of lean production is itself contentious and is best understood as a complex cocktail of ideas including continuous improvement, flattened organisation structures, teamwork, the elimination of waste, efficient use of resources and co-operative supply chain management (SCM). However, the debate is complicated by the subsequent use of ‘lean thinking’ as the generic term to describe application beyond manufacturing (Womack and Jones, 1996). Further complications are added by the notion of ‘lean organisation’ and the metaphorical connotations associated with the word ‘lean’ itself. Yet the ongoing confusion of definition has not prevented ‘lean construction’ becoming an established component of construction best practice (Flanagan et al., 1998; Saad and Jones, 1998). In common with BPR, there is an extensive critical literature relating to lean production, which is too often ignored. It will be argued that if lean thinking is to be understood, it is important to appreciate its potential negative consequences as well as its supposed benefits. The chapter is structured in four parts. First, attention is given to the critical literature on lean production and the way in which Japan is positioned within Western discussions of management. Consideration includes the homogenising effects of globalisation in the automotive sector. The discussion also links lean thinking with the broader discourse of enterprise. Of particular note is the way the rhetoric of lean thinking reflects and reinforces the iconic status of the customer. Of further note is the overwhelmingly prescriptive nature of the existing literature on lean construction, with little recognition of the socialised nature of the diffusion process. The prevailing production-engineering perspective too often assumes that organisations are unitary entities where all parties strive for the common goal of ‘improved performance’. The second part of the chapter develops an alternative perspective which focuses on the need to understand the processes through which ideas such as lean become diffused. Of particular note is the way in which the conceptualisation and enactment of lean construction differs across contexts, often taking on different manifestations from those envisaged. Consideration is extended to the function of consultants as intermediaries between the producers and users of ‘new’ management ideas, and the role of inter-organisational networks. Given the

DOI: 10.1201/9781003308133-7

Lean Construction 151 endless exhortations for construction to learn from other industries, consideration is also given to responses to lean production in the automotive sector. The third section of the chapter specifically addresses lean thinking in the construction context. Coverage includes techniques such as the Construction Lean Improvement Programme (CLIP) and extends to the alleged need for an alternative ‘theory of production’. Attention is given to the Last Planner technique, which in some quarters is held to be synonymous with lean construction. The aim is not to dispute that such techniques can be useful in the here-and-now, but to set them against the broader context of sectoral change. It is suggested that the concepts of ‘leanness’ and ‘lean construction’ must be understood in the context of 40 years of construction sector re-structuring. Finally, the chapter is concluded by the description of empirical research that sought to access the ascribed meanings of lean thinking by UK construction sector policy makers and practitioners. 7.2  Lean production in critical perspective 7.2.1  The guru-hype of lean thinking

The seminal description of lean production is provided by Womack et al. (1990) in their bestselling book The Machine that Changed the World. The advocated model draws heavily from Japanese management practices and the Toyota manufacturing system in particular. Although the book is undoubtedly well-researched and authoritative, the more critical reader cannot help but be struck by the way organisations are conceptualised as profit-maximising machines. Success is primarily seen to depend upon efficiency in meeting the needs of the customer. Womack et al. readily admit to giving little attention to the special features of Japanese society from which lean production emerged. The Machine that Changed the World was undoubtedly a significant intellectual contribution born from an extensive research effort, but the extent to which the findings can be extrapolated to other contexts remains hotly contested. Many continue to challenge the extent to which lean methods are applicable beyond the unique Japanese institutional context (e.g. Dohse et al., 1985; Kenney and Florida, 1993; Morris and Wilkinson, 1995; Oliver and Wilkinson, 1992). The notion that universal management techniques can be applied irrespective of context is in harsh contradiction to the long-established principles of contingency theory (Lawrence and Lorsch, 1967). Ultimately, such concerns were marginalised by the globalisation of the automotive industry. Womack and Jones’ (1996) subsequent publication on Lean Thinking notably ignored any discussion of contingent responses in favour of universal prescription. Most strikingly, lean thinking was not only advocated for the automotive sector, it was advocated as being applicable to all sectors – including the provision of services. Lean Thinking also displays many characteristics of the popularised ‘guru-hype’ for which Western managers seem to have a perennial weakness (cf. Jackson, 1996). The evangelical nature of Womack and Jones’ (1996) message is well illustrated by the last two sentences of the preface: In the pages ahead we’ll explain in detail what to do and why. Your job, therefore, is simple: just do it! In other words, the reader is not required to think, or to waste time reading any other books, or indeed to waste time gaining an education. All of these are seemingly considered to be wastefully irrelevant in the quest for improved efficiency. Of particular note is the way the role of practising managers is reduced to implementation. The arguments used to promote lean thinking are, in many respects, identical to those used by Hammer and Champy (1993) to promulgate BPR. Once again, a stark prescriptive intent is

152  Lean Construction combined with a maddening degree of definitional vagueness. Lean thinking is presented as an economic imperative in the face of global competitive. The only alternative to adopting lean thinking is to go out of business. In other words, modernise or die. The advice to ‘just do it’ may well bring a comforting sense of security, but the ambiguity of precisely what is being suggested leaves plenty of scope for different interpretations of precisely what should be done. 7.2.2  Wizards, villains and Western hypocrisy

While notably ignored by Womack and Jones (1996) and Rethinking Construction (Egan, 1998) the 1990s saw an explosion of interest in the merits and de-merits of so-called Japanese management methods. In essence, the debate hinges on whether Japanese methods are based on nice things like loyalty, empowerment and consensus or whether they are based on nasty things like management-by-stress and exploitation. It seems to suit Western authors to sometimes portray the Japanese as wizards of modern management, and at other times to portray them as exploitative villains. The truth of course is more problematic, and certainly accords with neither of these two extremes. There is certainly much hypocrisy among Western commentators who attribute the success of the Japanese motor manufacturers to Japan’s protected home market. It is conveniently forgotten that the hegemony of the US and European manufacturing industry was founded on similar protectionist principles. For example, the most successful sectors of the US economy were hugely supported through prolonged state intervention. It is difficult to deny that the US’s commercial lead in advanced technology has not benefited hugely from a substantial public subsidy via the Pentagon’s defence budget. Much of the early critical literature draws from Marxist theories that depict stark battle lines between ‘capital’ and ‘labour’. Hampson et al. (1994) certainly provide a very different account of the Japanese ‘culture’ of industrial consent and cooperation to that provided by The Machine that Changed the World. They argue that an essential requirement for the success of lean production was the weakness of Japanese organised labour in the aftermath of World War II: the Japanese labour movement was ‘systematically disembowelled’ in the immediate postwar period by an alliance of Japanese capital, the Japanese state and the United States occupying forces - the latter alarmed by the Communist influence in the Japanese labour movement. (Hampson et al., 1994, 240) These of course are not the kinds of issues which are normally raised during discussions of lean production. According to this particular critical storyline, it was the weakness of organised labour that provided the context for so-called enlightened practices such as lifelong employment. The argument is that throughout Japan’s economic recovery workers were effectively tied to single companies through firm-specific training and so-called ‘enterprise unions’. Dissident Japanese workers have apparently long resented the loss of individual freedom associated with in-company unions. Kamata (1982) is often cited to illustrate how Toyota’s single-minded drive for success in the 1970s was accompanied by significant personal deprivation on the part of the workforce. It seems that workers were often required to live in guarded company camps hundreds of miles from their families and suffered high levels of stress at the workplace as they struggled to meet company work targets. But the real concern was that relentless Japanese competition throughout the 1970s and 1980s progressively forced Western corporations to adopt similar methods. The end result was a widespread reduction in industrial democracy and a corresponding intensification of work. Yet it seems somewhat farfetched to lay the blame for such trends solely on the shoulders of the Toyota manufacturing system. Karl Marx of course developed his arguments of oppression

Lean Construction 153 and exploitation entirely independently of Japanese management practices. And the industrial combines of the Soviet Union noticeably failed to win many awards for their enlightened human resource management (HRM) practices. The arguments promoted by the likes of Hampson et al. (1994) are heavily shaped by the metaphor of organisation as an instrument of domination. Condemning every new initiative as a means of technocratic totalitarianism ultimately becomes sterile and threatens to replace one set of supposed dogma with another. Arguments that lean methods necessarily produce ‘bad’ outcomes share the same instrumental logic with the contention that lean methods necessarily produce ‘good’ outcomes. Both perspectives display the same tendency towards technological determinism by denying managers an active role in shaping how such ideas are implemented. Ultimately, both perspectives are equally impoverished. In the final analysis, critiques of Japanese management methods become conflated with critiques of globalisation. The broader story is therefore perhaps less about the Japanisation of Western management practices, and rather more about the globalisation of Japanese management practices. 7.2.3  Globalisation and Japanese transplants

What is clear is that the reality of global competition impinged upon the UK car industry with dramatic effect throughout the 1980s and 1990s. It is equally clear that the enthusiastic adoption of Japanese management methods was not enough to save Rover Cars. Rather more successful have been the Toyota and Nissan ‘transplants’ which continue to mass produce cars in the UK (albeit under foreign ownership). The reasons for the success of these so-called transplants are again hugely debated within a hotly contested literature. The authors of the Egan report were especially impressed by the implementation of lean thinking within the Nissan plant in Sunderland. Yet Nissan posted a succession of massive global losses throughout the latter part of the 1990s. The Sunderland plant may well have been the most efficient in Europe, but Nissan globally were at the time in serious trouble. In 1999 French carmaker Renault took a 37% stake in Nissan, and installed the controversial Carlos Ghosn (nicknamed ‘Le Cost Killer’) as president and CEO. The subsequent turnaround in Nissan’s fortunes was impressive, but this was not achieved through the implementation of esoteric notions of ‘lean thinking’. It was achieved by the unprecedented closure of several Nissan plants in Japan coupled with a series of global cost-cutting purges. While the UK construction industry was looking to learn lessons from the Japanese automotive industry, Nissan were relying for their salvation on a French-Brazilian ‘cost killer’. Ghosn was ultimately obliged to flee Japan in December 2019 amidst accusations of corporate fraud. In April 2022 the French government issued an international warrant for his arrest. Published case studies of Japanese manufacturing transplants also fell consistently short of the ‘lean utopia’ envisaged by Womack and Jones (1996). For example, Fucini and Fucini (1990) point to the gradual disillusionment of the American workforce at Mazda’s plant in Michigan. Despite the relatively high wages available, workers frequently complained about poor safety standards, stress of work, loss of individual freedom and discriminatory employment practices. Similar criticisms have been levelled at the Nissan plant in Sunderland, UK (Garrahan and Stewart, 1992; Turnbull, 1988). Beale (1994) further describes how the Nissan system of continuous improvement is directly dependent upon the existence of a single union agreement that was in effect a ‘no-strike’ deal. The acceptance of such an agreement was a condition of Nissan’s initial location in Sunderland. Nissan also received significant government subsidies to locate in the North East of England, strangely at odds with Thatcher’s stated commitment to free-market economics. The relatively high levels of local unemployment continue to provide Nissan with significant negotiating power

154  Lean Construction over the workforce. There is arguably always an implicit threat that production might be switched elsewhere if the workforce refuses to conform. Whilst the workforce may well be grateful for the relatively high-paid jobs that Nissan provides, critics would argue that there is a price to pay in terms of worker autonomy. Beale’s (1994) perspective would of course have been far too ‘Old Labour’ to have been of any interest to the authors of Rethinking Construction. His arguments may have been well-received in the 1960s. But by 1998 he was just another dinosaur stubbornly holding out against the enterprise culture. The stark reality is that the Construction Task Force was simply not interested in hearing arguments against lean thinking. They had been tasked by Deputy Prime Minister John Prescott to provide solutions, and the solutions had to be compatible with the spirit of the enterprise culture. Hence the critical literature was systematically ignored in favour of a literature which was equally one-sided in the other direction. 7.2.4  Lean thinking and the enterprise culture

The authors of Rethinking Construction could perhaps by forgiven for ignoring the hyper-critical literature on Japanese management practices. But the report could usefully have been more sensitive to mainstream criticisms such as those proposed by Rehder (1994, 28): Japan’s industrial work hours are among the longest in the world and the quality of life is poor and not improving. Public and recently government sentiment in Japan is growing increasingly critical of the ‘lean system’, citing its drain on human and natural resources, its stressful and wasteful short model cycle and its street-congesting and polluting just-in-time system. Unfortunately none of the above concerns were even acknowledged. The preceding quote is of particular interest in that it raises concerns about the sustainability of lean thinking. Many would now accept that Rethinking Construction’s emphasis on narrowly defined efficiency in isolation of any consideration of sustainability was its biggest failure. Certainly there was no mention of the disparate needs of multiple stakeholders within Rethinking Construction. Notions of stakeholder theory had been cast aside by the remorseless rhetoric of customer responsiveness. This was the enterprise culture at its zenith and the cult of the customer was in full sway. Satisfying the needs of future generations was implicitly classified as waste; and waste of course is to be eliminated. The assumption which underpinned Rethinking Construction was the UK construction sector had been slow to adopt the sophisticated management techniques that had revolutionised the automotive sector. Within the broader context of UK manufacturing, it is clear that poor performance cannot be blamed entirely on out-dated management practices. Any meaningful diagnosis must surely take broader institutional factors into account; decades of under-investment and poor industrial relations cannot be solved by a cunningly clever set of management techniques. Any serious consideration of the relative decline of British manufacturing must take into account the long-term effects of the decline of empire and associated loss of protected markets. Of particular importance in explaining the prolonged lack of investment was the bankrupt state of the British economy postWorld War II. But such broader considerations do not lend themselves to simple solutions. Hence they seldom appear in accounts which are orientated towards performance improvement. Managerial audiences are rarely interested in understanding problems; they want solutions which bolster their own sense of self-identity. A much better way of understanding the influence of lean thinking is to focus on the rhetoric in which it is presented, rather than its supposed substantive content. The language of lean thinking undoubtedly resonated with that of the ‘enterprise culture’ which came to dominance

Lean Construction 155 in both the UK and the US during the 1980s (see Chapter 2). The prevailing political climate made strategies based on ‘cutting out the fat’ much more socially acceptable than they would have been during previous decades. In the UK, the doctrine of enterprise was primarily based on ‘wealth creation’ in the hope that the resultant benefits would trickle down to other levels of society. While it is easy to bemoan the intensification of work in the cause of efficiency, few would deny that many Western workers had become complacent in the belief that the world owed them a living. Whichever standpoint one adopts, it is surely naïve to advocate that the implementation of lean methods in Western manufacturing can be understood in isolation of these broader social and political changes. 7.3  Understanding diffusion 7.3.1  Perspectives on organisation

An essential starting point for reviewing the models of organisation that are implicit in the published models of lean construction is provided by the unitary, radical and pluralist frames of reference (cf. Burrell and Morgan, 1979; Fox, 1974; Morgan, 2006). The unitary perspective assumes that all parties strive to achieve common objectives for the organisation. It is this perspective that dominates the production-engineering literature and is especially evident amongst the advocates of lean construction (e.g. Ballard, 2000; Ballard and Howell, 1998; Koskela, 1992). Emphasis is given to efficiency, control and leadership with little recognition of conflict or power. Organisations are seen to comprise homogeneous entities with no variation between the interests of individuals (Marchington and Vincent, 2004). Burgoyne and Jackson (1997) suggest that an appropriate metaphor to capture the essence of the unitary perspective is that of a ‘parade of individuals marching purposefully forward in step, in one direction and to the same tune’. From this perspective, the implementation of ‘lean construction’ in the cause of waste elimination is seen to be in everyone’s interests. Whilst such assumptions are implicit within many improvement recipes, they sit ill-at-ease with the fragmentation and occupational diversity of the construction sector. Of further note amongst those who adopt a unitarist perspective is the assumption that the implementation of lean construction falls within the remit of ‘management’, i.e. there is an assumption that management are able to implement lean construction irrespective of the actions of others. In harsh contrast to the unitary perspective described above, Morgan (2006) describes the ‘radical’ frame of reference as influenced by ‘old-fashioned’ structural Marxism. From this perspective, society is viewed as ‘comprising antagonistic class interests, characterised by deep-rooted social and political cleavages held together as much by coercion as by consent’. Such deep-rooted conflicts are seen to be played out within organisations, which are in themselves viewed as ‘instruments of oppression’. The appropriate metaphor here is that of a ‘battlefield’ where rival forces such as management and trade unions strive to achieve ends that are ultimately incompatible (Burgoyne and Jackson, 1997). As noted above, there is a significant literature that analyses lean production from this perspective, primarily within the context of the automotive sector (cf. Beale, 1994; Dohse et al., 1985; Garrahan and Stewart, 1992). Green (1999a, 1999b) is one of the few authors to mobilise these critical arguments in the domain of lean construction. However, such provocations have had minimal impact on the accepted discourse. Howell and Ballard (1999, 33) provide one of the few attempts from mainstream authors to engage with critical arguments: We argue that Green misses the key foundations of lean which are drawn from a long history of production management thinking which first attempts to manage the physics of production in the service of higher performance.

156  Lean Construction The above rejoinder is primarily of note in its acknowledgement of lean construction’s intellectual heritage and the associated unitary frame of reference. The overriding concern with the ‘physics of production’ clearly illustrates the technocratic orientation of the mainstream lean construction literature. It is taken for granted that ‘higher performance’ is an aspiration shared by all parties. Ultimately, the lack of engagement with critical perspectives is not surprising. Those who insist on seeing the world in terms of exploitation and domination inevitably marginalize themselves from the mainstream conversation. Within the domain of political science, the term pluralism is usually associated with liberal democracies where potential authoritarian tendencies are constrained by the free-interplay of interest groups with a stake in government (Morgan, 2006). The pluralist view of organisations emphasises the diversity of individual and group interests. In the words of Morgan (2006): ‘the organisation is regarded as a loose coalition which has just a passing interest in the formal goals of the organisation’. Morgan’s words resonate strongly with Cherns and Bryant’s (1984) model of temporary multi-organisations (TMOs) in the construction sector; both are underpinned by the same pluralist perspective. Conflict is accepted as an inevitable characteristic of organisations, although this is not necessarily seen to be dysfunctional. Power is the medium through which conflicts of interest are mediated, and interest groups draw power from a plurality of sources (Clegg, 1979; Morgan, 2006). Such perspectives are by no means new, but they have been largely ignored in the debate about lean construction. 7.3.2  Arenas of enactment

Burgoyne and Jackson (1997) build on the pluralist perspective to suggest that organisations can usefully be understood as ‘arenas’. The arena concept creates an image of an organisation as a space where differences come together, are contested and to some extent, reconciled. The outcomes comprise a partial reconfiguration of the pre-existing factions and alliances. Events in the arena are to some extent visible; all parties can observe what takes place. Furthermore, observers may choose to become active participants if they perceive that their interests are at stake. Perhaps most pertinently, events constitute an element of performance (cf. Clark and Salaman, 1996). Individuals act out ‘roles’ and utilise ‘scripts’. However, Burgoyne and Jackson (1997, 60) go beyond the dramaturgical metaphor to suggest that the appropriate metaphor for understanding the pluralistic perspective is that of the ‘carnival’: Within the carnival, dazzling array of seemingly unrelated activities are being simultaneously undertaken by individuals and groups with diverse agendas seeking to satisfy diverse needs and desires. This frenzied activity, however, invariably takes place with more synergy than conflict, and with a dynamic complexity that is beyond the intelligence of any single agent to understand. Any appointed (or self-appointed) ‘champion’ of lean construction is therefore seeking to act out a role in the above arena. Published ‘best practice’ guidelines and prescriptive textbooks such as Womack and Jones (1996) provide the scripts against which they improvise. The lexicon of ‘lean thinking’ therefore provides the language of the performance: ‘value must be generated’, ‘flow must be managed’ and ‘waste must be eliminated’. Others within the arena will challenge the meaning of such jargon and may marshal other resources as a means of resistance. Language is therefore mobilised as a source a power whereby individuals compete for influence and resources. The task of ‘management’ is to shape the debate and convince competing parties to follow their chosen course of action. Language in its narrative form therefore dictates the agenda.

Lean Construction 157 It frames the way that people understand and act. But ‘management’ itself will be a pluralistic arena characterised by competing interest groups. There is rarely any certainty of outcome. Even if lean construction were a coherent recipe for industry improvement, it is doubtful whether this coherence would survive its progressive mediation through the multitude of arenas that characterises each construction project. The likelihood is that the language of lean will mix with the language of other scripts in unique and transient combinations. But any such interactions about the meaning of lean construction will only comprise a small part of the ‘dazzling array of seemingly unrelated activities’ that characterise any given arena. Notwithstanding the above, it is important to recognise that the acceptability of different scripts will depend upon their persuasiveness as sensemaking devices (Weick, 1995). Practitioners will attach more legitimacy to those narratives that help them make sense of their experienced reality. The discourse of any improvement initiative is more likely to be accepted if it resonates with the observed changes already underway. Managers are increasingly overwhelmed by externally driven change over which they have little control. Narratives such as lean construction may provide some degree of comfort that they are in control of events whilst boosting their sense of self-identity. More importantly, such narratives may serve to sustain and accelerate structural changes that are already underway. Such issues are notably ignored by the technocist literature on lean construction. Questions concerning the complex interaction between action and structure over time echo the structure-agency debate that has long characterised the broader domain of social theory (cf. Giddens, 1984). Issues of consideration include the relationship between language and action, the manner in which human agency relates to structural aspects of society and the way that action is structured in everyday contexts. 7.3.3  Consultants, intermediaries and inter-organisation networks

The pluralist perspective developed above provides a standpoint on the diffusion of new management ideas that is noticeably missing from the current literature on lean construction. A further essential point of reference is provided by Bresnen and Marshall’s (2001) consideration of the problems of transferring and applying new management ideas in the construction sector. Their observations on the contested nature of mainstream management knowledge are especially pertinent in the case of lean, which continues to defy universal definition and is repeatedly criticised for its lack of coherence (cf. Kinnie et al., 1996; Legge, 2000). Bresnen and Marshall (2001) further cite the highly socialised and politicised nature of the knowledge diffusion process. Such a diagnosis is readily compatible with Burgoyne and Jackson’s (1997) notion of a ‘carnival’ of activities being played out across a succession of arenas. The role of management gurus in the promotion of management fashions was touched upon in the preceding chapter. There is an extensive literature on management fashions and the way in which they are marketed to practising managers (e.g. Abrahamson, 1996; Clark and Salaman, 1998; Huczynski, 1993: Keiser, 1997). In many respects ‘lean production’ follows the pattern of previous management fashions such as total quality management (TQM) and BPR (cf. Fincham, 1995; Legge, 2002). All were initially presented as major innovations that were indispensable for modern managers. Selected aspects of the associated terminologies were subsequently absorbed into the discourse of practising managers and in some cases triggered change programmes with direct material consequences (Benders and van Bijsterveld, 2000). The process through which such fashions are generated and diffused therefore impacts directly upon the ‘reality’ of modern organisations. Of particular importance is the range of actors involved in the fashion-setting process. Active participants extend beyond management gurus to include business school academics, practising managers, the business media and government bodies. Scarbrough (2003) gives particular

158  Lean Construction emphasis to the intermediary roles performed by consultants and professional groups in terms of mediating between management gurus and end consumers. This mediating function is seen to be enacted through their involvement in inter-organisational networks and their ability to legitimise new ideas in the eyes of practising managers. Within the context of the construction sector, the networks that are mobilised include a diverse range of interest groups, quangos, government outreach bodies and membership clubs purportedly committed to promoting ‘change’. The evolving infrastructure of industry improvement has been described at various stages throughout the preceding chapters, but particular emphasis has been given to the various networks that were spawned in the wake of Rethinking Construction (see Chapter 5). The networks of industry improvement are invariably in a constant state of flux with little inherent stability. Legge (2002) argues that consultants use such networks to build the client base for their products. In the case of TQM, consultants are seen to have developed three ‘good stories’ that enable them to sell TQM in response to a range of different concerns. The first is termed the operational management ‘story’ and emphasises conformance to the requirements of customers. The second presents quality in terms of ‘value for money’ and is used to counter concerns about low price. The third story draws from the ‘excellence literature’ (e.g. Peters and Waterman, 1982) and emphasises employee involvement and empowerment as a means of achieving a ‘quality culture’. Management groups within client organisations are seen to mobilise different stories to suit their own political agendas. In this respect, consultants and users have a shared vested interest in the ‘interpretative viability’ of management fashions (cf. Benders and van Veen, 2001). The key point is that actions undertaken under a fashion’s label vary significantly across contexts. Indeed, the inherent ambiguity of a management fashion is essential for its effective diffusion. The possibility of generating alternative storylines makes the label much more marketable in a wider variety of contexts. If promoters were only able to mobilise one ‘good story’ it would be perceived as relevant in far fewer cases. Even if there were an uncontested core of technological innovations that are central to lean production, such innovations would still be subject to complex processes of social shaping (cf. Bijker et al., 1987; Williams and Edge, 1996). 7.3.4  Responses to lean production in the automotive sector

As has already been observed, construction practitioners are repeatedly exhorted to learn lessons from other sectors, especially the automotive sector. The lessons to be learned however are not quite as straightforward as the advocates of the Egan agenda would have us believe. Scarbrough and Terry (1998) make a useful contribution in providing specific insights into the diffusion of lean practices in the UK automotive sector. Drawing from a series of previous studies, they outline two competing models to explain a firm’s response to lean production. The first is derived from the prescriptive literature and focuses on the diffusion of the ‘Japanese paradigm’ of lean production as a supposed unique socio-technical innovation that offers significant advantages over other methods. This is very much the line of argument advocated in the prescriptive literature (e.g. Wickens, 1987; Womack et al., 1990), and also echoes previous arguments in favour of BPR. The contention is that competitive forces in the marketplace leave firms with little choice other than to adopt the most efficient techniques and practices. The key elements of lean production are seen to be universally applicable irrespective of context, with little importance accorded to the history of individual firms or sectors. Scarbrough and Terry (1998) emphasise that the assigned role of management is that of acceptance; there is little scope for managerial discretion. It is this same storyline of technological determinism that dominated the plethora of consultant-led courses on lean construction which followed in the wake of Rethinking Construction. The fact that courses of this nature continue to attract audiences suggests that the message is popular with at least some industry representatives. However, there is little evidence in support of the model of universal

Lean Construction 159 adoption which was largely discredited even before lean thinking became popular with construction sector policy makers (cf. Abo, 1994; Delbridge, 1998; Morris and Wilkinson, 1995). The second model outlined by Scarbrough and Terry (1998) follows Storey and Sisson’s (1989) diagnosis and is described as the ‘bolt-on’ model of change. From this perspective, lean production is seen to be an addition to the technical fixes already available. Emphasis is placed on the constraints of the cultural and institutional context. Storey and Sisson (1989) cite the limitations imposed by de-regulated labour markets and the institutionalised allegiance to short-term cost reduction policies. They further note a deeply ingrained aversion to risk amongst British managers, who are condemned to adopt short-term cost reduction policies as a result of external factors beyond their control. Managers can therefore give lip-service to the language of lean production, whilst persevering with established practices and routines. At best, individual ‘lean techniques’ are piloted alongside other accepted techniques. The bolt-on model rejects any radical re-orientation in operating practices as infeasible given the contextual constraints within which managers operate. In essence, context and local history are of primary importance in conditioning a firm’s response to lean production. This view resonates strongly with Bresnen and Marshall’s (2001) argument that the institutional-cultural environment surrounding the construction process must be taken into account when seeking to import approaches developed in other sectors. It is this argument which has shaped the structure of the current book. Improvement techniques such as lean construction are not directed at a blank piece of paper but at specific institutional-cultural environments with pre-existing dynamics of change. Scarbrough and Terry (1998) subsequently move beyond the above dichotomy to offer an alternative ‘adaptation model’ informed by empirical research within Rover and Peugeot-Talbot during the mid-1990s. The adaptation model credits management with a more proactive role and highlights the possibility that lean production may act as a catalyst for workplace change. However, the resultant changes are by no means pre-determined by the pre-existing discourse of lean production. In this respect, Scarbrough and Terry’s (1998) findings concur with Benders and van Bijsterveld’s (2000) study of the diffusion of lean production in Germany. Both studies give prominence to the tendency for innovations to be re-invented within localised contexts. The outcomes of the adaptation process will therefore differ across contexts with little uniformity, and often in different forms to those envisaged. Hence attempts to generalise about the outcomes of ‘lean production’ become highly problematic. Historical and plant-level factors continue to be important and change is construed as highly path dependent. The dynamics of the wider institutional context are also seen to be critical in shaping technological innovation (cf. Pettigrew, 1997). This observation is equally relevant to the ways in which ‘new’ management ideas are enacted in construction firms. The history of individual firms and their existing embedded practices will influence how ideas such as lean thinking are interpreted and enacted. The dynamics of the broader institutional context are of further importance in shaping and constraining responses to new ideas. But the heterogeneous nature of the construction sector means that ideas such as lean thinking are inevitably enacted in an almost endless variety of different ways. 7.4  Lean thinking in the construction context 7.4.1  Lean improvement techniques

The preceding discussion provides sufficient background to engage with the literature relating to lean thinking in the construction context in a more informed way. It is clear that the implementation of lean is crucially influenced by the terrain at which it is directed. The experience of lean production in the automotive sector suggests that the most likely outcome is that managers give lip-service to the language of lean production, whilst persevering with established practices and routines. However, the adaptation model opens up the possibility of more creative approaches

160  Lean Construction whereby the ideas of lean production are used as a catalyst for change. In this respect, the fact that lean production comprises a transient and ill-defined cocktail of different ideas can be seen as a positive advantage. It has already been argued that ‘interpretative flexibility’ is an essential characteristic of any management fashion. In other words, the persuasiveness of lean thinking is dependent upon its ability to take on different meanings in different contexts. Hence the absence of any universally agreed definition of ‘lean construction’ ceases to be a problem, and becomes an essential criterion of success. In common with TQM, there are sufficient ‘good stories’ with the literature on lean thinking to cater for a wide range of different tastes. Lean production is variously understood as a set of techniques, a discourse, a ‘socio-technical paradigm’ and even a cultural commodity. This co-existence of different interpretations is no less evident within the specific domain of the construction sector. The Egan (1998) report was responsible for popularising the lean label amongst construction professionals, and it is clear that the Construction Task Force primarily saw lean as a set of techniques: Lean thinking presents a powerful and coherent synthesis of the most effective techniques for eliminating waste and delivering significant sustained improvements in efficiency and quality. (Egan, 1998, p. 22) Of particular note is the strong reliance on an underlying machine metaphor. Also of note is the way ‘lean thinking’ could easily have been replaced by ‘business process re-engineering’ with little loss of meaning. The underlying allegiance is to instrumental techniques directed towards eliminating waste and improving efficiency. The reference to quality would appear to have been tagged on at the end as an afterthought. If the advocated techniques do not result in the promised efficiency improvements, it is always possible to blame those responsible for implementation. The techniques were obviously not applied with sufficient enthusiasm. Hence the faith in instrumental management techniques remains intact irrespective of the outcome. What is clear is that practising managers – and policy makers – are continuously on the look out for new techniques to demonstrate they are up-to-date with the latest thinking. And there is always a plethora of management consultants striving to meet the latent demand. One example amongst many is the CLIP programme briefly offered as a consultancy service by the privatised BRE Ltd. CLIP’s focus on process improvement through the elimination of waste points towards its antecedents in BPR. The advocates of CLIP also lay claim to benefits within the areas of communication, planning and logistics. Collaborative planning is seen to be especially important in terms of bringing ‘the whole team together at an early stage: client, designers, main contractor, subcontractors and specialists, in order to plan the optimum sequence of works’. There is an unstated assumption that the identified ‘optimum sequence of works’ serves equally the interests of all parties. In other words, it is taken for granted that the context of implementation is unitary. The notion of early contractor involvement (ECI) is hardly a new idea, having been previously advocated by Banwell (1964). However, what is notable is that construction planning is no longer seen to be the sole responsibility of the main contractor; planning is now seen to be a collaborative process which requires inputs from subcontractors and specialists. The benefits of better planning are of course presented as a ‘win-win’, but it is difficult not to read the fleeting popularity of CLIP as further evidence of the changing role of the main contractor. Having initially retreated from the physical activities of construction to focus on planning and coordination, it now seems that main contractors are increasingly determined to delegate their responsibilities even further. Whether subcontractors and specialists receive any extra payment for sharing this additional expertise is not made clear. Experiences of partnering suggest that subcontractors are squeezed ever more tightly

Lean Construction 161 to contribute more input for less return. Embedded industry recipes are not so easily overcome. What remains in short supply are independent evaluations of the way initiatives such as CLIP are enacted in practice. Such evaluations are unlikely to be conducted by BRE given they have a commercial interest in promoting CLIP as an effective technique directed towards eliminating waste and improving efficiency. 7.4.2  From factory physics to last planner

For those who wish to extend their understanding beyond instrumental improvement techniques, there are plenty of other takes on lean construction which warrant exploration. The Lean Construction Institute (LCI) in the USA has a sustained track record of promoting lean construction as a system of production control (e.g. Ballard, 2000; Ballard and Howell, 1998; Choo et al., 1999). Tommelein’s (1998) work on pull-driven scheduling and simulation is also frequently cited as an exemplar of lean construction. Alternatively, Koskela (1992) has attracted many admirers within the International Group for Lean Construction (IGLC) for his advocacy of the need for an alternative conceptual model of the production process (e.g. Koskela, 1992). A consistent point of commonality is their shared reliance on an underlying unitary conceptualisation of organisation. Such authors tend to see lean construction to be ‘inspired’ by lean production, rather than being concerned with the slavish application of the Toyota manufacturing system. Koskela (2000), for example, is clear that his alternative ‘theory of production’ is distinct from the supposed Japanese model. He is notably critical of the lean cocktail proposed by Womack and Jones (1996), whose five core ‘principles’ are unceremoniously dismissed as slogans. Koskela (2000) further criticises Womack and Jones’ terminology for being imprecise and unsystematic; few would disagree with him in this respect. Koskela’s response is to retreat to the level of abstract theorising, with little interest in how such theories play out in practice. According to Clegg et al. (2006) the theories on offer are highly rationalistic with little recognition that projects rarely unfold evenly and smoothly in accordance with pre-determined plans. Koskela may wish to distance himself from the guruhype of lean thinking, but the machine metaphor nevertheless remains dominant. To theorise on how the ‘physics of production’ might be applicable to construction may be commendable as an ivory-tower exercise. But the overriding challenge must be to connect with the dayto-day challenges faced by practising construction managers (Green and Schweber, 2008). Theories of course come in many shapes and sizes. Yet there seems to be little interest in theories which emphasise the way in which improvement recipes such as lean thinking are diffused in practice. Little recognition is accorded to the way ideas are re-shaped by the cultural-institutional context of the construction sector, or by the unique path dependencies of different firms. The heterogeneous nature of the construction sector renders generalisations few-and-far between. It must also be borne in mind that any attempt to learn ‘new methods of working’ also depends upon the ‘unlearning’ of previously embedded practices. Unpicking existing ways of working inevitably entails risk, with little in the way of guaranteed return. Hence the ‘bolt-on model’ tends to be more feasible than radical change. Firms are not condemned to replicate existing ways of working for ever, but change tends to occur as a process of evolution rather than top-down design (Green et al., 2008). The project-based nature of the construction environment also means that processes of innovation frequently extend across organisational boundaries; hence the innovation process is rarely within the control of a single organisation. But for present purposes, the real point of interest is that innovation is much more situated across multi-organisation networks than it was forty years ago. The large contractors of the 1970s were much less reliant on engaging others than the hollowed-out firms of today. The paradox is that the monolithic contractors of the past operated in a much more stable environment, and hence had little reason to innovate.

162  Lean Construction Ballard’s (2000) last planner technique is perhaps more immediately relevant to the challenges faced by industry practitioners. The basic idea of the last planner is to ensure that tasks only commence when preceding tasks are 100% complete and all necessary resources are available. Such tasks are labelled ‘quality assignments’ and the project manager is expected to ensure there is always a buffer of such assignments available – even if not necessarily on the critical path. As Winch (2002) points out, the difficulty is that work eventually grinds to a halt should there be an insufficient number of quality assignments. The focus on self-organising gangs as discrete resource units once again resonates strongly with an increased reliance on subcontracting. Contractors’ managers who have retreated from the supervision of directly employed operatives may find the last planner persuasive in helping them make sense of their revised role. In this sense, the last planner goes with the grain rather than against it. The broader context is that main contractors’ site managers are no longer able to re-assign individuals from one gang to another in response to contingent circumstances. Gangs now arrive on site as inseparable units; even if the gang members only met when they were picked up at dawn in the proverbial white van. The implication is that construction planning is now routinely dictated by the pattern of sub-contracting, rather than the immediate imperatives of the physical activities of construction. Of further note is that the last planner is essentially tactical is in its orientation and, as such, can easily be combined with existing practices. Practitioners can therefore lay claim to ‘lean construction’ with little in the way of radical change. Even if the last planner were a radical new innovation, it would be unrealistic to expect it to retain any coherence once implemented in real-world contexts. In the wake of Rethinking Construction, many pre-existing techniques aimed at eliminating waste were also opportunistically relabelled ‘lean construction’, thereby rendering before-andafter analysis untenable. Empirically, it becomes impossible to discriminate between new innovations and old innovations which have been re-labelled. There are, incidentally, a number of points of commonality between the last planner and CLIP. Both depend upon a model of collaborative planning and both take it for granted that all parties benefit equally. But in both cases it is more meaningful to focus attention onto the localised processes of innovating rather than the supposed substantive content. And localised processes of innovating will be shaped by what has gone before. Attempts to implement BPR may progressively evolve into attempts to implement lean construction. At the same time, advocates of partnering will be keen to influence at least the language that is used to enact the innovation. Hence the material manifestation of what is being implemented may evolve over time; but the biggest changes are likely to relate to the fashionable status of the labels round which localised innovations occur. 7.4.3  From leanness to anorexia

Moving beyond the narrow confines of the literature on lean construction, the term ‘lean organisation’ has a much wider currency and carries with it a number of metaphorical connotations. This wider debate extends beyond idealised models of production to consider the defining characteristics of ‘lean organisation’. Legge (2000) suggests that the popularity of ‘lean’ can in part be credited to the nuances of the word itself. ‘Lean’ is the opposite of ‘fat’, but different from ‘thin’. Whilst both ‘fat’ and ‘thin’ have negative connotations, ‘lean’ equates with healthiness and fitness. In this respect, ‘lean’ is a metaphor for a desirable bodily condition. To say that an organisation is ‘too fat’ would be to invite a degree of ‘downsizing’. On the other hand, to say that an organisation is ‘too thin’ (or even anorexic) would be to imply that it lacks some sort of nutrition and, by implication, the capacity to perform the required functions. Leanness of course also resonates with the discourse of the enterprise culture. The dominant model of competitiveness in the construction sector has already been seen to rest on leanness and agility in the market place (see Chapter 3).

Lean Construction 163 What is clear is that the advantages of being lean were recognised two decades prior to the publication of Rethinking Construction. The argument in favour of leanness in essence rests on the dangers of being fat and unresponsive in a competitive marketplace. Fat organisations carry too many overheads, typically caused by owning their plant and employing their own operatives. In consequence, fat organisations struggle to be enterprising. Lean organisations, in contrast, are much quicker on their feet. Lean organisations are specifically designed to survive fluctuations in demand. But leanness runs the risk of being an unstable state, with disadvantageous implications for the sector at large. Lean organisations do not invest in training, or implement enlightened HRM practices. Lean organisations rely on subcontractors, which in turn rely on labour-only subcontractors (LOSCs) which too often depend upon agency labour. Contracting firms which adhere to the lean model cease to take responsibility for the operatives who perform the work. The lowest common denominator is the vulnerable self-employed operative with limited rights to welfare provision, sick pay and pension contributions. The UK construction sector embarked on the road to leanness in the late 1970s. Rethinking Construction served to endorse and reinforce the trends that were already deeply embedded within the dominant industry recipe, if only by omission. Construction sector leaders could at least point towards the Respect for People initiative as evidence that ‘something was being done’ about the damaging side effects of lean construction (see Ness, 2010). 7.5  The meaning of leanness 7.5.1  Stages of leanness

One of the most comprehensive attempts to define ‘leanness’ is that offered by Kinnie et al. (1996), who define leanness in terms of three overlapping phases. Stage 1 is professed to be a transitional phase where the focus is on helping the organisation become leaner. Stage 2 concentrates on the achieved state of leanness as an end point, whereas Stage 3 focuses on leanness as a process for managing the lean organisation so that it remains lean and responsive. They further suggest that the most negative connotations are associated with the first stage, and the most optimistic with the last. Despite not being specifically directed at the construction sector, their diagnosis is nevertheless highly pertinent, and goes some way towards providing a contextually sensitive interpretation of leanness. The adoption of Kinnie et al.’s (1996) three-phase model of leanness provides the basis for bringing together many of the arguments previously presented. Under Stage 1, key topics include restructuring, downsizing, de-layering and changes in the contractual status of employees. In this respect, the onset of leanness in the UK construction sector can be traced back at least 40 years. Since the mid-1970s, the industry has seen extensive re-structuring involving the outsourcing of labour and increased reliance on sub-contracting (see detailed description in Chapter 3). Coupled with this was the significant shift in the employment status of the industry’s workforce. Selfemployment grew from 30% of the total workforce in 1977 and peaked at 60% in 1995 (ILO, 2001). The major contractors that characterised the 1970s have since developed into exemplars of the lean ‘hollowed-out’ firm. As such, they have largely removed themselves from the physical work of construction, preferring to concentrate on management and coordination functions. This trend has significantly undermined the industry’s capacity for training and innovation (cf. Gann, 2001). Subsequent years saw a series of intermittent attempts by government to tighten up the taxation regimes governing self-employment (Harvey, 2003). These partial clampdowns initiated a limited shift back to direct employment during the late-1990s, but in truth the long-term accumulative effects of downsizing, de-layering and outsourcing were hardly dented. Towards the end of the New Labour years, the level of self-employment was slowly rising once again (Harvey

164  Lean Construction and Behling, 2008). The downward pressure of the unregulated competitive processes described in Chapter 3 become even more ferocious in times of recession. Nevertheless, it would seem that many construction firms completed Stage 1 long before ‘leanness’ came into vogue. Stage 2 – leanness as an outcome – was arguably reached for the majority of firms in the mid1990s. According to Kinnie et al. (1996) the critical characteristic of a lean organisation that has gone though a phase of delayering, re-structuring and downsizing is its attained structural flexibility. The notion of firms being ‘staffed for troughs, not peaks’ will be familiar to anyone with experience of the construction sector. Forms of flexibility such as reliance on sub-contracting, overtime, temporary and seasonal working have long since been part of the construction sector’s ‘industry recipe’ (cf. Spender, 1989). These initiatives are invariably centrally directed and imposed. BPR can also have a role here. Task flexibility is further enhanced through team-working and work intensification as a means of managing with fewer employees. In preference to carrying a fixed overhead of directly employed workforce, subcontractors are assembled on a project-by-project basis in accordance with local market conditions. However, once this lean outcome is achieved, Kinnie et al. (1996) argue that it immediately creates problems in that the assumed flexibilities are not sufficient to allow firms to respond to new market demands. This observation echoes similar criticisms by Naim and Barlow (2003), who argue that the lean model frequently offers efficiency at the expense of effectiveness; i.e. lean organisations may lack the ‘ability to give customers exactly what they want, when they want it’. Stage 3 of Kinnie et al.’s (1996) model is concerned with the ongoing process of managing the lean organisation so that it remains lean and responsive. The model focuses attention onto the weaknesses of ‘leanness’ as an outcome in the context of a turbulent external environment subject to strong competitive pressures. Leanness as a process focuses attention on the attributes required by organisations if they are to respond to environmentally induced change. Tactics here include continuous improvement, TQM and team-working, which are described as the means of instilling a capacity for change at the lower levels of the organisation. Such techniques are seen to counteract the lack of responsiveness of lean organisations. Cultural change programmes and SCM are also placed within this stage. In the case of the construction sector, ongoing attempts to implement partnering and collaborative working could also be included as specific tactics for counter-acting the loss of control associated with an over-reliance on leanness. The inherent fragmentation of the construction process would also account for continuing pleas for ‘integration’ by bodies such as the Strategic Forum (2002) (see Chapter 8). The same might also be said of techniques such as CLIP and last planner. It is perhaps not surprising that SCM is so much in vogue among main contractors’ managers given that it is almost the only task they have left to do. Certainly the task of managing the main contractor’s direct employees cannot be especially onerous. Kinnie et al. (1996) are ambiguous in terms of whether the original recipe of lean production promoted by Womack et al. (1990) fits into Stage 2 or 3, although they do concede that there is much overlap between these stages. In many respects Stages 2 and 3 are best understood as largely concurrent and mutually adjusting. In this respect, Rees et al.’s (1996) interpretation of lean production is useful in that it distinguishes between the ‘hardware’ of production systems such as just-in-time (JIT) and the ‘software’ of ‘high commitment’ HRM practices. Womack et al. (1990) notably gave little emphasis to the importance of integrating HR practices into the lean production model (MacDuffie, 1995). One possible interpretation of how lean production fits into Kinnie et al.’s model is that the ‘hardware’ falls within Stage 2 whereas the ‘software’ falls within Stage 3. Given the continuing low status and influence of HRM in the construction sector (Cully et al., 1999), this raises the question of whether there is any significant number of construction firms who have reached Stage 3. However, this comment must be judged against Kinnie et al.’s (1996) observation that few organisations of any sort appear to get to this stage.

Lean Construction 165 Finally, it is pertinent to consider the relationship between the previously outlined models of diffusion and the three-stage model of leanness described above. Stage 1 is clearly driven by economic imperatives with little discretion on the part of middle managers. However, management responses during Stages 2 and 3 will be highly path dependent and different organisations will tend to adapt the lean production paradigm to suit their own circumstances. Possibilities include both the ‘bolt-on’ and ‘creative adaptation’ models. The notion of organisational arenas also remains useful in understanding how different ideas compete for attention. But – if Kinnie et al. (1996) are right – it is only the achievement of leanness as an outcome (with the associated backcloth of downsizing and de-layering) that makes ‘lean production’ meaningful. The overall picture is one of significant complexity; but the important point is that lean construction cannot be understood as a ‘best practice’ which is implemented in the same way across a diversity of different contexts. The framework developed here differs starkly from those provided in the lean construction literature. However, it should be noted that Ballard and Howell (1998) start their argument in favour of ‘shielding production’ with the observation that project managers in construction ‘manage contracts’ rather than task execution. There is therefore an implicit assumption that the organisation in question has already become ‘lean’ in accordance with Stage 1 of Kinnie et al.’s (1996) model. It should further be noted that the above interpretation resonates with Pettigrew’s (1997) notion of ‘processual analysis’ that seeks to understand organisations as a sequence of individual and collective events, actions, and activities unfolding over time in context. Of particular importance is the recognition of a complex interplay between human action and the context within which it occurs. Managerial actions are not only shaped by context, but they are also shaping. To some extent at least, the current context of the UK construction sector has been shaped by government and management actions over the last 50 years. From this perspective, ‘leanness’ is a systemic outcome and ‘lean construction’ (in all its variants) is the means by which managers seek to eradicate the damaging side effects. 7.5.2  Perceptions of lean amongst industry policymakers

There is relatively little research which sets out to explore lean construction as advocated above. Nevertheless, it is possible to access the storylines propagated by those policy makers who were at the time advocating lean thinking as a supposed cure for the ills of the UK construction sector. Green and May (2005) report on twenty-five interviews which were conducted with construction sector policy makers in the period May 2001 to April 2003. The interviewees were drawn from a range of quangos, institutions and sector ‘clubs’, including Egan’s original Construction Task Force. In addition to those directly involved in the Egan report, senior representatives were interviewed from the following organisations:

• • • • • • • • •

Strategic Forum for Construction Construction Industry Training Board (CITB) Royal Institute of British Architects (RIBA) Construction Research and Innovation Strategy Panel (CRISP) Design Build Foundation (DBF) Construction Industry Council (CIC) Construction Round Table (CRT) Construction Best Practice Programme Reading Construction Forum (RCF)

Whilst it is appropriate to list the above organisations, it should also be emphasised that the views expressed were personal opinions rather than sanctioned policy statements. It is interesting to note

166  Lean Construction that most of the above-named organisations have ceased to exist since the interviews were conducted. The fractured and ever-changing landscape of the industry’s lobby groups stands as testament to the difficulties of harnessing disparate interest groups to the ‘common good’. The interviewee sample also included senior representatives of construction firms and client organisations who were recognised as exemplars of lean construction. While these companies were at the time frequently cited in numerous ‘sanitised’ case studies promoting the benefits of lean, it is not appropriate that they should be named here. It should be noted that several interviewees had multiple allegiances, i.e. they were active within at least one of the above policy arenas whilst also promoting lean thinking within their own organisation. A further two interviewees were sourced from within consultancy firms actively involved in the promotion of lean construction as an improvement recipe. It is perhaps not surprising to record that the perceptions of ‘lean’ amongst industry policy makers shared all the vagueness of definition, contradictions and ambiguities found in the literature. The variety of lean perspectives and ‘theories’ described by the interviewees was striking. The interpretations offered ranged from narrowly defined operational techniques implemented at project level to strategically orientated, sometimes industry-wide models. Some of the descriptors used were:

• • • • •

‘…it is a philosophy, a way of thinking.’ ‘….an infinite stream.’ ‘….a set of principles.’ ‘……a set of techniques.’ ‘….a process where there is no going back, the task and the pull of the next phase drives the pace…’

JIT, partnering and SCM were all variously positioned as over-arching themes as well as tools that are used in the process of ‘becoming lean’. What was noticeably absent was any interpretation of leanness in the more generic sense as proposed by Kinnie et al. (1996). Beyond the dedicated lean champions, few of those interviewed admitted to having read the source texts on lean production (e.g. Womack et al., 1990; Womack and Jones, 1996). Even fewer were familiar with, or even aware of, the work of the LCI or IGLC. However, several had met Dan Jones in discussion seminars preceding the publication of the Egan report, and all were aware of the origins of lean production in the Toyota manufacturing system. One interviewer remarked upon the absence of explicit ‘lean’ references in Rethinking Construction although he went on to emphasise that it was ‘of course, all about lean’. Without exception the interviewees were thoughtful and reflective. There was scepticism amongst many regarding the extent to which the Japanese model of lean production could be applied directly to the construction process. Certainly there were few advocates of the ‘universal applicability’ model of diffusion. This was summed up nicely in the comment: ‘simple idea, but very difficult to put into practice given the nature of construction’. Others were somewhat measured in their support for lean thinking even in principle, and preferred to see it more as a rallying call for industry development rather than as a specific recipe for improvement. It was interesting to note that there was an almost unanimous agreement on the need to improve performance, which was invariably construed to be identical to waste elimination. Several were fond of using the Japanese word ‘muda’ to signify waste (usually accompanied by a raising of the eyebrows). Muda was seen to take a variety of forms and its elimination was generally seen as a healthy way of reducing costs. Whilst many were sceptical about the application of lean production to the construction process, several suggested that the real opportunities for application of the ‘purer’ models lay with the offsite manufacture of components and pre-fabricated units. The lean model of off-site manufacturing extended to the JIT delivery of components to site. Two of the clients interviewed were very clear

Lean Construction 167 that they had been ‘doing lean’ even before the term was invented. Both of these organisations were at the time repeatedly cited as exemplars of lean construction. One claimed to have achieved especially impressive productivity improvements for repetitive building through prefabrication, modularisation and multi-skilling. The interviewee claimed that their buildings are 90%–95% complete in the factory: all we have to do on site is fit the ‘lego’ parts together, and this takes a matter of hours rather than days. However, the motivation for investing in prefabrication did not lie within the pages of Rethinking Construction. The interviewee representing one of the internationally known clients had initially been motivated by the company’s experiences of industrial unrest in London, dating back to the early 1970s. Simply put, the shift to modern methods of construction (MMC) had been motivated by a determination not to be ‘held to ransom by trade unions’. Hence the company had deliberately shifted pre-assembly to non-unionised locations in the North of England as a long-term risk-management strategy. Hence prefabrication, modularisation and pre-assembly can be seen as material manifestations of the enterprise culture. A significant proportion of the interviewees associated lean thinking with partnering, which was sometimes described on a project level and sometimes at a more strategic level in terms of framework agreements. Several interviewees also referred to SCM, which was often used interchangeably with partnering. It is interesting to note that partnering was either seen to be a means of achieving leaner working, or alternatively as an outcome of leaner working. Several attributed Latham (1994) as the main promoter of partnering. Indeed, several expressed the view that they felt much more comfortable with the Latham report than they did with the subsequent Egan report. It was also of note that a number of interviewees felt the need to emphasise that they were talking about ‘real’ partnering, thereby acknowledging that some contractors talked about partnering ‘whilst screwing discounts out of sub-contractors’. The expression ‘integration’ was used a great deal by several interviewees (cf. Strategic Forum, 2002). Some conceptualised integration in terms of increased trust, teamwork and co-operation amongst contracting parties; thereby leading to a reduction in ‘adversarial waste’. Others described it in a more instrumental way, focusing on the need for better planning and task organisation. In either case, integration was seen as an antidote to the fragmentation of construction, both in terms of the supply base and the construction process. Some interviewees linked fragmentation to flexibility, describing them as ‘different sides of the same coin’. Flexibility to expand and contract in accordance with fluctuations in demand was seen to be an important characteristic of contracting firms. Such comments echo the notion of ‘structural flexibility’ that Kinnie et al. (1996) contend to be the central condition of ‘leanness as an outcome’. They also demonstrate that the structural changes described in Chapter 3 continue to cast a long shadow over the construction improvement landscape. Authors such as MacDuffie (1995) emphasise the importance of supporting HRM practices in ensuring the successful outcome of lean production. Yet HR issues were rarely mentioned in the interviews reported by Green and May (2005), either spontaneously or explicitly. When specifically prompted by the interviewer, the most common response related to the need for training. However, one interviewee rejected the idea that training was needed as a precondition of the effective implementation of lean: …low-level tasks will increasingly be accomplished by new technology, standardisation and off-site fabrication. Fewer people will be needed and those who are will not require much training since the work will comprise mainly prefabricated unit assembly.

168  Lean Construction At the same time, any suggestion of perceived de-professionalisation or de-skilling of design and construction was firmly rejected. The potential for any consequent reduction in motivation and commitment was treated as irrelevant. The long-term implications of the trend towards prefabrication should be considered in the context that approximately 45% of the construction sector’s turnover is concerned with the maintenance and refurbishment of the existing building stock. Such work relies upon traditional craft skills that will be increasingly eradicated from the new-build sector should the projected dominance of MMC ever become a reality. As an aside, it is interesting how policy sources have increasingly emphasised MMC, rather than ‘prefabrication’ or ‘off-site manufacturing’, as a means of overcoming memories of the quality problems experienced during the 1960s (Lovell and Smith, 2010). As before, the shadow of past events still looms large over the construction improvement debate. More generally, interviewees provided scant evidence of confidence in ‘high-commitment’ HRM practices. One interviewee expressed the view that: ‘…it’s a tough industry out there. It’s about survival. We really don’t have the luxury of investing in namby-pamby HR stuff. We have to get things built.’ Whilst the above opinion was at the extreme end of the spectrum, the interviewees were generally much more comfortable talking about efficiency than they were on the topic of supporting enlightened HRM practices. Paradoxically, several talked at length about the need for better ‘soft skills’ relating to human issues. Perhaps most pertinent is the fact that only two out of the twenty-five interviewees talked about HR issues without direct prompting. None of the interviewees made any direct reference to the level of self-employment in the sector; this was simply not judged to be relevant. 7.5.3  Concurrent and competing models of lean

The diversity of the views within the interviews described above make any summary prone to over-generalisation. Nevertheless, Green and May’s (2005) analysis reveals three dominant models of lean construction. However, it should be emphasised that these stylised accounts were frequently co-existent, i.e. individual interviewees were by no means consistent in their interpretation of lean even over the course of a single interview. The three models derived from the interviews should therefore be understood as characterisations rather than accurate depictions of the views expressed. Whilst overly simplified and neat, they could be portrayed as depicting a progression in conceptualisation from a narrow, operational project-level point of view to a strategic perspective on the industry at large. Credit for the initial derivation of these models should go to Susan May, who conducted the majority of the interviews with senior practitioners from which they were derived. The descriptions which follow are once again derived from Green and May (2005). Lean Model 1 (see Box 7.1) to a large extent reflects and reinforces previous long-established improvement storylines. For the advocates of this model, the discourse of lean construction has seemingly been assimilated into a pre-existing industry recipe. There is a progressive and seamless transition from scientific management to operational research to value engineering to BPR to lean thinking. The favoured slogans are adjusted accordingly: ‘eliminate needless movements’, ‘optimise workflow’, ‘cut out unnecessary cost’, ‘obliterate non value-adding activities’, ‘eliminate muda’. The words change, but the underlying metaphors remain the same. The worldview is to sort out the inefficiencies first, and thereafter we can worry about other things (if we ever get round to it). The storyline is notably limited to the ‘hardware’ of lean production. Advocates

Lean Construction 169

Box 7.1  Lean model 1: Waste elimination Lean model 1: Waste elimination • • • •

Waste elimination is paramount. Technical/operational focus. Espoused aim is to ensure smooth uninterrupted flow of activities. Assumed that cost savings made at the operational level will aggregate to the corporate level. • Further assumed that all parties will benefit equally from ‘improved performance’. • Discourse dominated by machine metaphor. • Underlying unitary perspective on organisations

of this approach are frequently embarrassed by reference to supporting HR practices. It is indeed a ‘hard, cold world out there’. In terms of diffusion models, Lean Model 1 is very much representative of the ‘bolt-on’ model. If Model 1 is characterised as ‘assimilation by the old guard’, then Model 2 (see Box 7.2) can be characterised as ‘assimilation by the new guard’. The underlying storyline arguably owes more to Latham than to Egan. Most interviewees talked about both ‘project partnering’ and ‘strategic partnering’. Many also talked about ‘framework agreements’ as a means of formulating long-term relationships. The advocates of this model also had a great deal of faith in the instrumental benefits of ‘partnering workshops’ as a means of resolving conflict. Effective facilitators were seen as key in this respect, especially in terms of being trained in the ‘appropriate soft skills’. A limited number of major clients were seen to be taking the lead; ‘if you want to work with us, then you have to work the way we want’. Other interviewees expressed concerns that clients were becoming too autocratic and that the ‘partnerships’ on offer were too often somewhat one-sided. Contractors are seemingly expected to trust the client but are themselves subject to ‘key performance indicators’. Trust and a commitment to ‘measuring performance’ are in many respects strange bedfellows. Yet the advocates of Model 2 acknowledged the notion of the ‘project coalition’ to a greater extent than the advocates of Model 1. Several interviewees clearly recognised that different parties in the ‘project team’ had different objectives that would need to be reconciled. However, the unit of analysis rarely strayed

Box 7.2  Lean model 2: Partnering Lean model 2: Partnering • • • • • • • •

Emphasis on relations between firms partnering and supply chain management. Project/corporate view Aim is to eliminate adversarial relationship/change culture Leanness is seen to be the outcome of better relationships Less conflict, more trust equals improved collaboration Emphasis on knowledge sharing, learning Dominant metaphors: teamwork, cybernetic Underlying pluralistic perspective on project organisations, unitary perspective on firms.

170  Lean Construction

Box 7.3  Lean model 3: Structuring the context Lean model 3: Structuring the context • • • • • • •

Lean is about structural change in the way projects are delivered Long-term contractual relationships an essential pre-requisite Implementation of lean requires ‘complete re-think of design and construction’. Technology clusters, integrated teams, integrated processes Big emphasis on simplification of design, standardisation, pre-fabrication, application of IT. Dominant metaphors: psychic prison, organic, cybernetic Underlying pluralistic perspective on organisations

below the level of the firm. The unitary perspective on firms remained very much in place. In terms of diffusion models, Lean Model 2 is once again reflective of the ‘bolt-on’ model. Furthermore, its advocates were again broadly silent on the need for supporting HR practices and the required shift in the established ‘industry recipe’. Lean Model 3 (see Box 7.3) combines elements of the previous two models, but focuses much more strongly on the institutional mechanisms that shape and condition the context within which participants interact. The emphasis was on the framework within which construction is delivered, seen by its advocates to be a radical break from the previous modus operandi of project delivery. From this perspective, lean cannot be achieved by considering construction, design and building operation in isolated compartments. Lean is seen to require a re-arrangement of the contractual boundaries between parties, and an incentivisation system that rewards both firms and individual team members. There was a much stronger storyline on innovation as the engine of competitiveness. The industry was therefore encouraged to break out of its long-established industry recipe and operate on a different basis. In contrast to the two preceding models, there was at least some recognition of the need to overcome institutionally embedded practices. Crucially, there was not seen to be a single model of lean that is appropriate in all cases; different solutions were seen to be necessary for different circumstances. The commitment was less about ‘continuous improvement’ and more about ‘continuous evolution’. There was much talk of ‘system integration’, especially in terms of the processes of design and construction but also in terms of the product. There was also a far greater emphasis on technology than the previous models. Product and process innovation were seen to be essential components of improved performance. There was also a recognition that training was essential at all levels if the preceding vision is to become a reality. In contrast to the other two perspectives, there was a much stronger emphasis on the role of individuals in ensuring success, and the commitment to ‘responsible innovation’ rested on a perceived need for diversity in terms of skills and outlook. In terms of the previously described diffusion models, Lean Model 3 is suggestive of ‘creative adaptation’. Several interviewees claimed to be constantly involved in horizon scanning on the lookout for new ideas from which they could learn. One client had adapted last planner to suit their specific purposes and the interviewee was positive about the learning that had been achieved from its implementation. Lean Model 3 is clearly more sophisticated than the other two models. It is also much more optimistic in terms of its vision for the future. Its advocates claimed to be committed to research and development, but it is notable that the vision was dependent upon some degree of shelter from short-term competitive forces. Others emphasised that the revised way of working is dependent upon a repeat client with a significant capital expenditure programme. The clients in question were

Lean Construction 171 prepared to engage proactively with the construction industry, apparently with a view of ensuring that ‘it could achieve its own objectives’. Whilst Lean Model 3 was certainly in a minority in comparison to the other models, it was by no means limited to a single organisation. However, it must be conceded that the advocates of Lean Model 3 were highly ambivalent about the label ‘lean construction’. One interviewee actually suggested that the label was best avoided because of the ‘lean is mean’ connotation: ‘we don’t really call what we do lean construction. I think we’ve moved beyond lean now’. One suspects that many of the interviewees would tell very similar stories irrespective of whether they were asked about lean construction or not. There is also a nice irony in moving ‘beyond lean’ before anybody has quite defined what it is. Perhaps the point at which the meaning of such concepts becomes accepted is the point at which they cease to be useful. 7.6 Summary The starkest conclusion to be drawn from the current chapter is that lean construction defies universal definition. The meaning of ‘lean’ is characterised by an empirical elusiveness. Nevertheless, the essential vagueness of lean construction has not prevented its acceptance as a recommended component of best practice. The continuing popularity of lean construction techniques is indicative of an interactive collusion between the promoters and receivers of lean discourse. However, the ‘receiving’ managers should not be cast as passive, gullible recipients. Management practitioners have a continuous need for persuasive scripts against which they can act out the role of improvement champions. The legitimacy of lean construction is underpinned by sources such as Womack and Jones (1996) and Rethinking Construction (Egan, 1998). The lean brand has been further institutionalised by its endorsement by a succession of government outreach bodies and sector membership clubs dedicated to ‘industry improvement’. The reported interviews with construction sector policymakers confirm the essential ambiguity of lean construction, even amongst those who promote its adoption. In essence, lean construction has been shown to draw from the same cocktail of ideas as BPR and partnering. All three storylines are mutually conflated, and they must hence be understood as part of the same discourse. In many respects, the inherent ambiguity of all three improvement recipes is essential for their effective diffusion. The co-existence of different storylines makes them relevant to a much broader range of contexts. As with any other management fashion, the ‘interpretive flexibility’ of lean construction is an essential condition for its longevity. The essential vagueness of lean thinking renders generalisations regarding its outcome problematic. In this respect, the critical literature is frequently as impoverished as the practitioner-based prescriptive literature. Arguments that lean thinking necessarily produces ‘bad outcomes’ essentially rest on the same instrumental logic as arguments that lean thinking necessarily produces ‘good outcomes’. In practice, lean construction continues to be conceptualised and enacted differently in different contexts, frequently taking on different manifestations from those envisaged. The multiple storylines of lean construction also compete for attention with other ‘improvement’ recipes as managers strive to find pragmatic compromises while demonstrating themselves to be up-to-date with the latest thinking. The most likely outcome is that organisations give lip-service to the language of lean, whilst persisting with established practices and routines. The wholesale implementation of any ‘new production paradigm’ would entail not only the cost of learning the new approach, but also the risks associated with unlearning the old one. More optimistically, there is a possibility that lean construction may act as a catalyst for workplace change. The ‘creative adaptation’ option credits middle managers with a much greater capacity for innovation. It also assumes that they have sufficient domain control to break with the institutionally embedded practices that characterise the construction sector. This may well depend upon the creation of a business context that is sheltered from the short-term competitive pressures

172  Lean Construction that shape the sector at large. It is perhaps no coincidence that the ‘structuring the context’ model was predominantly advocated by interviewees from within large client organisations. As such, they enjoy an unusual degree of market power to influence the behaviour of the construction supply chain. BAA plc is one of the few clients who have been able to operate in such a way, working in close cooperation with a limited number of framework partners. BAA for many years benefitted from the relative certainly which resulted from its quasi-monopolistic position in a heavily regulated industry. Here again we see the same paradox alluded to in Chapter 2. Government policies of privatisation all too often led to heavily regulated quasi-monopolies. Enterprise it was not. It is notable that BAA subsequently came under increasing pressure from the Competition Commission. In October 2009 BAA agreed to sell Gatwick, the UK’s second busiest airport, to Global Infrastructure Partners (GIP) for a fee of £1.51 billion. BAA as a client organisation would never quite be the same again. There is of course an irony in that the client which made most progress in leading change in the construction sector was able to do so as a result of its relative shelter from the rigours of market competition. Had the leading contracting firms been similarly sheltered from the marketplace, they also might have been better placed to invest in long-term construction improvement. Notwithstanding the above, considerable emphasis has been given to the way the meaning of ‘lean construction’ is repeatedly reinvented within localised arenas. Practitioners can be seen to engage in a continuous search for meaning. As part of this process they negotiate rules for action which in turn shape the context within which they operate. Ideas of lean construction are thereby shaped by the context within which practitioners operate, but they also act to shape the opportunities for future action. This is not to say that the construction is doomed forever to follow the model of leanness and agility which became dominant during the 1980s. Each generation of managers has the opportunity to re-negotiate the way the industry operates. But it is important not to keep repeating the mistakes of the past. Of central importance is the relationship between language and action. What is clear is that lean construction cannot be understood in isolation from long-term structural changes at the sector level. Managers continuously seek legitimising discourses to help them make sense of experienced reality. The legitimacy of lean discourse is rooted in 30-year trends of corporate re-structuring, de-layering and outsourcing. Such trends are characteristic of the transitional stage of ‘becoming lean’ in search of structural flexibility, as described by Kinnie et al. (1996). In this respect, the construction sector embarked upon the quest for leaner ways of working in the late 1970s, long before the terminology of lean thinking became fashionable. Lean construction therefore cannot be separated from the widespread reliance on non-standard forms of employment. Of particular concern in the UK construction sector are the inherent weaknesses of ‘leanness as an outcome’. The unstable endgame of lean construction equates too easily to corporate anorexia.

References Abo, T. (ed.) (1994) Hybrid Factory: The Japanese Production System in the United States, Oxford University Press. Abrahamson, E. (1996) Management fashion, Academy of Management Review, 21(1), 254–285. Ballard, H. G. (2000) The Last Planner System of Production Control, PhD Thesis, University of Birmingham, UK. Ballard, G. and Howell, G. (1998) Shielding production: An essential step in production control, ASCE, Journal of Construction, Engineering and Management, 124(1), 11–17.

Lean Construction 173 Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Beale, D. (1994) Driven by Nissan: A Critical Guide to New Management Techniques, Lawrence & Wishart, London. Benders, J. and van Bijsterveld, M. (2000) Leaning on lean: The reception of a management fashion in Germany, New Technology, Work and Employment, 15(1), 50–64. Benders, J. and van Veen, K. (2001) What’s in a fashion? Interpretative viability and management fashions, Organization, 8, 33–54. Bijker, W., Hughes, T. and Pinch, T. (1987) The Social Construction of Technological Systems: New Directions in the Sociology and History of Technology, MIT Press, Cambridge, MA. Bresnen, M. and Marshall, N. (2001) Understanding the diffusion and application of new management ideas in construction, Engineering, Construction and Architectural Management, 8(5/6), 335–345. Burgoyne, J. and Jackson, B. (1997) The arena thesis: Management development as a pluralistic meeting point, in Management Learning: Integrating Perspectives in Theory and Practice, (eds. J. Burgoyne, M. Reynolds) Sage, London, pp 54–70. Burrell, G. and Morgan, G. (1979) Sociological Paradigms and Organisational Paradigms, Gower, Aldershot. Cherns, A. B. and Bryant, D. T. (1984) Studying the client’s role in construction, Construction Management and Economics, 2, 177–184. Choo, H. J., Tommelein, I. D., Ballard, G. and Zabelle, T. R. (1999) WorkPlan: Constraint-based database for work package scheduling, Journal of Construction Engineering and Management, 125(3), 151–160. Clark, T. and Salaman, G. (1998) Telling tales: Management guru’s narratives and the construction of managerial identity, Journal of Management Studies, 35(2), 137–161. Clark, T. and Salaman, G. (1996) The use of metaphor in the client-consultant relationship: A study of management consultancies, in Organization Development: Metaphorical Explorations, (eds. C. Oswick, D. Grant) Pitman, London, pp 154–174. Clegg, S. (1979) The Theory of Power and Organization, Routledge & Kegan Paul, London. Clegg, S., Pitsis, T. S., Marosszeky, M. and Rura-Polley, T. (2006) Making the future perfect: Constructing the olympic dream, in Making Projects Critical, (eds. D. Hodgson, S. Cicmil) Palgrave Macmillan, pp 265–293. Cully, M., Woodland, S., O’Reilly, A. and Dix, G. (1999) Britain at Work, Routledge, London. Delbridge, R. (1998) Life on the Line in Contemporary Manufacturing: the Workplace Experience of Lean Production and the Japanese Model, Oxford University Press. Dohse, K., Jurgens, U. and Malsch, T. (1985) From fordism to toyotism? The social organization of the labour process in the Japanese automobile industry, Politics and Society, 14(2), 115–146. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Fincham, R. (1995) Business process re-engineering and the commodification of management knowledge, Journal of Marketing Management, 11(7), 707–720. Flanagan, R., Marsh, L. and Ingram, I. (1998) Bridge to the Future: Profitable Construction for Tomorrow’s Industry and Its Customers, Thomas Telford, London. Fox, A. (1974) Beyond Contract: Work, Power and Trust Relations, Faber & Faber, London. Fucini, J. and Fucini, S. (1990) Working for the Japanese, The Free Press, New York. Gann, D. (2001) Putting academic ideas into practice: Technological progress and the absorptive capacity of construction organisations, Construction Management and Economics, 19, 321–330. Garrahan, P. and Stewart, P. (1992) The Nissan Enigma: Flexibility at Work in a Local Economy, Mansell, London. Giddens, A. (1984) The Constitution of Society: Outline of the Theory of Structuration, University of California, Berkeley, CA. Green, S. D. (1999b) The dark side of lean construction: Exploitation and ideology, in Proc. of the 7th Conference of the International Group for Lean Construction (IGLC-7), (ed. I. D. Tommelein) University of California, Berkeley, USA, pp 21–32.

174  Lean Construction Green, S. D. and May, S. C. (2005) Lean construction: Arenas of enactment, models of diffusion and the meaning of ‘leanness, Building Research & Information, 33(6), 498–511. Green, S. D. and Schweber, L. (2008) Theorising in The context of professional practice: The case for middle range Theories, Building Research & Information, 36(6), 649–654. Green, S. D., Larsen, G. D. and Kao, C. C. (2008) Competitive strategy revisited: Contested concepts and dynamic capabilities, Construction Management and Economics, 26(1), 63–78. Green, S. D. (1999a) The missing arguments of lean construction, Construction Management and Economics, 17(2), 133–137. Hammer, M. and Champy, J. (1993) Re-Engineering the Corporation, Harper Collins, London. Hampson, I., Ewer, P. and Smith, M. (1994) Post-fordism and workplace change: Towards a critical research agenda, Journal of Industrial Relations, June, 231–257. Harvey, M. (2003) Privatization, fragmentation and inflexible flexibilization in the UK construction industry, in Building Chaos: A International Comparison of Deregulation in the Construction Industry, (eds. G. Bosch, P. Philips) Routledge, London, pp 188–209. Harvey, M. and Behling, F. (2008) The Evasion Economy: False Self-Employment in the UK Construction Industry, UCATT, London. Howell, G. and Ballard, G. (1999) Bringing light to the dark side of lean construction: A response to Stuart Green, in Proc. of the 7th Conference of the International Group for Lean Construction (IGLC–7), (ed. I. D. Tommelein) University of California, Berkeley, USA, pp 33–37. Huczynski, A. A. (1993) Management Gurus: What Makes Them and How to Become One, Routledge, London. ILO (2001) The Construction Industry in the Twenty-First Century: Its Image, Employment Prospects and Skills Requirements, International Labour Office, Geneva. Jackson, B. G. (1996) Re-engineering The sense of self: The manager and The management guru, Journal of Management Studies, 33(5), 571–590. Kamata, S. (1982) Japan in the Passing Lane: An Insider’s Account of Life in a Japanese Auto Factory, Pantheon Books, New York. Keiser, A. (1997) Rhetoric and myth in management fashion, Organization, 4(1), 49–74. Kenney, M. and Florida, R. (1993) Beyond Mass Production: The Japanese System and Its Transfer to the U.S, Oxford University Press, New York. Kinnie, N., Hutchinson, S. and Purcell, J. (1996) The People Implications of Leaner Ways of Working. Report by the University of Bath, Issues in People Management, No. 15, Institute of Personnel Development, London, 6–63. Koskela, L. (1992) Application of the New Production Philosophy to Construction, Technical Report No. 72, Center for Integrated Facility Engineering, Stanford University, CA. Koskela, L. (2000) An Exploration Towards a Production Theory and Its Application to Construction, VTT Publications No. 408, Technical Research Centre of Finland. Latham, M. (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry, HMSO, London. Lawrence, P. R. and Lorsch, J. W. (1967) Organization and Environment, Harvard Press, Cambridge, Mass. Legge, K. (2000) Personnel management in the lean organization, in Personnel Management: A Comprehensive Guide to Theory and Practice (eds. K. Sisson, S. Bach), 3rd edn., Blackwell, Oxford, pp. 43–69. Legge, K. (2002) On knowledge, business consultants and the selling of total quality management, in Critical Consulting: New Perspectives on the Management Advice Industry, (eds. T. Clark, R. Fincham) Blackwell, Oxford, pp 74–90. Lovell, H. and Smith, S. J. (2010) Agencement in housing markets: The case of the UK construction industry, Geoforum, 41(3), 457–468. MacDuffie, J. P. (1995) Human resource bundles and manufacturing performance: Organisational logic and flexible production systems in the world auto industry, Industrial and Labor Relations Review, 48(2), 197–221. Marchington, M. and Vincent, S. (2004) Analysing the influence of institutional, organizational and interpersonal forces in shaping inter-organizational relations, Journal of Management Studies, 41(6), 1029–1056.

Lean Construction 175 Morgan, G. (2006) Images of Organization, Sage, Thousand Oaks, CA Morris, J. and Wilkinson, B. (1995) The transfer of Japanese management to alien institutional environments, Journal of Management Studies, 32(6), 719–730. Naim, M. and Barlow, J. (2003) An innovative supply chain strategy for customized housing, Construction Management and Economics, 21, 593–602. Ness, K. (2010) The discourse of ‘Respect for People’ in UK construction, Construction Management and Economics, 28(5), 481–493. Oliver, N. and Wilkinson, B. (1992) The Japanization of British Industry, 2nd edn. Blackwell, Oxford. Peters, T. J. and Waterman, R. H. (1982) In Search of Excellence: Lessons from America’s Best Run Companies, Harper & Row, New York. Pettigrew, A. M. (1997) What is processual analysis? Scandinavian Journal of Management, 13(4), 1–31. Rees, C., Scarbrough, H. and Terry, M. (1996) The People Implications of Leaner Ways of Working. Report by IRRU, Warwick Business School, University of Warwick, Issues in People Management, No. 15, Institute of Personnel Development, London, 64–115. Rehder, R. R. (1994) Saturn, Uddevalla and the Japanese lean system: Paradoxical prototypes for the twentyfirst century, International Journal of Human Resource Management, 5(1), 1–31. Saad, M. and Jones, M. (1998) Unlocking Specialist Potential, Reading Construction Forum. Scarbrough, H. (2003) The role of intermediary groups in shaping management fashion, International Studies of Management and Organisation, 32(4), 87–103. Scarbrough, H. and Terry, M. (1998) Forget Japan: The very British response to lean production, Employee Relations, 20(3), 224–236. Spender, J.-C. (1989) Industry Recipes, Blackwell, Oxford. Storey, J. and Sisson, K. (1989) The limits to transformation: Human Resource management in the British context, Industrial Relations Journal, 21, 60–65. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. Tommelein, I. D. (1998) Pull-driven scheduling for pipe-spool installation: Simulation of lean construction technique, Journal of Construction Engineering and Management, 124(4), 279–288. Turnbull, P. (1988) The limits to Japanization - just-in-time, labour relations and the UK automotive industry, New Technology, Work and Employment, 3(1), 7–20. Weick, K. E. (1995) Sensemaking in Organizations, Sage, Thousand Oaks, CA. Wickens, P. (1987) The Road to Nissan, Palgrave Macmillan, London. Williams, R. and Edge, D. (1996) The social shaping of technology, Research Policy, 25, 865–899. Winch, G. (2002) Managing Construction Projects, Blackwell, Oxford. Womack, J. P. and Jones, D. T. (1996) Lean Thinking, Simon and Schuster, New York. Womack, J. P., Jones, D. T. and Roos, D. (1990) The Machine That Changed the World, Rawson Associates, New York.

8

From Enterprise to Social Partnership

8.1 Introduction The years following the election of Tony Blair as prime minister in 1997 saw a plethora of improvement initiatives aimed at the construction sector. The activities in the immediate wake of Rethinking Construction were described in Chapter 5. Of particular note was the Movement for Innovation (M4I) and the Construction Best Practice Programme (CBPP). But the unfolding improvement agenda must be understood within the context of New Labour’s policy direction. Rethinking Construction was undoubtedly born from the enterprise culture, but its emphasis on performance management reflected the managerialism of New Labour. The narrow-focus on technical efficiency was also soon to be outflanked by New Labour’s policy agenda which was to have a significant influence on the improvement debate within the construction sector. In the early years of the Blair administration much was made of a ‘new’ combination of enterprise and social democracy known as the ‘Third Way’. Although ridiculed by many for lacking intellectual coherence, the rhetoric of the Third Way captured the mood of optimism which prevailed as Britannia briefly became cool once again. Where once it had been trade union leaders eating sandwiches at No. 10 Downing Street, it was now pop stars drinking champagne. But behind the glitz and the glamour, New Labour demonstrated an obsession with presentation previously unheard of. The agenda in the early years was one of relentless reform across a range of policy areas. In the foreword to the 1999 White Paper Modernising Government, Tony Blair laid out the government’s mission: [t]he Government has a mission to modernise renewing our country for the new millennium. We are modernising our schools, our hospitals, our economy and our criminal justice system. We are modernising our democratic framework, with new arrangements for Scotland, Wales, Northern Ireland, the English regions, Parliament and local authorities. The commitment to ‘modernisation’ is clear. Modernisation notably did not mean reversing the privatisation policies previously implemented under the Conservative administration. But it did mean an unprecedented level of investment in schools and hospitals, delivered in ‘partnership’ with the private sector. The NAO (2001) report Modernising Construction subsequently directed the mantra of modernisation at the construction sector. There was much continuity with what had gone before, but there were also important points of difference. The first significant report to be published following Blair’s re-election as prime minister in 2001 was Accelerating Change (Strategic Forum, 2002). The title was once again borrowed directly from the New Labour lexicon. Those who were hoping for a return to the Labour policies of the 1970s were to be sadly disappointed, but the movers and shakers within the construction sector were mightily relieved.

DOI: 10.1201/9781003308133-8

From Enterprise to Social Partnership 177 The advent of New Labour did not precipitate the decline of the enterprise culture, but it did initiate the evolution of the enterprise culture into a concept which embraced social democracy. There was likewise a strong emphasis on ‘social partnership’ between the public and private sectors. Consideration of externalities was also back in fashion once again. Ultimately, the optimistic sense of progress fell victim to cynicism and government sleaze, as Tony Blair finally gave way to Gordon Brown in 2007. The construction improvement agenda under Gordon Brown will be addressed in Chapter 9. 8.2  Building Britain with New Labour 8.2.1  From hope to cynicism

It is difficult now to remember the sense of optimisation which followed the election of the New Labour government in 1997. New Labour enjoyed a huge parliamentary majority and Tony Blair immediately adopted a presidential style of government. Government power became evermore centralised on the prime minister’s personal office (Jenkins, 2006). The one exception related to the degree of authority conceded to Gordon Brown at the Treasury in respect of the financial implications of policy. The government also became increasingly obsessed with the need for ministers to be fully ‘on message’. In the latter regard, unprecedented influence was wielded by the prime minister’s political advisors. This was especially true of the appointed press officer, Alastair Campbell, former political editor of the Daily Mirror and avid supporter of Burnley Football Club. The age of spin had arrived and presentation was seen to be everything. While the language was that of modernisation, the way that style consistently triumphed over substance owed more to postmodernism. Deputy Prime Minister John Prescott was one of few senior members of government seemingly immune to communication via media soundbite. The climate which surrounded the implementation of the Egan agenda within construction (see Chapter 5) was directly reflective of the prevailing climate within government. Policy was decided by a tightly knit cabal, and thereafter the emphasis switched to the means of implementation. Ministers and MPs were expected to fall into line. Within the corridors of Whitehall, the prime issue of importance was that the machinery of government should be ‘on message’. In the case of the construction sector improvement agenda, the culture of compliance strayed beyond government to include the plethora of government-supported quangos orientated towards implementing the Egan agenda. The need to align with the Egan ‘principles’ applied equally to client representative groups, although there was frequently a significant credibility gap between rhetoric and reality. Many contracting firms were similarly more compliant in words than in deeds, but most had discovered the benefits of ‘lean thinking’ long before it became fashionable (see Chapter 3). In the first couple of years following the 1997 election, the Blair government secured some notable wins, not least of which was the 1998 Good Friday agreement in Northern Ireland. Foreign policy initiatives were a further characteristic of Blair’s first term of office, including military adventures in Kosovo and Sierra Leone. It was during this period of relative optimism that Modernising Construction (NAO, 2001) was published. New Labour were re-elected for a second term in June 2001 with a slightly reduced majority. The Conservative Party had still not recovered from the infighting which caused John Major’s downfall and was a long way from being electable under the bald leadership of William Hague. New Labour’s re-election was undoubtedly aided by the stable economic growth which prevailed throughout their first period in office. Gordon Brown as Chancellor of the Exchequer very quickly established his authority and reputation for sound economic management. Margaret Thatcher may have been the Iron Lady, but it was Gordon Brown who was the Iron Chancellor.

178  From Enterprise to Social Partnership The epochal event of the time occurred on 11 September 2001 with the al-Qaeda attack on the World Trade Center in New York. With US President George Bush in the driving seat, Britain subsequently participated in the invasion of Iraq on the basis that Saddam Hussain was alleged to possess weapons of mass destruction (WMD). The invasion of Iraq in 2003 was of questionable legality and was hugely divisive within British society. British troops were also engaged, comparatively surreptitiously, in Afghanistan where they were destined to remain active for much longer. The controversy of the invasion of Iraq undoubtedly stains Blair’s legacy as prime minister, which for many will forever be associated with the ‘dodgy dossier’ on WMD. The invasion resulted in the resignation of Foreign Secretary Robin Cook, and the somewhat less prompt resignation of the Secretary of State for International Development, Claire Short. For many the gloss of New Labour wore off all too quickly. Despite the continuing controversy about Iraq, Blair succeeded in being elected for a third term in 2005, albeit with a significantly reduced majority. The Conservative Party were searching around desperately for a leader to return them to power. William Hague had been replaced by the even balder Ian Duncan Smith following the Conservatives’ election defeat in 2001. Duncan Smith did not bring around the reversal in fortune that the Tories hoped for and was subsequently replaced by Michael Howard in November 2003. Howard had previously served in government under both Thatcher and Major and was too strongly connected with memories from a previous era to generate a sufficient swing to oust New Labour. 8.2.2  PFI, schools and hospitals

But the legacy of New Labour’s first term was not all about foreign policy adventures. While Tony Blair courted George Bush in Washington D.C., Gordon Brown was left to focus on domestic economic policy. At the time there seemed little danger of Brown going the way of previous high-spending Labour chancellors. He seemed deliberately to nurture a public image of Scottish Presbyterian prudence. In common with Blair, Brown relied heavily on a small clique of personal advisors often to the detriment of career Treasury officials. Brown also slipped remarkably easily into the rhetoric of the enterprise culture, with much emphasis on competitiveness and wealth creation. Prior to the 1997 election, Brown had committed himself to staying within the Conservative’s spending targets for three years beyond the election. This was a promise which he duly kept. Early fund raising initiatives included the ‘windfall’ utilities tax. This had been in the election manifesto and was directed at the excess profits realised by the privatised utilities. The tax was a strictly oneoff arrangement which raised in the region of £5 billion. The proceeds were invested directly in the progressive ‘New Deal’ employment initiative (Marr, 2007). Brown’s other extravagant gesture was to delegate the fixing of interest rates to the Bank of England. The effective outcome was a continuation of the low-inflation economic policy pursued by the preceding government. All of this was fine, but left Brown with the problem of how to fund ambitious health and education programmes without raising public borrowing. The solution was to shift borrowing ‘off-balance sheet’ through the expanded use of the previously vilified private finance initiative (PFI). Prior to taking power, Blair and Brown had steadfastly warned against the Tories’ privatisation policy. But once elected, New Labour embraced PFI with even more enthusiasm than the preceding Conservative administration. The spin-mongers tried hard to re-label it as publicprivate partnership (PPP) but with only limited success. The government’s enthusiasm for PFI/ PPP was demonstrated in 1998 when the Department of Social Security transferred the ownership and management of most of its estate to a private sector consortium. This was part of an early PPP deal known as PRIME worth over £1 billion. By 2003 Brown was boasting extensively about his achievements in health and education, amounting to 23 hospitals and 239 schools (HM Treasury,

From Enterprise to Social Partnership 179 2003). The new infrastructure was real and comprises a lasting legacy to the facilities within which patients are treated and children are taught. But the money to pay for it was essentially mortgaged against the future. PFI prisons were a further area of growth within which a limited number of contractors in partnership with security firms had established quasi-monopolistic positions. Prisons of course are much simpler to operate than schools or hospitals, with much more straightforward output specifications. Roe and Craig (2004) estimate that the accumulated off-balance sheet debt by 2003 amounted to £100 billion. If this was prudence, it was a strange variety. Numerous commentators continued to express concerns about the windfall profits secured by PFI contractors, although in time such concerns were partly alleviated by a maturing market. A flourishing secondary market in PFI concessions began to develop, thereby exposing the lie that the PFI procurement arrangement necessarily ensures an ‘optimal balance’ between capital cost and operating cost. The operating concessions were of course not always sold on, but even the possibility that they might be sold on would inevitably cause capital cost to be prioritised over through-life operating costs. In any case, responsibilities were often spilt between different operating companies and integration could not be taken for granted. PFI further acted to create a significant distance between those who would use the building and those who were responsible for its design, thereby militating against good briefing practice. Although PFI would subsequently be presented as an ‘integrated procurement approach’, the reality was that the institutional barriers between design, construction and building operation were replicated rather than alleviated (Leiringer et al., 2009). Following on from the above, it is important to recognise that PFI was a game whose rules were in almost constant evolution since the scheme’s initial inception. The one guiding principle was the desire to keep public sector borrowing ‘off balance sheet’, coupled with a seemingly axiomatic belief that the private sector can deliver more innovative and efficient solutions. In this respect, privatisation policy under New Labour remained broadly consistent with that of the preceding Tory government. 8.2.3  Enterprise meets social democracy

But it would be misrepresentative to suggest that the policy discourse of the New Labour government was identical to the preceding Conservative administration. One important point of difference relates to the way New Labour intertwined the discourse of enterprise with a modernising discourse of social democracy. According to Hall (2003), the New Labour government: …adapted the fundamental neo-liberal paradigm to suit its conditions of governance – that of a social democratic government trying to govern in a neo-liberal direction while maintaining its traditional working-class and public-sector middle class support, with all the compromises and confusions that entails. (Hall, 2003, 14) The above interpretation could be seen to apply to many of the New Labour government’s policy objectives in respect of construction. It can also be taken as an explanation of the continued focus on enterprise while at the same time emphasising notions of corporate social responsibility (CSR). The iconic status of the customer remained firmly in place, as did the broader commitment to outsourcing and the privatisation of service delivery. However, the New Labour policy agenda differed starkly in the way it strove for greater social justice. It further differed in the way it saw a major role for the state in its achievement. This revised policy orientation progressively became apparent through the commitment to drive sustainability through government procurement (e.g.

180  From Enterprise to Social Partnership DEFRA, 2006; GCCP, 2000). Fears about global warming meant that a stronger focus on environment sustainability was inevitable. This was an issue of scientific fact which could not be ignored. But it was the government’s social democratic credentials which shaped the promotion of social sustainability as part of the procurement agenda. The combination of enterprise with social democracy was encapsulated within the ideas of the so-called ‘Third Way’, as advocated by the eminent sociologist Antony Giddens (1998). In many respects, New Labour was following in the wake of a number of overseas politicians, including Bill Clinton (USA), Lionel Jospin (France) and Gerhard Schroeder (Germany). Nevertheless, in the early years of the Blair administration the Third Way was promoted as the big idea, even if Deputy Prime Minister John Prescott remained stubbornly resistant. What was notable was the way in which the advocates of the Third Way accepted the trend of previous policy initiatives, and then sought to mobilise them towards a greater degree of social justice. It is also necessary to acknowledge that the Third Way remains much criticised in terms of its essential vagueness and lack of intellectual coherence (e.g. Hall, 2003; Driver and Martell, 1999; Faux, 1999). Powell (2000) has further cast doubt on the extent to which the Third Way can be held to be either distinctive or new. In these respects, it shares many of the defining characteristics of a management fashion and is perhaps best understood as a political fashion. Connolly et al. (2008) argue that the Third Way must be understood in the context of the times, and positioned against what had gone before. The enterprise culture had previously been positioned against the failings of the social contract and the ‘winter of discontent’ (see Chapter 2). Policy up until 1997 was seemingly driven through the ideological belief that the private sector is more efficient than the public sector. But the core difficulty was that the private sector will only invest if there is a prospect of making a profit, and this remained problematic in the context of traditional public services such as health and education. There was also the problem that by 1997 everything that could conceivably be privatised had already been outsourced to the private sector. Hence if the private sector was to be engaged further, it became necessary to make further steps towards guaranteeing both demand and funding, thereby making investment more attractive to private sector firms (Ietto-Gillies, 2006). 8.2.4  Efficiency and risk in service provision

The opening up of even more public services for privatisation created a raft of new opportunities for private contractors, many of which originated in construction. The expansion of traditional construction firms into the provision of public services further eroded the feasibility of any attempt to define precisely what is meant by the ‘construction sector’. A significant proportion of the income of the UK’s leading contracting firms became increasingly secured from activities outside the definition of construction. Many engineering consultancies similarly diversified into service provision, even to the extent whereby firms once primarily associated with civil engineering where now negotiating contracts for the provision of catering services; from designing concrete waffle floor slabs to sandwiches in two short steps. The Association of Consulting Engineers (ACE) was notably forced to rename itself the Association of Consultancy and Engineering in an effort to remain relevant to its members’ increasingly diverse business activities. At least they were able to retain the cool acronym. Some steps towards the privatisation of public sevives were undoubtedly more successful than others. Outsourcing companies such as Capita and Serco expanded rapidly in response to the plethora of opportunities. Such firms were particularly notable for the way in which they promoted themselves as working in ‘partnership’ with the public sector. Construction companies also knew a thing or two about outsourcing, and firms such as Balfour Beatty, Carillion and Skanska similarly

From Enterprise to Social Partnership 181 expanded into service provision. Strangely enough, this was at the time that the construction sector was still being roundly criticised for the poor calibre of its managers. The firms themselves had never quite believed Egan’s jibes about their supposedly out-of-date management practices. But then it must also be conceded that there are also many inspirational managers within public sector organisations. In both cases, the debate is rather less about the capabilities of the managers themselves, and rather more about the institutional context within which they operate. Nevertheless, there is a deep-rooted paradox in stigmatising the construction sector’s management as ‘dinosaurs’ on the one hand, while entrusting it with an increasingly large proportion of the nation’s public services on the other. Notwithstanding the many successful privatisations, it is necessary to acknowledge that there were also some important failures. WS Atkins notably walked away from a contract to run Southwark’s education service on the basis it could not generate sufficient income to make it worthwhile (Jenkins, 2006). A further high profile case concerned the failure of Metronet, which went into administration four years into a £17 billion contract to modernise the London Underground. It was subsequently confirmed that London Underground would remain responsible on a permanent basis for the renewal and maintenance of the track for which the Metronet ‘infracos’ had previously been responsible. Jarvis had been one of the earliest firms to specialist in PFI markets, and also became heavily involved in railway maintenance. On both counts, the firm suffered a succession of adverse headlines before finally going into administration in March 2010. Firms which default on PFI contracts inevitably leave the taxpayer with the bill for picking up the pieces. It is therefore dubious to claim that PFI shifts the risk of failure to the private sector. If PFI firms really are operating in a marketplace, some will succeed and others will inevitably fail. This is how markets work; and it is the possibility of failure which acts against management complacency and inefficiency. But if a PFI firm fails, the risk reverts to the taxpayer. In the case of Metronet, the cost of failure was reputed to be in the region of £410 million. The issue of risk was central to the debate on the merits of PFI from the outset. In essence, the debate hinges around the extent to which commercial risk can meaningfully be transferred to the private sector when the taxpayer is ultimately required to pick up the bill in the event of failure. Early entry PFI contractors during the Major administration were roundly criticised for earning super-normal profits. In mitigation, the major contractors cited the significant risks involved, together with the huge costs associated with the bidding process. As the PFI market matured, the risks gradually declined and the possibility of windfall profits declined accordingly. For a government committed to public-private partnerships, it undoubtedly made sense to reduce the level of risk associated with major PFI projects. But on too many occasions, the transfer of risk remains illusory. Demand risk is routinely borne by the taxpayer in that a certain through-put of patients or students is guaranteed from the outset. There have been cases of some schools closing as soon as they have been opened due to declining numbers of pupils, thereby necessitating the need to terminate the contract at significant costs to the taxpayer. In the absence of any guarantee relating to ongoing demand, the risk of declining pupil numbers would have to be priced by the private sector, and the cost would be astronomical. Hence enterprise gives ground to public-private partnership. 8.2.5  Partnerships in delivery

Notwithstanding the above, one of the central rhetorical themes of the Third Way was the notion of ‘partnership’. The metaphor of partnership was primarily aimed at eroding the barriers between public and private sectors, and promoting the cause of collaborative working. But the idea of partnership can also be taken to imply the need for collaborative working between management and workforce. Within the context of employment relations, Collins (2001, 21) argues that the metaphor of

182  From Enterprise to Social Partnership partnership is ‘invoked in order to express the highly cooperative ideal expressed by the flexible employment relationship’ (quoted in Smith and Morton, 2006). The same source also quotes Collins (2002) who suggests that the purpose of partnerships is: to enhance competitiveness, through improvements in quality and efficiency. This purpose requires the exchange of information: management needs to explain its product and marketing plans to the workforce, and the workers need to use their human capital to suggest how production and products can be improved. (Collins, 2002, 456–459) The above quote succeeds in capturing the essence of the Egan improvement agenda as advocated in the construction sector. The headline emphasis on quality and efficiency is immediately suggestive of Rethinking Construction, likewise the attempt to mobilise the expertise of the workforce to improve productivity. The expertise of the workforce might have been mobilised a little easier had the contracting sector not been so keen to avoid direct employment. But the enterprise culture was by now hard-wired into the dominant industry recipe. There is nevertheless a delicious irony in that several large hollowed-out construction firms involved in highway maintenance increasingly found themselves acquiring large directly employed workforces as a result of TUPE-transfers from local authorities. The same was also true of the large outsourcing companies which had assumed responsibility for contracted-out public services. However, it should be emphasised that this applied only to very small number of large firms, and the TUPE-transferred operatives were undoubtedly perceived as a risk which was appropriately priced. The marginal strengthening of the TUPE regulations had been New Labour’s sole concession to trade union opposition to its privatisation policies. As the New Labour government moved into its second term of office, the rhetoric of partnership became even more prominent. In 2003 the Department for Children, Schools and Families (DCSF) announced the ambitious Building Schools for the Future (BSF) programme. The programme originally aimed to renew all 3,500 English secondary schools over the 15-year period 2005–2020. The initiative was launched with great fanfare with a budget of £2.2 billion in its first year (2005–2006). Of central importance were the supposed ‘long-term partnering efficiencies’ to be achieved between the public and private sectors through the establishment of local joint ventures called Local Education Partnerships (LEPs). The LEPs were to have exclusive rights for 10 years to deliver new and refurbished school facilities and related services. Unsurprisingly, the majority of LEPs were secured by large national contractors thus serving to force local contractors to operate as subcontractors. These was reflective of the way framework agreements in general acted to squeeze out local firms on the basis of size, despite in many cases having admirable track records of client satisfaction coupled with localised engagement. The objectives of BSF were to be subsequently exposed as being too ambitious (NAO, 2009). The NAO further criticised the high costs of establishing the first 15 LEPs, which were seen to have been inflated by local authorities’ extensive reliance on consultants. However, it was acknowledged that Partnerships for Schools had since ‘taken measures to control capital costs so that BSF capital costs are similar to most other school building programmes and cheaper than Academies built before their integration into BSF’. This was not a view which was destined to survive beyond the New Labour government. The procurement of schools had undoubtedly become a politicised agenda. The construction sector is ultimately tasked with delivering such politicised agendas, and hence the rhetoric of industry improvement became inherently politicised. Certainly construction improvement was no longer focused solely on efficiency improvement; firms were also required to demonstrate their credentials in terms of social sustainability. Many simply employed consultants to develop and maintain an appropriate storyline, while they themselves concentrated on ‘managing the supply chain’.

From Enterprise to Social Partnership 183 NAO (2009) further pointed towards the difficulties of establishing effective working arrangements and relationships between local authorities and private sector partners. The paradoxes of partnering and collaborative working seemingly cannot simply be wished away in the cause of value for money. Perhaps most telling of all was the observation that there is a general lack of skills in procurement and programme management across the public sector, and that this constrains capacity within BSF. It seems that irrespective of the extent of privatisation the public sector cannot achieve value for money without its own expertise in procurement and programme management. Local authorities may in the future choose to take back in house some of the expertise that they have lost. Perhaps some future government may even return to the idea of a public sector ‘property services agency’. The reliance on consultants within BSF was indicative of a much broader problem; Craig and Brooks (2006) have estimated that the New Labour government spent £70 billion on consultants between 1997 and 2006. This was indicative of a trend established several decades previously under Margaret Thatcher. The big picture is one of relentless privatisation coupled with the imposition of centralised performance monitoring to ensure efficiency and value for money. The same approach has been applied by stealth to the construction sector. Hence the culture of enterprise goes hand-in-hand with the culture of audit. The paradox exists on the level of national policy and shapes the improvement agenda in construction. In essence, it is the same paradox which characterises individual partnering initiatives. The health sector was similarly characterised by the rhetoric of ‘partnership’. The Department of Health followed a parallel path to DCSF and established a national joint venture with Partnerships UK ‘to develop and encourage a new market for investment in primary care and community based facilities and services’. The joint venture company was initially called Partnerships for Health (PfH), before giving way to Community Health Partnerships (CHP) which was a wholly owned company of the Department of Health. CHP existed for the purpose of delivering the NHS Local Improvement Finance Trust (LIFT) initiative. This involved primary care trusts (PCTs) setting up LIFT companies in partnership with the private sector. The so-called ‘LIFTco’ then became the vehicle for improving and developing frontline primary and community care facilities. Each LIFTco was a limited company involving the local PCTs, CHP and the private sector partner as shareholders. It was the LIFTco which took responsibility for owning and maintaining the required buildings and for leasing the premises to PCTs, GPs, local authority social services, dentists, pharmacists, etc. The local PCTs were ultimately tasked with protecting the public interest. If it all sounds extremely complicated, it is because it was extremely complicated. Hence the need for all those expensive consultants to explain what all the acronyms meant and to advise on ‘change management’. The first task of a LIFT was to develop a ‘strategic service development plan’. The local health authority would then seek private sector partners to set up a LIFTco, which in turn would contract to deliver the required services over a 20 or 25 year period. Hence the required facilities and supporting services are delivered in partnership between the public and private sector. The boundaries between the two sectors thereby become evermore blurred, and the risks of private sector involvement become evermore opaque. Notions of public sector clients and private sector contractors became conflated around ideas of ‘LIFTcos’, ‘opcos’ and ‘infracos’. The ethos of public service became interspersed with the profit motive. The Third Way was not only unclear in theory, but was also very confused on the ground. Everyone seemingly works in partnership; everyone ‘partners’ with the supply chain. Collaborative working abounds. But the contractors still work as contractors, and the subcontractors still operate as subcontractors. The concept of ‘partnership’ did not of course extend to the construction workforce, and the competitive drivers on employment practices described in Chapter 4 remained entirely unaffected. Leanness and agility in the marketplace continued to be the passwords to success on the construction site.

184  From Enterprise to Social Partnership Similar issues characterised the services which were contracted to outsourcing specialists. Catering, cleaning and security were all services routinely outsourced to private sector contractors, and all three sectors were – and still are – characterised by casualised employment, low pay and poor conditions. The report of the TUC Commission on Vulnerable Employment (TUC, 2008) was especially damning. It describes how the widespread use of labour-supply agencies results in the unequal treatment of agency workers and directly employed staff. It further describes how many ‘workers’ and bogusly self-employed operatives are routinely denied the welfare rights enjoyed by employees. Agency workers are held to be especially vulnerable to abuse, even more so when migrant workers are forced into vulnerable employment by immigration regulations. The TUC Commission on Vulnerable Employment provides a damning incitement of employment practices in 21st century Britain. In the region of 2 million workers are held to be trapped in a continual round of low-paid and insecure work where mistreatment is the norm. Perhaps the construction sector is not so unique after all. 8.2.6  A blot on the landscape

In the same way that the focus on leanness and agility described in Chapter 3 can be read as the material manifestation as the enterprise culture, the preceding description can be read as the material manifestation of so-called third-way ‘partnerships’. PFI was relabelled public-private partnership (PPP), and multiple variants continued to evolve. The New Labour government notably failed to show any enthusiasm for reversing any of the preceding Tory government’s privatisations. The trend towards ever-increasing levels of privatisation continued unabashed, extending even to the day-to-day administration of public services. This was despite Blair and Brown’s virulent criticism of privatisation policy while in opposition. Neither did New Labour repeal any the industrial relations legislation of which they had previously been so critical. The railways continued to be problematic, and the after-effects of the botched privatisation presented significant operational challenges. Railtrack plc remained heavily regulated until it was eventually forced into bankruptcy following the general seizure of the railway system in the wake of the Hatfield rail crash in October 2000. It was replaced by Network Rail, a unique ‘not for dividend company’ which is immune from bankruptcy and effectively state-owned. According to the railway historian Christian Wolmar (2007), by 2005 the railway was receiving five times as much public subsidy than it had as a nationalised industry. In 2006, Network Rail’s chairman, John Armitt, announced that track maintenance was being taken back in-house from the private sector contractors who had been criticised for poor quality work and spiralling costs. This in effect amounted to the re-nationalisation of track maintenance in response to a perceived lack of control caused by the previous reliance on private-sector subcontractors. At the time of writing, the trains continue to be operated by private sector train operating companies (TOCs) on the basis of what increasingly approximates towards risk-free contracts. The privatised railways thereby reverted to a ‘partnership’ between the public and private sectors. It is a partnership which requires significant state subsidy, and it is a partnership which offers little risk to private sector operators. The shift back into direct employment of the track maintenance workforce did indeed go against the grain and is hence described as a ‘blot on the landscape’. But the return to direct employment within the railways had minimum long-term impact on the construction sector. Despite the much-vaulted ‘shift back’ to direct employment in the late 1990s, by 2002 the level of self-employment was inexorably rising once again. Network Rail had acted decisively against fragmentation through the effective re-creation of a railway track maintenance DLO. But this was categorically not on the agenda for the construction sector at large. Integration remained something that was talked about as an abstract concept, it was not something that was

From Enterprise to Social Partnership 185 in any danger of being implemented. Policy makers continued to prefer vague exhortations in favour of ‘collaborative working’. Laing O’Rourke at the time was frequently cited as going against the grain in terms of its alleged commitment to direct employment. But this was categorically not a return to direct employment in the style of the 1970s. Many workers initially resisted Laing O’Rourke’s offers of direct employment on the basis of the terms and conditions which were on offer. Few of the contracts on offer extended longer than two years, thereby avoiding the statutory requirement for redundancy payments. Basic rates of pay were also drastically reduced, with a corresponding drop in overtime pay. On the positive side, there was a ‘discretionary bonus’ which rested entirely upon the discretion of management. For the cynics, the new contracts were labelled as ‘contricks’. But their implementation was fully supported by UCATT, which did its best to encourage its members to comply. However, many operatives continued to resist the new contracts, and there were several wild-cat strikes in response to the pressure to sign up. Laing O’Rourke’s shift to direct employment should perhaps be understood in terms of Atkinson’s (1984) model of financial flexibility, whereby firms seek to adjust employment costs in response to fluctuations in demand. Hence Laing O’Rourke sought to move away from standardised pay structures towards more individualised systems, with a greater linkage to performance. Such an approach can hardly be described as inferior to the model of numerical flexibility which dominated elsewhere, but neither does it deserve the plaudits which it received at the time. It should be noted that Laing O’Rourke also seemingly continued to use the services of an illegal blacklisting agency to ensure that no ‘trouble makers’ were employed. But this was equally true of other leading construction firms, including Balfour Beatty, Costain and Sir Robert McAlpine (Evans et al., 2009). The shadow of the Economic League continued to fall over construction sector employment practices, despite its abolition in 1994. 8.3  Modernising Construction 8.3.1  On message in an expanding market

The preceding discussion of New Labour’s policy initiatives provides the context within which the post-Egan construction sector improvement agenda can be evaluated. Modernising Construction was published in January 2001 by the National Audit Office (NAO) in the final months of Tony Blair’s first term of office. It was primarily concerned with the industry’s performance in the delivery of public sector projects, and in the performance of government agencies in construction procurement. It also offers a useful commentary on the performance of the various initiatives that lay within the remit of the M4I and the equivalent Achieving Excellence programme in the public sector. The report provides an invaluable insight in the dominant themes of the improvement debate in the immediate aftermath of the Egan agenda. Despite the role of the National Audit Office as a quasi-independent watchdog of government efficiency, it was never likely that the authors would conclude that Rethinking Construction was deeply flawed. The overriding necessity was to be ‘on message’; this was how New Labour operated, and this is how they expected their civil servants to operate. The only surprise was the extent to which the construction sector had seemingly accepted the Egan agenda, despite its repeated criticisms of the sector’s management capability. But in truth construction firms were more interested in pursuing work in an expanding market. CEOs were less interested in whether PFI was a good deal for the UK taxpayer, and rather more interested in how they could secure a position on the gravy train. These were good times for construction firms, and there were few who were prepared to rock the boat. The cognoscenti could exhort ‘best practice’ all they liked, provided that the opportunities to win work and make money continued to be forthcoming. And the ongoing emphasis on

186  From Enterprise to Social Partnership privatisation and the contracting-out of public services continued to provide new opportunities for innovative firms to expand their business portfolios. Such opportunities reinforced the previously established tendency for contracting firms to organise in terms of business sector. Schools and healthcare were certainly areas which required contracting firms to embed themselves within the respective policy contexts, continuously monitoring and responding to the ever-changing landscapes. Such opportunities required new capabilities beyond being ‘good builders’, but once the work was secured the competitive model remained broadly unaffected. The essential challenge was to sub-contract the risks of construction down the supply chain at minimum cost. But effective supply chain management (SCM) was about much more than efficient contract trading. It was also about positioning in the marketplace. The financial barriers to entry posed by PFI work increasingly resigned smaller, regional contractors to the role of subcontractors in public sector work. The same also applied to the national framework agreements established by large private sector clients. Subcontractors felt progressively more squeezed by ever-increasing demands for continuous improvement, and in turn increasingly squeezed the sub-subcontractors. At the very end of the supply chain were the gangs of bogusly self-employed tradesmen from Eastern Europe, who worked hard and posted good money home. Until the boom years came to an end and they all went home again, taking their skills and enterprise with them. 8.3.2  Partnering ‘takes great strides’

Modernising Construction was first and foremost about the modernisation of the procurement and delivery of construction projects for the benefit of public sector clients. The report shared its theme of modernisation with the 1999 White Paper Modernising Government. Relationships between the construction industry and public sector clients were seen to have been long since characterised by conflict and distrust. This had now been repeated so often it had become a truism. Yet the original solution of creating public sector direct labour organisations (DLOs) was clearly no longer on the agenda, other than the special case of railway track maintenance. Modernising Construction repeated Latham’s (1994) previous claim that the resulting inefficiencies comprised towards 30% of the cost of construction, the evidence for which remains unclear. Such soundbites seem to enter the ether of the construction improvement debate without the need for any verification. The aspiration was to overcome decades of conflict and distrust through widespread ‘culture change’. This was a bizarre circumstance. On the one hand the government was promoting PFI on the basis of the efficiency gains that could be achieved through the private sector. And yet, on the other hand, the privately-owned construction sector was being lambasted for its inefficiency and adversarial attitudes. But Modernising Construction recognised that improvement was also dependent upon the adoption of appropriate behaviour by public sector clients. The recognised interdependence between public sector clients and providers militates against the possibility of the construction sector implementing change in isolation. It also militates against the possibility of the industry’s major private sector clients instigating change through coercion. Neither of these points is made explicit within Modernising Construction, but the implication is clear for the discerning observer. Under the previous Conservative government, private was ‘good’ and public was ‘bad’. But such simple dichotomies were no longer fashionable under the New Labour regime. Emphasis instead was given to PPP, policed through an endless bureaucracy of key performance indicators (KPIs). It was significant that the foreword to Modernising Construction was written by Sir Michael Latham. This would seem to have been a deliberate attempt to emphasise the continuity between the Latham (1994) and Egan (1998) reports, and gloss over the differences. It commenced with a

From Enterprise to Social Partnership 187 reminder of his previous recommendation that the client should be at the core of the construction process. He further highlighted the central message from Constructing the Team that the best route to achieving client satisfaction was through teamwork and co-operation. Creative design was conceded to be important, but the machine metaphor was in evidence in terms of the emphasis given to ‘stripping out waste and ‘inefficiency’. Latham went on to express the view that partnering had made ‘great strides in recent years’. He considered that fastest growth had occurred within housing associations and some other (unspecified) parts of the public sector. He further described the response from private sector clients as mixed, accusing many as not yet understanding that ‘lowest price’ did not always equate to value for money. This was a marked departure from Rethinking Construction, which had seemingly held private sector clients to be beyond criticism. Lowest price procurement was seen to often result in commercial responses from contractors who thereafter tried to claw back a return through adversarial practices such as variations, claims and the ‘dutch auctioning’ of subcontractors and suppliers. Partnering was somehow held to turn such processes around by offering a ‘win-win scenario’ for all parties. Latham progressed to repeat the now established mantra that the whole team should sign up to achieve reasonable margins on an open book basis. Mutuality of objectives was seen to be key, and great weight was placed on how this could be achieved through the initiation of a project charter. He further emphasised the importance of problem-solving through the whole team working collaboratively. Latham was a consistent supporter of the core ideas of teamwork and collaboration, and he undoubtedly saw partnering as the means through which these could achieved. But his endorsement of the principles of Rethinking Construction was also highly selective. He strongly endorsed its emphasis on client satisfaction through partnering, but he was noticeably silent in respect of Egan’s various other recommendations. 8.3.3  Improving construction performance

Modernising Construction set out to highlight existing good practice that was being adopted by government clients and industry. The belief was that if these good practices could be more widely adopted they would realise sustainable improvements in construction performance, thereby achieving better value for taxpayers. Emphasis throughout was given to the need for a greater concentration on meeting the needs of the end user at lower through-life costs. But insufficient emphasis was given to the resultant benefits that could be expected to accrue to contractors and consultants, thereby sowing the seeds of further distrust. Modernising Construction (NAO, 2001, 4) was further notable for adopting the cause of supply chain integration: [t]he entire supply chain including clients, professional advisors, contractors, subcontractors and suppliers of materials must be integrated to manage risk and apply value management and engineering techniques to improve buildability and drive out waste in the process. It was repeatedly argued that the above process would reduce though-life and operational costs. Integration of the supply chain would apparently also lead to greater certainty in terms of project time and cost, fewer accidents and more sustainable construction. The quest to drive out waste from the process was immediately reminiscent of the emphasis within Rethinking Construction. The NAO also displayed the same touching faith in the effectiveness of ill-defined management techniques such as ‘value management and engineering’. The evidence to support the claims made

188  From Enterprise to Social Partnership

Figure 8.1 Better construction performance – What is needed? National Audit Office analysis of Latham, Levene and Egan reports. Source: Modernising Construction, NAO, 2001.

was remarkably thin given the remit of the NAO. The overriding inference was that the evidence had already been provided by the Latham (1994) and Egan (1998) reports. There seemed to be a prevailing feeling that if such claims were repeated often enough, and with sufficient enthusiasm, they would eventually become true of their own accord. The culture of spin had seemingly extended to the NAO, perhaps under the tutelage of Alastair Campbell. The NAO’s summary of what needed to be done is reproduced in Figure 8.1. The analysis was apparently based on the recommendations of the Latham (1994) and Egan (1998), taken together with the Levene (1995) report Construction Procurement by Government. It was the latter report which had concluded that government bodies were partly to blame for the poor performance of the industry. Figure 8.1 is useful in that it offers a coherent narrative which summarises the findings of the three reports in terms of their lowest common denominators. But it also disguises the differences between the reports in terms of their stark differences in emphasis. Especially noticeable is the way the more fanciful of Egan’s recommendations are ignored. For example, there is no mention of lean thinking, or of the need for the advocated industry-wide regime of performance measurement. Perhaps most interesting of all is the slippage between different units of analysis. Rethinking Construction was very much an agenda for changing the modus operandi of the construction sector at large, but the summary offered in Modernising Construction was primarily directed at public

From Enterprise to Social Partnership 189 sector clients and the ways in which they could improve project procurement and delivery. The shared solution lay in the eradication of adversarial relationships in favour of partnering. If only life were so simple (see Chapter 6). 8.3.4  Improving the performance of departments and contractors

Modernising Construction was especially firm in its assertion that traditional forms of contracting based on lowest-price tendering do not provide value for money in the longer term. It was emphasised that private sector clients were increasingly seeking to establish long-term collaborative relationships with construction firms, or were seeking to implement partnering on individual projects. The endorsement of partnering by the NAO was significant in that it was further legitimised as a central component of construction best practice. But the approach was still essentially advocated on the basis of potential, rather than convincing evidence. Perhaps in response to concerns about the lack of supporting evidence, the NAO commissioned two academics to produce an anodyne review of the partnering literature (Fisher and Green, 2000). It was understood at the outset that the review would have to be at least neutral in terms of the espoused benefits of partnering. And in truth the overwhelming majority of the academic literature at the time was indeed favourably orientated towards the benefits of partnering. As has been demonstrated throughout this book, academics are frequently directly implicated in the social construction of best practice – and the present author is no exception. Notwithstanding the above, NAO sought to collate its own evidence in support of partnering. Modernising Construction included details of different forms of partnering used by various government departments and agencies. Evidence was also gleaned from five M4I demonstration projects: Anglian Water, Kingston Hospital, Notley Green Primary School, Dudley Southern by pass and the Building Down Barriers initiative presided over by Defence Estates. However, it should be noted that none of the case studies was seemingly subject to independent audit. In each case, the supporting information seemed to have been provided by those responsible for promoting the partnering initiative in question. What was most noticeably absent was any attempt to position the case studies against the extensive restructuring which had taken place – and was still underway – of the public sector client base. The case studies were therefore offered in isolation of any broader evaluation of government policy vis-à-vis outsourcing, downsizing and privatisation. All five examples could be more meaningfully read in terms of the third stage of ‘leanness’ as described in Chapter 7. Any such broader long-term analysis was entirely missing in Modernising Construction, as it had been previously missing in Rethinking Construction. The previous 25 years of change were seen as irrelevant. The problem was reduced to ‘adversarial relationships must be overcome by partnering and collaborative working’. In common with many other sources, Modernising Construction was careful to emphasise that partnering was not an easy option, and that it was not the same as having a cosy relationship with contractors. Many within the public sector remained sensitive to the possibilities of corruption. But at the time, cosy relationships with contractors were of course increasingly the rage, especially when they were dressed-up as PPP. Nevertheless, the NAO was clear that partners should still be appointed competitively, and that clear improvement targets should be set. It was recommended that both parties should be committed to continuous improvement and open book accounting. It was further seen to be important that clients should have access to contractors’ records so they could verify the contractors’ costs and efficiency improvements. Trust is purported to be an essential pre-requisite of partnering, but behind the rhetoric of collaborative working contractors are still seemingly not to be trusted.

190  From Enterprise to Social Partnership 8.3.5  Performance measurement

Modernising Construction further pledged its support for the notion of performance management as advocated by Rethinking Construction. Reference was made to the key performance indicators (KPIs) produced by the DETR ‘in conjunction with the construction sector’. In respect of the public sector, reference was made to KPIs produced by the Government Construction Clients’ Panel (GCCP) and the Office of Government Office (OGC). The propagation of endless performance targets was highly characteristic of the New Labour government. KPIs in various forms were extended across all policy domains and were by no means limited to construction. But there is a recurring irony in advocating private sector enterprise on the one hand, while insisting that performance should be monitored through the use of KPIs on the other. The NAO further claimed to have assessed the impact of construction improvement initiatives on performance within four organisations: NHS Estates, Defence Estates, the Highways Agency and the Environment Agency. Tellingly, they went on to say that it was too early to quantify the benefits being achieved. In other words, some three years after the publication of Rethinking Construction there was still no hard evidence in support of the approaches advocated. Strangely, the absence of any such evidence had not prevented the Construction Best Practice Programme from disseminating its best practice ‘factsheets’. Likewise, the lack of evidence did not prevent all four organisations from confidently predicting significant savings in construction costs and improvements in quality. Once again, it is likely that the NAO assessors spoke with the individuals intimately involved in the four improvement initiatives. Hence the interviewees would understandably take an optimistic view on the benefits likely to be achieved. Given that they had invested a significant amount of their own energy (and credibility) in the respective initiatives, it would have been unlikely they would have offered a balanced view on the chances of a positive outcome. The NAO assessors further spoke with 11 construction firms and 17 specialist contractors and consultants and asked them to describe the initiatives which they were taking to improve their services to clients. The soundbites listed as responses were derived directly from the accepted lexicon of industry improvement:

• • • • •

establishing longer term relationships and partnering arrangements; providing more value to customers with greater consideration of their needs; better supply chain management; learning from promoting good practice; identifying better ways of reducing whole life costs.

Irrespective of what was being achieved in practice, contractors had at least learnt to ‘talk the talk’ of the Egan agenda. As discussed previously, this was arguably the most important part of convincing clients that they were up-to-date with the latest thinking. But the interviewees did also apparently concede there were a numbers of factors which could limit improvements in construction performance. Concerns were expressed about the declining number of applications to construction courses at universities from 1994 to 1998. Contractors and consultants alike were concerned that the industry was becoming reliant on a less skilled workforce. Strangely, they did not seemingly relate this to their own retreat from training provision. Disquiet was also expressed that staff within government departments were insufficiently trained to act as intelligent construction clients, thereby echoing one of the themes of the Latham (1994) report. Further doubts were expressed about the extent to which maximum use was being made of information technology as a means of improving the cost effectiveness of construction. It seems there were some who were still not convinced of the benefits of IT-enabled business process improvement.

From Enterprise to Social Partnership 191 8.3.6  Recommendations for action

The failure of the NAO to find any concrete evidence that the current improvement agenda was producing the required benefits did not prevent it from recommending more of the same. The recommendations were directed at four key groups: (i) the Department of The Environment, Transport and the Regions (DETR), (ii) the Office of Government Commerce (OGC), (iii) government departments who are clients of the construction sector (the so-called ‘line’ departments) and (iv) the construction industry itself. The DETR was encouraged to provide more co-ordinated direction to the plethora of initiatives which were at the time in existence. There was considered to be some duplication in effort and the existence of so many initiatives was seen to be a source of confusion to many in the industry. According to Modernising Construction, the Construction Industry Board (CIB) had acquired the responsibility for the provision of strategic direction, although this was to be short lived. The DETR was further exhorted to use its influence with M4I to ensure that the demonstration projects were truly innovative. Apparently the M4I team had originally accepted all suggestions for demonstration projects that had been proposed by the industry. Hence the fears of those who had at the time questioned the rigour of the demonstration projects can be seen to have been justified. The M4I Board were asked to tighten the criteria for inclusion in the future. The final recommendation to the DETR related to the perceived need for ever more sophisticated performance measures. What had been achieved to date was seen to be little more than an important first step. The NAO’s advice here is symptomatic of the classic response when performance targets fail to achieve the desired effect: ‘we need more sophisticated performance indicators’. The recommendations directed towards the OGC were noticeably modest; they were simply encouraged to disseminate good practice more widely. The so-called ‘line departments’ were encouraged to actively measure improvements in construction performance. The Egan report, Rethinking Construction, was cited as having ‘estimated’ that a reduction of 10% per year in construction costs was achievable. At best, this was a misrepresentation of the status of the Construction Task Force’s suggested targets for improvement. At worst it was outright lie. It should be recalled that Egan’s original targets were based on ‘an impressionistic and partial assessment’ in light of an absence of solid data. Undeterred, Modernising Construction went on to suggest that the desired improvement would only be achieved if the good practice initiatives promoted by DETR and OGC were actively and widely implemented. Given the vagaries of the advocated recipes, and lack of supporting evidence, this was an expression of faith rather than an assessment based on hard evidence. Line departments were further exhorted to ensure that all staff involved in procuring and managing construction attended appropriate training courses. Whether the advocated recipes on offer were of any use was an issue which was notably ducked. As tends to be case with all management fashions, if they initially fail to achieve the required impact, the inevitable response is to advocate that they should be implemented with more enthusiasm. The final recommendation was directed at the construction industry, which was taken to include consultant architects, engineers, quantity surveyors and project managers. The continued use of the term ‘construction industry’ to cover such a heterogeneous sector is indicative once again of an assumption that generic ‘best practice’ is applicable universally. The overriding plea was that the ‘industry’ should make greater use of innovation in the cause of improving public sector procurement. The industry was seen to have much to gain from the range of improvement initiatives which were at the time under way. Treasury of course would have been somewhat disappointed had the NAO concluded otherwise. Particular note was made of the benefits of remuneration on the basis of target price with associated opportunities to share in efficiency gains. The benefits of longer term relationships were also emphasised yet again, together with partnering as a means of ensuring

192  From Enterprise to Social Partnership a shared commitment to continuous improvement. The NAO clearly thought that the benefits of partnering would be accepted on the basis of repeated emphasis. The possibility that contractors had mixed experiences of partnering was not acknowledged. Neither was it acknowledged that subcontractors’ experiences of partnering had very little to do with the mutuality of objectives repeatedly espoused in the literature. 8.4 Accelerating Change 8.4.1  Egan rides again

Despite being tentatively tasked with providing ‘strategic direction’ to the host of improvement initiatives in Modernising Construction, the CIB was formally dissolved within six months, primarily as a result of a lack of support among the industry’s clients. Plans had been underway for some time to replace the CIB, while at the same time bringing together the various strands of the Rethinking Construction movement, including M4I, the Commission for Architecture and the Built Environment (CABE), the Housing Forum, the OGC and the remnants of CRISP (Adamson and Pollington, 2006). The Strategic Forum formally came into being on the 1 July 2001 in the immediate aftermath of the June 2001 general election. Sir John Egan was duly invited to become the first chairman of the new strategic body, whose initial membership is listed in Table 8.1. Under the tutelage of the new Minister for Construction, Brian Wilson, the Strategic Forum set about producing a new report. The direction of change had of course already been decided upon, the task in hand was how to accelerate the pace of change by seeking to ‘inculcate the principles of Rethinking Construction throughout the industry’. Hence the report was entitled Accelerating Change (Strategic Forum, 2002). From the outset it was understood that the Strategic Forum should seek to build on and reaffirm the principles of Rethinking Construction. The main thrust of the report was the extent to which the targets for improvement previously outlined were being achieved in practice. Accelerating Change therefore re-confirmed the culture of performance measurement, justified on the basis of ‘if you do not measure how can you demonstrate improvement?’. The seven original targets were expanded Table 8.1  Strategic Forum membership British Property Federation (BPF) Commission for Architecture and the Built Environment (CABE) Confederation of Construction Clients (CCC) Construction Industry Council (CIC) Construction Industry Training Board (CITB) Construction Industry Products Association (CPA) Construction Research and Innovation Strategy Panel (CRISP) Constructors Liaison Group (CLG) Department of Trade and Industry (DTI) Design Build Foundation/Reading Construction Forum (DBF/RCF) Health and Safety Executive (HSE) Housing Forum (HF) Local Government Task Force (LGTF) Major Contractors Group (MCG) Movement for Innovation (M4I) Office of Government Commerce (OGC) Rethinking Construction (RC) Trades Union Congress (TUC) Source: Strategic Forum (2002).

From Enterprise to Social Partnership 193 to twelve with the addition of client satisfaction measures, thereby strengthening further the primacy of the client over the needs of other stakeholders. In the preamble to Accelerating Change, Sir John Egan confidently stated: [t]he demonstration projects clearly show that the targets we set were realistic, and that when achieved the results bring benefit to all. (Strategic Forum, 2002, 7) The targets to which he was referring, it should be recalled, were those which the Construction Task Force had previously described as being based on an ‘impressionistic and partial assessment’ (Egan, 1998, 18). But the original caveats had now seemingly been forgotten as the ‘illustrative’ targets were legitimised and adopted verbatim as policy. Egan’s faith in the demonstration projects, however, was not shared by others. Of particular note was the lack of any objective process of verifying the claimed innovations (Gray and Davies, 2007). But this was seemingly unimportant. It had already been decided that the implementation of the Rethinking Construction ‘principles’ (in all their glorious vagueness) would lead to improved performance. The task in hand was to demonstrate what had already been decided. The same approach was adopted by the New Labour government in 2003 in respect of Saddam Hussain’s WMD. It had already been decided that they existed because this suited the advocated policy of ‘regime change’. Hence the challenge was reduced to providing supporting evidence. Likewise the Strategic Forum’s approach to Accelerating Change. The vision of Accelerating Change was set out as follows: [o]ur vision is for the UK construction industry to realise maximum value for all clients, end users and stakeholders and exceed their expectations through the consistent delivery of world class products and services. (Strategic Forum, 2002, 8) Despite the stated intention to build on and reaffirm the principles of Rethinking Construction, the above vision demonstrates how the debate had moved on since 1998. The task of maximising value had surreptitiously taken over from the previous focus on eliminating waste. The introduction of end users and stakeholders also represented a significant shift away from the ruthless emphasis on the client which characterised Rethinking Construction. Despite these immediate differences in focus, the authors of Accelerating Change were at pains to emphasise its continuity with Rethinking Construction rather than the points of divergence. There was clearly a sensitivity to the charge of ‘initiative overload’, as alluded to previously by Modernising Construction (NAO, 2001). 8.4.2  Progress since Rethinking Construction

Accelerating Change commences its review of progress with a reminder of Rethinking Construction’s objectives: [t]o achieve radical improvements in the design, quality, sustainability and customer satisfaction of UK construction. And for the industry to be able to recruit and retain a skilled workforce at all levels by improving its employment practices and health and safety performance. (Strategic Forum, 2002, 14) Unfortunately, the above quote once again represents a retrospective re-writing of the original Egan report, which had very to say about either design or sustainability. Neither did

194  From Enterprise to Social Partnership Rethinking Construction give any great deal of emphasis to employment practices in the construction sector, other than a passing reference of the need to provide staff with ‘employment conditions to enable them to give of their best’. Rethinking Construction therefore fell some way short of advocating fair and equitable employment practices. In some sense, the re-writing of the objectives of Rethinking Construction could be read as an acknowledgement of its deficiencies. But in truth, the ‘principles’ of Rethinking Construction were undergoing a process of continuous renegotiation. The authors of Accelerating Change confidently described how the programme of demonstration projects lay at the heart of the Rethinking Construction initiative. It was reported that there were 400 demonstration projects in the programme with a total value of £6 billion. They were claimed to provide examples of off-site fabrication, standardisation, use of new technology, partnering and supply chain integration and other (unspecified) areas of process improvement. The need for the industry to adopt a culture of performance measurement was re-affirmed on the basis of the argument that without measurement there is no way of demonstrating improvement. It was further described how an industry wide group had developed a set of simple headline KPIs based on the 7 Rethinking Construction targets, but with the addition of 5 new measures of client satisfaction. Designated champions on the demonstration projects were apparently required to measure their own performance against the specified KPIs and to report annually. Taken together, the demonstration projects were seen to significantly outperform the industry at large (see Table 8.2)

Table 8.2  M4I demonstration project performance compared to all construction for 2001 Headline key performance indicator

Measure

All construction

M4I

M4I enhancement

Client satisfaction – Product Client Satisfaction – Service Defects Safety

Scoring 8/10 or better

73%

85%

+16%

Scoring 8/10 or better

65%

80%

+23%

Scoring 8/10 or better Mean accident rate/ 100k employed On target or better

58% 990

86% 495

+48% +100%

63%

81%

+29%

On target or better

50%

71%

+42%

On target or better

46%

81%

+76%

On target or better

61%

70%

+15%

Median profit of turnover

5.6%

7.6%

Median value added/ employee (£000) Change compared to 1 year ago Change compared to 1 year ago

28

34

+2% percentage points +21%

+2%

-2%

+4%

+4%

-8%

+12%

Cost Predictability – Design Cost Predictability – Construction Time Predictability – Design Time Predictability – Construction Profitability Productivity Cost Time

Source: Accelerating Change, Strategic Forum (2002).

From Enterprise to Social Partnership 195 The demonstration projects were apparently subject to ‘independent research’ which reviewed their impact by consulting with the participants:

• more than two thirds apparently reported improved partnering, procurement or supply chain management skills;

• more than half reported that their organisations had made changes in eight specific arenas of their business;

• more than two-thirds of participating individuals felt that they had been at the cutting edge of construction innovation and learned new skills.

Unfortunately, no details of the supposed ‘independent research’ were provided, so it is difficult to confirm the extent to which it had been rigorously conducted. It would certainly seem that the demonstration projects had captured the enthusiasm of the survey respondents, and this in itself was a significant achievement. The lessons learned were subsequently disseminated through the websites of M4I and the Housing Forum in the form of case studies, progress reports and themed reports. Nevertheless, despite the plethora of information which appeared on the internet, the aspiration to turn the CBPP into a ‘knowledge centre’ which provided the whole industry with information on the lessons learned never came to meaningful fruition. Knowledge, of course, comprises rather more than an accumulation of assembled information on the supposed benefits of instrumental management techniques. Some would argue it has more to do with developing the ability to discriminate between competing claims. But knowledge of this kind was not seemingly valued by the Strategic Forum; the only knowledge considered worthwhile was that which related to the implementation of the principles of Rethinking Construction. In reflecting back on the lasting contribution of the demonstration projects, to the author’s knowledge there are very few independently evaluated case studies of the lessons learned which remain accessible in the public domain. The tendency to publish the findings on the internet is understandable; but the transient nature of the internet means that relatively little information remains available for public critique. In truth, most of the case studies comprised little more than an entirely unreflective narrative from the appointed (or self-appointed) ‘innovation champion’. Such case studies may have served their immediate purpose in terms of dissemination, but it is difficult to argue that they made any lasting contribution to knowledge. Nevertheless, any doubts about the rigour with which the demonstration projects were evaluated did not prevent Accelerating Change enthusiastically endorsing what had been achieved: …results show that the demonstration projects are consistently exceeding the targets in Rethinking Construction. (Strategic Forum, 2002, 15) But the reality of precisely what was being implemented on the demonstration projects remained elusive. Indeed, beyond the managerialist rhetoric of radical change, the defining principles of Rethinking Construction were vague from the outset. And this essential vagueness was only exacerbated by the way in which they were constantly re-written as the Rethinking Construction bandwagon rolled on. The authors of Accelerating Change had clearly identified some notable omissions within the original Rethinking Construction report, and in consequence, issues such as design quality, sustainability and enlightened employment practices suddenly found their way into the lexicon of industry improvement. Despite the widespread pressure to conform to the Egan agenda, Rethinking Construction had received extensive criticism from the architectural profession for giving insufficient emphasis to design quality. This criticism was subsequently alleviated by M4I’s encouragement to the

196  From Enterprise to Social Partnership Construction Industry Council (CIC) to develop a set of ‘design quality indicators’, which were subsequently launched in July 2002. Likewise, criticisms that the Egan report had failed to take sustainability seriously resulted in the establishment of a ‘Sustainability Working Group’. This subsequently led to the provision of a set of project-based environmental performance indicators (EPIs) in 2001. A further example is provided by the response to the criticism that Rethinking Construction failed to give sufficient emphasis to the espoused commitment to people: M4I launched a working group on ‘respect for people’ which published its report A Commitment to People – Our Biggest Asset in November 2000. Here again the emphasis was on toolkits and KPIs. Indeed, this seemed to be the generic response to every criticism. In response to any criticism that design quality, sustainability or employment conditions were not being addressed, the Eganites could simply point towards the proliferation of toolkits, DQIs, KPIs and EPIs. But at least the debate had progressed slightly since the publication of Rethinking Construction, and the parameters of best practice were being continuously expanded. No wonder the Construction Best Practice Programme struggled to keep up. Notwithstanding some of the above mentioned deficiencies, the broader Rethinking Construction initiative continued to receive financial support from the Department of Trade and Industry (DTI). A further two years’ funding was announced to extend the initiative’s duration through to April 2004. Accelerating Change also claimed that the initiative was being: …backed solidly through the direct engagement of hundreds of companies and industry organisations, as well as other government departments. (Strategic Forum, 2002, 17) Enlightened clients were apparently seeking to work with people who were committed to the Rethinking Construction agenda. This claim of course owed much to the adopted definition of ‘enlightened’ as those who were committed to Rethinking Construction. If a particular client was not adopting the principles of Rethinking Construction then it could not, by definition, be classified as enlightened. And of course the only other category that was available was that of dinosaur. In summarising the progress made since the Egan report, Accelerating Change states that the four key objectives of Rethinking Construction remained as follows: 1 2 3 4

Providing and selling the business case for change. Engage clients in driving change. Involve all aspects of the industry. Create a self-sustaining framework for change.

The need to sell the ‘business case’ for change was subsequently to become one of the main mantras of industry reform. But if the case for change really was so compelling, those firms which adopted ‘best practice’ most effectively would be those which went on to be most successful. And those which were resistant to change would be those which went out of business. Industry was seemingly a bit slow on the uptake and needed to be persuaded. An alternative explanation is that the principles and targets of Rethinking Construction were of limited application, and the evidence from the demonstration projects was not as convincing as had been claimed. Clients seemingly needed separate encouragement for them to engage in the change process. The Strategic Forum clearly believed in the universal applicability of ‘best practice’, which was apparently applicable for ‘all aspects of the industry’. However, there was also an ominous warning that the industry should take responsibility for developing and maintaining continuous improvement. This

From Enterprise to Social Partnership 197 represented a clear indication that government was not prepared to fund the Rethinking Construction initiative indefinitely. Accelerating Change’s emphasis on continuous improvement also contrasted starkly with Egan’s original call for a radical change. The rhetoric of business process re-engineering (BPR) had seemingly slipped out of fashion by 2002. The members of the original Construction Task Force had been even more effusive in their support of lean thinking. Yet strangely, it was not even mentioned in Accelerating Change. Perhaps someone has discovered that lean thinking was not quite the panacea that had been suggested. Unfortunately, nobody told the Construction Best Practice Programme. 8.4.3  Strategic direction and targets

Accelerating Change further detailed how the Strategic Forum had identified ‘three main drivers to accelerate change and secure a culture of continuous improvement’:

• The need for client leadership • The need for integrated teams and supply chains • The need to address ‘people issues’, especially health and safety. These were seen to embrace customer focus, supply chain integration and respect for people. The three issues were further seen to be strategically linked, although it was unclear how they related to the drivers for change which had been previously specified in Rethinking Construction. Clients were seen to be the starting point of the change process and they were exhorted to procure on the basis of best value rather than lowest price. Nevertheless, the focus on the elimination of waste remained a favourite theme. Delivery of the espoused vision was seen to require collaboration between an extensive list of parties, including the whole of the entire supply chain, government, the finance and insurance sector and the research institutions. The quest to align all parties to the common cause of industry improvement is again reminiscent of Progress through Partnership (OST, 1995). It was further claimed to be important to secure the ‘right sort of people’ with the ‘right blend of skills and competences’. Presumably those individuals who remained sceptical of the Egan agenda were the ‘wrong sort of people’. The predetermined notion of the ‘right sort of people’ was hardly compatible with the cause of increasing diversity in the workforce. Neither is it compatible with an environment within which innovation is likely to flourish. During New Labour’s second term of office the use of performance targets became ever more popular as instruments of public policy. There was also commonly much more enthusiasm for inventing new targets than there was for investigating why previous targets had not been achieved. The Strategic Forum (2002, 8) followed this broader trend by setting out yet another set of strategic targets to be achieved by the end of 2004: i 20% of construction projects by value should be undertaken by integrated teams and supply chains; ii 20% of client activity by value should embrace the principles of the Clients’ Charter. It was further exhorted that both of the above should rise to 50% by 2007. The Strategic Forum also expressed its determination to reverse the long-term decline in the industry’s ability to attract and retain a quality workforce. Of additional note was the promise to put in place a means of measuring progress towards the advocated targets. Seemingly, some four years

198  From Enterprise to Social Partnership after the publication of Rethinking Construction, little progress had been made in terms of implementing the required regime of performance measurement. It was notable that this had now been prioritised over the need for the construction industry to produce its own structure of objective performance measures, as had been originally advocated. The industry it seems had taken the easy way out and had simply accepted the targets initially suggested by the Construction Task Force. Given the imposed requirement for the industry to ‘agree’ their suggested measures with clients, this was probably a pragmatic response. However, it also suggested that the response of the construction sector to Rethinking Construction was more akin to passive behavioural compliance than it was to the desired cultural change. In truth, construction sector chief executives thought the advocated targets were nonsense. They were just too polite to say so. 8.4.4  Accelerating client leadership

Despite the repeated emphasis on the need to comply with the principles of Rethinking Construction, precisely what constituted the ‘right sort of people’ was something of a movable feast. Clearly, it was necessary to sign up to the Egan agenda, but it remained unclear which particular principles one was required to endorse. Rethinking Construction had previously given scant attention to sustainability, and yet it was now claimed to be ‘self-evident’ that clients should enter the construction process with a ‘clear understanding of the environmental and social responsibilities of clients’ (Strategic Forum, 2002: 20). Clients were further exhorted to have a clear understanding of what value means to them. Any lack of clarity at the outset was seen to imply changes throughout the delivery process, resulting in waste, duplication and general dissatisfaction. The underlying conceptualisation of the briefing process was heavily shaped by a reliance on a simplistic machine metaphor. Particular care was taken to advise inexperienced clients on the need to follow a defined process, commencing with the verification of need. Inexperienced clients were advised to access independent advice, with the predictable proviso that the advice on offer should meet the principles of Rethinking Construction. In other words, advice should only be sought from the ‘right sort of people’. Clients were further exhorted to create an environment which would deliver excellence in health and safety. Clients, it was claimed, would increasingly be judged by their customers and financial analysts on their ‘ethical stance in relation to safety’. The view was that this would be applied in the same way as was already happening for environmental performance and sustainability. The Strategic Forum’s recurring emphasis on safety can only be applauded, but there was little attempt to analyse the root causes of the industry’s poor safety record. Emphasis instead was also placed on the need for training so that all parties were aware of the ‘demonstrable business, efficiency and safety benefits of integrating teams and processes’. Needless to say it was not made clear where the demonstrable evidence to support such claims was going to be found. The responsibility for this was conveniently shifted to the Construction Best Practice Programme (CBPP). Lean thinking may have been temporally forgotten, but partnering and ‘integrated procurement’ were still very much in vogue: Too many organisations continue to believe that partnering and integrated procurement are experimental techniques and that the majority of their mainstream projects can still be effectively procured through traditional arrangements. (Strategic Forum, 2002, 22)

From Enterprise to Social Partnership 199 Considering the discussion of partnering in Chapter 6, organisations were justifiably cautious of adopting partnering solely on the basis of ‘faith and commitment’. What is clear is that partnering cannot be understood as a definable ‘technique’, experimental or otherwise. Accelerating Change progressed to give particular emphasis to public sector clients, which at the time accounted for 40% of construction orders. The public sector was seen to have a vested interest in getting best whole life value from construction. Suggestions for action even included the linking of government funding of projects to the principles of Rethinking Construction. Public sector clients were further exhorted to take a lead in the procurement of sustainable construction, despite the fact that this received very little emphasis within Rethinking Construction. The Strategic Forum’s focus on whole life value represented a return to the script previously advocated by Progress through Partnership (see Chapter 4). This debate might have been progressed more quickly had it not been prematurely stifled by Rethinking Construction’s sharp focus on short-term waste elimination. Advice was also directed toward private sector clients, who were exhorted to understand how construction projects should contribute to their business needs. The Construction Clients’ Confederation was at the time working on a ‘Starter Charter’ aimed at inexperienced clients. But, given the widely varying experience of clients, it was recognised that any guidance could not be universally relevant. The reluctance to recommend ‘one-size fits all’ guidance for clients did not extend to the KPIs aimed at the construction sector, despite its considerable heterogeneity. It would seem that clients were not willing to be dictated to in the same way that they liked to dictate to the construction sector. Client action was further recommended to support the development of long-term integrated supply chains with the aim of increasing productivity, reducing time, increasing cash-flow efficiency and minimising risk. Despite such recommendations for action, there were no KPIs aimed at major private clients to ascertain the extent to which they were implementing the principles of Rethinking Construction. Clients seemingly deserved a much softer form of encouragement. Given the demise of the CIB due to lack of client support, it was perhaps inevitable that the Strategic Forum would tread carefully in respect of its advice for clients. 8.4.5  Accelerating supply-side integration and integrated teams

Notwithstanding the above, the major contribution of Accelerating Change lay in its endorsement of the terminology of supply-side integration and integrated teams. Although these concepts remained ill-defined, they were nevertheless seen to be of central importance. The list of supposed advantages of supply-side integration was extensive and included the following:

• • • • • • • •

increasing quality and productivity; reducing in project times; increasing cash-flow efficiency; reducing costs from getting it ‘right first time’; ensuring that people work within the process; delivering benefits during initial project delivery; securing best value throughout use of the completed project; maximising opportunities for sustainable solutions

The above benefits are difficult to argue against, but it seems hugely optimistic to accredit such a wide-ranging list of benefits to such a vaguely defined set of concepts. Supply chain integration

200  From Enterprise to Social Partnership and integrated teams could perhaps be read as rhetorical correctives to the old bête noire of construction sector fragmentation. But, strangely, fragmentation is not mentioned in the text of Accelerating Change. In contrast, the term ‘integration’ is cited 27 times, and ‘integrated team’ is mentioned an incredible 40 times. It seems that ‘integrated teams’ had replaced ‘lean thinking’ as the most popular term in the lexicon of industry improvement. Despite the original Construction Task Force being impressed by the ‘dramatic success’ of lean thinking it seems that by 2002 the novelty had worn off – thereby creating another problem for the Construction Best Practice Programme in its task to maintain a checklist of approved best practice recipes. Notwithstanding the long list of supposed benefits, the main emphasis of the justification for supply-side integration lay with creating ‘value’ – a term that the cognoscenti increasingly found difficult to use without the simultaneous raising of both eyebrows. The implication of this mannerism was the word was used to imply a deep set of philosophical principles. The repeated emphasis on ‘value’ was increasingly central to the espoused discourse of industry improvement, even if it remained difficult to define and operationalise. But ‘value’ was clearly a good thing, and clients understandably wanted more of it. And if integrated supply chains secured greater value for the client then this must be a good thing too. A further difficulty lay in defining precisely what constituted an ‘integrated supply chain’. Accelerating Change did make it clear that an integrated supply chain includes the client, as well as those who are ‘pivotal’ in providing solutions that meet the client’s requirements: …those involved in asset development, designing, manufacturing, assembling and constructing, proving, operating and maintaining, will have the opportunity to add maximum value by being integrated around common objectives, processes, culture/values, and reward and risk. (Strategic Forum 2002, 24) The implication is that membership of the integrated team is limited to those who are seen to be of ‘pivotal’ importance to the outcome. It was further emphasised that ‘key’ manufacturers must be part of the integrated team, although again the implication is that those manufacturers who are not ‘key’ should not be admitted to the integrated team. The essential argument of seeking to integrate key suppliers owes much to SCM, whereby key suppliers are embraced into partnering contracts and non-key suppliers are ruthlessly squeezed on the basis that they can easier be replaced. Such an approach undoubtedly makes good business sense, but it hardly constitutes a ‘culture change’. Notwithstanding the above, Accelerating Change gave particular encouragement to product manufacturers, suppliers and specialists who can develop solutions that involve less site processing. This was very much in line with the established mantra of modern methods of construction (MMC), whereby increased standardisation, pre-assembly and prefabrication are seen as means of improving quality and reliability (see Chapter 12). The engagement of such firms in the integrated team was further seen to be a way of ‘unlocking their research expertise and deploying it to deliver value and enhance the finished product’. Once again, the overriding emphasis was on the advantages that can accrue to clients; there was much less emphasis on the benefits realised by the team members (other than the potential for relationship continuity). It could also perhaps be inferred that the concept of integrated teams was limited in its application to new construction; Accelerating Change as a whole had had very little to say about repair and maintenance, which consistently accounts for approximately 45% of construction sector output. Accelerating Change also called for a significant investment in education and training to emphasise the importance of teamworking. The Construction Best Practice Programme was once again tasked with developing the necessary tools to support SMEs to become part of an integrated supply team. As previously, this presumably only applied to those SMEs who were judged to be

From Enterprise to Social Partnership 201 ‘pivotal’ to meeting the client’s requirements. Perhaps to alleviate the prevailing sense of vagueness, the Strategic Forum also promised to ensure that a toolkit would be developed by April 2003 to help assemble integrated teams, mobilise their value streams and promote effective team working. If only such a ‘toolkit’ for enhancing co-operation had been produced to follow through the recommendation of the Simon (1944) report: …efficiency and success are dependent on an honest desire for co-operation. (Simon, 1944; cited in Murray and Langford, 2003, 205) The phenomenon at play here seems to be what Buchanan (2000) refers to as the ‘continuous reinvention of teamworking as a management idea’. Each generation of construction professionals is exhorted to adopt teamworking as a new idea and to break with the industry’s adversarial past. But Accelerating Change also provided an important thread of continuity in stating that integrated teams should ideally be based on strategic partnering. The relationship continuity inherent within strategic partnering is held to enable knowledge and expertise to be transferred more effectively from one project to the next. Especially notable within Accelerating Change is the stubborn refusal to define the meaning of an integrated team; a task which was delegated to the proposed ‘toolkit’. The promised toolkit was subsequently published on the Strategic Forum website, where it was advocated that the interdependent principles shown in Figure 8.2 should be adopted if effective and sustained integration were to be achieved.

Figure 8.2  Principles of integration. Source: Accelerating Change, Strategic Forum, 2002.

202  From Enterprise to Social Partnership Despite all the grandiose claims in favour of integrated project teams, it is ultimately difficult to see how the substance of the ‘underlying principles’ differ from those of strategic partnering. Accelerating Change further pledged its support for a greater focus on SCM and logistics as means of facilitating integrated working and the elimination of waste. SCM was seen to relate to the flow of goods and materials from supplier to the point of use, whereas logistics was seen to relate to the flow of goods and materials, equipment, services and people throughout the supply chain. Yet again the CBPP, this time in conjunction within the Construction Products Association, was fingered for the responsibility of collating best practice in logistics and disseminating best practice. The chief executive of the Construction Best Practice Programme must have been starting to despair at this stage. 8.4.6  Accelerating culture change in people issues

Accelerating Change devotes an entire chapter to ‘people issues’, arguably in response to previous criticisms directed at Rethinking Construction. The authors express a determination to reverse the long-term decline in the industry’s ability to attract and retain a quality workforce. The dominant instrumentalism is indicated by the way the workforce is described as the industry’s most valuable ‘asset’; as if it were something to be owned and exploited. Nevertheless, the overall tone is progressive and the arguments presented act as an important counter-balance to the top-down prescription which dominates elsewhere. Reference is made to the ten KPIs associated with the Respect for People initiative which include benchmarks on employee satisfaction, staff turnover rate, sickness, pay safety and working hours. Further reference is made to no less than eight toolkits which were to be available in October 2002 to help managers evaluate their performance and focus on the following areas:

• • • • • • • •

Workforce satisfaction; Personal working environment; Safety; Health; Work in occupied premises; Training Working environment, and; Equality & diversity.

Strong support was also expressed for the Construction Skills Certification Scheme (CSCS) as a means of improving the industry’s health and safety performance. The CSCS was intended to enable employers to identify workers with a recognised level of competence in skills and health and safety. The focus on supply chain integration was judged to have benefits vis-à-vis health and safety. For example, such integration was seen to aid pre-planning such that certain risks could be ‘designed-out’. The emphasis on pre-assembly and pre-fabrication was also seen to have safety benefits. Particular emphasis was placed on the importance of consulting the workforce on health and safety matters. Practitioners were further exhorted to be more aware of their responsibilities under the CDM regulations. All of this deserved to be applauded. In marked contrast to Rethinking Construction, specific mention was made of the need to offer attractive pay and conditions in comparison to other sectors. Criticism was directed towards the ‘long hours culture’ within the construction industry, considered detrimental to health and safety and also costly for employers. Perhaps most remarkably, employers were further exhorted to ensure that all operatives were embraced with the industry’s new stakeholder pension scheme. Pleas

From Enterprise to Social Partnership 203 were also made in support of Investors in People and greater workforce diversity. However, it is noticeable that no KPIs were promoted to measure that extent to which firms were improving their performance against these criteria. Nevertheless, this was a much more progressive agenda than that advocated by Rethinking Construction. In contrast to the trend within previous reports, supportive comments were made in respect of the role of professional institutions and the Construction Industry Training Board (CITB). But even here much of the discussion about training is directed towards the need to create the required integrated teams and supply chains. The involvement of the Major Contractors Group (MCG) would seem to have neutralised any significant criticism of the main contractor. In consequence, SMEs were targeted as the fall guys and were criticised for not being as active in the area of ‘people culture issues’ as they might be. But even those SMEs which were ‘paying attention’ to people issues were seemingly only doing so because their clients had been telling them to. Apparently, the reason for this lack of attention was that most SMEs fail to see the good business case in support of tackling people issues. SMEs were further criticised for being confused and struggling to decide what to do first. In light of their constant bombardment with ill-defined management techniques, it is perhaps not surprising that the construction sector’s SMEs were in a perpetual state of confusion. Universities were also considered a safe target for allocating blame for the perceived deficiencies in training and education. Support was expressed for the CIC’s ‘Common Learning Outcomes’ initiative which was aimed at achieving a greater degree of consistency across university degree curricula. Accelerating Change further recommended the requirement to include integrated project team-working within university courses as part of the accreditation process. Presumably the Strategic Forum was looking for such ideas to be accepted entirely uncritically on the basis of their recommendation. Clients however were not let off the hook completely: [h]ow partners in the supply chain behave towards one another is important in developing the relationship of trust that underpins integrated teams. (Strategic Forum, 2002, 33) The implication was that clients had a responsibility to set an example in terms of trusting behaviour. There is of course an obvious paradox between advocating trust on the one hand, while advocating continuous performance measurement on the other. But setting an example in terms of trust was not the challenge presented to clients. In contrast, they were tasked with the rather less onerous role of ensuring that the selected designers and consultants recognised working rule agreements, were in possession of excellent health and safety records, and were committed to training their workforce. If these three points were satisfied, the implication was that clients would be doing their bit towards achieving the strategic vision of excellent performance and whole life value. Placing onerous requirements on private-sector clients was clearly not acceptable. Indeed, government was notably singled out as the industry’s most important client, and as such was tasked with leading the way in terms of best practice. Here again, one can easily imagine how placing the emphasis on public sector clients met with the approval of the Confederation of Construction Clients (CCC) and the British Property Federation (BPF). Within the Strategic Forum’s meetings, it is easy to imagine the trade union representative struggling to get their points across and embedded into the text of Accelerating Change. The one issue that they would have consistently lobbied to have included would have been ‘false’ selfemployment. There were at the time between 300 and 400,000 self-employed workers in construction who were held to be falsely classified as self-employed when on the basis of any ‘economic reality test’ they should have been in direct employment (cf. Harvey, 2001). The large proportion

204  From Enterprise to Social Partnership of self-employed workers in the construction sector presents on obvious tension with the dominant focus on the ‘integrated team’. Within Accelerating Change, the overriding inference is that the problem of bogus self-employment is confined to the grey economy. Firms who contravene tax and employment legislation were seen to provide unfair competition for ‘respectable law abiding firms’. Strangely, there is no mention of government complicity in the systemic encouragement of self-employment, nor of the shift away from direct employment by the main contractors. The conflation of false self-employment with the informal construction economy usefully served to confine the problem to a different space from that occupied by the MCG and the CCC. Accelerating Change further maintained that it was this ‘other’ sector where there was most concern about health and safety and where ‘people’ issues were most consistently ignored. Unfortunately, this was a gross misrepresentation of the picture painted by Harvey (2001). Harvey’s research had demonstrated that workers were routinely falsely classified as self-employed on major construction sites, many of which involved members of the MCG as main contractors (see previous discussion in Chapter 3). The association of false self-employment with the informal construction sector was at best disingenuous. Undoubtedly the informal sector is characterised by many of the problems described, but these very same problems also apply to the formal construction sector presided over by the membership of the Strategic Forum. But nothing could be said which went against the interests of the Strategic Forum’s membership. Much better to focus on vague exhortations in favour of ‘integrated teams’. At least if the reader could not understand precisely what was being advocated, nobody could be offended. 8.4.7  Cross-cutting issues

The final chapter of Accelerating Change set out a list of ‘cross-cutting’ issues which could act as either enablers or barriers to change. The first such issue was sustainability, which the authors had seemingly belatedly realised had not received sufficient emphasis in the main body of the report. Care was taken to align Accelerating Change with the Sustainable Construction Task Group as then chaired by Sir Martin Laing. Approval was expressed for the advocated importance of whole life performance in terms of ensuring value through productivity in use. This may have been a very narrow interpretation of sustainability, but at least it was an improvement on Rethinking Construction. However, the Strategic Forum notably offered its support to the Secretary of State’s call for trade associations to address environmental and social impacts. Despite having previously – and erroneously – claimed that ‘radical improvement’ in sustainability was a central objective of Rethinking Construction, the authors of Accelerating Change subsequently contradicted themselves by offering an explanation of why it had not previously featured as a core issue. Apparently, at the time Rethinking Construction was published, it was considered more important to focus on the ‘fundamental flaws’ in the construction procurement and delivery process. Precisely how these flaws had been eradicated in the intervening four years was left unexplained. Neither was it explained why lean thinking had received so much emphasis in Rethinking Construction, but was then seemingly abandoned by 2002. Nevertheless, Accelerating Change went on to emphasise that: [e]very link of the supply chain has a critical contribution to make towards sustainable construction and development. (Strategic Forum, 2002, 35) But there was very little coverage of the broader principles of sustainability. Despite having previously alluded to the broader concept of corporate social responsibility (CSR), the advice offered remained stubbornly focused on the elimination of waste in the cause of efficiency. In this

From Enterprise to Social Partnership 205 respect Accelerating Change was entirely consistent with Rethinking Construction, and the linking of efficiency with sustainability seemed somewhat convoluted. The ‘waste’ which was primarily targeted was not physical waste in the sense of environmental pollution, but inefficiency caused by a lack of alignment with the client’s objectives. It is worthwhile recalling the original definition of waste promoted within Rethinking Construction related to ‘activities which do not add value from the customer’s viewpoint’ (see Chapter 5). It is therefore difficult to celebrate Accelerating Change for its emphasis on sustainability. The argument presented was broadly consistent with that previously mobilised by Rethinking Construction. And the original Egan report was no more representative of the principles of sustainability than Frederick Taylor’s scientific management (Taylor, 1911). The emphasis was not on the broader principles of sustainability, but on narrowly construed notions of economic efficiency. The attempt to weave sustainability into the argument while being consistent with the ‘principles’ of Rethinking Construction led to the authors of Accelerating Change tying themselves in rhetorical knots. The task was made especially difficult by the pre-determined position that the answer to all the industry’s perceived problems was the adoption of ‘integrated teams’: [a] poorly specified brief perpetuates waste and increased costs; without integrated teams the ability to pre-plan is lost, thereby running the risk of even greater inefficiencies and potential accidents; an undervalued and undertrained workforce make mistakes which result in financial, environmental and, all too often human cost. (Strategic Forum, 2002, 35) All the construction sector seemingly had to do was to adopt integrated teams, coupled with a commitment to pre-planning. It was of course recognised that the required integration of the supply process would require a ‘step change in the culture of the industry’. Every proposed improvement technique is seemingly always dependent upon ‘culture change’. According to the Strategic Forum, the envisaged change would be characterised by ‘clients procuring and specifying sustainable projects, products and services’. And the supply side would in turn respond collaboratively in a way that enables all parties involved in the integrated supply team to ‘maximise the added value their expertise can deliver’. The construction sector was indeed fortunate to have the Strategic Forum to set the strategic vision for the industry. Or maybe clarity was not considered a core issue in 2002, just as sustainability had not been considered important in 1998. Other so-called ‘cross-cutting issues’ included a further exhortation in favour of investment in high quality design. And of course, the investment had to be made by an integrated team, the existence of which was seemingly seen as an essential pre-condition. IT and e-business were held to be enablers and were seen to have transformed many operations in the construction sector, with much scope for further improvement. But Accelerating Change notably warned that the benefits accruing from e-business and virtual prototyping are not easy; their adoption was seen to require the construction industry: to transform its traditional methods of working and its business relationships. Key barriers to this transformation include organisational and cultural inertia, scale, awareness of the potential and knowledge of the benefits, skills, perceptions of cost and risk, legal issues and standards. (Strategic Forum 2002, 36) The advice on offer can once again be seen to fall someway short of being useful. Of particular note is the assumption that the construction sector is essentially static. Traditional methods are seen

206  From Enterprise to Social Partnership to dominate and the sector at large is seen to be characterised by organisational and cultural inertia. Despite the lack of clarity, the essential mindset remains depressingly familiar. The above quote could equally have been lifted from the narrative of BPR (see Chapter 6). The final ‘cross-cutting issue’ deserving of mention relates to the need for the industry to invest in research and development (R&D), which was seen to be essential to underpin innovation and continuous improvement. The extent to which innovation is compatible with the advocated regime of performance measurement was, needless to say, not addressed. The support function previously provided by the Construction Research and Innovation Strategy Panel (CRISP) was dismissed as inadequate and a call was made for a ‘new CRISP’ with an expanded role and resources. Unsurprisingly, the Strategic Forum considered that an immediate priority was to focus research effort ‘on filling the industry’s knowledge gap in the development of integrated supply teams’. One can almost imagine the scenario throughout the industry’s R&D departments: …listen up everyone: ditch all that work on lean thinking, it’s integrated teams from now on. But in truth by 2002 there were very few R&D departments left in the construction sector. Several large contractors had maintained R&D departments in the 1960s/70s, but these had all but disappeared by the late 1980s. Despite the alleged organisational and cultural inertia, the industry had already undergone extensive radical change prior to the propagation of the so-called Egan agenda. But the pre-existing dynamics of change were seemingly of little interest to the visionaries of the Strategic Forum. Accelerating Change gave especially scant attention to topical issues such as PFI and the move towards PPP. Fleeting note was made of the OGC’s recommendation that forms of contract should be adopted which ‘encourage team integration’ such as PFI, prime contracting and design & build. Whether or not PFI encourages integration is a moot point; but it was in any case a claim which was entirely peripheral to the host of criticisms which were being articulated at the time. The Strategic Forum clearly felt no need to offer any qualifying observation; its members seemingly had no opinion on the efficacy of PFI. If the OGC said it was good for integration then this was seemingly good enough for them. Neither did they apparently have any opinions about the contracting out of public services or the move towards PPP. The same had also been true of the preceding Modernising Construction report. Reports about industry improvement kept well clear of commenting on the politically contentious PFI. In the case of Accelerating Change, all that seemed to matter were warm words about ‘integration’, together with the promise of yet more KPIs and toolkits. The link between those who were advocating change and the reality of what was happening on the ground was becoming evermore tenuous. This was after all the ‘age of spin’, and nobody seemed very worried about reality any more. 8.5 Summary This chapter has described the context of construction improvement under the early years of the New Labour government. In the short term, there was no radical departure from the policies of enterprise enacted by the preceding Major government. The Blair administration was hence a very different entity from the Labour governments of the 1970s. Blair was fortunate to preside over a period of continuous economic growth throughout his term of office. The continuous growth progressively allowed for significant new investment in health and education. It was only when Gordon Brown took over as prime minister in 2007 that dark clouds began to appear on the horizon. The preceding years under Blair represented very good times indeed for the UK construction

From Enterprise to Social Partnership 207 sector, with many new opportunities around PFI/PPP and the contracting out of public services. Many construction firms diversified extensively in response to these emerging opportunities. At the same time, pre-existing notions of partnering merged into a new government-promoted discourse of social partnership. Rethinking Construction (Egan, 1998) was initially important in cementing New Labour’s business-friendly credentials. In many respects, the report represented the highpoint of the enterprise culture in construction. However, it must be recognised that this was not a form of enterprise which relied on the free market; this was a form of enterprise subject to continuous performance management in accordance with predetermined objectives. But the early emphasis on implementing the Egan agenda described in Chapter 6 was rapidly overtaken by events. Of particular importance was New Labour’s espoused commitment to the Third Way, which promised a new combination of enterprise and social democracy. In the construction sector, this entailed a certain degree of newage revisionism in terms of what the Egan agenda was about. Public sector agencies were exhorted to work in partnership with the private sector for the purposes of securing best value. The machine metaphors of Rethinking Construction were progressively supplemented by the organic metaphors of corporate social responsibility. Of particular note was the way the battle lines which previously existed between the public and private sectors were re-drawn. Political ideology was claimed to no longer to be important; what mattered now was what worked. Hence the notion of performance management diffused across every policy arena, and the construction sector was no exception. The culture of enterprise had long-since emphasised the private sector’s capacity for innovation, but this could no longer be taken on trust. It now had to be measured alongside everything else in accordance with an endlessly expanding infrastructure of KPIs. The debate was also progressively extended beyond the domain of contracting, to include clients, professional advisors, subcontractors and the suppliers of materials. Integration became the new watchword, and supply chain integration became the essential rhetorical corrective to structurally embedded fragmentation. And if the rhetoric of ‘partnering’ had by now become a little tarnished, there were always new buzzwords to be mobilised. Certainly by 2003 all the talk within the newly formed Constructing Excellence was of ‘integrated teams’ and ‘collaborative working’. Lean thinking had seemingly slipped out of fashion and was certainly not held to be the panacea it once was. But the model of the lean organisation remained central to way the contracting sector operated. And when recession returned in 2008, the emphasis of lean thinking on the elimination of waste became popular once again. The increasing policy focus on environmental sustainability also played a part in the rehabilitation of lean thinking, although this was a radically different interpretation of lean from that proposed in Rethinking Construction. But in the age of spin, reality no longer seemed to matter. All that mattered was to be ‘on message’ with the advocated policy direction. It must also be said that the vast majority of managers in the construction sector remained aloof from the details of such debates. If the client wanted an integrated team, they would provide an integrated team. And if the client wanted prime contracting, then prime contracting is what the contractor would provide. Given that none of these terms were clearly defined it was not difficult to comply with requirements. This was perhaps the logical endpoint of customer responsiveness in the age of spin. The important thing was to be ‘Egan compliant’, despite the fact that nobody bothered to remember precisely what it was that had been advocated. It was always possible to cite the demonstration projects as having provided clear evidence of the benefits of new ways of working, even if nobody was quite sure what the ‘new ways of working’ were. Few pointed out the inherent contradiction between advocating innovation on the one hand, while seeking to measure performance against a pre-determined set of KPIs on the other. But the economy was growing and CEOs within the construction sector were broadly happy – barring lingering concerns about skills

208  From Enterprise to Social Partnership and health and safety. Few bothered to talk about the absence of stable employment regimes as increasing numbers of migrant workers were sucked in from Eastern Europe. It was far easier to keep on advocating the need for an industry-wide culture change – a meaningless soundbite which everyone could support. References Adamson, D. M. and Pollington, T. (2006) Change in the Construction Industry, Routledge, London. Atkinson, J. (1984) Manpower strategies for flexible organisations, Personnel Management, 16(8), 28–31. Collins, H. (2001) Regulating the employment relation for competitiveness, Industrial Law Journal, 30, 17–46. Collins, H. (2002) Is there a third way in labour law?, in J. Conaghan, R. Fischi and K. Klare (eds.), Labour Law in an Era of Globalisation. Oxford University Press, Oxford, pp 450–69. Connolly, C., Martin, G. and Wall, A. (2008) Education, education, education: The third way and PFI, Public Administration, 86(4), 951–968. Craig, D. and Brooks, R. (2006) Plundering the Public Sector, Constable, London. DEFRA (2006) Procuring the Future: Sustainable Procurement National Action Plan – Recommendations from the Sustainable Procurement Task Force, Department for Environment, Food and Rural Affairs, London. Driver, S. and Martell, L. (1999) New labour: Culture and economy, in Culture and Economy: After the Cultural Turn, (eds. L. Ray, A. Sayer) Sage, London, pp 246–269. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Evans, R., Carrell, S. and Carter, H. (2009) Man behind illegal blacklist snooped on workers for 30 years, The Guardian, Wednesday 27 May. Faux, J. (1999) Lost on the Third Way, Dissent, 46(2), 67–76. Fisher, N. and Green, S. (2000) Partnering and the UK construction industry: the first ten years - a review of the literature, in Modernising Construction, Report by the Comptroller and Auditor General of the National Audit Office, The Stationery Office, London, pp 58–66. GCCP (2000) Achieving Sustainability in Construction Procurement, Government Construction Clients’ Panel, London. Giddens, A. (1998) The Third Way: The Renewal of Social Democracy, Polity Press, Cambridge. Gray, C. and Davies, R. J. (2007) Perspectives on experiences of innovation: the development of an assessment methodology appropriate to construction project organizations, Construction Management and Economics, 25(12), 1251–1268. Hall, S. (2003) New Labour’s double-shuffle, Soundings, 24, 10–24. Harvey, M. (2001) Undermining Construction, Institute of Employment Rights, London. HM Treasury (2003) PFI: Meeting the Investment Challenge, HMSO, Norwich. Ietto-Gillies, G. (2006) Is new Labour’s ‘Third Way’ new or just hot air in old bottles? Post-Autistic Economics Review, 39, 31–47. Jenkins, S. (2006) Thatcher and Sons: A Revolution in Three Acts, Allen Lane, London. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Leiringer, R., Green, S. D. and Raja, J. (2009) Living up to the value agenda: The empirical realities of through-life value creation in construction, Construction Management and Economics, 27(3), 271–285. Levene, P. (1995) Construction Procurement by Government: An Efficiency Unit Scrutiny, Cabinet Office, London. Marr, A. (2007) A History of Modern Britain, Macmillan, London. Murray, M. and Langford, D. (2003) Conclusion, in Construction Reports 1944–89, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 196–217.

From Enterprise to Social Partnership 209 NAO (2001) Modernising Construction. Report by the Comptrollor and Auditor General of the National Audit Office, The Stationery Office, London. NAO (2009) The Building Schools for the Future Programme: Renewing the Secondary School Estate, The Stationery Office, London. OST (1995) Technology Foresight Report: Progress through Partnership, Office of Science and Technology, HMSO, London Powell, M. (2000) New labour and the third way in the British welfare state: A new and distinctive approach, Critical Social Policy, 20(1), 39–60. Roe, P. and Craig, A. (2004) Reforming the PFI, Centre for Policy Studies, London. Simon, Sir Ernest (1944) The Placing and Management of Contracts, HMSO, London. Smith, P. and Morton, G. (2006) Nine years of new labour: Neoliberalism and workers’ rights, British Journal of Industrial Relations, 44(3), 401–420. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. TUC (2008) Hard Work, Hard Lives. The full report of the Commission on Vulnerable Employment, Trades Union Congress, London. Wolmar, C. (2007) Fire and Steam: A New History of the Railways in Britain, Atlantic Books, London.

9

Dilemmas Unresolved

9.1 Introduction The purpose of this chapter is to summarise the construction improvement debate as it stood following 13 years of New Labour (1997–2010). It hence provides a snapshot of progress prior to the onset of the age of austerity which commenced in 2010. The chapter also seeks to pull together some of the threads from the preceding chapters. Attention is initially directed at the changing infrastructure of construction improvement. Many of the bodies advocating construction sector improvement which came into being during the 1990s were subsequently combined to form Constructing Excellence in 2003. Particular attention will be given to the post-Egan propensity for continuous target setting, which continued to be championed by the Strategic Forum. Attention is also given to the recurring popularity of simplistic machine metaphors and the possibility that these reflect and reinforce pre-existing trends in the construction sector. From this perspective, mechanistic ‘improvement’ recipes such as business process re-engineering (BPR) and lean thinking, rather than being part of the solution, can be seen to have been part of the problem. Small wonder that the sector was widely seen to possess an ‘adversarial culture’ given the way it was continuously bombarded with over-simplistic improvement recipes. Consideration is further given to the ‘disconnected agendas’ which continue to characterise the construction sector improvement debate. One such agenda provided a short-lived focus on the value of good design, which thereafter spilled into a broader consideration of the value provided by the construction sector. This debate, although flawed in many respects, was important in viewing the industry from a much wider perspective. The construction sector had for too long been viewed as a ‘closed system’ whereby the overriding obsession lay with internal efficiency. Some even suggested that the sector should be relabelled as the ‘built environment industry’. There was also much talk of the ‘value agenda’, a theme which is seemingly destined to be rediscovered anew by each generation. Irrespective of this seemingly enlightened perspective, the construction workforce remained stubbornly invisible. It seemed that those who promoted the value agenda were entirely unconcerned about regressive employment conditions within the sector. Despite all the heady talk of ‘integrated teams’, very few industry leaders were interested in tackling the fragmentation caused by false self-employment. In this respect, there were seemingly two almost entirely disconnected agendas at work. The first was concerned with a ‘value-orientated built environment’, and the second was concerned with the needs of the increasingly vulnerable workforce. It seems these two agendas are destined to remain forever disconnected. Coverage is also given to health and safety, which was widely heralded as one of the success stories over the preceding 20 years. For many, the statistics relating to onsite fatalities seemed to be a vindication of the adopted policies. For others, however, headline statistics only ever

DOI: 10.1201/9781003308133-9

Dilemmas Unresolved 211 tell part of the story. A particular emphasis is given to the alternative perspective provided by Rita Donaghy’s (2009) often neglected report entitled One Death Is Too Many. The reality was that health and safety remained a huge concern such that any sense of complacency was sorely misplaced. Finally, the chapter provides a brief review of Never Waste a Good Crisis (Wolstenholme, 2009), which purported to offer yet another review of progress since Rethinking Construction. It will be argued that this continued fixation with the Egan (1998) report continued to distract attention from more important issues. 9.2  The changing infrastructure of construction improvement 9.2.1  Constructing Excellence

The changing infrastructure of industry improvement has been referred to at several points throughout this book. Chapter 4 described how the Construction Industry Board (CIB) was created as a direct result of the Latham (1994) report. In the wake of Rethinking Construction (Egan, 1998) there was an explosion of different bodies and networks advocating the need for industry improvement. Some of these were publicly funded and others operated on the basis of private sector industry ‘clubs’. Modernising Construction (NAO, 2001) concluded that such organisations had succeeded in raising awareness across different parts of the industry. The NAO report further commented on the extent of duplication of effort and a sense of confusion within industry on the best source of assistance. It was hence recommended that there should be more co-ordination and better direction of their activities. In consequence, the various publicly funded agencies came together in 2003 under the brand of Constructing Excellence. At the time of writing, Constructing Excellence is still in existence, although it operates as a much smaller organisation than it did when it was in its prime. It currently operates as a modest networking group within BRE. But in 2003, by means of a progression of mergers, Constructing Excellence laid claim to the legacy of many of the improvement bodies which have been referred to throughout this book, including:

• • • • • • • •

Reading Construction Forum (RCF) Design Build Foundation (DBF) Construction Best Practice Programme Movement for Innovation (M4I) Local Government Task Force (LGTF) Rethinking Construction Be Construction Clients’ Group (CCG)

The overall trend is that as the various bodies merged, the smaller the overall entity became. Bodies such as the Construction Best Practice Programme and the Movement for Innovation (M4I) had originally been government funded. From the outset government took the view that the ‘best practice’ movement should ultimately become self-funding. This view prevailed throughout the years of the New Labour government. It was therefore inevitable that the gradual withdrawal of publicly funded support would present real challenges for the infrastructure of industry improvement. Bodies such as the Reading Construction Forum had previously operated very successfully as membership organisations funded through subscription. However, the onset of recession in 2008 made the funding of Constructing Excellence through membership fees progressively more difficult.

212  Dilemmas Unresolved Constructing Excellence continued to champion the cause of key performance indicators (KPIs) as a means of benchmarking performance. It also purported to conduct ‘action research’ as a means of piloting new ideas. It further continued to support a programme of demonstration projects following-on from the work of the M4I. Perhaps in response to previous criticisms, the programme also included a restricted number of in-depth ‘innovation in practice’ projects. However, doubts remain whether the evaluations were any more rigorous than had previously the case with the notoriously over-hyped M4I demonstration projects. At the time of writing, the Construction Excellence brand extends to a regional structure of ‘best practice’ clubs, although some of these are more active than others. Many have become dormant. The regional ‘best practice’ clubs have frequently been critical of the centralised organisation, claiming that it was ill-placed to understand the nuances of their local markets. Construction practitioners invariably possess the very human characteristic of being resistant to ‘best practice’ as taught by others; they much prefer to work it out for themselves. 9.2.2  In favour of best practice networks

The history of industry improvement bodies since the Latham (1994) report leaves much to be desired, but such networks undoubtedly have an important role to play. The benefits do not lie in the advocated codified prescriptions, but in the processes through which such ideas are re-conceptualised by practitioners within localised contexts. In many cases, practitioners undoubtedly adopt some of the more fashionable soundbites while persevering with tried-andtested routines. However, in other cases the advocated recipes may act as catalysts for localised innovation. The overriding difficulty is that practising managers too often look for management recipes which legitimise what they already do. Hence partnering and supply change management were adopted as best practice because they legitimised the widespread reliance on subcontracting. In other words, such recipes are used as sensemaking mechanisms; they are used to make sense of the reality which practitioners experience taking place around them. They support practitioners’ sense of self-identity by helping them ascribe to themselves an active role in the shaping of change, rather than seeing themselves as passive recipients. But the difficulty lies in what goes unsaid. If the popularised improvement agenda is silence on the potentially adverse effects of accepted ‘best practice’, such issues do not become part of the discussion. Hence managers focus on the enactment of ‘supply chain management’, while remaining seemingly blind to the corrosive effects of labour casualisation and false self-employment. In seeking out recipes which reinforce their sense of self-identify, managers progressively act to shape the language in which the debate is conducted. An active endorsement of supply chain management (SCM) is consequently translated into a passive acceptance of the increased role of subcontracting. Hence the favoured discourse of industry improvement serves to legitimise and reinforce pre-existing trends. But the best practice agenda is by no means homogeneous; there is plenty of scope for firms to respond in different ways. Each new generation of managers has the opportunity to re-invent the improvement agenda; we are not necessarily destined to continuously re-cycle the debates of the past. It must further be recognised that the best practice agenda is only one source of ideas; there are numerous other agendas against which practitioners continuously position themselves. But what is clear is that there is a much looser relationship between codified ‘best practice’ and what firms do than is commonly supposed. Different firms will have different path dependencies and hence will respond to ideas in different ways. The benefits lie not in the implementation of best practice but in the extent to which the advocated best practice initiates localised processes of innovation. Critiques of the accepted approaches thereby become equally important as prescriptive guides to implementation. It could even be argued that critiques are even more important in that they leave

Dilemmas Unresolved 213 more scope for localised responses. It is further important to recognise that such processes do not take place solely within the boundaries of single firms, but span across networks which transcend organisational boundaries. Processes of innovation must therefore be understood in the broader context of sectoral change. They do not exist in isolation. Organisations such as Constructing Excellence frequently claim to provide a unique bridge between industry, clients, government and the research community. This role is undoubtedly very important. The events and networks promoted by organisations such as Constructing Excellence provide a quasi-neutral space where different parties can come together to debate issues of industry improvement. All of this is very healthy and arguably directly contributes to a more responsive construction sector. But what is less healthy is the requirement to align with pre-determined agendas such as that advocated by Rethinking Construction. Best practice organisations such as Constructing Excellence would serve the cause of innovation much more successfully if they were rather more open to the value of critique. They could also become slightly more orientated towards placing current debates within the context of long-term trends. The difficulty lies in the way participating individuals seek to align themselves with the established agenda because they think this important for the purposes of career progression. Hence individuals willing to promote arguments which go ‘against the grain’ are few-and-far between – it is simply perceived to be too much of a career risk to the individual, and too much of a commercial risk to their employing organisation. This was certainly the case in the wake of Rethinking Construction. But even more worrying was the way the cause of innovation was adopted without a corresponding focus on the need for regulation. This is a theme to which we shall return. It would of course be a mistake to suggest that more critically orientated discussions never take place, but more could undoubtedly be done positively to encourage them. For example, seminars on lean construction should not have been limited to those advocating the supposed benefits of lean construction techniques; they should also have included those who were critical of such ideas. Of particular importance would have been to position such ideas within the context of ‘leanness’ as an organisational form (see Chapter 3). This may have led to a more balanced discussion thereby perhaps making bodies such as Constructing Excellence more relevant to the practical challenges faced by practitioners. But perhaps it has been the academic community which was at fault rather than the advocates of best practice. Too many academics remain content to promote abstract theoretical ideas in isolation of any engagement with the lived realities of practitioners. Others strive merely to echo the function of consultants by seeking only to reinforce the persuasiveness of popularised recipes. Academics are of course increasingly motivated by the need to secure research funding. In consequence, they often feel the need to echo the accepted improvement narrative to make their research ‘relevant’ to the needs of industry. Some even complain that they are faced with some sort of censorship mechanism. Precisely who they think is operating the censorship mechanism is unclear. In truth, self-censorship is a much more invidious problem whereby academics limit themselves to research which they think will be sympathetically received. These are the processes through which researchers and practitioners become indoctrinated into the same discourse. 9.2.3  Targets and yet more targets

In addition to Constructing Excellence, the Strategic Forum also remained in existence as the New Labour years drew to a close, although it was noticeably becoming less assertive. The Strategic Forum still retained responsibility for ‘target setting’ in the spirit of Rethinking Construction. Its principal role was stated as being: ‘to coordinate, monitor, measure and report on progress under the headline targets’. It is notable that the target areas continued to evolve, although strangely

214  Dilemmas Unresolved nobody ever admitted that the original targets were inappropriate. By 2010 the target areas had been reduced to six:

• • • • • •

Procurement & integration Commitment to people Client leadership Sustainability Design quality Health & safety

The above areas can all be superficially linked back to Rethinking Construction. But in truth the emphasis on sustainability and design quality developed primarily in response to notable omissions within the Egan report. Aesthetic notions of design quality had undoubtedly been squeezed out by the report’s obsession with narrowly defined efficiency. This reflected and reinforced the pre-existing culture of design-and-build architecture which continues to blight the UK’s urban landscape. ‘Lean architecture’ has unfortunately been in fashion for some time, and the advocates of design quality indicators (DQIs) never quite seemed to make any headway. It has also been conveniently forgotten that sustainability received only the scantest of lip-service within Rethinking Construction. Subsequent attempts to present ‘lean thinking’ as a means of enhancing sustainability were guilty of conflating two diametrically opposed concepts. It is further difficult to credit Rethinking Construction with any originality in respect of the remaining four areas of desired improvement. All four can be traced back at least as far as Emmerson (1962) and Banwell (1964). Murray and Langford (2003) have previously noted the recurring themes which have long since characterised the construction improvement agenda. The Strategic Forum’s propensity for setting endless performance targets echoed the policy orientation of the New Labour government. Although the ‘New Labour’ label was conspicuously down-played once Gordon Brown took over as prime minister in June 2007, the overriding commitment to performance targets remained firmly in place. Rather than construing the later Strategic Forum targets as the direct continuation of Rethinking Construction, they could be rather more convincingly construed as being representative of areas where the policy agenda had failed. In many respects, the targets can be linked directly with the regressive side effects of the enterprise culture. This of course is not to say that the construction sector was perfect prior to the advent of the enterprise culture, because clearly it was not. Few remain nostalgic for the crisis years of the 1970s, and those who are nostalgic often have very selective memories. But collectively, the construction sector had consistently chosen to prioritise enterprise over other considerations. Phrased slightly differently, the choice was made to prioritise innovation over regulation. The cumulative effects of this prioritisation cannot be denied, and they ultimately served to pave the way for the Grenfell Tower tragedy (see Chapter 11). The diverse needs of multiple stakeholders had been progressively sacrificed on the altar of narrowly construed competitiveness. This tendency was especially dominant throughout the 1980s and early 1990s, and resulted in structural flexibility becoming established as the dominant competitive model within the contracting sector. This brought significant advantages in terms of the ability of firms to expand and contract in accordance with fluctuations in demand, but it undoubtedly had adverse implications in terms of integrated working and skills development. The emergence of the hollowed-out firm, coupled with a widespread reliance on non-standard forms of employment, is also widely held to have had a detrimental effect on health and safety (Donaghy, 2009). The continued widespread reliance on casualised labour, coupled with an all too frequent conflation with vulnerable migrant workers, sat ill-at-ease with the Strategic Forum’s espoused ‘commitment to people’. Things were however destined to get much worse.

Dilemmas Unresolved 215 The Strategic Forum’s focus on ‘procurement and integration’ can similarly be positioned against the backcloth of extensive downsizing within private sector client organisations. This often resulted in non-core capabilities – such as procurement – being outsourced in accordance with the doctrine of BPR. It is this scenario which frequently provided the motivation to engage in ‘partnering’ (see case studies in Chapter 6). Such changes have been even more pronounced within public sector client organisations characterised by the contracting out of services. The trend is exemplified by the demise of the Property Services Agency (PSA) (see Chapter 4). Given these long-term trends, it is perhaps not surprising that procurement policies within many client organisations remained under-developed. This is arguably especially true in terms of ethical sourcing and sustainability – two issues which were so conspicuously under-emphasised in Rethinking Construction. The outsourcing of property services throughout the public sector further served to fragment procurement expertise across a wide range of external private-sector consultancy firms. Hence the ongoing concern about a lack of ‘integration’. Firms who committed themselves to extensive programmes of outsourcing were also subsequently attracted to storylines about ‘knowledge management’. As more and more activities were outsourced, organisations understandably became concerned with ways of retaining control over any residual ‘knowledge’. According to the Strategic Forum, client leadership was ‘vital to the success of any project and enables the construction industry to perform at its best’. This was undoubtedly true, and the Broadgate and Heathrow Terminal 5 developments continue to be cited as good examples of effective client leadership. The latter is especially deserving of mention in terms of its efforts to encourage direct employment. But the onset of customer responsiveness fatally undermined the ‘mutuality of responsibility’ for the construction sector’s long-term development which prevailed during the 1960s. Clients hence became far too focused on what the industry could do for them on a project-by-project basis. The changing mindset was dramatically illustrated by the failure of the Construction Clients’ Forum to support the aspirations of the CIB (see Chapter 4). It is also notable that the down-sized BAA subsequently withdrew from the position of client leadership which it once occupied. This was in part due to the absence of any long-term investment programme following the completion of Terminal 5. Clients with long-term investment plans understandably adopt a longer-term perspective which is at least in part driven by enlightened self-interest. Perhaps even more striking is the retreat of public sector clients from any notion of ‘mutually of responsibility’. Such aspirations had long since fallen victim to the culture of performance management initiated by market testing and compulsory competitive tendering (CCT). Hence construction sector development became almost entirely dependent upon market forces. Many aspects of construction have improved immeasurably since the early 1980s, and many others remained stubbornly unimproved. Others still have become progressively worse. Training regimes and stable employment patterns fall firmly in the latter category. Client leadership in these areas remains especially lacking, with little immediate prospect of improvement. Perhaps the biggest failure lay in sustainability. Progress through Partnership (OST, 1995) was undoubtedly ahead of its time in the emphasis given to the cause of sustainability. Yet, as already noted, sustainability received remarkably little emphasis in Rethinking Construction, which also downplayed corporate social responsibility (CSR). Subsequent years saw a plethora of reports urging public sector clients to encourage sustainability through procurement (DEFRA, 2006; GCCP, 2000; NAO, 2005). But these reports were never quite embraced with the same enthusiasm as Rethinking Construction. Even Sir John Egan belatedly endorsed New Labour’s vision of ‘sustainable communities’ in his foreword to Skills for Sustainable Communities (ODPM, 2004). Sustainable communities were defined as those which: …meet the diverse needs of existing and future residents, their children and other users, contribute to a high quality of life and provide opportunity ad choice. They achieve this in

216  Dilemmas Unresolved ways that make effective use of natural resources, enhance the environment, promote social cohesion and inclusion and strengthen economic prosperity. (ODPM, 2004, 7) This was indeed a dramatic conversation on the road to Damascus. In common with the rhetoric espoused by Margaret Thatcher, the authors of Rethinking Construction were seemingly blind to the notion of externalities. The Egan report did not quite go as far as saying there is ‘no much thing as society’, but this was the overall implication. Yet six years later Sir John Egan was enthusiastically endorsing sustainable communities. Lean thinking had seemingly been well and truly ditched. No wonder so many in the construction sector were slow to ‘change their culture’. They were understandably confused by so many vague and conflicting messages. Needless to say, the advocated approach to sustainable communities involved yet more targets and KPIs, with little guidance on how to make meaningful trade-offs in localised contexts. Perhaps the very notion of sustainability is too much of a fudge. The idea of ‘sustainability’ as it tends to be advocated implies the possibility of meaningful compromises between marketbased ideas of shareholder value, the needs of local communities and the imperatives of climate change (Shrivastava, 1995). Finding compromises between the three elements of the ‘triple bottom line’ continued for far too long to be celebrated as best practice. The harsh reality is that the institutionalised consensus in favour of blurry compromise needed to be challenged much earlier if the climate crisis was to be averted (Wright and Nyberg, 2015). In light of the above, it is pertinent to question the extent to which the Strategic Forum’s reliance on voluntary regulation by means of an ever-evolving set of centrally imposed targets was ever likely to have been effective. The New Labour inspired obsession with generic top-down targets undoubtedly prevailed for far too long. At least it could be said that ‘something was being done’; but there was little evidence to suggest that private sector companies adjusted their behaviour in response to centrally dictated targets. There was certainly no evidence that such targets were ever likely to induce culture change. The above should not be taken to imply that practitioners are unable to take meaningful actions in localised contexts. Many construction firms have always been deeply embedded within their local communities, contributing widely to a range of local causes. This is equally true for small local building firms as it is for regional contractors. Such firms paid little attention to the Egan agenda, and arguably they remained more viable as a result. The construction sector is not, and never has been, populated with ‘dinosaurs’ who are somehow different from the rest of society. Construction practitioners are no less likely to be committed to sustainability aspirations than the public at large. But their behaviour is undoubtedly patterned and constrained by the political economy within which they operate. Unfortunately, the various manifestations of the improvement agenda over the last 50 years are directly implicated in shaping the political economy of the construction sector. 9.2.4  Enduring popularity of machine metaphors

A recurring theme throughout this book has been the way the problems of the construction industry are invariably conceptualised as impediments to machine efficiency. The overriding assumption is that complex organisations are subject to an ‘engineering fix’. The rhetoric and imagery of re-engineering was persuasive amongst construction sector leaders because it resonated with the established favoured discourse (cf. Bresnen and Marshall, 2001). Construction leaders find it easy to endorse improvement recipes that exhort others to be more efficient. The rhetoric of BPR specifically sought to impose a management regime of command and control onto the construction sector. Classical management theories such as Taylorism (Taylor, 1911) are similarly characterised

Dilemmas Unresolved 217 by the same underlying machine metaphor. Organisations are perceived as unitary entities with all parts working in harmony towards predetermined objectives. The environment within which organisations operate is further assumed to be static. The primary task of management is hence to ensure that the machine operates efficiently. The storyline of lean thinking is similarly characterised by a reliance on an underlying machine metaphor. Indeed, the same argument could also be made of the entire infrastructure of KPIs. There is a further widespread tendency to interweave the machine metaphor with notions of ‘teamwork’ and ‘leadership’. This was especially apparent in the case of partnering, which combined notions of efficiency with metaphors of teamwork and collaborative working. ‘Good team players’ are expected to subjugate their own aspirations to those of the project. Leadership is primarily concerned with motivating team members towards pre-determined objectives. In many cases, the ultimate test for an effective project team is that it should ‘work like a well-oiled machine’. The underlying model of organisations would have been readily recognised by Taylor (1911). Re-engineering was popular for so long because it reflected and reinforced the way construction leaders already thought. The danger of continuously advocating improvement recipes based on underlying machine metaphors is that it continually reinforces the reality that employees in the construction industry are required to act as mindless cogwheels. There is frequently little pretence that any efficiency gains will be shared equally amongst the diversity of stakeholders. Targets abound for reducing the cost of construction and enhancing profitability. The rhetoric is heavy in the machine metaphor whilst exhorting others to be more efficient. It is taken for granted that people are compliant, predicable and willing to be programmed in accordance with the requirements of a rationally designed system. There is no recognition that the continued imposition of simplistic machine metaphors may contribute to the ‘bad attitudes’ and ‘adversarial culture’ that industry leaders repeatedly decry. The metaphor of ‘culture’ also continues to feature strongly in the rhetoric of construction improvement. The advocated storyline invariably tends to be hugely optimistic about the extent to which the construction sector’s culture can be changed. The associated assumption that organisational performance depends on an alignment between employee values and managerial strategy primarily dates from Peters and Waterman (1982). However, others have questioned the extent to which culture can be manipulated and controlled (e.g., Antony, 1994; Legge, 1994; Willmott, 1993). Of particular interest is the possibility that managerial action may promote unforeseen counter-cultures that are dysfunctional. Individuals are especially unlikely to be persuaded by the discourse of culture change when the espoused storyline is in direct conflict with experienced reality (Ogbonna and Harris, 2002). In the construction sector, culture change initiatives espousing integration and collaborative working are therefore unlikely to be persuasive when experienced reality accords with downsizing and outsourcing. Culture change was especially strongly emphasised within the discourse of partnering (Bennett and Jayes, 1998). However, observed discrepancies between rhetoric and reality render wholesale culture change a highly unlikely outcome. Memories of partnering undoubtedly shaped responses to subsequent calls for a culture change in favour of collaborative working. The cycle is seemingly repeated ad infinitum. 9.3  The disconnected agendas of construction improvement 9.3.1  The value of good design

Throughout the period reviewed by the current book so far there have been numerous attempts to understand the meaning of ‘value’ and how it might be best achieved. Banwell (1964) was clear that good value depends upon clients allowing sufficient time during briefing and design. Too often clients were rushed into sending out the tender documents before they are fully complete. It was seen to be vital that the design was complete and tender documents ‘watertight’ if disputes leading

218  Dilemmas Unresolved to claims were to be avoided. The underlying message was that clients need to be more diligent in codifying their requirements in the tender documents. For those clients who continue to engage in lowest price lump sum tendering, this remains good advice. But the above advice was based on a very narrow conceptualisation of value-for-money which related solely to the transaction between client and contractor. Several decades later, Latham (1994) was again to touch on value for money in the context of tender selection, but the emphasis here lay with taking costs-in-use into account: ….[v]alue for money and future cost-in-use should play an important part in the selection process. (Latham, 1994, 43) …those tenders which offer best value for money and show clear regard for cost-in-use should be accepted. (Latham, 1994, 60) This was progress of a kind, although scant attention was given to how cost-in use might best be evaluated. Nevertheless, discussions about value for money remained framed in terms of meeting a defined specification at minimum cost. It is this interpretation of best value which leads directly to the industry’s recurring obsession with efficiency. The dominant metaphor is that of the machine and the overriding challenge is that of operational efficiency. It was this predilection for machine metaphors which rendered BPR so attractive to the authors of Progress through Partnership (OST, 1995). Popular myth would have it that Egan came along in 1998 with a radical new recipe for industry improvement. The rather more mundane reality is that Rethinking Construction served only to reinforce the construction sector’s predilection for machine metaphors. This is illustrated throughout the Egan report by the repeated emphasis on the elimination of waste. Egan’s obsession with waste elimination is exemplified by his interpretation of value management: Value management is a structured method of eliminating waste from the brief and from the design before binding commitments are made. (Egan, 1998, 10) Egan was seemingly much less interested in how the brief might be better formulated in the first place, or how subsequent changes might be managed more effectively. This is not to say that efficiency is not important, because clearly it is. But there is a danger in focusing on narrowly defined efficiency alone. Egan was especially blind to the value of design quality, a failing which was only in part rectified by the formation of the Commission for Architecture and the Built Environment (CABE) and the subsequent development of the DQIs. This was characteristic of the tendency for any alleged gap in the construction improvement agenda to be met by a newly created quango supported by yet another set of KPIs. Unfortunately, each set of evermore detailed KPIs served to reinforce the prevailing mechanistic mindset. Architects of course have always seen themselves as decidedly separate from the construction sector, and such attitudes were unlikely to be changed by the advent of the DQI. Indeed, it is a moot point whether such a change in attitude would even be desirable. Diversity in thought among the professions is something which deserves to be celebrated, even if it does continuously render aspirations of ‘integrated project teams’ problematic. CABE was subsequently abolished in 2011 in the infamous ‘bonfire of the quangos’, and all the thinking which had accrued was lost. Following rapidly on the heels of Rethinking Construction, the Royal Academy of Engineering published a report (Evans et al., 1998) which emphasised the long-term costs of owning and using buildings. The stated intention was to shift the emphasis away from seeking capital cost reduction in

Dilemmas Unresolved 219 isolation of any consideration of the long-term implications. Central to the adopted argument was the disputed claim that for every pound spent on the construction of a commercial office building, five pounds are spent on maintenance and operating costs and 200 pounds are spent on staff and business operations. At the time, this claim received relatively little attention, although it would subsequently become hotly contested and was eventually discredited as misleading (Hughes et al., 2004; Ive, 2006). But the important point is that there was a counter-discourse to the prevailing narrow focus on building process efficiency. This was despite the continued insistence within the DETR that the industry’s future depended on an evermore enthusiastic application of the Egan ‘principles’. The Eganites were still demanding greater commitment to the cause of Rethinking Construction when the Department of Culture, Media and Sports (DCMS) published Better Public Buildings (DCMS, 2000). In contrast to Egan’s emphasis on the elimination of waste in meeting client requirements, Better Public Buildings pleaded the case for good design: Good design is worth investing in. It is the key to giving the client maximum value for money throughout the whole life of a building. (DCMS, 2000, 2) The view was further expressed that the achievement of value depends upon making sure that buildings better serve the needs of the organisations and people who use them. Good design was held to bring ‘numerous benefits including: the sick healing faster, students performing better, workers more productive in their workplace’. This debate of course took place in an entirely separate space from that within which the Egan agenda was being promoted. But design and construction are not the separate entities they once were. They are increasingly situated within the same organisational framework in procurement approaches such as design-and-build and prime contracting. This of course is not quite the same thing as saying they are ‘integrated’. Designers had long been criticised for poor buildability, a problem which was conveniently ‘solved’ by the subservience of designers to constructors within design and build projects. In essence, one of the main limitations of Rethinking Construction (Egan, 1998) was the way it effectively reduced all construction to a design-and-build mindset whereby the reduction of waste was seen as paramount. The failing was seemingly subsequently recognised given the more explicit promotion of design within Accelerating Change (Strategic Forum, 2002). But what was strange was the way that Accelerating Change claimed that design quality had been one of the original objectives of Rethinking Construction. This is at best a highly partisan re-interpretation of what had been originally written. At worst, it was a lie. The design lobby continued to make itself heard, and the NAO (2004) subsequently published a report entitled Getting Value for Money from Construction Projects through Design. The authors included Sir Stuart Lipton, the then chairman of CABE and previously best known for his leading role in the Broadgate development with Stanhope. The NAO (2004) was admirably clear in its conceptualisation of value for money: A good project will continue to provide value for money and meet user needs throughout its lifetime. (NAO, 2004, 3) The ultimate aim is to deliver construction projects that meet the requirements of the business and all stakeholders, particularly the end users. (NAO, 2004, 5) This was indeed a welcome corrective to the more myopic Rethinking Construction. But noticeably absent was any commitment to the construction sector which was required to build

220  Dilemmas Unresolved the designs which were being advocated. The ‘mutuality of responsibility’ between public sector clients and the construction sector had long since been forgotten. The crude customer focus of the 1980s had admittedly given way to the rhetoric of stakeholders much beloved by New Labour. But just as New Labour had seemingly forgotten about its Old Labour constituents, so had the design quality debate seemingly forgotten about the construction workforce. At least the Egan agenda had its Respect for People initiative, despite its many limitations (see Ness, 2010). Here lies an essential dilemma at the heart of any construction improvement debate: on whose behalf are the improvements being made? Improvements directed solely at the needs of a commercial developer are unlikely to meet the long-term needs of the building occupiers. Neither will they necessarily meet societal aspirations for the public built environment. But even if we shift the emphasis from the former to the latter, there is still no guarantee that the improvements will contribute to the aspirations of the construction workforce. Indeed, it may well serve to marginalise them even further. Hence different agendas will always populate different spaces, and any unified vision of ‘construction improvement’ is destined to be forever illusive. 9.3.2 Be Valuable

The design quality debate progressively became subsumed within the so-called ‘value agenda’, at least within Constructing Excellence circles. The pivotal contribution here was provided by Saxon’s (2005) ‘guide to creating value in the built environment’, otherwise known as the Be Valuable report. Richard Saxon was a prolonged champion of industry improvement having previously chaired the Reading Construction Forum (1999–2005) while at the same time acting as chairman of the Building Design Partnership (1996–2002). Reading Construction Forum merged with the Design Build Foundation in 2002 to form the bizarrely titled ‘Be, Collaborating for the Built Environment’. ‘Be’ was subsequently absorbed into Constructing Excellence in 2005, the same year that Saxon’s report was published. As has already been argued, the changing emphases of the construction improvement debate cannot be understood in isolation of an understanding of the ever-changing infrastructure through which such debates are conducted. Different networks are populated by different interest groups; and ideas are constituted differently within different networks. There is a need to understand all such activities as a seamless web whereby the improvement debate becomes mutually constituted with the particular social networks within which it is propagated. This in part is what is intended when we refer to the ‘discourse of construction improvement’, although many would extend this interpretation to include the material effects of the advocated storylines. But it is important to recognise that there is never only one discourse being mobilised at any time. The construction improvement terrain is invariably populated by multiple discourses which are propagated through different networks. Returning to the ‘value agenda’, the Be Valuable report did much to bring the ‘value of design’ theme into the remit of Constructing Excellence, and thereby into the mainstream of the construction industry improvement debate. Previously, the debate had been dominated by issues relating to contracting firms. Indeed, the construction sector was largely seen to be synonymous with the contracting sector, as defined by Standard Industrial Classification (SIC) 45 used in the official statistics. Pearce (2003) had previously been influential in arguing the case for a broader definition of the ‘construction industry’. He referred to the narrow interpretation of construction as being predominantly limited to on-site assembly and the repair of existing buildings and infrastructure by contractors. In contrast, he pointed towards a broader definition of construction which includes the materials supply chain together with professional services such as architecture, engineering design and surveying. The Egan agenda clearly

Dilemmas Unresolved 221 subscribed to the narrow interpretation of construction, seemingly with little interest in professional services. If consideration is limited to the narrow interpretation of construction, it is little wonder that the improvement debate tends to focus on delivering a defined product at minimum cost. Up until relatively recently this was the limit of the construction sector’s responsibility. The corresponding advice directed at client organisations was to ensure that their requirements were fully defined in advance. The changing focus of the improvement agenda throughout the noughties was indicative of a combination of several factors. First, it comprised a broadening of the long-established focus on customer-responsiveness. The construction sector was now being asked to do much more than build efficiently; it is being asked to ‘add value’ to the client’s business. For decades, the improvement agenda had focused on efficient construction. This emphasis was still there, but there was also an additional focus on the need to provide ‘integrated solutions’. The focus on integrated solutions embraced the need to combine the provision of built facilities with aspects of through-life service provision. This was in no small way reflective of long-term trends within client organisations to outsource their property management capabilities. Clients had previously performed ‘value adding’ activities internally, but over a period of time these were progressively outsourced. Not only are services now routinely contracted-out, but so is the responsibility for ‘adding value’. This was to eventually lead to the misguided ‘value toolkit’ as developed by the Construction Innovation Hub (see Chapter 12). The ‘integrated solutions’ storyline also provided a justifying narrative for the sharp escalation in the number of PFI projects initiated by New Labour. Whereas PFI had previously been a minority interest, by 2005 most of the large national contractors were directly involved. The desire to procure on the basis of ‘value’ was operationalised through the use of output performance specifications. Such an approach became central to the ‘second generation’ PPP initiatives relating to schools and hospitals. Prime contracting also placed significant emphasis on designing to performance specifications. Notwithstanding the significant practical difficulties associated with such aspirations, the accumulative experience contributed to a changing rhetoric of industry improvement focused upon outcomes. Hence the challenge of school design extended beyond the spatial layout of the building to the end goal of ‘educating students’. Likewise hospital design became similarly focused on treating patients. The difficulty in both cases is that the design of the building does not predetermine the desired outcomes. The skills of the teachers (or surgeons) are always going to be of primary importance, and these thankfully remain beyond the control of the construction sector. Nevertheless, the focus on the ‘upside’ of construction’s contribution provided a welcome break with the previous obsession with building efficiently. Saxon (2005) positioned the ‘value agenda’ rather differently, contrasting it with the previous prevailing focus on cost: The era since World War II in UK property and construction matters has until recently been ruled by the word ‘cost’. Buildings were designed down to a budget by consultants, then tendered for by contractors with the lowest cost tender winning. (Saxon, 2005, 2) The above interpretation was a fair characterisation as far as it went. But what it failed to convey was any sense of the changing context within which the construction improvement agenda was situated. As described in Chapter 2, the priority in the immediate aftermath of World War II was the provision of housing. The focus lay on building the maximum number of housing units for minimum cost. This led to an interest in prefabrication (later to be re-labelled ‘modern method of construction’), which in turn led to concerns about quality. Much of the debate also focused

222  Dilemmas Unresolved on contractual procedures with a view to ensuring that client requirements were fully specified in advance. Such debates must be positioned against prevailing concerns about the capacity of the construction sector to deliver, and the damaging effects of the economic stop-go cycle on investment in training and skills. As has already been described, in the immediate post-war years there were real concerns that private sector contracting firms did not have the capacity – or the management skills – to deliver against the national agenda. Combined with fears about bid-rigging and corruption such concerns rendered nationalisation a real possibility. Indeed, there was a time when nationalisation was seen to be almost synonymous with modernisation. Saxon (2005) notably omitted any of the above considerations from his analysis, preferring to limit himself to a supposed dichotomy between value and cost: Good value in that era was defined as getting ‘it’ for the lowest possible price. ‘It’ was a generic, commoditised view of building, sufficient to get planning permission, pass building regulations and meet yardstick areas and specifications for its function. (Saxon, 2005, 2) As with the previous quote, the above provided a superficially appealing soundbite; but there was once again much which remained unsaid. Saxon failed to mention the extensive debate about ‘value’ which took place among building economists in the 1960s and 1970s (e.g., Hutton and Devonald, 1973; Stone, 1966; Turin, 1966). Such authors gave extensive attention to the ‘use value’ of buildings and the extent to which it could be optimised. Saxon’s (2005) interpretation of value as the ratio of ‘what you get’ to ‘what you give’ was therefore at least forty years out of date and was arguably rooted in the idealism of a previous era. 9.3.3  Quality and value in building

Given the current popularity of ‘procuring for value’ it is worthwhile briefly rehearsing previous debates about quality and value in building. In 1978, the Building Research Establishment published a report entitled a Survey of Quality and Value in Building (Burt, 1978). While not notable for its originality, the report was successful in encapsulating the understanding of both quality and value which prevailed at the time: Maximum value is.... in theory obtained from a required level of quality at least cost, the highest level of quality for a given cost, or from an optimum compromise between the two. Burt (1978) also took care to define precisely what was meant by quality: …quality is defined as the totality of the attributes of a building which enable it to satisfy needs, including the way in which individual attributes are related, balanced, and integrated in the whole building and its surroundings. Saxon’s (2005) critique of the commodified view of building was – and probably remains – a fair reflection of the frame of reference routinely adopted by contracting firms. But it said more about the institutional structures within which they work, rather than of any underlying lack of imagination. Construction firms are still routinely contracted to build in accordance with a predetermined specification. Even when engaged on a design-and-build contract, they compete on the basis of meeting yardstick space requirements. But challenges to this frame of reference are by no means new – it was repeatedly challenged by the construction research community throughout the

Dilemmas Unresolved 223 1970s. Notions of optimising value at the time rested very much on what remained of the idealism of the 1960s. But by the late 1970s researchers were already starting to give up on attempts at ‘design optimisation’. Such efforts had been informed by the disciplines of operational research and systems engineering, which encapsulated assumptions about an unchanging external environment which are no longer justified. Notions of design optimisation further rested on an entirely unrealistic reification of both ‘quality’ and ‘value’. In other words, rather than recognise quality and value as abstract concepts building economists sought to treat them as if they were real, tangible and measurable. Such an approach is seemingly destined to be rediscovered by every new generation. Similar processes of reification underpin many of the KPIs which were routinely advocated in response to aspirations which do not lend themselves to simple measurement. The net effect is to reduce understanding to a limited number of quasi-objective criteria which too often stand as poor proxies for the desired outcomes. The Egan targets promoted in the wake of Rethinking Construction stand as good examples of how a process of reification can eventually become counter-productive. The endless cycle of target setting, backed up by ever more complex KPIs, ultimately served to impoverish the improvement debate. The difficulty is that a mechanistic focus on ‘performance’ tends to distract attention away from the need to take meaningful action in an environment increasingly characterised by conflicting priorities. Returning once again to the debates of the 1970s, the research community progressively came to the view that terms such as ‘quality’ and ‘value’ are best read in terms of their metaphorical connotations, rather than in terms of their literal meaning. Different interpretations of value follow from different metaphorical perspectives. Attempts to optimise the ‘totality of attributes’ of a building were clearly shaped by an underlying allegiance to the machine metaphor. An interpretation of value in accordance with an organic metaphor would emphasise the importance of remaining responsive to changing circumstances. The metaphor of culture would similarly lead to a different interpretation of value. But the metaphor which ultimately proved most persuasive was that of the marketplace. Research into value optimisation was outflanked by an axiomatic belief in the wealthgenerating capabilities of private sector enterprise. And the only requirements which needed to be satisfied were those required by the immediate paying customer. Activities which did not ‘add value’ to the customer were classified as waste, and were hence eliminated. This trend was progressively legitimised by the doctrines of BPR, which reached their zenith in the construction sector with the publication of Rethinking Construction. Most contracting firms realised in the early 1980s that clients were in the game of maximising their own financial returns, with little thought to the long-term needs of the construction sector. Notions of shared responsibility were hence consigned to the past as the construction sector organised itself in accordance with the principles of the enterprise culture. The poor industrial relations climate was a further source of significant risk to both clients and contractors. Strikes and unofficial stoppages directly impinged upon the profits of main contractors as well as threatening the value which clients derived from their investment. The path towards leanness and agility fitted the bill as a means of risk mitigation (Druker, 2007). The strategy was driven by a vision of ‘value creation’, but the vision was primarily shaped by the discourse of the enterprise culture. Under the New Labour government elected in 1997 the rhetoric of stakeholders increasingly complemented the rhetoric of enterprise. Value was not only achieved through satisfying customer requirements; it also became necessary to provide value to society – and even to stakeholders as yet unborn. Hence the value agenda remained strong in terms of its persuasive rhetoric, but rather less strong as a guide to pragmatic action. Perhaps its most useful role was to provide discursive resources for firms seeking to legitimise their role within the domain of PFI/PPP. This remains true even if the underlying modus operandi of such firms remains much the same as it ever did (see Leiringer et al., 2009).

224  Dilemmas Unresolved 9.3.4  The industry formerly known as construction

Returning to the script of the so-called ‘value agenda’, Saxon (2005, 12) unwittingly captured the essence of the shift which had taken place over a 30-year period: Customers in the great majority of cases do not seek to buy construction per se; they seek the use of facilities or the creation of assets. They find value in the availability of service space, developed and run to support their business or social service. In other words, the creation of value for customers continued to be prioritised over any consideration of the needs of the construction supply chain. Stakeholder models of management which balance the needs of different interest groups came back into fashion elsewhere, but not seemingly for the major clients of construction. The tendency to promote client value with little consideration of the long-term capacity of the construction sector was by no means limited to the UK. The following quote is especially telling in the context of the changes described throughout the preceding chapters: In many countries private clients are organised into groups and have used their enhanced power in recent years to force contractors to lower their costs and improve their delivery. Unfortunately, as we have seen, this has too often been at the expense of the workforce and of the investment in human capital required to ensure the long-term capacity to deliver highquality construction. (ILO, 2001, 56) By the time Be Valuable was published in 2005, the adverse implications of the downward pressure on construction costs for the industry’s workforce were becoming increasingly difficult to ignore. But Saxon (2005) and his colleagues within Constructing Excellence were seemingly not interested in engaging with such deep-rooted and protracted problems. Issues relating to the construction workforce were deftly sidestepped by shifting the focus of the debate elsewhere. This was achieved by combining construction, property development and facilities management into a continuum which was labelled the ‘built environment’. The construction industry thereby became relegated to ‘an industry formerly known as construction’ (Saxon, 2002). To talk about the ‘construction industry’ was seen to perpetuate old ways of thinking. Hence the undesirable implications of the Egan agenda and its subsequent variations were effectively barred from polite conversation. The rhetoric of Saxon’s (2005, 5) concept of a value-orientated built environment industry was directly reflective of the New Labour ideology which prevailed at the time. This is most evident in the stated mission: to add value for customers and society by shaping and delivering the built environment to their needs. The pre-existing doctrines of customer responsiveness and enterprise remained of central importance but were suitably sweetened with vague aspirations of social democracy. The explicit reference to ‘society’ would certainly not have occurred during the years of unconstrained enterprise. Prior to 1997 any reference to the needs of society would have had too many connotations of the discredited social consensus of the 1960s/1970s. But by 2005 ‘society’ was back in fashion – if only in a rhetorical sense. Saxon (2005) further alludes to the ‘triple bottom line’ which must be satisfied if the built environment is to be sustainable. Reference was made to the need to satisfy

Dilemmas Unresolved 225 aspirations of social equity as well as environmental and economic considerations. Social sustainability was further seen to require ‘positive social and cultural value’. But no comment was offered on the need to seek social equity within the construction workforce, which had seemingly slipped entirely off the agenda. The needs of society may well have been accepted as important, but this did not ostensibly extend to the 2 million operatives who worked within the construction sector. Be Valuable pointedly expressed no interest in how the supply side is organised in terms of the widespread reliance on subcontracting, false self-employment and the use of agency workers. Such issues had been rendered invisible. 9.3.5  Vulnerable workers in the ‘built environment’

Following on from the above, Saxon (2002, 2005) arguably deserves credit for re-energising the ‘value agenda’ after it had been neglected for the best part of thirty years. But Saxon’s arguments enabled those in the ‘industry formerly known as construction’ to legitimise their long-standing lack of interest in issues relating to skills and training. Investment in the employment relationship had been progressively side-lined by fashionable management ideas such as SCM and collaborative working. Furthermore, this trend had been consistently reinforced by the construction improvement agenda ever since the advent of the enterprise culture in the late 1980s. Certainly the ‘best practice’ agenda promoted by Constructing Excellence and its predecessors had done little to promote an awareness of vulnerable workers in the construction sector. The increased plight of vulnerable workers in the UK economy was highlighted by the TUC Commission report on Vulnerable Workers (TUC, 2008), which estimated there were at the time two million such workers in the UK. The report lamented the way in which ‘employees’, ‘workers’ and the ‘self-employed’ possess different levels of employment protection. As described previously in Chapter 4, determination of employment status is by no means straightforward, and can often only be determined by a consideration of a range of factors derived from statute, contract and various test cases (ibid.). The Vulnerable Workers report further describes how temporary agency workers continue to be paid less than directly employed workers doing the same job, with reduced rights to sick pay, holiday pay and pension contributions. Furthermore, operatives working in false self-employment frequently lack the autonomy of the genuinely self-employed. Yet at the same time they are denied the protections routinely provided to direct employees. Migrant workers are held to be particularly vulnerable, especially when forced to work for dodgy labour agencies by force of circumstance, or by hostile immigration regulations which effectively bar them from direct employment. Hence the employment terms and conditions of migrant workers are frequently dictated by the economic circumstances of the areas from where they are recruited, rather than by the ‘going rate for the job’. Such extreme forms of fragmentation in the construction sector consistently lie beyond the reach of the construction improvement agenda. The favoured rhetoric of ‘integrated teams’ and ‘collaborative working’ never seems to apply to the construction workforce. But the problem of vulnerable workers is not limited to the construction sector. It also extends across a range of other low-paid sectors, including care, cleaning, hospitality and security. Many of these sectors have followed similar trends to those experienced in construction. Outsourcing and the contracting out of services have led to a dramatic increase in the numbers of vulnerable workers, with similar discrepancies between the rights of direct employees and agency workers. Many such workers spend the majority of their working days within the context of the built environment, and would therefore fall within the definition of Saxon’s (2002) ‘industry formerly known as construction’. The operation of the new schools and hospitals procured under PPP arrangements were frequently dependent upon a low-paid and vulnerable workforce, despite the surrounding rhetoric of social

226  Dilemmas Unresolved sustainability. Vulnerable workers also often continue to provide cleaning and security services to the glitziest of modern office developments. Behind the espoused visions of ‘educating students’ and ‘treating patients’, the key source of competitive advantage is too often based on low-paid workers who lack basic employment rights. This is the unacknowledged reality which too often lay behind Saxon’s concept of a ‘value-orientated built environment industry’. Not much has changed in the interim. 9.4  Health and safety 9.4.1  Long term trend in fatalities

Any consideration of ‘dilemmas unresolved’ at the end of the New Labour years would not be complete without a discussion of health and safety. Construction professionals take health and safety extremely seriously, and its importance in recent years has been emphasised ever more strongly. The reduction of onsite fatalities is also often heralded as an example of how change can be achieved in the construction sector. But it is also puzzling why the reduction in the number of onsite accidents is not routinely included in discussions about productivity (Gruneberg and Francis, 2019). The long-term trend in construction fatalities has thankfully been inexorably downwards. According to the latest available HSE statistics there were 30 construction sector fatalities in Great Britain in 2021/2. As a point of comparison, in 1974 there were 166 reported fatalities. There has undoubtedly been a significant increase in broader societal concern regarding health and safety since the 1970s. This shift in attitude has resulted in a welcome decrease in the number of accidents in the workplace across all sectors. Nevertheless, tabloid journalists are still frequently prone to refer in disparaging terms to a ‘health-and-safety culture gone mad’. The stark truth is the health-and-safety culture in the construction sector is still not quite ‘mad’ enough, despite the overall downwards trend. The rate of fatal injuries in the construction sector is surpassed only by agriculture (see Figure 9.1). It must also be said that the reduction in fatalities in construction has been less than that achieved in every other industry sector with the sole exception of agriculture. Hence there is little justification for complacency. It is also notable that the long-term reduction in construction fatalities has flat-lined in recent years. Accidents on site are of course only part of the overall picture; consideration must also extend to issues of occupational health. Both industry and government

Figure 9.1  Rate of fatal injuries to workers in Great Britain in 2021/22, by industry (per 100,000 workers). Source: HSE.

Dilemmas Unresolved 227 had certainly become dangerously complacent about the issue of fire safety, as demonstrated in the Grenfell Public Inquiry (see Chapter 11). Hence at the same time as the construction sector was congratulating itself on its improved performance in terms of onsite fatalities, there was another safety crisis in the making. 9.4.2  Statistical uncertainties

It must be further conceded that there is little which is straightforward about health-and-safety statistics. Although it is the headline figure of number of fatalities per year which inevitably grabs attention, a more meaningful statistic relates to the number of reportable accidents per worker. However, as highlighted in Chapter 5, there are continuing concerns that the statistics on non-fatal accidents in the construction sector are rendered unreliable due to systemic under-reporting. Reporting rates are held to be especially low amongst the self-employed who often have little incentive to comply with statutory procedures. It is worth re-emphasising that many commentators have repeatedly argued that customary sub-contracting arrangements have negative implications for health and safety because of blurred responsibilities (Gyi et al., 1999; Haslam et al., 2005). Clarke (2003) is especially forthright in arguing that the possibility of a positive safety culture is seriously undermined by an increased percentage of contract and contingent workers. However, in the late 1990s such critical voices were easily contained by the Rethinking Construction target to reduce construction accidents by 10% per year. Provided that fatalities continued to fall nobody seemed to worry too much about the under-reporting of non-fatal accidents. Another source of statistical uncertainly relates to the amount of overtime being worked, which is again less likely to be recorded accurately among those who are engaged on non-standard forms of employment. Overtime is more likely to occur during periods of economic growth, thereby having an adverse impact on the health and safety statistics. The picture is further clouded by the grey economy of micro-firms which serve the domestic market. An increasingly important health and safety issue relates to the construction sector’s high reliance on migrant workers. Although this is frequently conflated with the grey economy, the presence of such workers is by no means confined to small projects. What is clear is that changing patterns of employment within the sector are likely to distort the available health-and safety statistics. A further issue relates to the number of accidents which subsequently prove to be fatal. The available statistics make no allowance for the significant improvement in ambulance response times and emergency medical treatment since the 1970s. An accident which resulted in a fatality in 1974 might not have had the same catastrophic consequence in 2023. The same issue accounts in part for the lower recorded number of US military causalities in the Iraq conflict (2003–2011), in comparison with the Vietnam War (1967–1973). The recorded number of causalities is not only an indication of the intensity of the conflict, but it also says something about the comparative standards of in-theatre medical treatment. As an aside, there remains rather less interest in statistical data relating to the relative survival prospects of Vietnamese and Iraqi causalities. But in the context of health-and-safety in the construction sector, one issue is clear: statistics must always be treated with caution. 9.4.3  Balancing voluntary regulation and legislation

In charting the UK construction sector’s progress in health and safety, it is appropriate to begin initially in the 1970s during the years of the social contract (1974–1979) (see Chapter 1). At the time, government combined with the trade union movement to place health and safety at the centre of the political agenda. The aspiration was to strengthen the regulatory framework within which issues of health and safety are managed. In contrast, business organisations such as the Confederation

228  Dilemmas Unresolved of British Industry (CBI) consistently lobbied in favour of self-regulation as an alternative to ‘restrictive’ government legislation (Beck and Woolfson, 2000). One of the first acts of the incoming Thatcher administration in 1979 was to encourage the Health and Safety Commission (HSC) to consider the ‘economic implications’ of any proposed new regulations (Dawson et al., 1988). Two subsequent white papers, Lifting the Burden (1988) and Building Businesses…Not Barriers (1986), further emphasised the need for a reduction in the ‘regulatory burden’ on business (Green, 2009). The emphasis of government policy hence shifted subtly away from legislation towards encouraging the Health and Safety Executive (HSE) to be more sympathetic to the needs of business. During the latter years of John Major’s premiership, capacity within the HSE was further reduced by 15 million pounds worth of budget cuts, with direct implications for morale among inspectors (Beck and Woolfson, 2000). The resourcing of the HSE was to decline further during the subsequent years of austerity (see Chapter 10). On the positive side, the Construction Design and Management (CONDAM) regulations came into force in 1995 covering all sites where five or more workers were employed. The regulations placed duties on all those involved in the design and construction process. Clients were required to appoint a designated planning supervisor and the principal contractor was legally required to be competent in the management of health & safety and to deploy sufficient resources. Designers were in turn required to ensure that their designs carried minimum risks vis-à-vis health and safety. The planning supervisor was awarded overall responsibility for co-ordinating the health and safety aspects of the design. They were further required to set up the initial stage of a health and safety plan which would run throughout the project. Principal contractors were similarly obliged to take account of health and safety when preparing tenders and to ensure the compliance of subcontractors. In addition, they were responsible for ensuring the provision of information and training for employees and for consulting with the self-employed on health and safety relating issues. The CONDAM regulations undoubtedly served to raise awareness of health and safety and to ensure that proper management regimes are in place. They were subsequently revised and updated by the Construction (Design and Management) (CDM) Regulations in 2007. The revised regulations replaced the planning supervisor with a CDM co-ordinator, whose job is to ensure that the regulations are being observed and to act as an expert advisor to the client on health and safety procedures. The remit of the CDM co-ordinator extends throughout the design and planning phases of the construction work. Non-compliance with the regulations can result in unlimited fines, or imprisonment for serious breaches. 9.4.4  One Death Is Too Many

Many of the above issues were brought into sharp focus in 2009 with the publication of Rita Donaghy’s report to the Secretary of State for Work and Pensions entitled One Death Is Too Many (Donaghy, 2009). Donaghy had previously been the chair of the Advisory, Conciliation and Arbitration Service (ACAS). When her appointment had been announced in 2008 it was roundly criticised by Alan Ritchie, the General Secretary of UCATT, on the basis that she had no background in construction. Yet, in sharp contrast to the prevailing trend within mainstream reports directed at construction improvement, the Donaghy report successfully captures the very essence of construction: The Construction Industry generally is modelled to provide maximum flexibility. Consequently the majority of functions are contracted out and at least 40% of workers are selfemployed or CISs.1 The advantages are obvious in that it reduces overheads. Some but not all

Dilemmas Unresolved 229 argue that it improves profitability and productivity. The disadvantages are that it becomes more difficult for a safety culture to flourish, worker engagement is weak, employment security and continuity is minimal and skills training is at best patchy. (Donaghy, 2009, 21) One Death Is Too Many certainly represents a sobering read for those who had followed the construction improvement debate over the preceding three decades. The Donaghy report reads in part like a catalogue of the accumulated failings of the enterprise culture in construction. The report contains no less than 28 detailed recommendations, including an extension of the Gangmasters Licensing Regulations to cover construction (still not implemented in 2023). It was further recommended that the industry should renew its effort to establish genuine consultative frameworks to encourage greater worker participation. Even more surprising is the plea that more should be done, particularly by the larger companies, to encourage joint working with the trade unions. Pleas of this nature were commonplace in the 1960s and 1970s, but such thoughts of collaboration with the trade unions were effectively displaced by the onset of the enterprise culture. It is notable that when organisations such as Constructing Excellence champion the cause of ‘collaborative working’ it is invariably taken primarily to apply to clients and contractors. The notion of the ‘integrated team’ as advocated by the Strategic Forum (2002) extended slightly further to include consultants and key suppliers. But collaborative working with trade unions consistently falls outside the accepted lexicon of industry improvement. Donaghy’s advocacy for worker participation and constructive engagement with trade unions seemed like an echo from a previous age. Donaghy’s background with ACAS undoubtedly preconditioned her towards a process of consulting equally with employers and trade unions. This orientation led to a very different type of report from those which had dominated the industry improvement debate over the preceding couple of decades. One important distinction was the way in which the employment status of construction workers was given centre stage. One Death Is Too Many rehearses – and updates – many of the arguments about self-employment previously presented in Chapter 3. Donaghy certainly adopts a much broader interpretation of industry stakeholders than had prevailed during the Egan era: [m]any stakeholders, particularly trade unions, some academics and bereaved families, feel strongly that self-employment, whether genuine or bogus, adds to the risk in the industry because self-employment is such a high proportion of the total. In London it is approaching 90%. (Donaghy, 2009, 34) The more usual interpretation of stakeholders is limited to those groups or individuals that the organisation depends upon for its continued survival. But Donaghy’s interpretation includes not only the ‘involved’ but also the ‘affected’. Such a view is in stark contrast to the guiding construct of lean thinking, whereby activities which do not add value to the client are classified as waste. Donaghy appeals to a much broader moral argument rooted in the expectation that everything possible should be done to keep construction workers alive. One Death Is Too Many is particularly critical of the way in which construction fatalities are still seen to be socially acceptable on the basis that ‘construction is a dangerous industry’. Prosecutions and sentencing were further observed to be ludicrously low. The issue which lies at the heart of the Donaghy report is that construction is rendered more dangerous because of the sector’s fragmented employment context. One Death Is Too Many offers a further damning indictment of the construction sector’s record on occupational health. Although the brief of the inquiry was focused on fatal accidents, Donaghy

230  Dilemmas Unresolved recognised that far more workers die because of the chronic effects of ill health caused by longterm exposure to on-site hazards. The report points towards the high numbers of SMEs in the sector, and that for many any evaluation of occupational health risks consistently take second place to ‘making do’ and getting the job done. Twenty tradesmen (sic.) were estimated to die every week from asbestos related disease, with a further twelve construction workers dying every week from silica-related lung cancer. However, the statistical analysis of deaths resulting from occupational ill-health is even more problematic than that relating to accidents. Workers’ health is often only affected 15–40 years after exposure, and it is invariably difficult to be sure precisely when the exposure to hazardous substances took place. The fragmented employment context within construction also renders it extremely difficult retrospectively to identify who was responsible for any lack of preventative hazard control. There remains no occupational ill-heath compensation scheme for construction workers. An important point of reference is provided by the £4bn British Coal Compensation Scheme established in 1998. This followed the ruling of two High Court judges that the British Coal Corporation had been negligent in its hazard control procedures when the risks to miners were well known. Following the demise of British Coal in 1997, it was ruled that the government was responsible for the coal industry’s historical failings. The first ruling of the Compensation Scheme related to vibration white finger, a debilitating illness that causes muscle spasms and can lead to gangrene. The second ruling related to chronic bronchitis and emphysema. These opened the flood gates to the largest-ever number of compensation claims against a single employer. A similar, but much smaller scheme, exists for radiation-linked diseases with the participation and support of major employers in the nuclear sector. There seems little prospect of a similar ill-health compensation scheme for the construction sector. Industry leaders are consistently fond of talking about esoteric notions of ‘value’, but rarely does this extend to the value of a healthy workforce. 9.4.5  Government response

The formal government response to One Death Is Too Many (Department for Work and Pensions (DWP), 2010), supported the majority of the report’s findings. One important exception was the recommendation relating to the extension of the Gangmasters Licensing Regulations to construction. It was observed that this would involve the licensing of over 200,000 construction businesses, with significant capacity and cost implications. The view was expressed that the responsibility for ensuring the health and safety of construction workers was already clear under the CDM regulations. The principal contractor was seen to be responsible for all individuals on site, irrespective of their employment status. It was further emphasised that this applied equally to the directly employed, labour-only subcontractors and the self-employed. Each contractor working under the principal contractor was held to have a duty of care to those who are working under their control. Emphasis was therefore given to the effective enforcement of existing laws, rather the need for additional legislation. Subcontracting and self-employment were re-affirmed to be central to the way the construction sector operates, as had been clearly acknowledged in the Donaghy report. However, the government response did concede the issues associated with false self-employment and the adverse impact it has on levels of reporting relating to unsafe practices and serious accidents. In mitigation, attention was drawn to the government’s support of various initiatives to improve awareness of vulnerable workers’ rights and how to report abuses. It was further pledged that the government would continue to consider the possibility of applying the licensing regime to parts of the construction industry, so the possibility was at least left open for the future. At the time of writing, there is still no licensing of gangmasters in the construction sector. The unfortunate

Dilemmas Unresolved 231 truth is that it seems that there remains a socially acceptable number of deaths in the construction sector, just as there is a socially acceptable number of deaths in road traffic accidents. 9.5  Never Waste a Good Crisis 9.5.1  Ten years on

The final report of the New Labour years which deserves mention was published by Constructing Excellence in October 2009. Never Waste a Good Crisis (Wolstenholme, 2009) set out to review progress since Rethinking Construction and the extent to which the principles behind the Egan agenda remained relevant. Particular attention was given to the extent to which the recommendations of Rethinking Construction had been implemented in practice. Based on the preceding chapters of this book, it is naïve to expect an instrumental relationship between supposed best practice recipes and what happens once they encounter reality. Nevertheless, it was this same instrumentalist way of thinking which characterised the Egan report and led to the subsequent policy-level obsession with KPIs. For many, the justification for such an approach lay in the mantra of ‘we can only manage what we can measure’. For others, the continued focus on KPIs served only to reinforce the industry’s predisposition towards simplistic machine metaphors. Never Waste a Good Crisis was immediately notable for its reluctance to direct any criticism at Rethinking Construction. It seems that in policy circles the Egan report continued to enjoy an unchallengeable status. Wolstenholme could have picked numerous other reports as the basis for such a review of industry progress, but other reports were seemingly not judged significant enough. Few had any interest in Egan’s subsequent report on Skills for Sustainable Communities (ODPM, 2004). Egan himself seemed to forget about the latter report when talking to construction sector representatives. The foreword to Never Waste a Good Crisis boasts contributions from Sir Michael Latham, Sir John Egan, and Nick Raynsford MP, all of whom lend their enthusiastic support. Latham once again advocates the cause of partnering and close collaboration between client and the ‘whole’ construction team. Latham was nothing if not consistent. He further promotes the case for best practice, which he claims to mean that ‘all have won and all must have prizes’. Unfortunately, as was described in Chapter 6, such an outcome does not necessarily follow from the implementation of partnering. Egan predictably reflects back on 1998 and comments ‘we could have had a revolution and what we’ve achieved so far is a bit of an improvement’. Most would agree with the latter statement, but the desire to instigate a ‘revolution’ was entirely unrealistic from the outset. Managerial regimes of target setting and performance measurement rarely produce dramatic improvements in performance. They did not work in the former Soviet Union, and neither do they seem likely to work in the UK construction sector. Even as late as October 2009, Egan was still seemingly obsessed with ‘radical improvement’, whereas most others had settled for modest levels of continuous improvement. The difference in emphasis in part reflects the long-running battle between BPR and total quality management (TQM). Egan consistently seemed to opt for the more gung-ho storylines of BPR. There were lessons here for those who would subsequently advocate the cause of ‘industry transformation’. Nick Raynsford’s contribution to the foreword of Never Waste a Good Crisis looks back at the M4I with no small hint of nostalgia. It is remembered as a time of hope and expectation. Tellingly, he also comments that it is not easy to reach a balanced judgement on what has been achieved. The difficulty is that change in the construction sector forever runs concurrent with changing expectations, thus rendering objective appraisal highly problematic. Even more problematic is the existence of multiple lobby groups representing starkly conflicting interests, hence the industry’s fractured representative structure. The existence of multiple interest groups, which inevitably pull

232  Dilemmas Unresolved in different directions, presents an ongoing challenge to the cause of ‘integration’. This is no less true today than it was in 1940s. 9.5.2  Re-writing history

The main body of Never Waste a Good Crisis took an equally partisan view of the Egan improvement agenda. The Wolstenholme report is perhaps best understood as a rallying call to arms rather than an objective appraisal of the merits of Rethinking Construction. The onset of severe recession in 2008 inevitably created a very different environment for any review of progress. Many feared that the construction sector would ‘revert to type’ by abandoning even its rhetorical commitment to collaborative working. The construction sector had previously experienced continuous growth since 1994 and firms had grown use to an ever-expanding market. Many industry practitioners had no memory of the previous recession which followed the ‘Lawson boom’ of the late 1980s. Certainly by October 2009 the electorate was waking up to the espoused need for stringent cuts to address the accumulated budgetary deficit. And cuts in public expenditure are always bad news for the construction sector. During the credit crunch of 2008–2009, billions of pounds of public money had been diverted to bail out the banks, thereby preventing the economic recession turning into a full-blown depression. Strangely there was little talk of the banks being lame ducks that had to fend for themselves in the marketplace. Simply put, their role in the economy was too important for government to allow them to fail. They did of course continue to pay their senior managers handsome performance bonuses, much to annoyance of the man on the Clapham Omnibus. The crisis was of course global in nature and the UK economy was by no means alone in catching a severe cold. Many accorded Gordon Brown significant credit for steering the nation through the crisis. Others somewhat unfairly blamed him for creating the mess in the first place. To say that Never Waste a Good Crisis was entirely uncritical of Rethinking Construction is of course not the same as saying that it offered an identical storyline. The Wolstenholme report was equally enthusiastic about Saxon’s vision of an industry based on the built environment, and the necessity to understand how value is created over the whole life cycle. The following quote is particularly powerful in communicating the vision adopted by Wolstenholme’s review team: [w]e want our industry to embrace the whole, complex picture of how people can interact sustainably with the environment to maximise health, wealth and happiness. (Wolstenholme, 2009, 5) While the above vision may have been compatible with Saxon’s (2005) concept of a value-orientated built environment industry, it was far removed from the arguments which were originally promoted in Rethinking Construction. The Egan (1998) report had primarily emphasised the need to add value through efficiency improvement; the dominant metaphor was that of the machine. In contrast, the dominant metaphor behind Wolstenholme’s vision for the industry is that of an organism striving to survive in complex interaction with its environment. In comparison with Rethinking Construction, the vision quoted above reads like it was written by a 1960s hippy commune. This was a very different message from that of the 1998 Egan report, and yet there was no acknowledgement of any change in philosophy. Criticising the Egan report was clearly off the agenda, but at the same time it was seemingly important to be equally positive about subsequent reports which had received Constructing Excellence’s endorsement. Here lies a further notable characteristic of the construction improvement debate; previous reports are never cited to have been wrong. They are either supported entirely uncritically, or they are forgotten. The difficulty is the continuity of people which are involved in each progressive report. They are essentially drawn from the same

Dilemmas Unresolved 233 clique of politicians and industry leaders. During the years of New Labour, individuals moved increasingly seamlessly between the two categories. Only occasionally is a report written by an outsider who adopts a very different viewpoint. One of the most striking examples is Rita Donaghy’s report One Death Is Too Many. Never Waste a Good Crisis was noticeably bold in declaring the era of client-led change to be over. The gauntlet was thrown down to the supply side to demonstrate how it could improve. But ever since Accelerating Change (Strategic Forum 2002), the improvement agenda had been much more about ‘integrated teams’ striving to improve performance collectively. Client-led change had been the exception rather than the norm. Wolstenholme had previously been Capital Projects Director at BAA where he was responsible for Terminal 5 and the Heathrow Express rail link. He was therefore one of relatively few individuals who could speak of client-led change with any degree of conviction. BAA had undoubtedly been an excellent client which had led the industry in several innovative approaches. But, as has already been observed, it did have the important advantage of being a privatised quasi-monopoly and was hence relatively sheltered from the harsh winds of competition which prevail in open markets. It is unlikely that BAA would have been able to exercise the same degree of leadership had they been exposed to a more competitive situation. The Wolstenholme report exhorts government to make greater efforts to understand the benefits which could be achieved through more intelligent design. It undoubtedly remains the case that many government departments continue to undervalue the importance of good design. But it should also be noted that in Better Public Buildings the DCMS (2000) was advocating good design and through-life value creation when the Eganites were still emphasising waste elimination. Wolstenholme might therefore have more meaningfully directed his criticism at Rethinking Construction. This recurring failure to point out the limitations of previous reports does little to encourage open debate, and ultimately constrains the industry’s capacity to learn. In truth, Rethinking Construction contributed as little to the design quality debate as it did to sustainability. Rather than investigating progress since Rethinking Construction it might have been more useful to assess the extent to which the principles of the Egan report merely acted to legitimise changes which had already been initiated. Such a starting point would have led to a very different diagnosis. Never Waste a Good Crisis further perpetuates the myth that Egan’s Construction Task Force set out carefully thought-through targets for industry performance improvement. What is repeatedly forgotten is that the authors of Rethinking Construction were seeking primarily ‘to illustrate the kind of targets which the Task Force wants to see construction adopt’. The suggested set of targets was readily admitted to be impressionistic and partial. It is therefore odd that the same targets should still be quoted some 11 years later. The continued adherence to the Egan targets risked reinforcing the mechanistic thinking which was so dominant in the immediate aftermath of Rethinking Construction. So much had changed since 1998, both within the construction sector and beyond, and yet in 2009 the industry improvement debate was still unhealthily obsessed with Egan’s original set of tentative targets. In the years following Rethinking Construction the Department of the Environment, Transport and the Regions (DETR) was undoubtedly under pressure from the Treasury to justify its investment in bodies such as the Construction Best Practice Programme and the M4I. The targets therefore suited the Treasury’s agenda, but it is doubtful if they ever suited the diverse needs of the heterogeneous construction sector. There is of course a broader irony. It has become axiomatic that the private sector is more competitive, innovative and efficient than the public sector. This was the repeated justification provided over the course of several decades in support of initiatives such as CCT and ‘Best Value’. It was also the justification for PFI. For many years the debate between public and private sectors had been essentially ideological, but progressively such arguments became outdated. Tony Blair famously declared himself to be in favour of ‘whatever works’. The irony lies in unleashing private sector innovation on

234  Dilemmas Unresolved the one hand, while continuing to insist on monitoring the construction sector against a set of generic targets on the other. This was of course a classic New Labour characteristic. But even more bizarre is the way in which the original Egan targets related to issues which would surely have been best left to the marketplace. At the same time, there seemed to be little interest in setting targets for the issues which the market was patently failing to deliver, such as stable employment and training regimes. 9.5.3  A review of progress

Wolstenholme (2009) notably cites the 500 demonstration projects as the strongest body of evidence in favour of the principles of Rethinking Construction. Clearly, Wolstenholme’s review team did not share the reservations about the demonstration projects which had been previously expressed in Modernising Construction (NAO, 2001). Furthermore, the Egan ‘principles’ had been vague from the outset. They had been subsequently reinterpreted to such an extent that it was decidedly unclear which principles the demonstration projects were supposed to demonstrate. Wolstenholme certainly never succeeded in engaging with the paradoxes which lie behind supposed best practice recipes such as partnering and lean construction. Nevertheless, the Never Waste a Good Crisis team did conduct a survey which revealed that the commitment to the ‘principles’ of Rethinking Construction often remained only skin deep, even in those cases where they had allegedly been adopted. There is a direct correlation here with the ‘responses to lean production’ discussed in Chapter 7. Wolstenholme clearly had an expectation that the Egan principles would be adopted in accordance with the ‘universal applicability model’. In other words, the expectation was that firms would stop operating in the way they had previously, and thereafter begin operating in an entirely different way. However, the survey results are indicative of the ‘lip-service’ model, whereby adoption tends to be limited to the cherry-picking of isolated techniques together with a few supporting soundbites. In truth, this should not have been too much of a surprise. Questionnaire surveys of this nature are of course of limited value in determining the effectiveness of planned organisational change. The primary problem is that both the respondents and the evaluators are too fully immersed in the particular change discourse to be able to offer any degree of detached objectivity. A further difficulty is that only those who are broadly sympathetic to the questions being asked tend to complete such questionnaires, thus leading to a very biased sample. Hence it was no surprise that 90% of the respondents reported a positive impact from Rethinking Construction. But it was interesting that many at the same time pointed towards its limited uptake. Especially interesting is the reported finding that the most widely perceived benefit was a greater emphasis on integration, collaboration or partnering. But many respondents added the caveat that the benefit was patchy and did not extend into the supply chain. Such responses would of course be much more meaningful if there were commonly agreed definitions for these supposed ‘new ways of working’, all of which have been repeatedly advocated at least since World War II. The point is well illustrated by the surprise expressed that only 56% thought that ‘integrating the process and the team around the product’ remained important. The question was raised that this could mean that the respondents felt that sufficient progress had already been made, or alternatively that there was still a large section of the industry that has yet to understand the supposed benefits of an integrated process. In other words, the responses did not mean very much at all. Integration and collaboration are undoubtedly words that will be trotted out for many years still to come, but they are ultimately only words. To understand how such words can be translated into meaningful action is a different challenge altogether. And any such discussion needs to rest on an understanding of the everchanging context within which such words are enacted.

Dilemmas Unresolved 235 An associated problem is the difficulty of ascertaining which innovations are inspired by the Egan agenda and which are not. Many attempts to implement partnering may well have been inspired by the Latham report (1994), or even the notoriously hackneyed Partnering the Team (CIB, 1997). In truth all such reports merge into a continuously fluxing discourse of industry improvement, with many internal contradictions and competing sub-narratives. Few bother to track the changing nature of this discourse and its relationship with the broader socio-political context. But ultimately, such issues cannot be understood as unrelated constituent parts. They need to be understood as a single complex entity. Notwithstanding the above, Never Waste a Good Crisis clearly acknowledges the difficulty of knowing whether the industry’s alleged improved profitability is primarily due to a decade of favourable economic conditions, or to the effects of process efficiency and waste elimination. In retrospect, it seems reasonable to put more weight on the prevailing economic conditions. Wolstenholme might equally have expressed caution about the difficulties of separating the efficiency gains due to lean thinking from, for example, those which were due to BPR. The overriding problem lies in the expectation of a linear relationship between cause and effect. Yet such linear models have become increasingly discredited in favour of other models which emphasise the nonlinear, iterative and multi-agent character of the innovation process (Perkman and Walsh, 2007). This is a debate about innovation with which the mainstream advocates of construction improvement have yet to engage. Too many advocates of industry change remain obsessed with measuring the impact of ideas in isolation of any understanding of the way in which ideas are diffused and reconfigured in practice. But the most striking assumption was that the goal of ever-increasing levels of innovation was the means of ensuring improved performance. The important role of appropriate regulation had seemingly been forgotten. Similarly forgotten was the construction sector’s continued capacity for corruption. An investigation by the Office of Fair Trading in 2008 named 112 companies who were found to have colluded to inflate the cost of a wide range of public sector contracts. Those named included Balfour Beatty and Carillion. The four-year investigation had centred on cover pricing whereby firms secretly agree on the prices that they submit during the tender process. The successor bidder would often compensate the others with a secret payment. John Fingleton, the OFT chief executive was quoted as saying: ‘Cartel activity of the type alleged today harms the economy by distorting competition and keeping prices artificially high.’ Cover pricing is held to be especially common in conditions where there is plenty of work and contractors are often operating at full capacity. They hence choose to submit a cover price rather than declining the invitation to tender. Such practices might be described as ‘collaborative working’ among the bidders, although it is illegal under competition law. The point is that lump sum low-cost competitive tendering does not guarantee value-for-money in a market where demand exceeds supply. But neither does negotiating with a single contractor. The simple truth is that the balance of power between clients and contractors is forever shaped by the prevailing economic conditions. The authors of Never Waste a Good Crisis were likewise entirely blind to the extensive restructuring which took place in the construction sector in the 20 years preceding the Egan report. The extensive changes which took place prior to 1998 were seemingly of no interest to Wolstenholme (2009). This reflects a recurring tendency to adopt 1998 as the base date for analysis. Nothing that happened prior to Rethinking Construction was judged relevant. Notwithstanding the occasional acknowledgement of Latham’s role in ‘paving the way’ for Egan, 1998 had become the equivalent of Cambodia’s Year Zero. It is this fallacy above all others which it is hoped this book has helped overcome.

236  Dilemmas Unresolved 9.6 Summary In seeking to pull the threads of this chapter together it is appropriate to point towards the sustained popularity of collaborative working, integration and lean. The sustained currency of such ideas was evidenced by the comments of Constructing Excellence Chief Executive Don Ward in the April 2010 newsletter: Collaborative working, integration and lean will be essential to deliver low carbon buildings with much lower budgets, and our mission continues apace to save the industry from the damage of a reversion to lump sum lowest price tendering. Collaborative working and integration remain similarly popular in 2023, and stubbornly difficult to define in any meaningful way. In truth, the longevity of such concepts is directly related to their essential vagueness. For those who have not yet slipped into cynicism, these over-lapping storylines may arguably inspire more progressive ways of working. Such fashionable management storylines can also perhaps play an important role in bolstering practitioners’ sense of self-identity. But there was a growing sense among many client representatives that contractors had had the upper hand during a prolonged period of economic growth. Many public sector clients felt especially sore that the construction sector had earned supernormal profits from the PFI initiative. Hence when the economic climate took a turn for the worse, many reverted to procurement practices based on lump sum lowest price. And when work is short contractors are much less likely to submit cover prices. Indeed, they are more prone to ‘buying’ work by submitting tenders below cost. This in turn was to lead to other problems as described in the next two chapters. Finally, as emphasised repeatedly, the recurring emphasis on collaborative working cannot be separated from long-term trends in outsourcing and subcontracting. The current need for collaboration within the supply chain extends across organisational boundaries where previously fewer boundaries existed. The notion of ‘integration’ likewise remains attractive for similar reasons. The importance attached to ‘leanness and agility’ can also be seen to be directly implicated in the evolution of the hollowed-out firm. The model of structural flexibility had become dominant by the early 1990s with direct adverse implications for health and safety, employment conditions and training. Construction firms had notably become experts in ‘leanness’ even before the terminology became fashionable. Indeed, the construction sector arguably provided the original model for the gig economy (Erlich, 2021). This can perhaps even be understood as a bizarre form of innovation, although it hardly qualifies as modernisation as it might normally be understood. Note 1 The Construction Industry Scheme (CIS) required subcontractors to register with the Inland Revenue to obtain a registration card which had to be presented to the main contractor before any payment can be made. The main contractor then deducted tax and national insurance from any due payments.

References Antony, P. D. (1994) Managing Culture, Open University Press, Milton Keynes. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Beck, M. and Woolfson, C. (2000) The regulation of health and safety in Britain: From old labour to new labour, Industrial Relations Journal, 31(1), 35–49. Bennett, J. and Jayes, S. (1998) The Seven Pillars of Partnering, Thomas Telford, London.

Dilemmas Unresolved 237 Bresnen, M. and Marshall, N. (2001) Understanding the diffusion and application of new management ideas in construction, Engineering, Construction and Architectural Management, 8(5/6), 335–345. Building Business…Not Barriers (1986) Cm 9794, HMSO, London. Burt, M. (1978) A Survey of Quality and Value in Building, Building Research Establishment, Garston, Watford. CIB (1997) Partnering in the Team, A report by Working Group 12. Construction Industry Board, London. Clarke, S. (2003) The contemporary workforce: Implications for organisational safety culture, Personnel Review, 32(1), 40–57. Dawson, S., Willman, P., Bamford, M. and Clinton, A. (1988) Safety at Work: the Limits of Self Regulation, Cambridge University Press, Cambridge. DCMS (2000) Better Public Buildings: A Proud Legacy for the Future, Department of Culture, Media and Sport, London. DEFRA (2006) Procuring the Future: Sustainable Procurement National Action Plan – Recommendations from the Sustainable Procurement Task Force, Department for Environment, Food and Rural Affairs, London. Department for Work and Pensions (DWP) (2010) The Government Response to the Rita Donaghy Report, Cm 7828, TSO, London. Donaghy, R. (2009) One Death Is Too Many. Report to the Secretary of State for Work and Pensions. Cm 7657, TSO, London. Druker, J. (2007) Industrial relations and the management of risk in the construction industry, in People and Culture in Construction, (eds. A. Dainty, S. Green, B. Bagilhole) Spon, London, pp 70–84. Egan, Sir John (1998) Rethinking Construction. Report of the Construction Task Force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Erlich, M. (2021) Misclassification in construction: The original gig economy, Industrial and Labor Relations (ILR) Review, 74(5), 1202–1230. Evans, R., Haryott, R., Haste, N. and Jones, A. (1998) The Long Term Costs of Owning and Using Buildings, Royal Academy of Engineering, London. GCCP (2000) Achieving Sustainability in Construction Procurement, Government Construction Clients’ Panel, London. Green, S. D. (2009) The evolution of corporate social responsibility in construction: Defining the parameters, in Corporate Social Responsibility in Construction, (eds. M. Murray, A. Dainty) Taylor & Francis, Abingdon, pp 24–53. Gruneberg, S. and Francis, N. (2019) The Economics of Construction, Agenda, Newcastle-upon-Tyne. Gyi, D. E., Gibb, A. G. F. and Haslam, R. A. (1999) The quality of accident and health data in the construction industry: Interviews with senior managers, Construction Management and Economics, 17, 197–204. Haslam, R. A., Hide, S. A., Gibb, A. G. F., Gyi, D. E., Pavitt, T., Atkinson, S. and Duff, A. R. (2005) Contributing factors in construction accidents, Applied Ergonomics, 36, 401–415. Hughes, W., Ancell, D., Gruneberg, S. and Hirst, L. (2004) Exposing the myth of the 1:5:200 ratio relating initial cost, maintenance and staffing costs of office buildings. in 20th Annual ARCOM Conference, (ed. F. Khosrowshahi) 1–3 September 2004, Heriot-Watt University, Vol. 1, 373–381. Hutton, G. H. and Devonald, A. D. G. (1973) The value of value, in Value in Building, (eds. G. H. Hutton, A. D. G. Devonald) Applied Science Publishers, London, pp 1–12. ILO (2001) The Construction Industry in the Twenty-First Century: Its Image, Employment Prospects and Skill Requirements, International Labour Office, Geneva. Ive, G. (2006) Re-examining the costs and value ratios of owning and occupying buildings, Building Research & Information, 34(3), 230–245. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Legge, K. (1994) Managing culture: Fact or fiction, in Personnel Management: A Comprehensive Guide to Theory and Practice in Britain, (ed. K. Sisson) Backwell, Oxford, pp 397–433.

238  Dilemmas Unresolved Leiringer, R., Green, S. D. and Raja, J. (2009) Living up to The value agenda: The empirical realities of through-life value creation in construction, Construction Management and Economics, 27(3), 271–285. Lifting the Burden (1988) Cm 9577, HMSO, London. Murray, M. and Langford, D. (2003) Conclusion, in Construction Reports 1944–89, (eds. M. Murray, D. Langford) Blackwell, Oxford, pp 196–217. NAO (2001) Modernising construction. Report by the Comptrollor and Auditor General of the National Audit Office, The Stationery Office, London. NAO (2004) Getting Value For Money from Construction Projects Through Design. Report prepared by Langdon & Everest, National Audit Office, London. NAO (2005) Sustainable Procurement in Central Government, National Audit Office, London. Ness, K. (2010) The discourse of ‘Respect for People’ in UK construction, Construction Management and Economics, 28(5), 481–493. ODPM (2004) The Egan Review: Skills for Sustainable Communities, Office of the Deputy Prime Minister, London. Ogbonna, E. and Harris, L. C. (2002) Organizational culture: A ten year, two-phase study of change in the UK food retailing sector, Journal of Management Studies, 39(5), 673–706. OST (1995) Technology Foresight: Progress Through Partnership, Office of Science and Technology, London. Pearce, D. (2003) The Social and Economic Value of Construction: The Construction industry’s Contribution to Sustainable Development, nCRISP, Davis Langdon Consultancy, London. Perkman, M. and Walsh, K. (2007) University-industry relationships and open innovation: Towards a research agenda, International Journal of Management Reviews, 9(4), 259–280. Peters, T. J. and Waterman, R. H. (1982) In Search of Excellence: Lessons from America’s Best Run Companies, Harper & Row, New York. Saxon, R. (2002) The industry ‘formerly known as construction’: An industry view of the fairclough review, Building Research & Information, 30(5), 334–337. Saxon, R. (2005) Be Valuable: A Guide to Creating Value in the Built Environment Constructing Excellence, London. Shrivastava, P. (1995) The role of corporations in achieving ecological sustainability, Academy of Management Review, 20(4), 936–960. Stone, P. A. (1966) Building Economy: Design, Production and Organisation: A Synoptic View, Pergamon Press, Oxford. Strategic Forum (2002) Accelerating Change, Rethinking Construction, London. Taylor, F. W. (1911) Principles of Scientific Management, Harper & Row, New York. TUC (2008) Hard work, hard lives. The Full Report of the Commission on Vulnerable Employment, Trades Union Congress, London. Turin, D. A. (1966) What do we mean by building? An Inaugural Lecture Delivered at University College London on 14 February 1966, H. K. Lewis, London. Willmott, H. (1993) “Strength is ignorance: Slavery is freedom”: Managing culture in modern organisations, Journal of Management Studies, 30(4), 515–552. Wolstenholme, A. (2009) Never Waste a Good Crisis, Constructing Excellence in the Built Environment, London. Wright, C. and Nyberg, D. (2015) Climate Change, Capitalism and Corporations: Processes of Creative Self-Destruction, Cambridge University Press, Cambridge.

10 The Age of Austerity

10.1 Introduction Gordon Brown as prime minister had been widely applauded for coordinating the international response to the global financial crisis. The British electorate however took a different view, and the general election of 6 May 2010 marked the end of 13 years of New Labour government. Despite not winning an overall majority, the Conservative Party was able to form a government in coalition with the Liberal Democrats. Hence David Cameron became prime minister and Nick Clegg of the Liberal Democrats was named as his deputy. Cameron presented himself as a socially liberal moderniser with an informal style and a penchant for open-necked shirts. He undoubtedly deserves credit for rehabilitating the brand of the Conservative Party. Nevertheless, in terms of economic policy his premiership represented a return to the economic policies of the Thatcher era – with significant implications for the construction sector. George Osbourne was the appointed Chancellor of the Exchequer, and quickly embarked upon a harsh austerity policy that was deemed necessary as a means of balancing the books. In contrast, other countries took advantage of record low borrowing rates to invest in modern infrastructure and public services. But the newly elected coalition government wasted little time in announcing extensive cuts in public expenditure, with severe consequences for the construction sector. Public investment in roads was severely curtailed and the Building Schools for the Future programme was abruptly cancelled, with the loss of 700 planned new schools. Such progressive policies as were advocated tended to emulate from the Liberal Democrats, and more specifically from Vince Cable who served throughout as Secretary of State for Business, Innovation and Skills (BIS). It was in the context of the above that a new government construction strategy slowly began to emerge, although there was little in the way of new ideas. Many ‘small-state conservatives’ within government remained resistant to the very idea of industrial strategy. Hence the approach to construction sector policy tended towards the minimalist. Much of the previous infrastructure in support of construction improvement was either dismantled or otherwise fell into disuse. There was brief cause for celebration in terms of the delivery of the London 2012 Olympics Games. But there was also mounting criticism that the government was not doing enough to support the construction sector during a period of severe austerity. In response, policymakers tended to put their faith in modern technology. There was an increasing emphasis on building information modelling (BIM) as a means of salvation. Concerns about lack of government support also eventually led to the publication of the Construction 2025 strategy (HM Government, 2013). This offered little in terms of practical action, but it provided a relentlessly positive message in support of ‘transformational change’. But these were difficult years politically and it was not long before clouds started to gather on the horizon. In response to pressure from the right-wing of the Conservative Party, Cameron was forced to include a commitment to a referendum on the UK’s membership of

DOI: 10.1201/9781003308133-10

240  The Age of Austerity the European Union (EU) in his manifesto for the 2015 election. The good years had undoubtedly come to an end. The Cameron/Clegg government also inherited the challenge of a low carbon built environment. The Innovation and Growth Team (IGT) (HM Government, 2010) report on Low Carbon Construction had cited the need for the biggest change initiative since Victorian times if the commitments of the 2008 Climate Change Act were to be met. The suggestion was that efficiency gains could enable low carbon buildings to be delivered without any extra cost. There was also a focus on the existing building stock, which required an extensive programme of retrofit. Specific barriers to progress identified by the IGT (HM Government, 2010) included the following:

• the structure of the industry, particularly in the lack of collaborative integration of the supply chain.

• a growing need for a general up-skilling of people in all parts of the supply chain to address the design, construction and operation of low carbon, energy efficient building.

• a continuing preoccupation, on the part of many public and private clients, with initial capital cost, instead of appraising projects on a whole life basis.

• the lack of drivers for a change in customer demand, without which the supply side lacks the confidence to invest in new products and services for which there may be no market at a profitable price.

The above barriers to progress were notably not very different from those previously identified in Building Britain 2001 (University of Reading, 1988) and Progress through Partnership (OST, 1995). Much within the construction sector had since changed beyond all recognition, and yet the cited barriers to progress remained essentially the same. If the barriers identified by the IGT were to be overcome, it would require a very different approach to industry reform than that which had previously prevailed. The chances of success were not high. 10.2  Towards another government construction strategy 10.2.1  Government as a client

The Government Construction Strategy published by the Cabinet Office (2011) represented a tentative step into the new era. It was undoubtedly a child of its time; it was short on words and equally short on new ideas. The focus was primarily on the role of government as a client and how it could better engage with the construction sector. Within the context of severe cuts in public expenditure, the strategy set a high priority on the efficient delivery of government-sponsored construction projects. The report followed the theme of many previous studies by emphasising the importance of the construction sector to the broader UK economy. The emphasis lay on exploiting the potential of public procurement as a means of driving economic growth. The strategy also notably emphasised infrastructure. The adopted logic is well illustrated by the following quotation: The principal barrier to reduced cost and increased growth is the lack of integration in the industry, compounded by a lack of standardisation and repetition in the product (e.g. fragmented and unpredictable demand), and by relative protection from overseas competition. (Cabinet Office, 2011, 6) Reducing the cost of construction was a familiar theme. But quite how the construction sector was supposed to increase growth in the absence of sustained demand was never made clear. The reference to the industry’s alleged lack of integration was likewise a recognisable theme from

The Age of Austerity 241 previous reports. Yet there was little interest in analysing the underlying reasons for the construction sector’s supposed shortcomings. As ever, the industry was characterised as highly fragmented – not least on the basis that it comprised 300,000 businesses of which 99.7% were SMEs. The report nevertheless gave scant attention to the needs of SMEs. Some may perhaps have been encouraged by the pledge to create the conditions for supply chains to thrive and to incentivise investment in new technology and people. The more astute reader might have wondered why such policies had not been prioritised over the preceding 30 years. The importance of the sector was further emphasised by the size of the workforce which was estimated at 2 million workers. Beyond this, there was no further mention of workforce issues other than the ‘skills’ judged to be important in the pursuit of efficiency. Construction workers themselves remained as invisible as ever (Ness and Green, 2012). Complaints about the fragmented and unpredictable demand for construction can be traced back to at least the 19th century. However, the idea of demand management in support of construction sector development was very much a product of the post-World War II consensus. Yet, by 2011 government had long since divorced itself from any responsibility for a proactive role in quasiKeynesian demand management. The tone was set by the oft cited 1982 visit of the representative ‘Group of Eight’ to lobby Margaret Thatcher (see Chapter 2). In the post-2010 climate of austerity, the best the Government Construction Strategy could offer was the vague promise of a transparent pipeline of future work. The report further bemoaned the lack of standardisation and repetition in the construction product. Such concerns had been previously aired in the Emmerson (1962) and Banwell (1964) reports and could hence hardly be construed as new. Standardisation was of course much beloved by the initiators of Soviet era industrialised housing in Eastern Europe, and throughout the Soviet Union (Glendinning, 2021). Within the UK, the highpoint of standardisation and repetition coincided with the government’s commitment to the provision of mass housing during the 1960s. The doctrine thereafter has been to leave the provision of housing to the mechanisms of the marketplace. For some, the notion of industrialisation is forever associated with the supposed perils of socialism. Industrialised housing undoubtedly has a decidedly mixed track record in terms of quality. Many of the systems-built tower blocks of the 1960s were demolished within 15 years due to structural deterioration and skyrocketing remediation costs. Even those developments which initially suffered no such problems subsequently became stigmatised as ‘sink estates’. In some quarters the phrase ‘industrialised building’ remained highly problematic. The same was equally true of ‘prefabrication’. Such phrases conjure up too many ghosts of the past. Hence the focus on the alleged benefits of standardisation and repetition. But the supposed advantages are invariably framed in narrow terms of technical efficiency. The Government Construction Strategy (Cabinet Office, 2011) further called for a ‘profound change’ in the relationship between public authorities and the construction industry. The stated aim was to ensure that government clients can secure a ‘good deal’. Here again, there seems to have been an implicit recognition that the long-established policies that prioritised market competition had not entirely lived up to expectations. The espoused strategy further failed to make any mention of climate change. The net zero agenda was seemingly yet to become fully established within policy circles. The primary concern was that the UK was not getting good value from public sector construction, despite the prolonged insistence on compulsory competitive tendering (CCT). The report’s authors further made no mention of the failed experiment of PFI/PPP. The preceding New Labour government had stubbornly ignored the mounting tide of criticism directed at PPP. However, the election of the Cameron/Clegg coalition saw PPP unceremoniously ditched almost overnight, and thereafter it was rapidly snow-flaked from history.

242  The Age of Austerity Notwithstanding the above, the Cabinet Office’s trust in private sector innovation remained entirely undented by the legacy of past failures. Within policy circles, any notion of reinstating the direct labour organisations (DLOs) of the 1970s remained entirely unthinkable. Such arguments had long since become the preserve of the so-called ‘looney left’. There was however good cause to reflect on the wisdom of having outsourced the entirety of the public sector’s procurement expertise – not least that which presided within the Property Services Agency (PSA). But within the prevailing political climate, there was little point in challenging the public sector’s reliance on systemic outsourcing. This had been accelerated by the preceding New Labour government and there was little prospect of any backpaddling by the Cameron/Clegg coalition. The summary recommendations of the Government Construction Strategy (Cabinet Office, 2011) contained few surprises. Clients were urged to issue a brief which concentrated on the required performance outcomes, thereby reinforcing the longstanding myopia among policymakers on issues of building performance. The prevailing inclination was to conceptualise the construction ‘product’ as a supposedly fixed entity. Policymakers too often assume that ‘outcomes’ are in some way predetermined by design choice. Such assumptions continue to prevail despite an extensive body of research which suggests otherwise (Duffy and Worthington, 1972; Patel and Green, 2020). Brand (1994) famously conceptualised buildings as entities which remain malleable throughout their life cycle, continuously adapting to the changing demands placed upon them. Hence outcomes cannot be predetermined through design choice. But such thinking was notably ignored by the Cabinet Office (2011). Debates about construction improvement are especially constrained by the widespread tendency to adopt the project as the basic unit of production around which the market is organised. Indeed, the very discipline of project management routinely encourages construction professionals to construe their responsibilities in accordance with stated objectives of time, cost and quality – otherwise known as the ‘iron triangle’ (Atkinson, 1999). An alternative perspective would be to conceptualise building performance in terms of an enacted sequence of material and social practices that continuously unfold over time (Patel and Green, 2020). Such a perspective would require a very different framing of the productivity debate from that which usually prevails. It would also serve to emphasise the notion of stewardship as it might be applied to the built environment. Ultimately, it is the imposed requirement for a competitive market focused on project delivery which shapes and constrains the way we think about building performance. Competitive markets of course have their advantages, not least as a means of offsetting the systemic corruption which was revealed by the Poulson scandal (see Chapter 2). But what is gained on the swings tends to be lost on the roundabouts. The reality is that debates about construction improvement are forever constrained by the broader political economy within which the sector is embedded. The Government Construction Strategy (Cabinet Office, 2011) further exhorts contractors to engage key members of the supply chain in the design process. A similar recommendation of early contractor involvement had been made by the Latham (1994) report. Such proposals imply a predominantly technocratic view of the design process. Also of interest is the way ‘early contractor involvement’ gradually morphed over time into ‘early supply chain involvement’. This reflects the transition whereby main contractors retreated from the physical task of construction. They also routinely sought to offset as much risk as possible onto the supply chain – including that which relates to design development. The Cabinet Office report further emphasises the importance of engaging supply chains on a serial basis. This was seen as a means of incentivising research and innovation around a standardised product. It is notable how by 2011 the metaphor of the ‘supply chain’ had become entirely naturalised. The terminology of ‘main contractors’ had also been largely replaced by that of ‘tier 1 contractors’. But the shift was about much more than terminology; those who saw themselves as tier 1 contractors deliberately avoided taking responsibility for

The Age of Austerity 243 the physical task of construction. Much easier simply to operate as a client-facing portal whilst getting others to do the work. Such is the nature of supply chain management. Early contractor involvement was not the only idea to be re-cycled from the past. A further example was the encouragement of clients to ensure value for money through price benchmarking and cost targeting rather than lump sum tendering. Strong echoes here of the Rethinking Construction agenda as initiated by Egan (1998). The Government Construction Strategy also emphasised the importance of a visible forward procurement pipeline so the supply chain could make informed choices. The notion of a ‘pipeline’ was destined to become another favoured metaphor among policymakers. There was however no prospect of any return to the demand management policies of the past. The Cabinet Office strategy further called for an alignment of interests between those responsible for designing and constructing a facility, and those who subsequently occupy and manage it. This plea was perhaps made in recognition that the required alignment had categorically not been achieved through the ill-feted PFI/PPP initiative. Nevertheless, the espoused alignment of interests is rendered immediately problematic by the fact that the identities and needs of future occupiers are invariably unknowable at the time a facility is commissioned (Patel and Green, 2020). Unfortunately, such uncertainties cannot be eradicated by using ever more sophisticated procurement methods. The Cabinet Office report arguably inches towards a more realistic perspective by stressing that procurement should be viewed as part of the broader asset life cycle. The procurement process is seen to be concluded when the asset is ‘brought into use with proper arrangements for asset management’. There is perhaps a hint here of the ‘soft landings’ idea which was subsequently to become popular as a means of thinking (slightly) beyond project delivery in terms of time, cost and quality. The report also raises the question of whether design and construction should be procured separately, or whether they should be procured in combination. Further mention was made of the thorny issue of risk, and how it might best be allocated between the contracting parties. Notwithstanding the above, the Cabinet Office’s (2011) call for new procurement models was ostensibly aimed at achieving ‘tight integration’. This was defined as the process of removing contractual interfaces and working against the systemic tendency towards protecting individual interests rather than the interests of the project. The interesting point here is the reification of the ‘project’ as an entity which supposedly exists above and beyond the messy complexities of human affairs. The emphasis throughout lay on encouraging a single supply-side proposition led by the tier 1 contractor. Further emphasis was given to the use of frameworks with the incentivisation of cost and programme efficiency using pain/gain sharing. None of this was new, and much was recycled from the previous era of partnering (see Chapter 6). What was notably missing was any recognition that the advocated approach to procurement required capabilities which many public sector clients no longer possessed. Many private sector clients had also become immune to advice from government sources. The culture had been established whereby the public sector was expected to learn from the private sector, with little appetite for learning in the other direction. Innovation was the holy grail, and the private sector was best positioned to deliver. This after all had been the primary message of the Egan (1998) report. The role of the state was to keep out of the way. The Cabinet Office (2011) strategy report was of further note for championing the causes of prompt payment and standard forms of contract. Both issues had been running sores for years. This is still the case at the time of writing, and is likely to continue for the foreseeable future. Poor payment practices and the use of non-standard forms of contract had previously been targeted by Latham (1994). Such practices are undoubtedly major contributors to the construction sector’s much-derided adversarial culture. Yet it seems that government policymakers in 2011 were still catching up with Latham’s recommendations from 1994. In retrospect, the Egan (1998) report did not help by calling for formal contract documents to be phased out in favour of partnering. The reality is that pleas in favour of ‘collaborative working’ distract from the importance of standard

244  The Age of Austerity forms of contract in ensuring the equitable allocation of risk. Contracts are especially important in providing protection against the abuse of power. They cannot be replaced by warm warms and wistful thinking about collaborative working. The one aspect of procurement policy within the Cabinet Office (2011) report which was ostensibly new was the strong advocacy in favour of BIM. The report emphasised that companies at the industry’s leading edge already possessed the capability to work in a collaborative 3D environment. However, as ever, the construction sector at large was seen to be lagging other industries in realising the full potential of digital technologies. Hence a target was set for the full adoption of BIM, with all project and asset information to be provided in digital form by 2016. The suggestion was that the mindset of those who work in the construction sector is somehow intrinsically different from those who work in other sectors. This remains a recuring theme among policymakers and continues to prevail despite the absence of supporting evidence. The construction sector’s reluctance to invest in new technologies is much better explained by economics rather than with allusions to a supposedly regressive ‘mindset’. Using the Cabinet Office’s own figures, the construction sector in 2011 comprised 300,000 firms of which 99.7% were SMEs. Gruneberg and Francis (2019) argue that all methods of improving productivity require high up-front investment. They further contend that SMEs are least able to make the necessary investment because of their low profit margins and restricted access to capital. Even if they could borrow the necessary money, they would inevitably be charged a higher rate of interest than larger firms with greater capital assets. But they would also need to ascertain the risk of making an investment in the absence of demand certainty and the vagaries of the tendering process. Hence the reason why construction firms are slow to invest in new technologies such as BIM is best explained by basic economics; there is no need to allude to the mindsets of those involved. It must further be recognised that the sector’s operating model owes much to the procurement policies of the industry’s clients, not least those in the public sector. As previously argued, the construction sector’s much lamented fragmented structure has been exacerbated by long-term government policy, not least the systemic incentivisation of self-employment through the tax and national insurance system (Harvey, 2003). Also of significance is the strategic withdrawal of the state from any pretence of demand management. It is further telling to note the topics that are not addressed within the Government Construction Strategy (Cabinet Office, 2011). For example, there is no mention of the need to strengthen regulation in respect of building safety, or to invest additional resources to ensure compliance with existing regulations. Neither is there any reference to One Death is Too Many (Donaghy, 2009) which had seemingly been very quickly snow-flaked from history. Any emphasis on the need to strengthen regulation would of course have been at odds with the prevailing political climate, and especially with the ethos of small-state conservatism. Hodkinson (2019) tellingly describes how the Cameronled coalition government committed itself from the outset to a bonfire of regulations. Prior to taking office, Cameron repeatedly emphasised his personal mission to curb the supposedly ‘over-the-top health and safety culture’. To advocate that the construction sector should peddle-back on health and safety regulation was a dangerous message to promote. Despite his supposed socially liberal attitudes, Cameron had a strong pre-existing ideological commitment to deregulation. 10.2.2  Lessons from the London Olympics

The Cabinet Office (2011) report was further notable for embracing infrastructure into the domain of consideration. Indeed, the boundary drawn around the entity of the ‘construction industry’ is notably continuously subject to renegotiation (Pearce, 2003). Nobody is ever quite sure what is included, and what is omitted. The Cameron/Clegg government inherited a highly complex infrastructure project

The Age of Austerity  245 in the form of the London Olympics 2012. Large-scale infrastructure projects are invariably about much more than construction in that they inevitably involve complex governance arrangements. This is especially true of mega-projects such as the London Olympics 2012. They are also notoriously prone to shifting political priorities (Gil et al., 2017). The Olympics Delivery Authority (ODA) was charged with the design and construction of the supporting infrastructure. But it was accountable to multiple governance structures, all of which were characterised by shifting political priorities. Of no small importance was the commitment to deliver the most sustainable games ever as a consequence of the original bid submitted to the International Olympic Committee (IOC). The vision of delivering the most sustainable games ever commenced when Tony Blair was prime minister and culminated in the era of the Cameron-Clegg coalition. Perhaps even more pertinently, the Mayor of London during the initial stages was the famously left-wing Ken Livingston. He was subsequently replaced by Boris Johnson following the mayoral election in May 2008. It would be difficult to imagine two more diametrically opposed personalities with starkly different political hinterlands. Delivery was made even more complex by the fact that the Olympic Park spanned across no less than six host boroughs: Hackney, Newham, Barking, Dagenham, Greenwich, Tower Hamlets and Waltham Forest. Each borough was characterised by contrasting priorities, and very different interpretations of sustainability. It was within this context that the ODA was tasked with delivering the supporting infrastructure in accordance with stated sustainability targets. Even more demanding was the requirement to perform under intense media scrutiny. The only constant imperative was that the Olympic Stadium should be open on time. The completion date was immovable; everything else was malleable, not least the budget and the guiding vision of sustainability. The latter was especially subject to renegotiation given the shifting interests of the various stakeholders. The important challenge throughout was to maintain the impression that sustainability was being taken seriously while at the same time keeping diverse stakeholders on board. What cannot be denied is that the London Olympics 2012 were a huge success. This was true both in terms of the facilities provided, and in terms of the organisation of the events by the London Organising Committee of the Olympic and Paralympic Games (LOCOG). A total of 10,768 athletes from 204 nations competed in 302 events in 26 sports across 39 different disciplines. Team GB was awarded 34 gold medals and 120 medals in total. In sporting terms, the games were therefore an undeniable triumph. They were also hugely successful in projecting a positive image of the host nation internationally. However, the question of whether the ODA lived up to its promises in respect of sustainability remains at best contestable. Certainly, there have been numerous critical voices regarding the long-term legacy of the games, not least in terms of its economic contribution to the host boroughs. Participation in sport across the six boroughs disappointingly went down rather than increasing as had been anticipated. But for current purposes, the key learning point is that there is invariably much more involved in the successful delivery of mega-projects than the physical task of construction. Of huge additional importance is the necessity to manage the political constituency within which such projects are delivered. The ODA were also notable for their commitment to the ‘ethos of a directly employed workforce’. It was stipulated from the outset that all operatives should be in the direct employment of a contractor or subcontractor. The wording however was seen by many to be deliberately ambiguous. There were also doubts regarding the extent to which such a vaguely worded commitment could be policed (Druker and White, 2013). The task of ensuring compliance fell to the ODA’s delivery partner, CLM – a joint venture comprising CH2M Hill, Laing O’Rourke and Mace. At the initial point of selection, contractors were required to demonstrate that their supply chain was compliant with the required ethos. The difficulty however lay in monitoring compliance over the course of each contract (op. cit). Nevertheless., the Olympics Park is held to have been successful in achieving a much higher rate of direct employment than that which prevailed across the industry at large. More

246  The Age of Austerity generally, subcontractors tend to see the requirement for direct employment as another means through which tier 1 contractors seek to offset risk onto the supply chain. Hence their response is often to fudge, and in the absence of any centralised commitment to monitoring employment practices post contract-award they too easily revert to the norm. The London Olympics 2012 undoubtedly differed from other projects in terms of scale and complexity, but the need to manage the aspirations of multiple stakeholders would be recognised by most project managers in the modern era. Hence it is necessary to question the recurring policy focus on productivity as defined in terms of construction cost efficiency. More emphasis could usefully be given to efficacy in terms of ensuring the appropriateness of what we build. Nobody’s interests are served by constructing white elephants which are redundant upon delivery. This remains true irrespectively of the efficiency with which they are delivered. Unfortunately, the narrow focus on efficiency continues to dominate the policy discourse despite the lessons that are learnt and repeatedly forgotten. 10.2.3  Construction Commitments

In addition to promoting the ethos of direct employment, the ODA also adopted the 2012 Construction Commitments as developed by the Strategic Forum’s 2012 Task Group under the chairmanship of Peter Rogers. The commitments set out what was seen to be best practice in construction procurement. Major projects of course are not representative of the construction sector at large, but they nevertheless often play an important role in setting the standards for the rest of the sector. Terminal 5 at Heathrow Airport (2002–2008) was widely held to have been an exemplary project, not least in promoting the use of BIM. Such projects are renown for the complexity of their governance arrangements, and certainly in the case of London 2012, high levels of political interest. They also invariably require strongly engaged client leadership. The high profile and longevity of such projects invariably attract the sector’s leading delivery teams and are often career-defining experiences for those involved. Crossrail (2009–2022) is another such mega-project which is deserving of mention, not least because of the repeated delays and cost overruns. Crossrail was also embarrassingly embroiled in the blacklisting scandal whereby an industrial relations manager was accused of cross-checking job applications against the secret (and illegal) list held by the Consulting Association. Such things tend not to be talked about in polite company and are all too easily forgotten. As the Olympic Park neared completion, the Strategic Forum recommended the Construction Commitments for adoption by the industry at large – albeit on a voluntary basis. Companies were encouraged to sign up via the Strategic Forum’s website, and it hence became potentially embarrassing for those who failed to do so. The commitments were advocated as replacing the long-established Egan targets which had by 2012 lost much of their shine. All such agendas inevitably have a shelf life. Industry leaders might reasonably be expected to look forward rather than passively endorsing that which has gone before. It is further difficult to create an identity for oneself as a moderniser whilst continuing to advocate an agenda from the previous millennium. Hence the perennial privileging of innovation over the hard slog of implementation. The constant challenge is how to secure support from the industry’s disparate interest groups for any advocated set of actions. The necessary buy-in is often best secured by being ambiguous in terms of meaning. Henry Kissinger famously referred to the negotiating tactic of ‘constructive ambiguity’. However, the blurring of meaning is much more difficult to maintain when it comes to implementation. Hence it becomes much easier to launch yet another new initiative. The newly amended Construction Commitments were formally launched in June 2012. They comprised a set of 43 principles structured under six headings: procurement & integration; commitment to people; client leadership; design quality; sustainability; health & safety. Design quality

The Age of Austerity 247 and sustainability had not notably been emphasised by the Egan (1998) report. The advocated principles were intended for application on all construction projects with a view to achieving a better industry and exceeding current best practice. The guiding hand of Peter Rogers would have been readily apparent to those who had worked with him on the pioneering Broadgate development during the 1990s. As might be expected, there was a strong emphasis on the responsibilities of the client. Examples include:

• Procurement decisions will be transparent, made on best value rather than lower cost, use evalu-

ation criteria and where appropriate, specialist advisors, whilst encouraging the contribution of smaller organisations. • There will be client commitment to best practice guidelines and engendering cooperation with all organisations involved in the project. • A detailed brief with clear financial objectives, programme and definition of what is meant by success will be developed by the client before the design stage for all projects and this will be shared at the outset with all those involved. • The client will work within the project team from the outset of the project to identify and manage project risks. The above principles were undoubtedly well-intentioned, but they are heavily reliant on the client possessing the appropriate experience and expertise. In contrast, most construction clients are relatively unsophisticated and tend to avoid becoming directly involved in the construction process. They are also often almost entirely led by consultants. Decades of outsourcing have further served to limit the extent of procurement expertise within public sector clients. Many clients hence remain addicted to arms-length competitive tendering. The appointed consultants are also too often squeezed on fees, and therefore likewise have little capacity for collaborative working. Notwithstanding the above, the Construction Commitments reflected an underlying sympathy with the needs of smaller firms within the supply chain. Examples in this respect include the following:

• All members of the construction team will be identified and involved at an early stage, particularly during the design process and encouraged to work collaboratively.

• To ensure effective and equitable cashflow for all those involved, all contracts will incorporate

fair payment practices, such as payment periods of 30 days, no unfair withholding of retentions, project bank accounts, where practicable and cost effective and will include mechanisms to encourage defects-free construction. Yet there was also often an underlying hint of benevolent paternalism:

• Supply chain partners will be required to demonstrate their competency, their commitment to integrated working, innovation, sustainability and to a culture of trust and transparency.

• All contracts will have an informal and nonconfrontational mechanism to manage-out disputes. Informal mechanisms for managing disputes are undoubtedly a good idea, but access to such mechanisms tends to be shaped by the power relationships between contracting parties. Hence, they cannot replace formal dispute mechanisms that are transparent and contractually binding. The phrase ‘collaborative working’ also provides a good example of Kissinger’s constructive ambiguity. For many tier 1 contractors, collaborative working too easily translates into a means of pressurising

248  The Age of Austerity the supply chain. For example, many SMEs in the supply chain often struggle to secure timely payment in response to verbal variation orders. Yet if they insist on a written instruction prior to performing any additional work they risk being labelled as ‘uncollaborative’ and are thereby denied access to further opportunities. Collaborative working too easily becomes a one-way street. The Construction Commitments were relatively strong in respect of the ‘commitment to people’ agenda which emerged from the Egan (1998) report. Of note was the pledge in favour of local employment projects and local training initiatives. This would have made difficult reading for those with a vested interest in offsite construction. The Construction Commitments notably fell short of advocating a commitment to the ‘ethos’ of direct employment. This is again unsurprising given the need to ensure the agreement of those with a vested interest in the sector’s strategic model of structural flexibility. There was however a commitment in favour of monitoring employment practices:

• The employment practices of all organisations, including sub-contractors and the self-employed, will be scrutinised by the client and the supply chain to avoid abuses.

The above commitment was again undoubtedly well-intentioned, but the advocated level of scrutiny would require significant resources. This would be especially true for projects comprising multiple tiers of subcontract culminating in the use of contingent labour. Very few clients would have the capacity for the required level of scrutiny – or indeed the inclination to become involved in such things. The advocated approach would also need to be policed – an unenviable task given the increasing complexity of construction supply chains, the lower reaches of which were increasingly characterised by high levels of transient migrant workers. The Construction Commitments in respect of design quality also contained several points of interest, not least in respect of client briefing:

• The client will produce a clear brief before design commences. • Project briefs will specify performance criteria to encourage innovation in order to deliver cost-

effective solutions, taking advantage of opportunities for standardisation, prefabrication, off-site manufacture and adopting modern logistics principles.

The above commitments would seem to be derived from the context of commercial development with an assumed experienced client. The first seems to imply a linear separation between ‘briefing’ and ‘designing’ which would not be accepted by many designers, or indeed those who advise inexperienced clients. Many inexperienced clients are often unable to prearticulate their requirements until they have engaged in the design process. Indeed, clients frequently comprise multiple internal interest groups each with a very different interpretation of the requirements they are striving to achieve (Green, 1996). Hence the tendency in the literature to distinguish between the ‘strategic brief’ and the ‘functional brief’ (Blyth and Worthington, 2010; Patel and Green, 2020). The production of the former invariably requires an extended process of engagement across the broader organisation which often transcends individual projects. There is also a danger in relying on standardisation and offsite prefabrication. The difficulty is that buildings are often used in different ways from those originally intended. Hence performance requirements frequently change over time, and the higher the reliance on off-site prefabrication the less malleable the building is likely to be in response to changing requirements. This is especially true in the case of modular components. Mention has already been made of an obvious contradiction between advocating off-site prefabrication on the one hand and the importance of local employment opportunities on the other (see further discussion in Chapter 12).

The Age of Austerity 249 Notwithstanding the above criticisms the Construction Commitments, as published by the Strategic Forum in 2012, have stood the test of time as an expression of enlightened practice – not least in terms of the emphasis placed on client leadership. However, many clients simply lacked the necessary capacity and/or inclination to exercise the required level of leadership. This was especially true during the lean years of austerity. The Commitments also presented too much of a challenge to vested interests within the construction sector – especially those of the main contractor. They hence ultimately failed to gain widespread support. In many ways the Construction Commitments represented the last throw of the dice by the Strategic Forum for Construction. Peter Rogers as chairman subsequently became disillusioned with the lack of willingness within the sector to unite behind a common agenda. 10.2.4  Progress report and action plan

July 2012 also saw the publication of a one-year progress report on the Government Construction Strategy (Cabinet Office, 2012). Given government’s track record of implementing previous reform initiatives, the report was implausibly upbeat. ‘Excellent progress’ was reported in terms of industry engagement with the advocated reform programme and the development of cost benchmarking data. The commitment to embracing BIM on government projects over a 5-year timeline was further claimed to be positioning the UK as a world leader. Assertions of the UK’s supposed world-leading expertise were to become an increasingly common refrain in the years ahead. The update report further asserted that the take-up of BIM was encouraging investment in the industry in support of the desired ‘revolutionary change’. Sustained steady progress is seemingly never quite enough; change must always be revolutionary, or at the very least, radical. With the benefit of hindsight, a greater emphasis on the continued importance of appropriate regulation would have been wise. In either case, the onset of the technological revolution remained largely isolated from the 2 million construction workers in whom a whole generation of policymakers had seemingly lost interest. There was however an admission that elements of the implementation programme had shifted in terms of timetable, or were otherwise being dealt with in different ways from those originally envisaged. Of particular significance was the creation of the Government Construction Board (GCB) comprising senior representatives from all the major government departments involved in regular procurement. The GCB was chaired by the Government’s Chief Construction Adviser, Paul Morrell, previously senior partner at consultancy firm Davis Langdon. Morrell reported directly to Francis Maude in his role as Minister for the Cabinet Office. The promotion of BIM as the panacea for the industry’s problems had been a consistent message throughout Paul Morrell’s stewardship as the Government’s Chief Construction Advisor (2009–2012). He had also chaired the IGT report on Low Carbon Construction (HM Government, 2010). Morrell thereby became a persuasive champion for both BIM and low carbon construction. He was famous on the conference circuit for his visual presentations which rarely contained written text. The unplugged nature of his presentations provided an interesting contrast with the plethora of KPIs which prevailed in the wake of the Egan (1998) report. Many found Morrell’s presentation style to be refreshing, and his key messages were put across with consistent clarity. Meanwhile, there was much debate behind the scenes about the underpinning governance structure and how best to ensure appropriate representation for the construction sector. The Strategic Forum for Construction was becoming increasingly moribund in the face of sustained criticism that it was not speaking on behalf of the entire industry; the mooted response to the Construction Commitments was just one example among many. The Strategic Forum was further undermined during 2012 by a perceived attempt by the Construction Council of the Confederation of British Industry (CBI) to take over as the industry’s voice to government. This was very typical of the recurring construction sector squabble about

250  The Age of Austerity how best to represent its interests to government. The underlying problem was much as it ever was. Namely, that the construction sector cannot be construed as a homogeneous entity with a single set of interests. What was however increasingly clear was that the days of striving to implement the Egan agenda were over. As it happened, the GCB itself was remarkably short lived soon to be replaced by the Construction Leadership Council (CLC). Notwithstanding the above, the commitment to industrial strategy within BIS continued to gather pace under the guiding hand of Vince Cable. The broad position was set out in Industrial Strategy: UK Sector Analysis (BIS, 2012). This was apparently a response to calls for greater clarity from government on its long-term approach to supporting business. The key underlying principles were set out as follows:

• A focus on the long term to build sustainable growth – making enduring decisions, allowing sufficient time for policies to work, and creating long-lasting structures to support stable delivery.

• A continuing commitment to open and competitive markets as a means to stimulate innovation and growth.

• Identifying where the UK can have greatest success in capturing high value opportunities based

on its key strengths and capabilities, and putting the weight of Government behind these areas to enhance them. • Building a collaborative but challenging strategic partnership with industry to ensure appropriate government intervention which delivers the desired market outcomes. The very notion of industrial strategy was at the time anathema to many within the Conservative Party. But Vince Cable from the Liberal Democrats served as Secretary of State for BIS throughout the coalition government and was a consistent advocate in favour of government intervention. Cable was notably fond of citing John Maynard Keynes as one of his economic heroes. In this respect he was far removed from the small-state neo-Thatcherite tendencies of George Osbourne. The very idea of an industrial strategy was therefore a throwback to the distant past. Margaret Thatcher had been notoriously dismissive of such ideas, as was John Major as her immediate successor. Precious little was done to resurrect the idea of industrial strategy during the New Labour years (1997–2010). As described in Chapter 5, the Egan (1998) report is best understood as a message from the newly elected New Labour government that there was to be no return to 1970s-style industrial strategy as beloved by the likes of Harold Wilson. Yet by 2012, the notion of industrial strategy was back in vogue – at least within the corridors of BIS. The view from the Treasury was seemingly that Cable was free to promote an industrial strategy just so long as it did not cost any money or change anything. There was certainly no appetite for any retreat from the adopted hardwired commitment to a liberalised economy. But within BIS at least they were talking about industrial strategy - despite the lack of any encouragement from Treasury. The sector analysis report provides a strong justification in favour of a sector-based approach. The authors had seemingly discovered that different sectors have different characteristics. Mirroring the automotive industry was hence not quite the silver bullet in was once considered to be. The authors were further careful to point out that sectors evolve over time and that official statistics based on the Standards Industrial Classification (SIC) system are generally slow to keep pace. The advice that construction statistics should be treated with caution remains forever true. There was also explicit recognition that government targets in respect of climate change could not be delivered without a major contribution from the construction sector. Such concerns were seen to be a major driver for the embryonic low carbon construction agenda. The report further recognised that government policy targets in respect of health, education, housing and infrastructure are crucially dependent upon the construction sector. Politicians are of course famously fond of photo opportunities on construction sites wearing high-viz personal

The Age of Austerity  251 protection equipment (PPE). These are indicative of the importance of construction across a range of policy areas. The report was notable for identifying the construction and energy sectors as key enabling industries. Hence the stated strategy of building and maintaining strategic partnerships with prioritised sectors. Such a commitment contrasts with the dismissive reaction of Margaret Thatcher when the representative ‘Group of Eight’ sought such a partnership in 1982. Ultimately of course, governments are judged on their actions rather than their words. As an aside, the BIS (2012) report refers to BERR (2008) data produced under the previous government which pointed towards a relatively strong performance by construction both in terms of average labour productivity (ALP) and total factor productivity (TFP). Such data tends to be ignored because they do not align with the predetermined script that the construction sector is characterised by poor productivity. 10.2.5  BIM strategy: The road to Utopia

Previous prime minister Harold Wilson is famous for his 1963 speech on the ‘white heat of technology’ as delivered to the Labour Party Conference in Scarborough. Wilson was at the time Leader of the Opposition. His core political message was that if Britain were to prosper in the modern era it would need to embrace the ‘white heat’ of the technological revolution. The point was that there was no viable alternative to the modernisation of the British economy. The unstated implication was that the ageing and aristocratic leadership of the Conservative Party – as personified at the time by Harold Macmillan – was old-fashioned and out-of-touch. Wilson hence sought to align the Labour Party with science-based images of modernity. Modern-day proponents of BIM mobilise very similar arguments to those of Wilson. Those who are not convinced by the white heat of digital technology are likewise labelled as old-fashioned and out-of-touch. Such arguments can also usefully be understood as identity work on the part of their advocates. Not only are they arguing in favour of a particular technology, but they are also presenting themselves as the harbingers of modernisation. To challenge them is not only to challenge their ideas but also to challenge their very sense of self-identity. Modernisation is of course such a vague term it is difficult to argue against, especially when set against mythical notions of the ‘traditional’. Similar arguments have been made in respect of related concept of innovation (Sergeeva and Green, 2019). A younger version of the current author was no means immune to such tendencies: It is not only the finished building that will be dramatically affected by the new ‘sunrise’ technologies – so will the nature of the building design and construction process. Computer aided design (CAD) will be universally used, not only for the structural and services design elements, but also for the initial architectural concept. Designers working on different aspects of the building’s design will input information into an evolving three-dimensional computer model of the finished product. (Green, 1989, 69) What rendered the above thinking practical over the next twenty years was not the accompanying vision of modernity, but the ready availability of desk-top computers with sufficient processing power. Yet the current author is rarely cited as a BIM pioneer, and nor would he claim any such status. Notions of three-dimensional computer models were in truth commonplace throughout academia during the late 1980s. Industry leaders in corporate boardrooms were at the time dismissive of such ideas, preferring instead to focus on more immediate operational challenges. If we are looking to identify the pioneers of BIM within academia we could perhaps start with Chuck Eastman, latterly of Georgia Institute of Technology in the United States (Eastman et al., 2011). But in the UK context mention must also be made of those who championed BIM on major projects. The achievements of Mervyn Richards and his team during the design and construction

252  The Age of Austerity of Heathrow’s Terminal 5 (2002–2008) on behalf of BAA plc are especially deserving of mention. Such major projects of course are rarely representative of industry practice at large, but this does not mean that those who work on supposedly lesser projects are necessarily behind the times. The reality is that small firms working on small projects are more prone to be undercut by low-cost competitors. They are therefore unlikely have the necessary resources to invest in new technologies. None of the above prevented the UK government from enthusiastically endorsing BIM as a key part of its industrial strategy for the sector. Of initial importance was the strategy paper produced by the BIM Industry Working Party at the invitation of BIS and the Efficiency Reform Group within the Cabinet Office (BIS, 2011). The recommended strategy comprised a ‘push-pull’ approach. The ‘push’ element was focused on the supply chain and the way government could make it easier for them to innovate. The ‘pull’ element was focused on the need for government to be very specific and consistent in terms of what it specifies. The two key variables in shaping improvement were identified as whole-life cost and carbon performance. The working party report notably rests on the assumption that BIM can significantly improve the construction sector’s declining productivity. It was emphasised that BIM was only one part of an overall improvement strategy which included ‘offsite manufacturing’ and ‘lean’ techniques. Both were previously recommended by the Egan (1998) report. The belief was that if such techniques could be joined-up even more dramatic improvements in performance could be achieved. The working group was chaired by John Lorimer of Manchester City Council and Mark Bew of URS/Scott Wilson. The leadership team also included the inevitable representatives from Autodesk and Bentley together with three representatives from BIS. The BIM strategy report contained a long list of contributors whose expertise should be respected, not least that of Mervyn Richards. But the ability of individual contributors to shape such reports is always limited. Those on the leadership team from BIS would undoubtedly have been looking for a positive message, and those from the software venders would have been only too willing to oblige. The overall tone of technological optimism therefore served the needs of all involved. However, the working group was strangely reluctant to define precisely what they meant by BIM. They preferred instead to outline a hypothetical scenario: …that would deliver an environment whereby the Government client would have an estate that was ‘smarter and better’ equipped to face a low carbon economy, with associated reductions in delivery and operational costs and in carbon emissions. (BIS, 2011, 4) The stated overall aim was to maximise client value by increasing benefits at little or no extra cost. The Egan-inspired focus on client value was seemingly therefore still firmly in place, with little recognition of the long-term needs of the extended supply chain. The authors were also clear that, wherever possible, low-cost methods should be made available with a view to enabling all stakeholders to participate irrespective of their size or experience. This was seen to be important as a means of minimising barriers to involvement. However, a more immediate barrier was the capacity to read and assimilate a 107-page BIM strategy paper comprising no less than 22 appendices. Only the most very dedicated reader would have worked through to Appendix 22 which included the following important caveat: The key principle of the strategy is that the Construction Industry will respond to the opportunity created by government with innovation and solutions, the Government Construction Client should anticipate some inertia, should aim to encourage a single voice in the industry and be prepared to manage the outcomes of the initial development work streams. (BIS, 2011, 106)

The Age of Austerity  253 The lack of punctuation in the above paragraph is perhaps forgivable given that so few readers would ever get this far. The belief that the industry would respond with innovation and solutions was justified only insofar as the ‘opportunity created’ would enable firms to better position themselves to secure government work. As ever, those on the inside track would possess a distinct advantage. It is pertinent to recall that the same commitment to ‘innovation and solutions’ was evident throughout the PFI/PPP procurement initiative, but with little overall benefit to the taxpayer. The aim of encouraging a single voice from a supposed monolithic construction industry is likewise best described as wishful thinking. This was one the reasons for the demise of the Strategic Forum for Construction – whatever new initiative was proposed there was always someone arguing against it. The reality is that the construction sector comprises a plethora of interest groups who are forever striving to position themselves for the purposes of competitive advantage. Firms with the necessary resources seek to develop distinctive voices to access opportunities which are denied to others. This is one of main ways that larger contractors strive to avoid competing solely based on costs. Dainty et al. (2017) argue that the overblown hyperbole in favour of BIM risks propagating an ever-widening digital divide between large tier 1 contractors and the supporting tiers of sub-contractors. For many of the major players this was an implicit motivation from the outset. The resultant competitive asymmetry was to subsequently become even more pronounced with the advent of modern methods of construction (MMC) (see Chapter 12). Such approaches create ever higher barriers to entry for sub-contractors seeking to re-position themselves in the value chain. The government’s explicit endorsement of BIM therefore had the unintended consequence of protecting the interests of the established hierarchy. This was also previously true of the PFI/PPP initiative where the biggest barrier to entry comprised access to finance. The recommendations of the BIM Industry Working Group (BIS, 2011) were subsequently endorsed in an action plan published by HM Government (2012). This latter publication offered a revised definition of BIM, which was now seen to comprise ‘a collaborative way of working, underpinned by the digital technologies which unlock more efficient methods of designing, creating and maintaining our assets’. This follow-on report was heavily laced with hubristic notions of technological optimism. BIM was seen to be a ‘game-changer’ that was here to stay. It was held to be a key agent for economic growth in both the domestic and international markets. The action plan was threefold: (i) fully commit to the existing BIS BIM programme to create critical mass, (ii) aim for growth and (iii) help create the future by continually developing our capabilities. The Construction Industry Council (CIC) was apparently at the forefront of developing and leading the programme in conjunction with government. The Strategic Forum for Construction was notable only for its absence, seemingly abandoned and forgotten. 10.2.6  Policy making during the age of austerity

Notwithstanding the ongoing policy in support of the adoption of BIM, there was mounting criticism from various corporate interests that the government was not doing enough to sustain the construction sector through the recession. It was now 15 years since the publication of the Egan (1998) report and the construction reform movement was in severe need of an updated script. The panaceas which had been championed so strongly prior to the 2008–2009 recession were by now looking decidedly tarnished. The Wolstenholme (2009) report had concluded that the majority of Egan’s targets had only been accomplished in a superficial manner. Given the lack of underpinning substance it is perhaps more surprising that Egan’s targets had continued to be taken seriously for so long. Paul Morrell as Chief Construction Advisor had always been adamant that the last thing the industry needed was another glossy report. Morrell however stepped down from the role in November 2012 to be replaced by civil engineer Peter Hansford. On the broader political stage, Vince Cable as Secretary of State for Business Innovation and Skills (BIS) continued

254  The Age of Austerity to lobby in favour of a joined-up strategy for specific targeted ‘enabling’ sectors. The Treasury remained committed to George Osbourne’s fiscal policy of austerity, but clearly saw no harm in publishing an industrial strategy for the construction sector. The implied proviso was that it could not challenge the overarching policy narrative of making the sector more efficient and competitive through ‘better regulation’. But when government ministers cite ‘better regulation’ what they invariably meant is less regulation. This was consistently the case throughout the years of austerity. In 2009, prior to being elected, David Cameron made at speech at the Policy Exchange in London emphasising that he saw it as his personal mission to embark upon a sustained ‘bonfire of regulations’ (House of Lords, 2017). Indeed, in July 2013 the coalition government introduced its ‘one-in, two-out’ policy where for every pound of cost imposed by new regulations, government departments were required to cut other regulations by two pounds (Hodkinson, 2019). Regulatory oversight was further reduced through real-terms spending cuts of 49.1% to local authorities (NAO, 2018). In short, regulation was seen as the enemy of innovation. Government representatives were hence interested in talking to those within the construction sector with a similar view of the world, and rather less interested in talking to others. It follows that construction sector representatives had little room for manoeuvre in their interactions with government. The harsh reality is that construction sector policy reports are invariably shaped and constrained by the meta narrative which prevails within the broader political environment. Published reports may superficially claim to be about modernisation, or industry efficiency, but in truth they are invariably politicised. It therefore becomes necessary to denaturalise the constituent arguments rather than accept such reports at face value. Important insights can further be gained not only based on the issues highlighted but also on the issues which are so consistently ignored. 10.3  Construction 2025 10.3.1  Industry and government in partnership

The government was clearly under some pressure from the CBI for not doing enough to support the construction sector during difficult times. There was at the time a perceived policy void and many construction firms were struggling. There was hence significant pressure for government to publish a coherent industrial strategy for the construction sector. The resultant report was launched in July 2013 and was entitled Construction 2025 (HM Government, 2013). This was a report that was very different from those that had gone before. It was billed as a joint strategy which set out how industry and government would work together to put Britain at the forefront of global construction. In truth, it was more of a vision document than a strategy. The vision emulating from Construction 2025 was one of ‘radical, transformational change’. The tone throughout the report was remorselessly positive. Construction was seen to be a sector where Britain has a strong competitive edge with world-class expertise in architecture, design and engineering. British companies were seen to lead the way in sustainable construction, although there was a notable absence of any evidence to support such a claim. But in contrast to the Farmer (2016) report published three years later there was little suggestion the industry was experiencing any sort of existentialist crisis. Presumably the judgement was made that the construction sector needed a positive message rather than more of the usual criticism. The report was especially notable for being outward looking, pointing towards a projected growth in the global construction market of 70% by 2025. The authors can hardly be criticised for failing to predict the economic shocks that lay ahead; at least this was a positive message around which the various competing interests could coalesce. But there was also a telling acknowledgement that government has an important role to play in improving procurement practices. This was to become a consistent theme,

The Age of Austerity  255 subsequently to be adopted by the Construction Playbook (HM Government, 2020). There is however an important difference between saying that government procurement practices must improve and taking the necessary action to make it happen. The intent was clearly signalled in the foreword to the new report, as signed by Vince Cable, Michael Fallon and David Higgins. Michael Fallon presumably muscled in through being the minister responsible for construction within BIS. David Higgins was well known within the sector, having previously been the Chief Executive of the ODA and Network Rail. Construction was again duly celebrated as a key enabling sector with a massive impact on the performance of the wider economy. This was certainly an important message to implant within the corridors of government. In terms of challenges, the foreword recognised that construction businesses were struggling to access finance. This was something of an understatement. Prior to analysing the contents of the main body of the report, it should further be made clear that Construction 2025 as a text is difficult to follow. It is seemingly not designed to be read from start to finish in a linear sequence. Neither is it strong on coherence. It is perhaps a report that was written for the internet generation, or perhaps it was cobbled together on the model of Wikkipedia. A generous interpretation would be that it comprised a genuine attempt to look beyond the immediate horizon. A more critical view would be that it was tainted throughout by hubris. 10.3.2  Large type and stirring photography

The executive summary of Construction 2025 notably comprises 13 pages of large type and stirring photography. The opening claim was that, working together, industry and government had developed a clear and defined set of aspirations for UK construction. The authors of the report conspicuously went for aspirations rather than targets. It is of course more difficult to hold people to account against a set of aspirations. This was perhaps indicative of an aversion to the endless cycle of targets and KPIs which characterised the supposed implementation of the ‘Egan agenda’. The headline aspirations were listed as follows:

• Lower costs – 33% reduction in the initial cost of construction and whole life cost of built assets.

• Faster delivery – 50% reduction in the overall time, from inception to completion, for newbuild and refurbished assets.

• Lower emissions – 50% reduction in greenhouse gas emissions in the built environment. • Improvements in exports – 50% reduction in the trade gap between total exports and imports for construction products and materials.

In light of the failure of previous such attempts at radical transformation the aspirations were indeed visionary, perhaps even tending towards the hubristic. The broader vision was set out in five bullet points: 1 An industry that attracts and retains a diverse group of multi-talented people, operating under, that has become a sector of choice for young people inspiring them into rewarding professional and vocational careers. 2 A UK industry that, transformed by digital design, advanced materials and new technologies, fully embracing the transition to a digital economy and the rise of smart construction. 3 An industry that has become dramatically more sustainable through its efficient approach to delivering low carbon assets more quickly and at a lower cost, underpinned by strong, integrated supply chains and productive long term relationships.

256  The Age of Austerity 4 An industry that drives and sustains growth across the entire economy by designing, manufacturing, building and maintaining assets which deliver genuine whole life value for customers in expanding markets both at home and abroad. 5 An industry with clear leadership from a CLC that reflects a strong and enduring partnership between industry and Government. The overarching ambition was that by 2025 the construction sector would no longer be characterised by ‘late delivery, cost overruns, commercial friction, late payment, accidents, unfavourable workplaces, a workforce unrepresentative of society or as an industry slow to embrace change’ (HM Government, 2013, 18). Notwithstanding such grandiose aspirations, the Construction 2025 report had little to say that was substantively new. Beyond the hyperbole, it largely comprised a glossy re-hash of the Cabinet Office (2011) report from two years previously. Guidance and support were notably provided by the newly appointed Chief Construction Advisor, Peter Hansford, and the short-lived Construction Industrial Strategy Advisory Council (CISAC). Seeking to incorporate the construction sector’s broad diversity of interests in any such report is invariably a challenging task – and perhaps even an impossible one. The perennial difficulty is that the larger and better resourced tier 1 contractors are more skilled at engaging with government, and yet they are unrepresentative of the sector as a whole. The task was undoubtedly made more difficult by the need to satisfy different interest groups within the coalition government. Achieving sign-off for publication should therefore be celebrated an enviable triumph. It also conveniently alleviated the need to report progress on the implementation of the previous strategy (Cabinet Office, 2011). The Strategic Forum for Construction and the CBI were among those listed as having been ‘closely involved’. The evidence of the CBI’s influence on the tone and content of Construction 2025 is readily apparent from their separately published submission entitled Building Britain’s Future (CBI, 2013). Other representative bodies included the Construction Industry Council, the Civil Engineering Contractors’ Association (CECA), the Construction Client’s Group (CCG), the Federation of Master Builders (FMB) and the National Specialist Contractors Council (NSCC). Someone had even persuaded the Union of Construction, Allied Trades and Technicians (UCATT) to lend their nominal support. To bring this diverse coalition of interests together was no small achievement on the part of those involved. But the price that was paid was an overriding sense of vagueness. 10.3.3  Strategic context

Following the glossy extended executive summary and other visionary preambles, Construction 2025 reverted to a conventional format. There were four substantive chapters addressing each of the following (i) strategic context, (ii) strategy priorities, (iii) drivers of change and (iv) leadership. It is appropriate to address each of these in turn. The chapter on strategic context commences by setting out the sector’s key features and challenges in the form of a SWOT analysis. There was nothing here that was especially new. Something very similar could easily have been produced by any group of relatively well-informed MBA students. Government was however sensitive to the need to offset the criticism that they were not doing enough to support construction markets. Hence there followed a long list of initiatives that the government was taking to ‘facilitate investment’ in construction. There was also a very firm reminder of the tight fiscal constraints that were necessary to balance the nation’s books. Particular emphasis thereafter was placed on planning and infrastructure, and especially on the need to unblock the delivery process for housing. There was of course nothing on the long-term

The Age of Austerity  257 contributory causes of the housing crisis such as the Right-to-Buy policy championed by Margaret Thatcher in the 1980s. Neither was there any mention of the extensive industry re-structuring that had occurred since the early 1980s. There was clearly little interest in unpicking the causes of the construction sector’s long-term development trajectory – not least the much-lamented race to the bottom. The overall tendency was to provide summaries of pre-existing policies that had already been announced. The inference was that the CBI were unjustified in their criticisms that the government was not doing enough to help struggling firms. The broad direction of travel was the liberalisation of planning policy. Within the context of housing, the Build-to-Rent and Helpto-Buy equity loan schemes were especially controversial. Of further interest is the way that so much care was taken to describe the full scope of the term ‘construction industry’. The relevant passage is worth quoting in full: The construction industry is diverse and its markets broad and varied. Starting with mining, quarrying and forestry, the industry runs all the way from design, product manufacture and construction through to the maintenance of our buildings and infrastructure assets and, at times, into their operation and disposal. The supply chain can be hugely complex. Firms in the industry range from world renowned design practices working on some of the most prestigious projects across the globe, to the plumber who turns up on Wednesday afternoon to fix your dripping tap. What unites the industry is the fact that it touches all our working, social and home lives every day in a very tangible and visible way. It directly and immediately impacts on our quality of life. Decisions about what we build today, how and with what it is built, and how it can be maintained, have very long term consequences. (HM Government, 2013, 25) In many respects, the above passage is the highlight of the entire report. The description offered is very much in line with the ‘broad’ definition of the construction industry as previously offered by Pearce (2003). It notably extends beyond Standard Industrial Classification (SIC) 45 as routinely used by the Office for National Statistics (ONS). Such statistical nuances are hugely important when considering issues such as productivity. Nevertheless, the description offered captures the essence of the construction sector in all its glorious diversity. The last two sentences are especially notable in emphasising the impact that construction has on our daily lives, and the way in which decisions made today have long term consequences. Indeed, the importance of the construction sector is such that it deserves better than being perennially judged based on narrowly defined measures of efficiency. The sector might more meaningfully be judged in terms of its effectiveness in supporting the changing requirements of building occupants over time. This would of necessity lead to a more sophisticated conversation about industry improvement than had prevailed over the preceding thirty years; not least because specified performance requirements are invariably subject to continuous change (Patel and Green, 2020). The value criteria used to judge performance would hence be likely to evolve throughout a building’s life cycle. It follows that rather than forever judging value for money based on predetermined criteria, buildings might be more usefully evaluated based on how robust they are against a range of envisaged future scenarios. Similar arguments apply to infrastructure. The difficulty is that these rather more sophisticated arguments do not align with the Treasury’s recurring obsession with capital expenditure to the detriment of through-life considerations. The report notably said very little about earlier reform initiatives, although the industry was considered to have made ‘important improvements’ because of the Latham (1994), Egan (1998) and Wolstenholme (2009) initiatives. Even less credibly, the report claimed that government had made real improvements in carrying out its role as an important customer. There was no mention

258  The Age of Austerity of the various reports which preceded Latham, or the important role of government in shaping the construction sector’s adoption of structural flexibility as its guiding strategic model. There was further very little detail on the precise nature of the improvements which had been supposedly achieved, or even whose interests they served. Such improvements as were achieved were notably seen to have been incremental rather than comprehensive. Despite the extended description of the construction industry quoted above, there is a prevailing ambiguity throughout the report on precisely where the system boundary was being drawn. The idea that the ‘construction industry’ comprises a definable entity with a shared set of economic characteristics owes more to wistful thinking than to objective analysis (Gruneberg and Francis, 2019). The essential vagueness in respect of boundary definition thereby renders it even more difficult to identify where the supposed incremental improvements have occurred. The adopted rallying call of ‘transformation’ was notably prescient of the debates which were to follow about modern methods of construction (see Chapter 12). Such terminology was becoming endemic within the global consultancy sector – perhaps most typically in the various reports issued by McKinsey & Co. Precisely why the Egan initiative and its various spin-offs failed in their previous attempts at radical change was not seemingly considered relevant. But here at least the construction sector had a glossy new report around which the troops could be rallied. 10.3.4  Strategic priorities

The chapter on strategic priorities commences with an emphasis on smart construction and digital design. The construction industry is urged to place itself at the vanguard of smart construction/digital design by driving forward the Digital Built Britain agenda. It was claimed that if the construction industry was unable to respond the UK would be left behind. However, there was seen to be an opportunity for UK supply chains to secure a substantial share of a rapidly growing international market. The transition to a digital economy was further seen to have fundamental implications for our everyday lives. Due reference was made to the Internet of Things and the opportunities linked to the Smart City agenda. The joint commitment to the BIM programme was celebrated as a good start. But the challenge of the digital economy was held to be much broader, and the potential prize for UK construction much greater. A similar position of boosterism was adopted in respect of low carbon and sustainable construction. The transition to a low carbon economy was seen to offer ‘terrific’ opportunities for growth. As previously, much was made of the potential to exploit ‘huge’ export markets. Reference was made to the Green Construction Board’s high level route map that identified the work that was necessary for the built environment to meet the 80% carbon reduction target by 2050. The report quite rightly identified the biggest area of opportunity as the existing housing stock. Much was made thereafter of the Green Deal as the government’s flagship policy. This had been officially launched in January 2013. It was promised that it would transform the UK’s energy efficiency market enabling ‘billions of pounds of private investment’ in the fabric of the nation’s draughty homes. However, there were from the outset concerns about low levels of take-up and the necessary skills base within the sector. The scheme was subsequently scrapped following the Conservative victory in the 2015 general election. The third and final identified strategic priority was growth through improved trade performance. Transforming the UK construction industry was seen to provide significant opportunities for enhanced global trade, especially within emerging economies. Many UK-based design, engineering and construction services firms were already highly successful in international markets. But there was little basis for the assumption that this enabled greater engagement by the UK-based supply chain. The overall aim was seemingly to spin a story of international construction market

The Age of Austerity  259 growth in the context of the painfully slow domestic recovery from recession. Yet several UK construction-related professional service firms had already been acquired by international competitors. Professional service firms were in truth becoming increasingly globalised every year, and many long-established UK brands were disappearing from the marketplace. Such firms had little interest in distributing profits and dividends in accordance the priorities of the UK Government. Small trade surpluses were attributed to construction contracting and professional services such as architecture, project management and surveying. However, these were dwarfed by a trade deficit in construction products of £6 billion. The response was to encourage UK companies to take the lead role more often on overseas projects. This would apparently enable them to mobilise UK-based supply chains. The report further expressed the ambition of strengthening the domestic construction products manufacturers by encouraging inward investment. Meanwhile, prime minister David Cameron had already committed himself to conduct an in/out referendum on the UK’s membership of the EU if the Conservatives were to win the next election. Strangely, there was no mention of this in the preceding SWOT analysis. 10.3.5  Drivers of change

The idea of ‘drivers for change’ was seemingly a hangover from the Egan (1998) report. Egan had previously specified five drivers for change: (i) committed leadership; (ii) focus on the customer; (ii) integrated processes and teams; (iv) quality driven agenda, and (v) commitment to people. Construction 2025 however went one better and identified six drivers for change that were necessary if the vision of a world-leading construction industry was to be delivered: 1 2 3 4 5 6

Improved image of the industry Increased capability in the workforce A clear view of future work opportunities Improvement in client capability and procurement A strong and resilient supply chain Effective research and innovation

The tendency to specify ‘drivers for change’ would seem to originate from the long since outdated model proposed by Burke and Litwin (1992). Such models are notoriously simplistic, and are invariably guilty of failing to explain how the desired changes should be implemented. This was certainly the case with Construction 2025. The ‘action plan’ included in Annex B was explicitly acknowledged to be incomplete, and the task of developing it further was neatly delegated to the CLC. But it was also strangely flagged as being tactical, rather than strategic. This was an odd admission for a document purporting to comprise an industrial strategy. There is also something slightly strange about perpetuating the narrative that the industry needs to change its image if it is to attract the ‘right’ people. Much emphasis is given to changing the way the industry is perceived by the public, and on conveying the excitement of careers in construction. Rather than forever focusing on the image of the construction sector, it would be rather more positive to focus on the reality. An obviously starting point would be address the system of multi-tiered subcontracting such that in excess 50% of the workforce are either self-employed or otherwise indirectly engaged through agencies and/or gangmasters. Rather than comprising an organised supply chain with transparent patterns of employment, the reality is more often a highly opaque and transient mesh of vagueness. As commented previously, it is not uncommon for workers to be unaware of their own employment status. The potential for labour exploitation is therefore often high – especially in those circumstances where there are high numbers of vulnerable migrant

260  The Age of Austerity workers. Unfortunately, tier 1 contractors do not tend to take too much interest in the employment conditions which prevail on the construction sites for which they are nominally responsible. Yet there was no mention of such issues in Construction 2025. The only concern rested with improving the ‘image’ of the sector, and the ‘perceptions’ of the public. The report also pays lip service to the need to enhance diversity in respect of women and ethnic minorities. Those who identify as LGBT+ were seemingly not worthy of mention. Nevertheless, the industry is exhorted to adopt improved ways of working in terms of flexibility and the handling of workplace stress to create a more inclusive environment. Most construction operatives would settle for basis statutory employment rights such as payment in excess of the minimum wage, paid sick leave, paid maternity/paternity leave, holiday pay and a maximum working week of 48 hours. Many of those at the lower reaches of labour supply chains can further only dream of appropriate access to grievance procedures. Recruitment patterns for workers are too often shaped by personal acquaintance and/or recommendation, the onsite inspection of tools, and informal trial periods (Ness, 2010). All of these are potentially discriminatory against perceived ‘outsiders’. But at least industry leaders could take comfort in the status of the construction sector as an innovative pioneer of the gig economy. Construction 2025 further points towards declining numbers of apprenticeship completions in construction and related industries. The blame is somewhat bizarrely laid at the door of the selfemployed who are seen to face an ‘earn or learn’ dilemma. The underlying myth is that construction workers actively choose to be self-employed based on the supposed lifestyle benefits. The report sees it to be especially important to bring new recruits into the sector given the transient nature of the workforce and the changing nature of the industry. It might equally have pointed towards the widespread reliance on contingent forms of labour. This brings obvious advantages to contracting firms in terms of reduced overheads and enhanced flexibility, but it has significant adverse consequences for skills training. Such arguments had been forcefully made just a few years earlier in the Donaghy (2009) report, but nobody was interested in listening. The uncomfortable reality is that the construction workforce had been rendered evermore ‘transient’ as a direct consequence of the prevailing political commitment to labour market flexibility in accordance with the demands of a liberalised economy. Given this broader background, the initiatives aimed at building capacity in the workforce listed in Construction 2025 would struggle to justify the status of a sticking plaster. Examples included the CITB working with major contractors and their supply chains to implement the ‘Employer Ownership of Skills’ pilot, and the Green Skills Alliance which was working to develop skills in support of the ill-feted Green Deal. Much of this appeared to have been written on a Friday afternoon. The subsequent section of Construction 2025 on future work opportunities focuses on how to provide individual businesses with a sounder basis upon which to make investment decisions. Much emphasis is placed on the pipeline of future work opportunities as published by the UK Government since 2011. It is in this section that the report makes its one and only mention of regulation. We learn that uncertainty about the impact and timing of regulation can contribute to increased business risk and hence disincentivise investment in innovation and resources. This was undoubtedly the dominant view on regulation within government at the time, and indeed this had been the case for some considerable time spanning across several decades. To position regulation as a source of uncertainly is an essential component of the accepted narrative of liberalisation. There was a notable absence of dissenting voices at the time from the construction sector, or indeed from the broader research community. Attention thereafter was directed towards client capability and procurement. It is emphasised that the industry’s customers (including government) have an important role in transforming the

The Age of Austerity 261 construction sector. The way in which projects come to market was claimed to have significant implications for the industry’s ability to provide ‘innovative, whole life value for money solutions’. Strangely, once again there is no mention of the PFI initiative as initially launched by John Major’s government in 1992 and thereafter expanded under Tony Blair. PFI was justified on exactly the same basis but turned out to be a hugely expensive failure. Nevertheless, we learn that government was now seeking to be more ‘strategic’ in its approach in accordance with the Government Construction Strategy (Cabinet Office, 2011). Such an aspiration sat uneasily with the legacy of the systemic outsourcing of public sector procurement expertise to the private sector. Mention is also made of the National Infrastructure Plan and the Infrastructure Cost Plan. The emphasis throughout lies on using the collective purchasing power of government to reduce the cost of construction. In other words, on the topic of client capability and procurement, Construction 2025 had nothing to say that was new. The penultimate highlighted driver of change was a strong and resilient supply chain. It was conceded that construction had been hard hit by the economic downturn, and that this was especially the case for small businesses. Reference is made to a parallel study by consultant EC Harris which described how for a typical large building project the main contractor may be managing around 70 subcontracts – the majority of which are less than £50,000. This is presented as clear evidence of the extent of fragmentation in the sector (as if any such evidence were needed). Many had long since argued that the fragmentation of the sector had been exacerbated by government policy over the course of several decades (e.g., Green et al., 2008). The EC Harris study was further cited in respect of the crucial factors that determine the successful delivery of a construction project. These were listed as follows:

• equitable financial arrangements and certainty of payment; • early contractor engagement and continuing involvement of the supply chain in design development;

• strong relations and collaboration with suppliers; and • capability for effective site management including the ability to respond to change flexibly.

(HM Government, 2013, 54)

Such issues apparently go to the heart of the construction industry’s business models and commercial culture. Strangely, there is no mention of the role of the Egan (1998) report in legitimising the structural fragmentation which took place during the 1980s (see Chapter 3). There is however confirmation of the government’s commitment to ensuring fair payment practices. Specific mention is made of transparent and auditable 30-day payment terms and the use of Project Back Accounts (PBAs). These were undoubtedly positive initiatives, but subsequent action has been derisory. The final identified driver of change was research and innovation. It is notable how government policy invariably links these two concepts such they become a single soundbite. The research that is valued is that which serves the cause of innovation. Construction 2025 nevertheless celebrates the UK’s research community as amongst the best in the world. However, the problem seemingly lies in the lack of a co-ordinated approach to innovation. Especially notable is the emphasis given to ‘removing the barriers that inhibit innovation’. There are however dangers in aligning research too strongly with an ideological bias in favour of innovation. Innovation is indeed important, but innovation for its own sake is fraught with potential difficulties. This is especially true of modern building materials and new methods of construction – not least because we live with the consequences for so long. The system-building methods during the 1960s might perhaps have instilled a greater sense of caution but this continues to be overridden by an ideological zeal in favour of innovation. Yet at the same time as Construction 2025 was launched the seeds of the next building

262  The Age of Austerity safety crisis were already being sown (see Chapter 11). Of even greater importance is to safeguard built environment research from being unduly influenced by corporate vested interests. In this respect the privatisation of BRE in 1997 was subsequently to be viewed as especially controversial. Needless to say, the authors of Construction 2025 were oblivious to such concerns. Identified priority areas for research included (i) green construction and (ii) smart construction and digital design. The emphasis however was on summarising the research that was already underway rather than identifying critical areas where research was underfunded. Much was made of ‘making the most’ of BIM and offsite. It was claimed that the availability of digital information would enable more effective design for manufacture and assembly. It was also claimed that offsite construction has the potential to deliver assets with half the waste and 25% less energy in use. The cited source in support of these claims was Buildoffsite – a campaigning membership organisation dedicated to promoting the greater uptake of offsite techniques in UK construction. It remains unclear why government chose uncritically to align itself with the interests of the offsite lobby group (see Chapter 12). 10.3.6 Leadership

The chapter on ‘leadership’ comprises less than one page. It was again emphasised that the strategy was supported by key industry bodies. The proposal was that the CLC would provide the necessary forum for industry and government to work together in pursuit of the stated ambitions. We also learn that further actions will be identified by the CLC and that ownership thereafter will be assigned to industry bodies. Veterans of construction policy will recognise immediately that this equates to a collective strategy of inaction. It was left entirely unclear why it was considered that the CLC would be any more effective than the Strategic Forum for Construction. Given the lack of any detailed implementation plan of its own, Construction 2025 clearly fell some way short of comprising a strategy as normally understood. The joint commitments are consistently vague. Especially limp is the commitment to engage with bodies across the industry to ensure that capability and capacity issues are addressed in a strategic manner. Such things are forever easy to say, and yet extremely difficult to implement in practice. This is especially true of the construction sector where the interests of different parties are so often fundamentally different. The newly created CLC was to be co-chaired by Vince Cable and David Higgins. Here was at least a promise of serious ongoing government engagement with construction sector strategy. The aspiration was for an industry which drives and sustains growth across the entire economy. Yet this only really makes sense had there been a willingness to invest in the nation’s infrastructure – especially in the neglected regions beyond London and the home counties. The low rate of interest at the time made such investment a viable possibility. The Cameron/Clegg government however remained committed to the tight fiscal constraints of balancing the nation’s books. The formation of the CLC was viewed by many as a significant achievement in terms of maintaining a representative body for the construction sector as a conduit to government. At the very least it corralled the sector to get its act together in terms of how to interface with government. It also sealed the demise of the Strategic Forum for Construction. The report also marked the end of the road for the 2012 Construction Commitments which had seemingly been unceremoniously irradicated from history never to be referred to again. Yet Construction 2025 failed to replace them with any alternative tangible set of recommendations. Much was made of the specified joint commitments. But in reality, these were little more than vaguely specified directions of travel. Certainly, there was no commitment from government to support the strategy with significant additional funding. This was unlikely to change for as long as George Osbourne remained in charge of the purse strings. If construction utopia was to be achieved, it would have to be

The Age of Austerity 263 done on the cheap. In short, the Construction 2025 report promised an industrial strategy for construction, without ever quite delivering it. This was probably the intention from the outset. 10.4  Clouds on the horizon 10.4.1  Lukewarm support for fair payment practices

The period immediately following the launch of Construction 2025 was not conspicuously marked by any great sense of urgency in respect of producing a detailed action plan. One can imagine much debate among the thirty named members of the CLC about the issues which should be prioritised. The lack of explicit activity was by no means necessarily a bad thing. The economic recovery was proving stubbornly slow (and fears about a ‘double-dip’ recession had only recently abated (see Figure 10.1). It was therefore something of a surprise when in April 2014 the CLC announced the release of the Construction Supply Chain Payment Charter. One of the more tangible commitments within Construction 2025 had been the promise to address poor payment practices. Although the report did not explicitly call for 30-day payment terms, it did allude to this commitment having been previously made by government. Fair payment practices had also been a central component of the 2012 Construction Commitments. Pay-when-paid clauses had previously been specifically targeted by Latham (1994) and the subsequent 1998 Construction Act. There remained however a wide body of opinion that contended that more needed to be done. Unsurprisingly, many tier 1 contractors were quietly resistant to any further action, not least because securing credit from the supply chain was an essential part of the accepted business model. Any tightening of payment terms would hence be directly counter to their commercial interests. Behind closed doors, some main contractors undoubtedly questioned why the CLC was driving such an agenda. Public sector clients were already required to pay within 30 days of issuing an invoice by the Late Payment of Commercial Debts Regulations 2013. Government was undoubtedly keen to encourage similar expectations within the private sector, but as ever there was little appetite for legislation. Hence the launch of the voluntary charter scheme to be administrated by the CLC. Voluntary schemes are always favoured by the construction sector as an alternative to intrusive regulation.

Figure 10.1 Gross value added (GVA) of the construction industry in the United Kingdom (UK) from the 1st quarter of 1997 to 4th quarter of 2022 (in billion GBP). Source: ONS.

264  The Age of Austerity In total, the Construction Supply Chain Payment Charter comprised 11 specific commitments of which the following was perhaps the most exacting: For all new contracts we will ensure that payments are made to our supply chain not more than 60 calendar days from the end of the Calendar month in which the work is carried out or products are supplied. From June 2015 we will ensure that payments are made to our supply chain not more than 45 calendar days from the end of the calendar month. From January 2018 that will decrease to not more than 30 days. Signatories to the charter had to agree to be monitored for the purposes of reporting against a specified set of key performance indicators (KPIs). They were also asked to consider the performance of their suppliers against the agreed KPIs when awarding contracts. They were further obliged to commit themselves to retention arrangements that were no more onerous than those implemented by the client. The stated ambition was to move towards zero retentions by 2025. Signatories were required to adopt a ‘transparent, honest, and collaborative’ approach to resolving disputes. After several decades of supposed ‘culture change’, it was telling that transparency, honesty, and collaboration seemingly remained the exception rather than the general rule. Initial signatories to the charter included Kier, Laing O’Rourke and Skanska – all of whom were represented on the CLC. But the wider response was decidedly lukewarm. By January 2018 only three additional main contractors and two private sector clients had reportedly signed up. This was undoubtedly a major embarrassment for the fledgling CLC which was seen by some to be prioritising the interests of SMEs. Many of the major UK contractors were significant donors to the Conservative Party such that it is not difficult to imagine the conversations that took place behind the scenes. Such internal rows inevitably distracted attention from the broader aspirations set out in Construction 2025. The difficulties faced by the CLC were similar to those faced by its various predecessors, including the Strategic Forum for Construction. The more it tried to be representative of the sector’s competing factions, the more difficult it became to agree anything. There was also notably a discernible retreat from grandiose promises about a ‘joint’ industrial strategy between industry and government. Although Vince Cable did at least continue to turn up for the meetings. There was also the impending distraction of the 2015 general election. 10.4.2  Troubled times

Much to the surprise of the media pundits, David Cameron’s Conservatives secured a narrow majority in the general election of May 2015 despite the prospect of another five years of austerity. His cause had been significantly helped by the near wipe-out of the Labour Party in Scotland at the hands of the Scottish National Party (SNP) (Richards, 2019). The Liberal Democrats lost all but 8 of their 57 parliamentary seats thereby paying a heavy electoral price for their role in the coalition government. Vince Cable was among those who notably lost their seats. One of Cameron’s first announcements followed his electoral victory was to set a date for the proposed referendum on the UK’s membership of the EU. It was a huge gamble by any stretch of the imagination. It was instigated primarily as a means of appeasing the right wing of the Conservative Party to prevent the Eurosceptics from defecting to Nigel Farage’s UK Independence Party (UKIP). In short, Cameron was gambling with the country’s future for the sake of short-term political advantage. The stakes were hugely high for the economy at large, and hence by extension for the construction sector. It was a gamble that Cameron was destined to lose. The outcome of the 2015 general election also had significant implications for the CLC. The idea of a joint industrial strategy had previously been tolerated under the auspices of the coalition

The Age of Austerity  265 government, but there was little appetite for such an approach following the election. The CLC was duly re-launched in July 2015 with a reduced membership of just 12. Nick Boles, Minister for Skills with responsibility for construction, took over from Vince Cable as co-chair. According to the BIS press release, the Council was slimmed down ‘in response to calls from the sector to make it more effective and business like’. If taken at face value, this was a damning indictment of how the council had operated previously. It was also announced that CLC members would be allocated to dedicated ‘workstreams’. Anna Stewart of Laing O’Rourke would lead on skills, Mike Putnam of Skanska on sustainability, Madani Sow of Bouygues UK on supply chain and business models, and Andrew Wolstenholme of Crossrail on innovation. The approach was seemingly one of disaggregation. Responsibility for the grandiose aspirations of Construction 2025 was entirely unclear. The claim was that the newly formed Council would build on the work that had gone before, with an assurance that there would be ‘regular meetings’ with ministers. At the same time as announcing the reformed CLC, it was also announced that the role of Chief Construction Advisor would be discontinued with effect from November 2015. Peter Hansford was diplomatic about the demise of the role, but others were more overly critical. Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering (ACE) described it as a ‘massive step backwards’ (Oliver, 2015) Tony Burton, then chairman of the Construction Industry Council, was also quoted as saying that it was a ‘pity that the announcement came without meaningful consultation with the industry’. The common criticism was that the reformed CLC was too heavily dominated by large firms with little recognition of the industry’s pre-existing structure of representative bodies. The wider concern was that the previously expressed ‘commitment’ to a partnership had been replaced by the promise of a ‘dialogue’. There was a palpable sense that the newly elected Conservative government was retreating from any commitment to industrial strategy. In October 2015 it was announced that Andrew Wolstenholme would take over as CLC co-chair from Sir David Higgins who had been in the role since 2013. However, the extent of disquiet at the re-formed CLC showed no sign of dissipating. There was even an attempt to re-launch the moribund Strategic Forum for Construction. A press release went out in February 2016 stating the ‘revamped’ Strategic Forum was to consider an updated version of the 2012 Construction Commitments. The designated spokesperson for the re-launched Strategic Forum was Alastair Reisner, chief executive of the Civil Engineering Contractors Association (CECA). Reisner was quoted as describing the role of the Strategic Forum as follows: Since 2013 it has been working with the government to support delivery of the recommendations of Construction 2025, the industrial strategy for construction. But it has largely taken a back-seat role, with little visibility to the wider industry. The attempted relaunch of the Strategic Forum had apparently been initiated in response to the reformation of the CLC, and the 2015 merger of the UK Contractors Group with the National Specialist Contractors Council to form Build UK. It was further claimed that the ‘newly reinvigorated’ Strategic Forum would bring together the following representative groups:

• • • • • •

Build UK Construction Alliance Construction Clients Group Construction Industry Council Construction Products Association Specialist Engineering Contractors Group

266  The Age of Austerity The solitary press release further stated that the Home Builders Federation and CBI would also attend meetings. This can only be interpreted as a shot across the bows of the reformed CLC. Suitably supportive quotes were provided by Tony Burton, chairman of the Construction Industry Council (CIC) and John Sinfield, chair of the Construction Products Association (CPA). The extent to which the plan to resurrect the Strategic Forum was sincere is not entirely clear. It seemed to begin and end with the press release of February 2016. Coincidentally, it was not long before members of the above listed representative groups started to carve a path for themselves within the newly created CLC workstreams. Hence the ‘radical, transformation change’ envisaged in Construction 2025 (HM Government, 2013) gave way to the lowest common denominator that was necessary to keep all the various interest groups on board. The quotation which comes to mind is that made famous by Russian author Leo Tolstoy: ‘everyone thinks of changing the world, but no one thinks of changing himself (sic.)’. Such is the nature of construction sector improvement. 10.4.3  Cameron loses the Brexit referendum

The Brexit referendum was scheduled to take place on 23 June 2016, and the increasingly toxic debate between ‘Remainers’ and ‘Leavers’ consumed the political establishment. Cameron embarked upon a tour of European capitals in a vain attempt to achieve a substantial renegotiation of the UK’s terms of membership. This was never likely to win over the Eurosceptics in the Cabinet, but it was a bitter blow when Boris Johnson and Michael Gove announced that they would be campaigning for ‘Leave’ (Richards, 2019). Also of significance was the election of Jeremy Corbyn as Leader of the Labour Party in September 2015. Corbyn had always been cautious of the EU which he perceived as a ‘capitalist club’. He was visibly lukewarm in his support for the Remain campaign, preferring to focus his campaigning zeal on championing the ‘needs of the many over those of the few’. On the 23 June 2016 the British electorate voted by a narrow minority to leave the EU. David Cameron announced his intention to step down the following morning on the steps of 10 Downing Street. Cameron had gambled on the referendum as a means of silencing the Eurosceptics within the Conservative Party. It was a gamble that he categorically lost, and it marked the end of his political career. His abiding political legacy is to have led the UK out of the EU against his own wishes. The referendum triggered several years of acute political and economic instability with far-reaching implications for the economy at large, and for the construction sector. The electorate had voted for Brexit, and it now fell to the political establishment to define what Brexit meant. At the time of writing, the repercussions are still working their way through the economic system. There are perhaps two things that the construction sector demands of government above all else. The first is political stability, and the second is economic stability. Both of these were thrown into the air on 23 June 2016. 10.5 Summary In reviewing the contribution of the years of austerity to the cause of construction improvement it is difficult to paint a positive picture. These were largely wasted years, despite the success of the London Olympics 2012. Much of the infrastructure of industry improvement assembled under the preceding New Labour government was unceremoniously dismantled. The prolonged attempt to measure the industry’s improvement in accordance with the ‘Egan targets’ was also finally abandoned, with little immediate appetite for a replacement. The unresolved dilemmas highlighted in the preceding chapter were no longer seen as priorities; they simply disappeared from the conversation. In essence, the construction sector improvement debate was downgraded to reducing the cost of construction and the achievement of low carbon. The latter cause was undoubtedly championed

The Age of Austerity 267 within government by the Liberal Democrats, but there was little meaningful progress. The widely applauded Code for Sustainable Homes, first introduced in 2006, was disappointingly dropped following the subsequent 2015 general election. The Government Construction Strategy (Cabinet Office 2011) was notable in calling for a ‘profound change’ in the relationship between public authorities and the construction industry. However, the emphasis lay primarily on reducing the cost of construction thereby securing a ‘better deal’ for public sector clients. The strategy further championed the cause of standardisation and repetition, while studiously avoiding terms such as ‘industrialisation’ and ‘prefabrication’. It also pointed towards an increased role for digital technology in the form of BIM, which was subsequently widely embraced as a panacea for the sector’s supposed shortcomings. BIM has undoubtedly had a significant impact on ways of working within the sector, especially within the larger firms. But it failed to produce the predicted improvements in recorded construction sector productivity. There were many who were guilty of over-hyping the potential benefits of BIM adoption. This was a trend that was to accelerate in the years ahead. Following the successful completion of the London Olympics 2012, the Strategic Forum for Construction recommended that the progressive ‘Construction Commitments 2012’ should be adopted by the industry at large. The 2012 commitments have stood the test of time well and they probably represent a highpoint in terms of progressive thinking. Unfortunately, they failed to attract significant support within the sector and were soon side-lined prior to being largely forgotten. The same fate awaited the Strategic Forum which was subsequently ditched in favour of the CLC. But the bigger story was the broader policy focus on deregulation. The Cameron years were characterised by a prolonged and ruthless ‘war on red tape’ which constituted a radical retreat on the part of government from its responsibilities as a regulator. Many within the construction sector cheered and encouraged from the side lines, or even sought to influence deregulatory priorities. This was ultimately to result in tragic consequences. Paradoxically, there was also prolonged criticism that the government was not doing enough to support construction. This led directly to the publication of the largely content-free Construction 2025 with its optimistic vision of ‘radical, transformation change’. The new strategy offered an intoxicating and highly unrealistic vision of where the UK construction sector would be in 2025. The aim was to position UK construction at the forefront of the global market. The report was notable for tentatively easing the state back into the picture, with a vision from within BIS of the government and industry working in ‘partnership’. This was undoubtedly inspired by Vince Cable. Other branches of government were notably less enthusiastic. The underlying model of change was however largely a blank page. There was an over-reliance throughout on hype as a means of conveying a positive message. The final twist was to task the newly formed CLC with implementation. It was a poisoned chalice from the outset. The government’s commitment to any pretence of a partnership with industry subsequently dipped following the 2015 general election. And very quickly thereafter government attention was almost entirely focused on Brexit. References Atkinson, R. (1999) Project management: Cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria, International Journal of Project Management, 17(6), 337–342. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. BERR (2008) Cross Country Productivity Performance at the Sector Level: The UK Compared with the US, France and Germany, BERR Occasional Paper No, 1, Department for Business Enterprise & Regulatory Reform (BERR), London.

268  The Age of Austerity BIS (2011). BIM: Management for Value, Cost & Carbon Improvement, Strategy Paper for the Government Construction Client Group. Report from the Building Information modelling (BIM) Industry Working Group, Department of Business, Innovation & Skills (BIS), London. BIS (2012) Industrial Strategy: UK Sector Analysis. BIS Economics Paper No. 18, Department of Business, Innovation & Skills (BIS), London. Blyth, A. and Worthington, J. (2010) Managing the Brief for Better Design (2nd ed.). Spon, London. Brand, S. (1994) How Buildings Learn: What Happens after they’re Built, Viking, New York. HM Government (2012) Industrial Strategy: Government and Industry in Partnership - Building Information Modelling, Department of Business, Innovation and Skills, London. Burke, W. W. and Litwin, G. H. (1992) A causal model of organisation performance and change, Journal of Management, 18(3), 523–545. Cabinet Office (2011) Government Construction Strategy, Cabinet Office, London. CBI (2013) Building Britain’s Future: An Industrial Strategy for Construction, The CBI’s submission to the construction industry strategy, Confederation of British Industry, London. Cabinet Office (2012) Government Construction Strategy: One Year On Report and Action Plan Update, Cabinet Office, London. Dainty, A., Leiringer, R., Fernie, S. and Harty, C. (2017) BIM and the small construction firm: A critical perspective, Building Research & Information, 45(6), 696–709. Donaghy, R. (2009) One death is too many. Report to the Secretary of State for Work and Pensions. Cm 7657, TSO, London. Druker, J. and White, G. (2013) Employment relations on major construction projects: The London 2012 Olympic construction site, Industrial Relations Journal, 44(5–6), 444–589. Duffy, F. and Worthington, J. (1972) Designing for changing needs, Built Environment, 1(7), 458–463. Eastman, C., Eastman, C. M. and Teicholz, P. et al. (2011). BIM Handbook: A Guide to Building Information Modeling for Owner, Manager, Designer, Engineers and Contractors, John Wiley & Sons, Hoboken, NJ. Egan, Sir John (1998) Rethinking Construction, Department of the Environment, Transport and the Regions, London. Emmerson, Sir Harold (1962) Survey of Problems Before the Construction Industries, HMSO, London. Farmer, M. (2016) The Farmer Review of the UK Construction Labour Model: Modernise or Die, Construction Leadership Council, London. Gil, N., Lundrigan, C., Pinto, J. K. and Puranam, P. (2017) Megaproject Organization and Performance: The Myth and Political Reality, Project Management Institute, Pennsylvania, USA. Glendinning, M. (2021) Mass Housing: Modern Architecture and State Power – a Global History, Bloomsbury, London. Green, S. D. (1990) The building industry of the future. In Grosvenor, J. and Webb, J. (Eds.) The Ivanhoe Guide to Chartered Builders 1990, Ivanhoe, Oxford, pp 67–72. Green, S. D. (1996) A metaphorical analysis of client organisations and the briefing process, Construction Management and Economics, 14(2), 155–164. Green, S. D., Harty, C. F., Elmualim, A. A., Larsen, G. and Kao, C. C. (2008) On the discourse of construction competitiveness, Building Research & Information, 36(5), 426–435. Gruneberg, S. and Francis, N. (2019) The Economics of Construction, Agenda, Newcastle upon Tyne. Harvey, M. (2003) Privatization, fragmentation and inflexible flexibilization in the UK construction industry, in Building Chaos: An International Comparison of Deregulation in the Construction Industry, (eds. G. Bosch, P. Philips) Routledge, London, pp 188–209. HM Government (2010) Low Carbon Construction: Innovation & Growth Team Final Report, Department for Business, Innovation and Skills, London. HM Government (2013) Construction 2025: Industrial Strategy for Construction – Government and Industry in Partnership, Department of Business, Innovation & Skills, London. HM Government (2020) The Construction Playbook: Government Guidance on Sourcing and Contracting Public Works Projects and Programmes, Cabinet Office, London. Hodkinson, S. (2019) Safe as Houses: Private Greed, Political Negligence and Housing Policy after Grenfell, Manchester University Press, Manchester.

The Age of Austerity 269 House of Lords (2017) Deregulation: Government Policy Since 1997, House of Lords Library briefing, London. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. NAO (2018) Financial Sustainability of Local Authorities 2018, Report by the Comptroller and Auditor General, National Audit Office, London. Ness, K. (2010) ‘I know Brendan; he’s a good lad’: the evaluation of skill in the recruitment and selection of construction workers. In: Egbu, C (Ed.), Proceedings 26th Annual ARCOM Conference, 6–8 September 2010, Leeds, UK. Association of Researchers in Construction Management, Vol. 1, 543–552. Ness, K. and Green, S. D. (2012) Human resource management in the construction context: Disappearing workers in the UK, in Human Resource Management in Construction: Critical Perspectives, (eds. A. Dainty, M. Loosemore) Routledge, Abingdon, pp 18–50. Oliver, A. 2015. Industry condemns loss of chief construction adviser in sweeping reforms, Infrastructure Intelligence, 16 July, http://www.infrastructure-intelligence.com/article/jul-2015/industry-condemns-losschief-construction-adviser-sweeping-reforms [accessed 25/04/23]. OST (1995) Technology Foresight Report: Progress Through Partnership, Office of Science and Technology, London. Patel, H. and Green, S. D. (2020) Beyond the performance gap: Reclaiming building appraisal through archival research, Building Research & Information, 48(5), 469–484. Pearce, D. (2003) The Social and Economic Value of Construction: The Construction Industry’s Contribution to Sustainable Development, David Langdon Consultancy, London. Richards, S. (2019) The Prime Ministers: Reflections on Leadership from Wilson to Johnson, Atlantic, London. Sergeeva, N. and Green, S. D. (2019) Managerial identity work in action: Performative narratives and anecdotal stories of innovation, Construction Management and Economics, 37(10), 604–623. University of Reading (1988) Building Britain 2001, Centre for Strategic Studies in Construction, Reading. Wolstenholme, A. (2009) Never Waste a Good Crisis, Constructing Excellence, London.

11 A Prevailing Sense of Permacrisis

11.1 Introduction This chapter is framed by the appointment of Theresa May as prime minister on 13 July 2016 in the wake of the Brexit referendum. She had previously served in David Cameron’s government as Home Secretary. Although she had herself voted in favour of remaining in the EU she had campaigned for election as Leader of the Conservative Party on the basis of implementing the ‘will of the British people’. Her term as prime minister was a period of significant political instability. The nation had voted for Brexit, and David Cameron exited stage left to leave others to pick up the mess. Boris Johnson and Michael Gove had been leading figures in the Leave campaign. When interviewed on the morning following the referendum they appeared to be in a state of shock. Certainly, they had no plan for what was to follow. Cameron had apparently forbidden any contingency planning in respect of a victory for the Leave campaign. Leaving the politics aside, the referendum result marked the beginning of a period of huge uncertainty for the UK economy, and not least for the construction sector which had for so long relied on a reserve army of migrant workers from eastern Europe. From the point at which Theresa May took over as prime minister the government was almost totally consumed by Brexit. The government’s negotiations with the EU were problematic from the outset. Mrs May was unable to garner sufficient support in parliament to enable her to move forward in any meaningful way. She took the decision to call a surprise general election in June 2017 with the aim of securing a workable majority in support of her acclaimed ‘strong and stable’ leadership. The plan backfired in that she lost her overall majority in parliament. The Labour Party under the leadership of left-winger Jeremy Corbyn had surpassed expectations. Mrs May was hence forced to do a deal with the Democratic Unionist Party to enable her to continue as prime minister. She was to have a torrid time at the hands of the Brexit hardliners within the parliamentary Conservative Party. It was undoubtedly a time of national crisis. But it was also a time of acute crisis for the construction sector. The years of austerity under David Cameron and the resultant lack of investment in public infrastructure led to an equivalent lack of investment in the construction sector. Firms had been in survival mode since the recession of 2008/9 with negligible growth ever since. The good years for the construction sector had seemingly passed. There was certainly little residing sense of the optimism that had been briefly introduced by Construction 2025 (HM Government, 2013). And the mood was hardly helped by the publication of the Farmer (2016) review. This in due course spawned the narrative of modern methods of construction (MMC) which was to become so dominant over the subsequent years. Given the uncertainty of the broader economic outlook many within the construction sector were desperate for a more positive outlook. It was clear that little in the way of meaningful policy was going to emulate from government, so they had little choice other than to place their faith in the technological

DOI: 10.1201/9781003308133-11

A Prevailing Sense of Permacrisis 271 optimism of MMC. But further shocks were in store such that the construction sector improvement debate rapidly became instilled with a sense of permacrisis. 11.2  Modernise or die 11.2.1  A review of the construction labour model

The Farmer review was published in October 2016 some three months after the appointment of Theresa May as prime minister. The review had been initiated during the preceding Cameron government. It was towards the end of 2015 when the Construction Leadership Council (CLC) was asked by Nick Boles, Minister for Skills, and Brandon Lewis, Minister for Housing and Planning, to identify actions to reduce the construction industry’s structural vulnerability to skills shortages. Mark Farmer was thereafter commissioned to undertake a review of the UK’s construction labour model, with due consideration of the CLC’s ongoing work on business models and offsite housing. The brief also requested an examination of the ‘barriers and enablers’ to the greater use of off-site construction. The government’s primary interest lay in the UK housing market and how output might meaningfully be increased. They were apparently keen from the outset to secure evidence in support of off-site construction. This was presumably seen as an easier alternative to the development of a coherent housing policy. While writing the report, Farmer was faced with the additional challenge of trying to factor in the consequences of the Brexit referendum. This was by no means straightforward given the prevailing lack of clarity in terms of its broader implications. He is unlikely to have found Theresa May’s confident declaration that ‘Brexit means Brexit’ to be especially helpful. The foreword to the Farmer Review of the UK Construction Labour Model (Farmer, 2016) was provided by the CLC’s co-chair, Andrew Wolstenholme. He notably cites the government’s intention to review the role of the Construction Industry Training Board (CITB). Wolstenholme further expresses the CLC’s preference that the review should be radical. The view was clearly taken that the CITB was a remnant of a previous age and was no longer fit for purpose in a supposedly modern liberalised economy. This is the same Wolstenholme who had previously authored Never Waste a Good Crisis (Wolstenholme, 2009). The Wolstenholme (2009) report had been notable for emphasising that the era of client-led change was over, and for throwing the gauntlet down to the supply side to demonstrate how it could improve. There was no mention of the construction labour model. Clients had seemingly given up on trying to reform the construction sector and were hence given the all-clear to focus on their own interests. The preceding Egan (1998) report had similarly had nothing to say about the industry’s labour model, or the established trend whereby contractors had progressively divorced themselves of responsibility for the physical task of construction. None of this attracted any critical comment from Farmer. Nor did he make any reference to Rita Donaghy’s (2009) previous biting critique of the construction sector labour model. Even more strangely, none of Farmer’s headline recommendations suggested how the construction labour model might meaningfully be reformed, despite it being central to his initial brief. 11.2.2  Modernisation as a panacea

Farmer concedes from the outset that his conclusions may be seen by some as being overly negative, and his recommendations as too ambitious. For the uninitiated, there is much within the report to provoke reflection. Yet the overall framing is at best unconventional, perhaps even tending towards the bizarre. The core argument is that the industry and its clients are at a critical juncture. Deep-seated problems are contended to have existed for many years, with a collective inability to

272  A Prevailing Sense of Permacrisis steer a course towards the utopia of modernisation. The characteristics of the industry are seen to be synonymous with a sick, or even dying patient. Hence the diagnosis that the industry is urgently in need of treatment. The report identifies ten supposed symptoms of failure, most of which are long-established clichés (see Figure 11.1). But the overriding message is nevertheless stark; the choice for the industry is to modernise or die. Farmer’s analysis hence stands in harsh contrast to the bullishly positive storylines of Construction 2025 (HM Government, 2013). The optimism of Construction 2025 had long since been dissipated by the continued emphasis on austerity, supplemented by the fresh economic uncertainties caused by the Brexit referendum. If Farmer’s diagnosis is taken even remotely seriously, it must be also accepted that the sector had been seriously let down by the previous advocates of ‘radical change’ – not least the selfacclaimed ‘modernisers’ who supported the Egan agenda. Yet Egan (1998) is mentioned only briefly in terms of his diagnosis that the industry was under-achieving. Farmer offers no comment on the effectiveness of Egan’s prescribed course of treatment, or on the efficacy of the subsequent

SYMPTOMS The critical symptoms of failure and poor performance have been identified in this review as:

Low Productivity

A Dysfunctional Training Funding & Delivery Model

Low Predictability

Workforce Size & Demographics

Structural Fragmentation

Lack of Collaboration & Improvement Culture

Leadership Fragmentation

Lack of R&D & Investment in Innovation

Low Margins, Adversarial Pricing Models & Financial Fragility

Poor Industry Image

Figure 11.1  Critical symptoms of failure and poor performance. Source: Farmer, 2016.

A Prevailing Sense of Permacrisis 273 regime of KPIs (see Chapter 8). Neither is there any mention of the Wolstenholme (2009) report which perpetuated the Egan narrative well beyond its sell-by date. Nor is there any reference to the role of the Strategic Forum for Construction. Farmer hence followed the established trend whereby the authors of such reports stubbornly refuse to criticise any of their predecessors. They consistently implore the construction sector to embark upon ‘radical transformation’ without ever reflecting on the failure of previous initiatives. Yet lambasting the construction sector for its supposedly regressive culture is a storyline of which policymakers never tire. All such reports advocate the need for transformational change, yet very few pay any attention to the processes of change that have led the construction sector to its supposed point of crisis. The adopted storyline of modernisation is undoubtedly a useful rhetorical device in that few would ever want to position themselves in opposition. However, difficulties arise when we try to define what the abstract concept of modernisation means in practice. During the 1950s modernisation was seen as almost synonymous with nationalisation. In contrast, by the late 1960s it was represented by industrialised system-building techniques, the credibility of which disintegrated with the Ronan Point collapse. Hence the nature of modernisation is forever subject to re-negotiation. In the late 1990s the clarion call of modernisation was adopted by the advocates of the Egan (1998) agenda, and the cynics were in turn designated as dinosaurs. However, by 2010 modernisation was seen to be synonymous with the use of digital technologies. At the time of writing, the purveyors of modernity have progressed to digital twins and platform approaches. When these fail to achieve the desired radical transformation, they will undoubtedly move on to the next big idea. In other words, hollow calls for modernisation are as meaningless as they are beguiling. 11.2.3  Fragmentation as a critical symptom

In common with many of his predecessors, Farmer (2016) sees fragmentation as a critical symptom of the industry’s failure. Fragmentation is notably positioned as a characteristic of the traditional. In other words, as an ailment which must be overcome. Farmer further distinguishes between structural fragmentation, and leadership fragmentation. In common with many previous reports, he consistently erroneously refers to the construction ‘industry’ as if it were a homogeneous entity: The construction industry is often characterised as an example of ‘market failure’. This usually refers to its highly fragmented structure (both vertically and horizontally), introverted nature and unusually high levels of self employment. (Farmer, 2016, 17) The diagnosis of the industry as a sick and dying patient implies a single organism that has fallen victim to some sort of pathological virus. Elsewhere, Farmer explains how the term ‘industry’ is used to describe the ‘doing’ part of the construction process. The adopted scope includes main contractors, sub-contractors, and suppliers. Coverage also extends to the consultancy sector, but it remains unclear whether consultancy firms are seen to suffer from the same chronic illness as contracting firms. The notion of a market failure is especially ironic given the prolonged government commitment to the marketisation of the sector from the early 1980s onwards. In retrospect, it seems that the enterprise culture was not quite as successful as claimed. Farmer further refers to the lack of integration caused by the widescale use of subcontracting. He points especially towards the resultant multiple tiers of transactional interfaces. These are seen as contributing towards the industry’s much-lamented focus on cost rather than value. He further contends that the lack of control which results from the high reliance on subcontracting is exacerbated by high levels of self-employed labour. Famer is right on this point, but strangely he makes

274  A Prevailing Sense of Permacrisis

Figure 11.2  Percentage of self-employed in the United Kingdom as of 1st quarter 2022 by industry sector. Source: ONS/Labour Force Survey.

no mention of the way self-employment had been incentivised through the tax and national system. Neither is there any reference to the previous liberal regime of 714 certificates for the purposes of assigning workers with self-employed tax status. The rules around self-employed status were admittedly subsequently tightened in 1999 by the Construction Industry Scheme (CIS) (Briscoe et al., 2000). This supposed clamp-down resulted in a short-lived reduction in the level of selfemployment, but there was no lasting ‘return’ to direct employment. The latest ONS figures for 2022 suggest that out of a total of 2.17 million construction sector workers, no less than 799,000 are self-employed, i.e., 36%. The level of self-employment in construction hence continues to be significantly higher than that which prevails in other sectors (see Figure 11.2). Generic national statistics however too easily underplay the propensity towards selfemployment in particular locations. Donaghy (2009) contends that it is not unusual for 90% of the construction workforce on construction sites in London to be nominally self-employed. The picture is further blurred by a widespread reliance on contingent labour sourced via gangmasters and labour supply agencies. The broader context relates to the UK’s unregulated labour market which enables migrant workers to secure work in the grey economy. Farmer quite rightly observes that migrant labour has historically played a key role in providing capacity. This has been especially true for major projects in London and the southeast of England. Much was made during the construction of the Olympic Park in London of the Olympic Delivery Authority’s supposed commitment to the employment of local labour (see Chapter 10). Yet the test of being ‘local’ was limited to the provision of a local postcode. Hence ten Polish steel-fixers sharing a room above a pub in Stratford could easily qualify. A further complication is presented by the tendency towards false self-employment whereby firms seek to classify workers as self-employed for the purposes of avoiding their responsibilities under employment law. The official statistics invariably under-estimate the proportion of selfemployment in the sector due the lack of any statutory definition. The sad reality is that contracting firms have long since retreated from any large-scale investment in the employment relationship, preferring instead to rely on a reserve army of contingent workers. The default business model thereby prioritises flexibility over productivity. Tier 1 contractors simply offset the risk of poor productivity onto the supply chain. For Farmer, such ‘characteristics’ of the construction industry are seen to be in some way naturally occurring rather than the outcome of previous policy choices. The strategy of structural flexibility served the interests of tier 1 contractors well throughout the

A Prevailing Sense of Permacrisis 275 prolonged recession of the early 1990s. It also served them well during the subsequent ‘great recession’ of 2008/2009. Given the political and economic uncertainty which prevailed in the wake of the Brexit referendum they were unlikely to abandon it lightly. At the time of writing, the UK Government continues to prioritise labour market flexibility as an essential component of a liberalised economy, with little prospect of any significant change. In summary, Farmer (2016) was not seemingly especially interested in analysing the causes of the industry’s fragmentation, or the sector’s unusually high levels of self-employment. He was rather more interested in developing an argument that there was a ticking time bomb in terms of the industry’s workforce size and demographic. This could then be used as the justification for a greater reliance on prefabrication. Based on workforce age and declining levels of entry, Farmer foresaw a 20–25% decline in the labour force over the next decade. He notably avoided making any recommendations in terms how employment conditions in the sector might meaningfully be improved, or perhaps even ‘modernised’. The notion of the ‘ticking time bomb’ was simply used to justify the solution upon which he had already decided. The mode of modernisation on offer was that of technological optimism. This has the obvious advantage of not directly challenging the dominant vested interest groups in the sector. The adopted storyline thereby appeals to those seeking to embrace notions of modernisation as central components of their self-identity. Industry leaders are similarly happy to align themselves with innovation as a means of ‘identity work’ (Sergeeva and Green, 2019). Yet relatively few want to be seen as championing the cause of improved employment conditions. Such preferences are shaped by the nature of the political economy within which the sector operates. There was never any danger of Farmer (2016) transcending the boundaries of the accepted consensus. Radical change it was not. 11.2.4  Modern slavery reconfigured

Farmer made no reference to modern slavery. Yet it remains a common occurrence within the UK construction sector and hence deserves mention as a further symptom of failure. The unspoken reality is that the UK’s unregulated labour market creates the very conditions within which modern slavery is allowed to flourish. According to the Chartered Institute of Building (CIOB) (2016) the construction sector provides the perfect conditions for labour exploitation: A single supply chain for a major contractor consists of hundreds of subcontractors, labour agencies and materials suppliers with complex inter-relationships. Having visibility over every transaction is impossible. Major contractors are usually set up to vet the first and second tiers of their supply chain. Beyond that, the view becomes increasingly murky. Lack of transparency, combined with fragmented relationships between different tiers, enables those who want to hide human rights abuses to do so easily. While any respectable company will tell you they have policies and procedures in place to protect workers, the complexity of the procurement process provides ample opportunity to look away from issues that are too remote – or too embedded – to tackle. (CIOB, 2016, 9) As powerful as the above quotation is, there is no acknowledgement of the previous policy choices which have exacerbated the ‘perfect conditions’ that are otherwise so vividly described. In common with Farmer (2016), the CIOB seemingly simply accepts such conditions as a default characteristic of the sector. There is no mention of the UK Government’s ongoing commitment to an unregulated labour market. Also absent is any reference to Theresa May’s hostile environment policy as implemented from 2012. If the policy narrative frames the victims of modern slavery as ‘illegal migrants’

276  A Prevailing Sense of Permacrisis they are further disincentivised from seeking help from the authorities due to the perceived risk of deportation. Their plight is too often exacerbated by their passports being in the possession of the controlling traffickers. At the time of writing, Rishi Sunak’s government is even threatening to deny illegal migrants access to the modern slavery support system. Farmer undoubtedly considered such issues beyond his remit. But the prevailing lack of visibility of the labour supply chain is a symptom of a systemic policy failure rather than an inherent characteristic of the sector itself. Allain et al. (2013) argue that the way the UK economy operates has long since been dependent upon a pool of workers who are vulnerable to labour exploitation. Of particular importance in the construction sector is the expectation that firms should self-regulate. The prevailing lack of any enforcement regime instils employers with a sense of immunity. The national licensing scheme enforced by the Gangmasters and Labour Abuse Agency (GLAA) in sectors such as agriculture notably operates in construction based on a ‘voluntary protocol’. It would seem especially incongruous for a sector with a long tradition of illegal blacklisting to be expected to police itself on a voluntary basis. Notions of modernisation are hence applied very selectively. None of the above should be taken to imply that modern modes of labour exploitation in the construction sector are even remotely comparable to the 400-year duration of the transatlantic slave trade. The appropriation of the term ‘modern slavery’ to describe contemporary variations of labour exploitation hence risks trivialising the systemic horrors of historic slavery. Contemporary campaigners against modern slavery undoubtedly need to be sensitive to this broader legacy, not least in terms of the language they use and the images they portray. But the point remains that the UK’s construction labour model is directly implicated in creating the conditions within which labour exploitation too easily occurs. 11.3  Towards transformational change 11.3.1  In search of a scapegoat

Farmer offered no less than 10 headline recommendations, most of which rapidly sank into obscurity. The first recommendation was that the CLC should oversee the implementation process. This was hardly a surprise given that they had commissioned the report. It would have more surprising had Farmer recommended the restoration of the Strategic Forum for Construction. The second recommendation was that the CITB should be comprehensively reviewed. This was seemingly predetermined from the outset. Indeed, four out of the ten headline recommendations make specific reference to the CITB. There is a recurring sense throughout of the CITB having been made a scapegoat. Industry voices at the time were undoubtedly resentful of the new cross-sector apprenticeship levy as announced in the 2015 Summer budget. Paying two levies was clearly too much for many to swallow. The CITB may seem a little old-fashioned, but it only exists because of a market failure within the sector to invest in vocational training. The government at the time was embarked upon a mission rapidly to expand the number of apprenticeships. But the obsession lay with meeting quantitative targets rather than with enhancing the quality of training provision. Indeed, the notion of an apprenticeship had become so downgraded that it renders comparative statistics largely meaningless (Toner, 2008). But it was nevertheless convenient to blame the CITB for the acknowledged collapse in training and apprenticeships. The CLC had seemingly already decided that the CITB should be reformed, and Farmer was the duly appointed messenger. The absurdity is that the CITB had long since been employer-led. The statutory right of trade union representation was removed in 1989. Rather than criticise the CITB, it might have been more fruitful to decry the way its activities had been shaped over time by the construction sector’s larger firms. Ironically, these are the very same firms who have retreated from the responsibility of employing the construction workforce. This should have been the central issue at the heart of Farmer’s review of the construction labour model.

A Prevailing Sense of Permacrisis 277 11.3.2  The lionising of innovation

Farmer was very firm in his recommendation that commissioning trends should be changed from ‘traditional to pre-fabricated approaches’. Yet the commitment to off-site construction had already been made explicit in the initial terms of his appointment. If innovation is about anything, it must surely be about challenging taken-for-granted assumptions. But this does not seemingly apply to the case of prefabrication. Of further note is the recommendation that industry, clients and government should work together to ensure improved relationships and increased levels of investment in R&D and innovation. The recurrent linking of ‘R&D’ with ‘innovation’ serves to blur any sense of distinction between the two. Certainly, there is little obvious appetite for independent research which does align with an apparently predetermined agenda. The tendency throughout is to subjugate research to the espoused cause of innovation. Certainly, there is little interest in research into how the regulatory system might meaningly be improved. The word ‘innovation’ notably occurs in the report no less than 73 times. In contrast, the word ‘regulation’ appears only twice, both times with specific reference to Singapore. The city-state of Singapore was at the time lionised as an exemplar of a regulation-light, low-tax economy. Farmer describes Singapore as having a ‘proactive approach to building regulations and driving innovation’. Such an approach is seemingly taken to involve challenging regulations rather than adhering to them. Yet Singapore is hardly an exemplar of deregulation; it might more feasibly be seen as a quasi-authoritarian state with strict rules that impinge upon the daily lives of its inhabitants. Such nuances did not prevent Singapore-on-Thames from being advocated as a future model for ‘global Britain’. The broader narratives of deregulation and innovation were at the time central to the political debate as UK policymakers sought to make sense of Brexit. The lionising of Singapore was hence a variation on a broader theme. An alternative argument for the focus on Singapore might have been its propensity to invest in a modern infrastructure. This would be a more obvious lesson to learn, rather than forever demanding more investment in innovation. The point is not to criticise Mark Farmer as an individual, but rather the invidious context within which he was working. 11.3.3  The white heat of technology

Even more remarkable was the proposal that the housing sector should be used as a test bed for such a vaguely defined and unproven set of ideas. Pre-existing independent research on prefabrication by Gibb (2001) points towards its decidedly mixed track record. Plenty of success stories for sure but also plenty of failures. As commented previously, Farmer was seemingly only concerned with how academic expertise could be used to ‘support’ the proposed innovation programme. The adopted mindset reflects a recurring inclination among policymakers to subjugate academic research to the cause of innovation. The precedent had been set many years previously by the Technology Foresight Report Progress through Partnership (OST, 1995). The CITB was further expected to reorganise its grant funding model to align with a ‘future modernised industry’. The vision was for an industry where traditional skills are ‘efficiently met’, and looming labour shortages are offset by greater investment in the digital skills of the future. Traditional skills are seemingly reluctantly accepted as being necessary, but are ultimately seen as rather boring. Any sense of excitement is reserved for the skills of the future. No wonder bricklayers are hard to find. The terminology also rapidly becomes something of a minefield. The term ‘pre-manufacture’ was chosen as a suitable umbrella term in preference to alternatives such as ‘off-site manufacture’ and ‘pre-fabrication’. The primary advantage of pre-manufacture was seen in terms of reducing the required level of onsite labour and thereby offsetting the skills crisis. Although the Farmer review was subsequently associated with the cause of MMC, this was not his preferred terminology. The

278  A Prevailing Sense of Permacrisis notion of pre-manufacture was also seen to include design for manufacture & assembly’ (DfMA), ranging from standardised components through to pre-finished volumetric solutions. Mention was also made of ‘Industry 4.0’ in reference to the supposed fourth industrial revolution comprising smart technology, the internet of things (IoT) and machine-to-machine communication (M2M). Yet none of these terms receive any serious attention. They are seemingly dropped into the text to impress people, or perhaps even to intimidate them. The rallying call was ultimately in the same mode as Harold Wilson’s ‘white heat of technology’ from 1963. The message was one of unbridled technological optimism. 11.3.4  A levy too far

Perhaps the most surprising of Farmer’s recommendations was the threat to introduce a 0.5% charge on business clients with a view to influencing their commissioning behaviour. Entrenched approaches to procurement focusing solely on cost are seen to damage the sustainability of the sector, not least in terms of its capacity to serve the future needs of its clients. Hence procurement approaches dominated by short-term priorities such as low cost are seen to be inherently irresponsible. From this starting point Farmer quite rightly argues that wide-scale change in the industry will only occur if-and-when clients alter their regressive commissioning behaviour. Both public and private sector clients are seen to be problematic, but he is especially critical of the latter. If clients could not change on a voluntary basis then the specified alternative was government-led regulatory intervention. This was seen to be necessary in the medium to longer term if the advocated voluntary approach did not achieve the required step change. Farmer’s notion of irresponsible procurement practices notably included the use of non-standard forms of contract and inequitable payment practices. The eradication of such practices was however not ultimately central to Farmer’s vision of modernisation, and neither do they appear in his headline recommendations. The precise nature of the regulatory interventions Farmer had in mind is not entirely clear. Reference is made to utilising as many fiscal or policy tools as possible in a coordinated manner. Given the discord within parliament at the time over Brexit, this must have seemed a forlorn hope. Even more controversially, he also expressed support for the government’s demand-side stimuli for the housing market, which many commentators saw to be an intrinsic part of the problem (Hodkinson, 2019). He also stated his support for the easing of the planning system. Neither of these policies were ever likely to achieve cross-party support. Ultimately, Farmer settled on the totem threat of an additional 0.5% levy imposed on private sector clients. The claim was that this would enable investment in approaches that would be beneficial for the industry’s modernisation. Precisely who would be the judge of the advocated approaches is not made clear. It was further recommended that the decision to introduce the specified client charge should be set out in advance to be decided within the next five years. The suggested point of reference was the key targets specified in Construction 2025. To avoid paying the proposed levy, business clients would be required to demonstrate how they are contributing, directly or indirectly, to industry capacity building and modernisation. The options listed include ‘skills development’, ‘premanufacturing facilities’ or ‘other forms of innovation and R&D’. As ever, R&D was harnessed to the cause of innovation in accordance with a predetermined agenda. The task of evaluating such contributions to determine whether given clients should be exempt from the levy would presumably require some sort of independent evaluation. Farmer recognised that not all clients would be likely to react well to the prospect of funding investment in the construction sector. This would seem to have been something of an understatement. They would have undoubtedly mobilised every trick in the book to gain exemption in accordance with the tradition of ‘gaming the system’. Farmer further concedes that the introduction of a 0.5%

A Prevailing Sense of Permacrisis 279 charge would impact the financial feasibility of some projects, thereby depressing construction demand. Not surprisingly, the recommendation in support of a levy on business clients was not implemented, nor indeed ever referred to again. It rapidly sank into obscurity to sit alongside Latham’s (1994) aspiration for a 30% cost reduction. The resistance from the CBI and other client lobby groups would have been insurmountable. But perhaps even more pertinently, it flew in the face of the presiding belief in market mechanisms. 11.3.5  Presumption in favour of off-site construction

Almost one year after the publication of Modernise or Die the government announced as part of the Autumn 2017 budget that in future public sector procurement would operate based on ‘a presumption in favour of offsite construction’. It is unclear if this was the policy intervention which Farmer had in mind, or indeed if there was any connection between this announcement and the recommendations of his report. In either case, he must have been pleased with the outcome. In retrospect, this was a remarkable intervention by government in the workings of the market. Although the impact of such a presumption should not be exaggerated, it nevertheless directly serves the interests of the larger contractors. The stated ‘presumption’ creates a significant barrier for those who lack the capacity to invest not only in the necessary capabilities but also in the legitimising storylines. Tier 1 contractors were however not entirely convinced of the wisdom of investing in pre-manufacturing facilities, Nevertheless, slowly but surely, they all developed specialist business units with a claimed expertise in MMC largely leaving others to carry the risk of the required capital investment. Farmer was subsequently frequently quoted in the construction press such that he became something of a media personality. He remains a strong and consistent advocate of the benefits of MMC. He also continues in his role as CEO of Cast Consultancy which offers an MMC policy and advisory service. In seeking to evaluate the legacy of the Farmer review it is necessary initially to acknowledge the extent to which Farmer was constrained by his initial brief from the CLC. The terms of reference pointed specifically towards the sector’s widespread reliance on extensive subcontracting and the tendency to recruit skilled labour on a project-by-project basis. Farmer was also asked to focus on how to realise a greater utilisation of off-site construction. He cannot therefore be accused of failing to meet his brief. Government was looking for a panacea for the industry’s supposed problems, and Farmer was happy to oblige. The term ‘modern method of construction’ (MMC) was notably only used once in the entire report. As already noted, Farmer preferred the terminology of ‘pre-manufacture’. But his report is nevertheless remembered for championing the cause of MMC, and Farmer was subsequently only too pleased to be publicly endorsed as an acknowledged champion of MMC. But others would rapidly join the bandwagon, and even increase its forward velocity of travel. Irrespective of what came next, the diagnosis for change in the Farmer review was severely under-developed. There was an overriding tendency to warm over the same old clichés about the sector’s supposed failings. But more pertinently, the Farmer review played an important role in normalising the remorseless quest for innovation, not only in terms of construction processes but also in terms of construction materials. In short, MMC became a legitimising narrative for the ‘modern’ construction materials which were already in widespread use. Not once did Farmer suggest that such materials might be unsafe. And not once did he mention the issue of fire safety. But, again, the above commentary is not intended to be a criticism of Farmer personally. His report is simply representative of the debates which were taking place at the time, both within government and the CLC. Few at this stage foresaw the scale of the subsequent building safety crisis. Egan (1998) had previously notably made no mention of fire safely while advocating pre-assembly

280  A Prevailing Sense of Permacrisis Neither had Wolstenholme (2009), or Construction 2025 (HM Government, 2013). The harsh reality is that the movers and shakers within the construction sector were not talking about fire safety prior to the Grenfell Tower tragedy. Nor were they talking about the need to strengthen the regulatory system. What they were taking about was abstract notions of lean construction, partnering, collaborative working and, latterly, MMC. There was undoubtedly a widespread sense of complacency throughout the system. 11.4  In search of root causes 11.4.1  Commercial behaviours

Moving beyond the supposed symptoms of failure, Farmer points towards three underlying root causes. The first relates to the industry’s ‘survivalist’ structure and associated commercial behaviours. Farmer contends that the shape of the industry has developed to cope with an unforgiving market environment characterised by low capital reserves and chronically volatile demand. Yet there is more to the story than Farmer suggests – not least in terms of the long-term complicity of government. For example, the chronically volatile demand to which he alludes was undoubtedly exacerbated by the liberalisation of the construction sector from the late 1970s onwards. Farmer further makes no mention of the impact of the withdrawal of the state from any pretence at demand management. Of particular importance was the extensive privatisation of a significant part of the construction sector’s client base throughout the 1980s/90s. For example, modern privatised utility companies have little interest in providing a steady flow of work to enable long-term planning within the construction sector. In fairness, the government was not especially good at demand management even prior to 1979. But at least it existed as a possibility. To understand the reasons for the industry’s much maligned ‘survivalist’ structure, it is necessary to go back to the early 1980s. Of particular note is the infamous visit of the ‘Group of Eight’ to see the newly elected Margaret Thatcher in No 10 Downing Street. The Group of Eight was notably more representative of the construction sector than the CLC which commissioned the Farmer report. Membership included three professional institutions (RIBA, RICS and ICE), the Building Employer’s Confederation (BEC), the Federation of Civil Engineering Contractors (FCEC), the National Council of Building Material Producers and two trade unions. The Group of Eight was created with the specific purpose of presenting a united front to government. It was especially concerned with lobbying for a greater degree of demand management to offset the problems of cyclical booms and busts – not least in terms of skills development and training. Adamson and Pollington (2006, 10) describe vividly how Thatcher quickly lost patience and sent them away ‘with a flea in their ear’: It was made quite clear that if the UK construction industry was incapable of performing in a modern de-regulated economy, the Government, and the public sector generally, would obtain its construction requirements from overseas sources. Such was the view that prevailed within government at the time. Many overseas contractors have since established themselves in the UK market, but they notably depend upon the same workforce as their domestic competitors. They also by-and-large adhere to the same business model and face the same challenges in terms of the volatility of demand. When confronted with a recurring stop-go economic cycle it makes good sense for firms to limit their exposure to the fixed costs of direct employment. Hence the sustained shift to a business model whereby almost all the work is routinely subcontracted. In the mid-1970s direct labour organisations (DLOs) accounted for over 15% of the industry’s workforce, thereby providing islands of stability for training and skills

A Prevailing Sense of Permacrisis 281 development (see Chapter 2). The demise of the DLOs was inevitable once exposed to the market rigours of compulsory competitive tendering (CCT). With very few exceptions, it became progressively unsustainable for tier 1 contractors to invest in training and skills development to the same extent as prevailed previously. Slowly but surely a critical tipping point was reached whereby a reliance on subcontracting become the dominant model. The subcontractors themselves followed suit, such that multi-tiered supply chains became the norm rather than the exception. Hence the UK’s major contractors by and large divorced themselves from the responsibility of investing in the long-term skills of the workforce. The Farmer report talks about a tipping point being reached in ten years’ time. In reality, the tipping point had been reached several decades previously, and the industry’s leadership chose not to do anything about it. It must also be recognised that the strategy of outsourcing construction labour has long since served the interests of the industry’s big players. It continues to ensure that major contractors are sheltered from the damaging effects of industrial action. In this respect the shadow of the National Building Strike of 1972 continues to loom large. The shift away from direct employment significantly reduced contractors’ risk exposure. The same was true for the major clients of the construction sector, for whom industrial action by building workers had also previously comprised a significant risk. Farmer refers to this as a ‘market failure’, but in truth the response of the sector was a rational reaction to the landscape within which it operated. The blacklisting scandal also stands as evidence of the (illegal) lengths that contractors would go to for the purposes of reducing their exposure to the risk of industrial action (Smith and Chamberlain, 2015). 11.4.2  Problematising the ‘traditional’

The second root cause identified by Farmer relates to the non-aligned interests that exist between the industry and its clients. These are seen to be continuously reinforced by traditional procurement protocols. Indeed, modernisation is consistently positioned as an anecdote to the failings of the traditional. However, Farmer is slightly coy about precisely what is meant by ‘traditional procurement’. The following is as close to a definition as he gets: Clients tend to fixate on lowest initial tendered price and this is often perpetuated by their advisors, who, in a traditional procurement model, are implicitly employed (at least partly) to manage a fixed and adversarial transactional interface between clients and industry. (Farmer, 2016, 24) There is little in the above quotation that is contentious. Yet it is interesting how such practices are invariably laid at the door of the mythical defenders of the status quo. It is conveniently forgotten that CCT was initially introduced by the advocates of modernisation. At the time, CCT was interpreted as an essential anecdote to the widespread corruption revealed by the Poulson scandal (Jones, 2012). The subsequent renewed emphasis on competitive tendering undermined the viability of public sector DLOs, with a detrimental long-term impact on skills and training. The short-term focus on cost provides a superficially objective criterion for the determination of best value. Yet it is rarely recognised that the introduction of competitive tendering created transactional interfaces where they had not previously existed. The entire edifice rests on the adoption of the ‘project’ as the unit of production around which the competitive market is organised. At the time such processes of marketisation were synonymous with modernisation. And yet barely three decades later such approaches are castigated as being adversarial and transactional. Of further note is the recommendation of the Banwell (1964) report that contractor selection should be based on ‘character and ability, responsibility and pride in work, with fair renumeration

282  A Prevailing Sense of Permacrisis for good service’ (Murray and Langford, 2003, 202). Yet within twenty years such advice was being side-lined by the widescale commitment to single-stage competitive tendering. Hence it seems that the label ‘traditional’ is dependent upon the argument being made. Perhaps, ultimately, it is nothing other than a category of convenience. This does not mean that we should look back at the ‘old days’ through rose-tinted spectacles. The argument is simply that we should be cautious of those such as Farmer (2016) who lay claim to the cause of modernisation. The strong commitment to marketisation throughout the 1980/90s resulted not only in the demise of the DLOs but also the systemic outsourcing of public sector procurement expertise. Hence many public sector clients currently lack the capacity to engage with the industry on anything other than an arms-length transactional basis. The same is equally true of many private sector clients who also outsourced much of their procurement expertise during the 1990s under the guise of business process re-engineering (BPR) (see Chapter 6). Such trends were legitimised by the Egan (1998) report whereby leanness became an essential characteristic of the modern organisation. Little wonder so many interactions between clients and contractors remain essentially transactional. Here lies yet another example of the unintended consequences of previous policy interventions. Farmer further refers to the supposed ‘deep seated cultural resistance to change’ that prevails among many clients. Yet the acclaimed processes of modernisation described above are directly implicated in creating the ‘culture’ which Farmer decries. Many clients are understandably still scarred by an institutionised memory of the over-zealous implementation of BPR. The same argument applies to the construction sector where the hollowed-out main contractor remains the norm rather than the exception. It is sobering to recall that in the aftermath of the Latham (1994) report the Construction Industry Board (1996) recommended that BPR should form part of the industry’s ongoing programme of continuing professional development. The tendency of construction sector policymakers towards hubris is by no means a recent phenomenon. But it is undoubtedly an important part of the problem. Modernise or Die is not entirely consistent in terms of whether clients or the industry itself should carry the brunt of responsibility for the supposed failings of the sector. Yet the use of catch-all categories such as ‘clients’ and the ‘industry’ invariably conceals more than it reveals. Both categories comprise a huge diversity of organisations, with very few shared characteristics. The resultant multiplicity of embedded practices hence renders any tendency towards generalisation problematic. The perennial conversation about culture change is at best lazy, and at worse a distraction from what really matters. But Farmer does at least acknowledge that change in the construction sector will not happen unless clients alter their approaches to construction procurement. This represents a direct reversal of the position previously advocated by Wolstenholme (2009). 11.4.3  Implementation framework

Farmer’s third and final identified root cause relates to the lack of any implementation framework to initiate the required transformational change. Change it seems must always be ‘transformational’; steady incremental progress is never seemingly enough. Scholars of industry improvement would at this point be forgiven for feeling a sense of déjà vu. But Farmer’s framing goes way beyond what they might have seen before. Supposedly sick patients require radical treatment plans, or in Farmer’s terminology, a wholesale and coordinated ‘special measures’ approach to driving transformational change. Farmer further suggests that change needs to be led by clients through changing their expectations and commissioning behaviours. Clients were hence back in the spotlight. Even more surprisingly, there was also an enhanced role for government, not only in a regulatory capacity but as initiators of positive disruption. Such messages were briefly acceptable during the period of Theresa May’s premiership but were destined soon to slip out of political favour.

A Prevailing Sense of Permacrisis 283 Farmer’s plea was for a ‘tripartite covenant’ between industry, clients and government. The notion of a ‘covenant’ tends towards the bizarre. Leaving aside any religious connotations, the term is normally taken to imply a formal and binding agreement amongst parties who carry some sense of responsibility for their actions. But precisely who can make binding promises on behalf of the entire construction industry is not made clear. Certainly, the legitimacy of the CLC was fragile at best. Even less clear is who would speak on behalf of the industry’s clients, given that every household and business in the country is at some point a client of the construction sector. Governments are also notoriously prone to U-turns, and they also tend to be relatively short-lived. This was a problem that to become much worse in the years ahead. Undeterred by any the above, Farmer adopts the tortuous analogy of a ‘chemical chain reaction’, in which ‘reactants’ (the tripartite covenant) are worked on by an ‘intermediate’ (a reformed CITB), leading to ‘products’ (a modernised industry), spurred on by an ‘initiator’ (government ‘pump priming’ change). Presumably this analogy was intended to be taken seriously, but it bears little resemblance to any recognised model of industry reform. Yet the adopted medical and quasireligious analogies did little to distract from the report’s credibility. The view was seemingly taken that the adopted writing style was justified by the need to generate publicity. Certainly, this was a significant departure from the sober tone of previous construction policy reports such as Latham (1994). Egan (1998) was perhaps the first such report to resort to hyperbole. But there were sections within the Farmer review which carried this to new extremes. The Farmer review coincided with a period of political instability following the Brexit referendum. Yet barely six months after publication the political context took yet another turn as Theresa May was forced to call a general election in response to what she described as the political gameplaying of her opponents. In a misjudged attempt to overcome the political impasse within parliament, May called a general election for 8 June 2017. This resulted in the unexpected loss of her existing slim majority. She was thereafter a much-weakened figure even being forced to sack her closest personal advisors as a condition of being allowed to remain in office. What the construction sector really needed was political stability. Yet it was to be some considerable time before stability was to return. Political and economic uncertainty were to become the new normal. 11.5  The shadow of Grenfell Tower 11.5.1 Overview

Six days after the general election of 8 June 2017 tragedy struck in the London Borough of Kensington and Chelsea (LBKC). Grenfell Tower was a 24-storey block of residential flats originally designed in 1967 and completed in 1974. The building was hence a direct product of the postwar mass housing boom which re-shaped the urban landscape of British cities. It was at around 12.54am on 14 June 2017 that an electrical fault in a refrigerator on the sixth floor sparked what should have been a routine fire contained within a single flat. Yet within 15 minutes the fire had spread to the external cladding, and very rapidly the entire building was engulfed in flames. The fire was declared a major incident with more than 250 firefighters and 60 fire appliances in attendance. It burned for no less than 60 hours. Tragically, 72 people lost their lives thereby making it the worst UK residential fire since World War II. Many residents perished on the stairwell from smoke inhalation while trying to escape. It was a tragedy that should never have happened. In the immediate aftermath of the fire, the prevailing assumption was that the contractors involved in the refurbishment had somehow cut corners, or otherwise failed to comply with specified standards. The dominant narrative was that of a toxic and dysfunctional construction industry whereby unscrupulous firms are perennially engaged in a destructive race to the bottom.

284  A Prevailing Sense of Permacrisis The key messages were hence in alignment with those of the Farmer (2016) review. But over the years that followed, the tragedy slowly-but-surely became synonymous with the notion of a systemic failure (Kernick, 2021). It was further recognised as a failure that was decades in the making. Many commentators pointed towards Grenfell as a failure on the part of the state. Indeed, the tragedy was progressively reframed in the years that followed as an issue of social justice. Whether the authorities involved possess the capacity to learn the necessary lessons remains to be seen. This is especially pertinent in the case of the hollowed-out agencies of the state. Immediately prior to the fire, Grenfell Tower had undergone a major renovation (2015–2016). The refurbishment involved the installation of new windows and the renewal of the heating system. It also crucially involved the replacement of the external cladding with a view to improving the aesthetic appearance of the tower and its energy performance. The adopted approach was to fix 10cm-thick rigid foam insulation boards to the original concrete façade. The boards were protected from the elements by prefabricated aluminium composite material (ACM) rainscreen panels with a polyethylene (PE) core. In essence, the ACM PE panels comprised a thin aluminium sandwich with a highly combustible filling which melts and drips when exposed to heat. Prior to being fitted, the rainscreen panels were fabricated into three-dimensional cassettes. Such systems are generally referred to as ventilated rainscreen systems. Between the inner surface of the rainscreen panels and the outer surface of the insulation there was a cavity designed to allow ventilation and water drainage. The ACM PE rainscreen panels were subsequently identified as the principal cause for the rapid fire spread up and around the exterior of the building. Most of the insulation boards behind the ACM cladding comprised a Celotex product known as RS5000. Also used was a rival Kingspan product known as K15 which was likewise subsequently demonstrated to be unsafe. Celotex RS5000 comprised combustible plastic foam boards which once burning release highly the toxic gas hydrogen cyanide. Hence the firefighters which entered Grenfell Tower on 14 June 2017 were faced with the additional hazard of toxic black smoke. The Celotex insulation boards were further found to be a contributory cause of the vertical flame spread. It latterly became apparent that there were multiple problems throughout the refurbished building with the installed fire cavity barriers. Indeed, the problems were so numerous they defy succinct summary. 11.5.2  Building a Safer Future

On 27 July 2017 in the immediate aftermath of the Grenfell fire, Sajid Javid, Secretary of State for Housing, Communities and Local Government, announced an independent review of the building regulations and fire safety. Dame Judith Hackitt, previously chair of the Health and Safety Commission, was appointed chair. The interim report was published in December 2017 (Hackitt, 2017) and the final report was released on 18 May 2018 (Hackitt, 2018). Both reports were published prior to the commencement of the hearings for Phase 1 of the public inquiry (see below). The interim report did not pull its punches. It found that the prevailing regulatory system for ensuring fire safety in high-rise and commercial buildings was not fit-for-purpose. This was linked to the culture of the construction industry and the effectiveness of its regulators. Regulations and guidance were seen to be complex and unclear, leading to a confusion in their application. Hackitt further found the clarity of roles and responsibilities to be poor. In addition, the interim report pointed towards a lack of clarity in the system of product testing, marketing and quality assurance. There was a particular focus on the need to raise levels of competence within the sector, and to establish the formal accreditation of those involved in fire prevention in the context of high-rise residential and complex buildings. The interim report also made an early mention of the need for a ‘golden thread’. This was advocated as a means of ensuring that the original design intent, and any subsequent changes or refurbishment, are recorded and properly reviewed. Given the typical

A Prevailing Sense of Permacrisis 285 life-cycle of such buildings, and the complexities involved in their governance, the achievement of any such golden thread is by no means straightforward. Many of the above concerns were reiterated in the final Building a Safer Future report as published on 18 May 2018. The emphasis of the final report lay with setting out a new regulatory framework to deal with the identified shortcomings. This led in turn to primary legislation in the form of the 2022 Building Safety Act. Time will tell how effective this will be in addressing the various issues to have emerged from the Grenfell fire. But there nevertheless remains much to be learnt from studying the recommendations of Building a Safer Future, especially in light of the further revelations that subsequently emerged from the Grenfell Public Inquiry. In her personal comments preceding the Building a Safer Future report, Dame Hackitt refers to the notion of a ‘system failure’ for first time. She also alludes to ignorance on the part of many participants in respect of the existing regulations and guidance. The suggestion was that these are not always read by those who need to, and even when they were read, they are often misunderstood and misinterpreted. Dame Hackitt further refers to a tendency towards indifference. The primary motivation among those involved in the Grenfell Tower refurbishment was seen to be to build as quickly and cheaply as possible rather than to deliver quality homes that are safe. Further reference was made to a tendency among those involved to ‘game the system’. Hackitt (2018, 5) also refers to the alleged ‘race to the bottom’, a phrase that was destined to be much repeated: The above issues have helped to create a cultural issue across the sector, which can be described as a ‘race to the bottom’ caused either through ignorance, indifference, or because the system does not facilitate good practice. Dame Hackitt notably declined to make any reference to CCT, as first introduced by the 1980 Local Government, Planning and Land Act. However, in contrast to the previous interim report, the final report contains a strong emphasis on procurement: Improving the procurement process will play a large part in setting the tone for any construction project. This is where the drive for quality and good outcomes, rather than lowest cost, must start. (Hackitt, 2018, 8) Building on the above, there is an entire chapter devoted to the topic of procurement and supply. It is contended that the aim of procurement should be to obtain best value rather than lowest cost. It is further emphasised that best value is dependent upon establishing a collaborative relationship between the client, the contractor, and the supply chain. Such exhortations had been much repeated over the preceding 40 years, but Hackitt offers no explanation of why such platitudes are endlessly repeated to such little effect. ‘Best value’ perhaps offers yet another example of constructive ambiguity – everyone can agree to it in principle, yet nobody can agree to any single definition of what it means in practice. The Hackitt report further fails to acknowledge how design responsibilities had become increasingly blurred over the preceding 40 years as a direct consequence of the proliferation of procurement methods. Design responsibilities were much clearer when buildings were procured using the traditional JCT 1963 form of contract. However, the modernising tendency ever since has been to delegate detailed design work to the supply chain (Gray and Flanagan, 1989). This has undoubtedly served to distract from any overriding sense of clarity in terms of who is ultimately responsible for what. As ever, the most demanding problems lie at the interfaces between building components/systems as installed by different specialist contractors. The design and build form of contract provides an additional source of confusion, especially in those cases where the original

286  A Prevailing Sense of Permacrisis design team is novated to the design and build contractor. As an aside, the short-lived popularity of construction management (CM) as a procurement method served to legitimise the tendency for specialist trade contractors to take on design responsibility. Of additional relevance is the way contractors often find themselves working on multiple forms of contract across different projects, all of which allocate design responsibilities differently. The situation is further confused by the widespread tendency to amend supposedly ‘standard’ forms of contract. Indeed, recent research points towards amended forms of contracts being the norm rather than the exception (Green, 2023). The latter research also suggests that specialist subcontractors often do not even read the detailed amendments prior to signing the contract. The case for banning such amendments would seem overwhelming as a means of ensuring that those involved have a better understanding of their responsibilities. But the reality is that too many parties have a vested interest in advising clients to offset as much risk as possible onto the supply chain. This does then indeed set the tone for the rest of the project whereby design responsibility is perennially offset onto those who are least able to afford the necessary professional indemnity insurance. Notwithstanding the above, Building a Safer Future does not dodge the lack of legal accountability within the current system. Indeed, it specifically refers to the way the lack of accountability is exacerbated by industry fragmentation and multiple layers of sub-contracting. Dame Hackitt would of course have been familiar with the recommendations of the Donaghy (2009) report; she was at the time chair of the Health and Safety Commission. However, it is worthwhile recalling that the industry response to the Donaghy (2009) report was to ignore it, and the government response was to kick it into the long grass. As a final comment it is important to welcome the 2022 Building Safety Act as a positive step forward. This is certainly true of the creation of the new role of Building Safety Regulator (BSR) within the Health and Safety Executive (HSE). The purpose of the BSR is to create a new regulatory regime for high-rise buildings and to ensure compliance. It will also oversee the competence of professionals working in the sector. Although the primary legislation for the Building Safety Act is already in place, much of the secondary legislation at the time of writing remains outstanding. Of particular importance is the espoused requirement for clarity in respect of how design responsibilities are allocated in practice. Any sense of clarity has been dissipated by the proliferation of supposedly modern procurement routes thereby blurring boundaries between those responsible for ‘design’ and those responsible for ‘build’. The Hackitt (2018) report further refers to ‘unhelpful behaviours’ such as onerous contract terms and payment practices which serve to prioritise speed and low cost over value for money and building safety. Whether there is a willingness to legislate on such matters remains to be seen, but the signs are not promising. 11.5.3  Initial insights from the inquiry

The Grenfell Tower Inquiry was commissioned by Prime Minister Theresa May. The hearings for Phase I commenced on 21 May 2018 and concluded on 12 December 2018. Public inquiries are invariably conducted in forensic detail with a view to finding out what happened, and why. The broader motivation is to ensure that the events in question do not happen again. In complex cases such as Grenfell, such inquiries inevitably take a considerable amount of time thereby delaying any legal proceedings against those held to be responsible. The second phase of the Grenfell Inquiry was delayed for four months due to Covid-19. It eventually commenced in June 2020, concluding in December 2022. At the time of writing, the final report is yet to be published. The summary which follows is therefore of necessity incomplete and selective. In reviewing the emergent findings from the inquiry, the primary aim is to place them in the context of long-term industry change. But also of interest are the interim responses from the sector.

A Prevailing Sense of Permacrisis 287 The findings from Phase 1 of the inquiry were formally released in October 2019. Coverage included the principles underpinning fire safety in high-rise buildings together with a detailed consideration of the events on the night of the fire. Consideration was also given to the structure and organisation of the London Fire Brigade (LFB) and its statutory responsibilities. The standing policy of the LFB in respect of fires within multi-storey residential buildings was to advise residents to ‘stay put’ while the fire was dealt with. The doctrine of ‘stay put’ was deeply engrained within the fire service and dates back to the British Standards Institution (BSI) (1962) code of practice for the design of buildings. The key design principle is that of compartmentation whereby high-rise residential buildings are designed with the aim of ensuring that any outbreak of fire is contained within the unit in which it occurs. This is the same design principle that had previously failed so dramatically in the 23-storey Ronan Point tower in 1968. Nevertheless, with few exceptions, the policy of ‘stay put’ had since proved a broadly successful strategy for dealing with fires within residential high-rise buildings. It therefore remained the core principle which shaped the default response of the fire services. But in the case of Grenfell Tower the policy failed with catastrophic consequences. Lives would undoubtedly have been saved had residents been advised to evacuate much earlier. Phase 1 of the inquiry also refers to the Lakanal House fire in South London on 3 July 2009. The fire broke out on the ninth floor of the 14-storey residential block and rapidly spread throughout the building. Six people were killed, including three children. A further 20 were injured. In common with Grenfell, Lakanal House had recently undergone an extensive refurbishment (2006–2007) which included the replacement of the external cladding panels. The subsequent investigation revealed problems with compartmentation within the building due in part to suspended ceilings and inadequate fire doors. The inquest further focused attention on the external cladding panels installed as part of the refurbishment. These were found to provide less fire resistance than those they replaced. They hence enabled the fire to spread much more quickly than might have been reasonably anticipated. The coroner directed several recommendations at the LFB, Southwark Council and perhaps most tellingly at the Department of Communities and Local Government (DCLG). The most important recommendations were directed at DCLG in respect of the need to improve the clarity of the building regulations. Eric Pickles was the Sectary of State for Communities and Local Government from 2010 to 2015. It subsequently became apparent during the inquiry that nothing had been done in response to the coroner’s recommendations. The Phase 1 report of the Grenfell Inquiry further describes the diverse and yet closely knit community that lived within the tower. Coverage includes the functions and responsibilities of RBKC as the building owner, and the role of the arms-length Kensington and Chelsea Tenant Management Organisation (hereafter the ‘TMO’) which carried the responsibility for building management. The story that would emerge was one of institutional indifference to the needs of the Grenfell Tower residents. The proud tradition of public sector housing in the UK had seemingly been reduced to a culture of victim blaming with little sensitivity to issues of social justice. The Phase 1 report further contains a brief overview of the refurbishment, including a description of the installed cladding system. Reference is made to the associated changes to the windows and the various other aspects of the refurbishment that were supposed to enhance fire safety. 11.5.4  Merry-go-round of buck passing

Further details of the contributory causes of the Grenfell Tower were provided during Phase 2 of the inquiry. Given that the final report has yet to be published the description which follows is based on the available information at the time of writing. The basic facts are largely uncontested. Yet from the outset each written submission from the participants sought to allocate the blame onto someone else. It is appropriate to begin with the adopted procurement procedures.

288  A Prevailing Sense of Permacrisis The core problem was that the initial budget for the refurbishment works on Grenfell Tower was insufficient. The original preferred contractor was Leadbitter, part of the Bouygues group. The appointed architect, Studio E, strangely had no experience of cladding or the refurbishment of major residential tower blocks. The architectural practice apparently agreed to stagger their fees such that the payments fell below the threshold that would have required a process of competitive tendering. The core difficulty was that Leadbitter had originally estimated that the price of completing the proposed project would fall between £12 million and £13 million. Unfortunately, the available budget was limited to £8.5 million. By early 2013 the project had hence come to a standstill over concerns about budget (Apps, 2022). Atelia, the TMO’s retained project management consultant, specifically advised that without a significant rescoping exercise the refurbishment project would fail. Responsibility for progressing the project was thereafter taken up by the TMO’s newly appointed director of assets and regeneration, Peter Maddison. The decision was made to put the contract back out to tender without any revision of the overall scope. Three contractors submitted tenders on 13 February 2014. The lowest tender price was £9.2 million as submitted by Rydon Maintenance Ltd (hereafter ‘Rydon’). Unfortunately, this was still significantly over the TMO’s available budget. Rydon were hence asked to find savings of £800,000. Peter Maddison apparently had previously worked with several senior managers within Rydon. These connections enabled him to pursue a series of informal conversations about potential savings. Such ‘off-line’ dialogues were at odds with EU procurement rules and longstanding requirements in respect of public sector transparency. However, post-tender conversations of this nature are by no means unusual within the construction sector. Contractors are often asked to ‘sharpen their pencil’ after tender submission, or to confirm whether the submitted price is indeed their ‘best and final offer’. Hence the informal discussions which took place between the TMO and Rydon would not have been especially unusual to those involved. Such practices tend to flow from unrealistic initial budgeting on the part of the client, with potentially adverse knock-on consequences throughout the supply chain. This point was specifically recognised in the Hackitt (2018) report. It was during these post-tender discussions that Rydon advised the TMO that it could secure a cost saving of £293,368 by switching from the initially specified non-combustible zinc panels to ACM PE. It subsequently became apparent that Harley Facades had just a few days earlier estimated that the resultant savings amounted to £419,627. Rydon were apparently intending to pocket the difference with a view to recouping an inhouse ‘tender error’ of £212,000. The cladding switch required sign off from the client’s planning committee who were apparently satisfied by Arconic’s assurance that the ACM cladding met the requirements of Class 0. It was also the planning committee who insisted on the use of prefabricated cassettes (Apps, 2022). Rydon were thereafter advised of the contract award, and they were formally appointed under the JCT Design and Build Contract (2011 edition) (as amended) on 30 October 2014. As the appointed design and build contractor Rydon carried the responsibility for the design in its entirety. However, as a requirement of the contract they were obliged to novate Studio E Architects who had previously been engaged by the TMO directly. It subsequently became apparent that Rydon had no previous experience of working with novated designers. This lack of experience undoubtedly contributed to a sense of confusion in terms of where the ultimate responsibility lay. Rydon subcontracted the installation of the cladding system to Harley Facades Ltd (hereafter ‘Harley’). Other relevant parties included the building control authority within RBKC. Transcripts from the inquiry suggest that the RBKC building control function was severely under-resourced throughout the Grenfell Tower refurbishment project, and hence morale was very low. Simply put, staff within building control had more work than they could reasonably cope with. This was the justification

A Prevailing Sense of Permacrisis 289 given for a ‘number of failings’ on Grenfell Tower, not least the failure to request full details of the proposed cladding system. Such difficulties were all too common throughout the sector as a consequence of the extensive cutbacks in public spending during the years of austerity. This was explicitly confirmed by LABC – the representative agency for local authority building control bodies in their written submission to the inquiry. The problem related not only to limited financial resources but also to the availability of qualified staff. The involvement of the RBKC building control authority included a series of inspection visits between August 2014 and July 2016. However, building control bodies were only ever intended to provide an independent check. They are supposed to provide a last line of defence against noncompliance. Ultimately, they failed in their responsibilities. But the RBKC building control function was responsible for only a small part of a broader systemic failure in which so many others were implicated. And it was a failure that was waiting to happen. Ultimately, responsibility for compliance with the building regulations lay with those doing the work. But the widespread reliance on subcontracting means that such responsibilities are routinely cascaded down the supply chain. A blurring of responsibility is the norm rather than the exception. In response to questioning during the inquiry, Rydon’s contracts manager pointedly argued that the responsibilities for complying with the building regulations fell to the supply chain, namely Studio E and Harley. He also pointed the finger of blame at Arconic – the large multinational conglomerate previously known as Alcoa. The contentious ACM PE cladding panels used on Grenfell Tower were manufactured by Arconic’s French subsidiary. Five of Arconic’s senior executives were called in for questioning as part of the inquiry, but only two appeared. The other three declined citing an obscure French law which granted them an exemption. Lawyers for the bereaved suggested that Arconic actively targeted the UK market for its ACM product because of the relatively lax regulatory regime. Stephanie Barwise QC was especially unequivocal in her diagnosis that ‘Arconic knowingly and deliberately prioritised profits over safety’. The evidence presented further suggests that senior managers within Arconic had been aware since 2011 that the panels installed on Grenfell Tower were not suitable for high-rise buildings. The Arconic representatives in turn responded that it was not their responsibility to ensure that their products complied with UK building regulations. They argued that the responsibility rested with the contractors tasked with installation. It seems that all parties were perennially obsessed with outsourcing risk to others. This tendency was subsequently referred to by Richard Millet QC as a ‘merry-go-round of buck passing’. None of this of course provided much comfort to the bereaved. Also worth quoting is Adrian Williamson QC who was representing some of the Grenfell survivors and bereaved: The evidence of how dangerous those combustible cladding materials were is irresistible. The marketplace was itself a place of astounding ignorance. The manufacturers were of course only too happy to exploit this ignorance for their own commercial gain. What all this shows is that the Inquiry will need to undertake an unsparing investigation into the toxic and incestuous culture and practices of this industry. It is possible to agree with the above expressed sentiment without quite accepting the way in which the ‘industry’ is characterised, or indeed where the system boundary is being drawn. It is a moot point whether the French subsidiary of Arconic could be construed as part of the construction industry. But equally contentious is the inference that the industry possesses a culture (incestuous or otherwise) which exists separately from the procurement approaches adopted by the industry’s clients. There is a strong case that the problems started within the TMO, not least

290  A Prevailing Sense of Permacrisis with their commitment to low-cost tendering which set the tone for so much of what followed. The counterargument presented by the TMO was that they were obliged to secure ‘value for money’ on behalf of the taxpayer. But the decision to progress the refurbishment project despite being advised that the available budget was insufficient is less easy to deflect. Hence any diagnosis of the broader systemic failure must include the procurement processes adopted by the TMO. It must also include the accumulated effects of decades of deregulation which resulted in Arconic being allowed to ‘dump’ its inferior products onto the UK market. It subsequently transpired that the same ACM cladding had been widely used on hundreds of high-rise residential blocks throughout the UK, thereby initiating the long-running and still unresolved cladding crisis. But the crisis is not limited to high-rise buildings more than 18 m. There are thousands of residential buildings between 11 m and 18 m which require the removal of unsafe cladding and/or insulation. There are as yet no reliable estimates for completing the necessary work, and no agreement on how it is going to be paid for. And yet the advocates of supposed modernity continue to eulogise the supposed benefits of MMC with little sense of caution. 11.5.5  Deregulation on steroids

The findings from Phase I of the Grenfell Inquiry came as a huge shock to many within the construction sector. The Farmer (2016) review had fuelled the perception that the sector was in crisis, and those who were convinced of Farmer’s diagnosis sought confirmation in the emergent findings. But the most striking revelation was that no single party was to blame. It was the system that had failed in its entirety. During the inquiry the construction firms involved in the refurbishment of Grenfell Tower were exposed to ruthless scrutiny and were undoubtedly found wanting. But the same is also true of the building control function within RBKC, and likewise those responsible for the procurement process within the TMO. It also became increasing clear that this was a broader failure of the regulatory system. An important part of the story relates to deregulation and institutional indifference within government. And the problems can be traced back over the course of several decades. A further important source is provided by Apps (2022) who refers to Grenfell as ‘the most serious crime committed on British soil this century’. Hodkinson (2019) likewise presents a rigorous case that decades of deregulation within the corridors of government resulted in a ‘flexible’ interpretation of standards. This in turn is seen to comprise a major contributary cause of the Grenfell Tower fire. Hodkinson (2019) traces the trajectory of deregulation back to the 1984 Building Act which is flagged as a key turning point in the shift from prescription towards generic statements of performance. The overriding doctrine at the time was one of ‘maximum self-regulation, minimum government interference’. Hodkinson contends that this trend ultimately led to the use of combustible cladding on Grenfell and countless other high-rise residential developments. Throughout Phase II of the inquiry, it was increasingly apparent that the issue with the ACM cladding was not solely one of compliance but extended to the flawed nature of the regulations themselves. The ‘faulty and ambiguous’ nature of government guidance was eventually conceded by Michael Gove, Secretary of State for Levelling Up, Housing and Communities, in January 2023. He further explicitly accepted that the flawed nature of the government guidance was in part responsible for the Grenfell Tower tragedy. The only surprise was that it had taken him so long to admit something that for many had long since been blatantly obvious. The shift towards voluntary regulation is synonymous with the notion of a liberalised economy. The case for voluntary regulation has also been consistently lobbied for by the UK’s biggest property and construction firms, many of whom are longstanding donors to the Conservative Party.

A Prevailing Sense of Permacrisis 291 But the New Labour government (1997–2010) also placed a strong emphasis on voluntary regulation such that the blame cannot be laid at the door of any single political party. The argument therefore is about the dominant consensus which characterises the broader political economy within which the construction sector operates. The sustained shift towards generic performance standards was notably endorsed by the Egan (1998, 29) report: In particular, we feel that there is scope for regulatory regimes such as building control to be more output driven, so that constructors and their clients are able to deliver to performance standards rather than detailed prescription. The above quotation is especially sobering in the context of the subsequent failings by building control in the case of Grenfell Tower. The Egan report undoubtedly served to normalise expectations within the sector in respect of ‘output driven’ regulatory requirements. Of further note is the following quote from the Wolstenholme (2009, 9) report: When asked to rank a number of issues according to their importance to the industry, commitment to people, sustainability and client leadership emerged as the most important, followed by health and safety, design quality and long-term relationships. Least important issues were considered to be better regulation, reduced reliance on tendering and standardisation. The respondents to Wolstenholme’s survey seemingly saw little need for any focus on ‘better’ regulation. But Wolstenholme likewise saw no need to offer any sort of cautionary comment; the prevailing climate was such that the less said about regulation the better. Wolstenholme subsequently went on to play a leading role in the CLC. He probably also played a role in setting out the expectations for the Farmer (2016) review, for which he wrote the foreword. Farmer duly delivered his report within the required parameters, not least in terms of the consistent privileging of innovation over regulation. Irrespective of the complicity of previous governments in the trajectory of deregulation, there is little doubt that the de-regulatory fervour reached new heights during the period of the coalition government (2010–2015). Apps (2022) describes how the rules set out in the March 2011 budget disincentivised any tightening of the building regulations. Of further note was the April 2011 ‘red tape challenge’ as championed by the Cabinet Office (see Chapter 10). This was specifically aimed at reducing the number of regulations across a range of sectors, including construction. This in turn led to the imposition of the ‘one-in, one-out’ rule whereby the expectation was that for every new regulation introduced, one would have to be abandoned. This was subsequently inflated to an expectation of ‘one-in, two out’ as measured in terms of the overall financial impact. The idea that regulations exist to protect the wellbeing of citizens had somehow been forgotten. Business Minister Michael Fallon was an especially keen champion of deregulation. In response to reforms as part of the ‘red tape challenge’ he released a BIS press release on 6 April 2014: By reducing government meddling we are creating a better environment in which to do business and laying the foundations for strong and sustained growth. We are on track to be the first government in modern history to reduce the weight of regulation on business. This was the same Michael Fallon who had formally endorsed the Construction 2025 strategy the previous year. The government’s explicit stated aim was to remove the regulatory burden on business. EU red tape was identified as a source of particular concern in terms of the supposed

292  A Prevailing Sense of Permacrisis stifling of British entrepreneurship. The culture within government from 2010 onwards is hence well-described as deregulation on steroids. Eric Pickles, Secretary of State for Communities and Local Government (2010–2015) was equally vocal in discouraging civil servants from promoting ‘needless’ building regulations. There is therefore a convincing argument that the culture of deregulation within government was an important contributory cause of the Grenfell Tower tragedy. Whether this was a price worth paying in terms of reducing the regulatory burden on business is ultimately a matter of moral judgement. Much of the debate about the complicity of government in the Grenfell Tower tragedy relates to the controversial Class 0 standard. In the early 2000s, the UK Government had the opportunity to discontinue this standard but chose not to do so – despite copious advice to the contrary. The concern relates to the key technical guidance on which materials could safely be used for the purposes of cladding high-rise buildings. Part B of the Building Regulations sets out the requirements for fire safety, and the associated guidance was provided in the non-mandatary ‘Approved Document B’ (ADB). Requirement B4 (1) of the Building Regulations state that: …the external walls of the building shall adequately resist the spread of fire over the walls and from one building to another, having regard to the height, use and position of the building. The practical guidance of how this might be achieved as presented in ADB referred to the requirement that the ‘external surfaces of walls of buildings 18 m or more in height should be ‘Class 0’ (national class) or class B-s3, d2 or better (European class)’. The difficulty is that Class 0 was an out-of-date product classification derived from two small-scale tests described in an out-dated British Standard document. The tests in question related to the spread of flames over a given surface. But they notably did not relate to the combustibility of the material itself. The guidance was hence fundamentally flawed and was subsequently revised post-Grenfell in 2018. The above problem did not occur in Scotland where the relevant guidance had been updated in 2005 in response to the fatal fire at Garnock Court, a 14-storey block of flats in Irvine in 1999. No equivalent action was taken by the UK Government – despite numerous recommendations to the contrary (Carrington, 2019). In retrospect, the dominant culture of deregulation within successive governments must carry responsibility for the continued reliance on the outdated ‘Class 0’ classification. This led in turn to cladding manufacturers viewing the UK (Scotland apart) as a dumping ground for combustible products that would not have been acceptable on high-rise building in the rest of Europe. This was indeed a regulatory ‘race to the bottom’. 11.5.6  Gaming the system

Phase II of the Grenfell inquiry also raised many questions regarding the extent to which the manufacturing firms responsible for the insulation materials used on Grenfell Tower gamed the certification system. Much of the subsequent criticism relates to the way that Celotex and Kingspan continued to promote their products to the UK market even though they seemingly knew them to be unsafe. Questions were also raised in respect of whether the relationship between the major material suppliers and those responsible for testing within BRE were too close. The Building Research Establishment (BRE) had been initially founded in 1921 as the Building Research Station (BRS) and eventually merged with the Fire Research Station in 1972. It thereafter continued as an acknowledged centre of excellence for large-scale fire testing of building materials. Following privatisation in 1997 (see Chapter 3), BRE thereafter became highly commercialised and fullscale fire-testing for product manufacturers became a valuable source of revenue. The question

A Prevailing Sense of Permacrisis 293 raised is whether BRE may have become too close to its industry sponsors, thereby losing its position of independence. The broader background is provided by the increased emphasis on urban regeneration in recent times, and especially the need for an extensive programme of retrofit to ensure energy efficiency. It was on this basis that hundreds of high-rise residential tower blocks throughout the UK were retrofitted with enhanced insulation. Grenfell Tower was hence by no means unique. Plastic insulation boards – such as those offered by Celotex – are popular with contractors because they are lighter and cheaper than more traditional alternatives. They are also favoured by designers because of their low thermal transmittance (U-value). Celotex however had the problem that its RS5000 product was not approved for high-rise buildings. The company therefore risked losing market share to Kingspan, its main rival in the UK market. Kingspan’s equivalent K15 product had been previously verified as being compatible with the controversial Class 0 standard by the British Board of Agrément (BBA) in 2008 (Apps, 2022). Kingspan had also managed to secure the necessary certification in 2009 from the national representative body Local Authority Building Control (LABC) for use on high-rise buildings. In essence, K15 had been verified as a ‘material of limited combustibility’ and as such was deemed suitable for use on high-rise developments. Kingspan were undoubtedly pleased to have received this certificate, albeit somewhat surprised. This did not curtail the enthusiasm with which the product was subsequently marketed to a receptive industry. In summary, the suggestion is that Celotex observed how Kingspan had successfully gamed the system to secure certification of their combustible insulation. They hence set about achieving the same certification for their equivalent product, RS5000. The Celotex brand originates from the United States, with the rigid foam insulation business being acquired by Dow Chemicals in 2001. The British manufacturing interests were subsequently acquired in 2012 by the French-owned multinational materials conglomerate, Saint Gobain. There was thereafter an immediately pressure to increase market share in the UK, and to this end a fire test was arranged at the BRE in February 2014. The Celotex insulation board was tested in combination with a cement fibre cladding panel. Inconveniently for those involved, the test failed. A subsequent test was arranged for May 2014 using a thicker cement fibre cladding panel. But Celotex staff also included fire resistant magnesian oxide boards at key intervals. Under questioning during the inquiry, the Celotex representative, Jonathan Roper, admitted that the test rig had been deliberately ‘over-engineered’ to achieve the required pass. The point of contention is how this could have been done without the knowledge of the BRE staff who monitored the test. Roper later accepted that his actions on behalf of Celotex were ‘deliberately misleading and dishonest’. Phil Clark, the BRE’s burn hall manager subsequently denied any knowledge of Celotex’s manipulation of the test rig. Based on the above-described test, Celotex happily proclaimed that RS5000 was suitable for use on buildings above 18 m. They were less vocal about the specific conditions of the test, with no mention of the additional use of the fire-retardant magnesium oxide board. Celotex also achieved the equivalent certificate from LABC, thereby enabling it to compete directly with Kingspan (Apps, 2022). It is difficult to avoid the conclusion that Celotex and Kingspan were guilty of gaming the regulatory system. Yet this same gaming behaviour was being encouraged by the deregulatory environment within which they operated. Perhaps they construed their behaviour to be directly aligned with the ‘proactive approach to building regulations and driving innovation’ which Farmer (2016) seemingly admired in the case of Singapore. As a postscript, it was announced on 12 April 2023 that Arconic, Celotex and Kingspan had agreed to pay an undisclosed sum to a group of those affected by the Grenfell Tower fire following a civil claims case. The out-of-court settlement was

294  A Prevailing Sense of Permacrisis achieved through a process of alternative dispute resolution (ADR). The beneficiaries of the settlement included the bereaved in addition to survivors and residents. 11.6  Edinburgh schools, cavity walls and wall ties 11.6.1  Flawed quality assurance

The heightening sense of crisis within the construction sector was exacerbated by the publication of the Cole (2017) inquiry into the causes of the collapse of a gable wall at Oxgangs School in Edinburgh. The collapse had taken place in January 2016 and hence predated the Grenfell Tower tragedy. But it was only with the publication of the Cole report that the causes became widely known. In contrast to Grenfell, there were no injuries or fatalities resulting from the collapse at Oxgangs School. However, this was largely a matter of luck. Nine tonnes of masonry fell into an area where children could easily have been present. The collapse was caused by high winds which should not have been of any concern, just as a fire within a single flat within Grenfell Tower should not have been of any great concern. The construction of the school had been completed in 2005 as part of a public-private partnership (PPP). 17 similar Edinburgh schools were subsequently closed leaving 7,000 pupils barred from their classrooms. Following inspection, two further schools were found to suffer from similar faults. Ultimately, every council in Scotland commissioned surveys to ensure the safety of schools that could be affected. The largest teaching union in Scotland, the Educational Institute of Scotland (EIS), called for an urgent review of PFI/PPP contracts with a view to ascertaining how the identified faults could escape scrutiny by building control. The City of Edinburgh Council duly appointed Professor John Cole to conduct an independent inquiry. He did not disappoint. The remit of the Cole (2017) report was far-ranging, extending way beyond the narrow causes of the technical failure. Cole was asked to consider the rationale for the Council having procured the schools on the basis a PPP contract and the effect that the financing arrangement had on the construction process. He was also asked to examine the role of the Council regarding the quality assurance of the construction process. Cole’s remit further extended to the management and maintenance regimes which had prevailed since the schools were initially built. Perhaps most pertinently he was invited to provide advice and recommendations on any wider lessons which he thought should be drawn. At the most basic level, the collapse was caused by poor quality construction of the cavity wall. The report points towards a failure to ensure the required minimum embedment of 50 mm for wall ties. This was seen to relate especially to the outer leaf of the cavity wall. Further criticisms related to the laying of the bricks and positioning of the wall ties, and the extent to which the construction process was subject to appropriate supervision. The Cole report also drew attention to the quality assurance processes used by VB Contracts, the appointed sub-contractor, and Miller Construction, the main contractor. Of particular concern was the significant number of defects in the installation of the required fire-stopping throughout the broader sample of PPP schools. The inquiry concluded that a fundamental weakness of the adopted PPP procurement approach was the absence of a properly resourced process of independent scrutiny on behalf of the client, i.e., the City of Edinburgh. Public sector clients were seen to have statutory duties to the communities they serve. They hence cannot delegate the responsibility for building safety to others, irrespective of the adopted procurement methods. Especially notable was the recommendation that a clerk of works could usefully be incorporated into the more recent procurement approaches. However, if this was to be a fightback on the behalf of the ‘traditional’ it was unfortunately short lived. The CIOB (Flanagan and Jewell, 2021) subsequently published a guide to quality management in construction which never quite attracted

A Prevailing Sense of Permacrisis 295 the attention that it deserved. Notions of quality assurance are always destined to struggle for airtime in any competition with the technological optimism of MMC (see Chapter 12). 11.6.2  Not limited to schools

Of particular concern within the Cole (2017) report was the finding that the same defects which impacted upon the structural integrity of Oxgangs School were found across the broader sample of 17 schools. These had been built by different main contractors, using different bricklaying subcontractors with different squads of bricklayers. Hence the conclusion that the identified faults were not the fault of a single rogue squad of bricklayers. Cole also suggested that the problem was likely to be spread across a range of building types rather than being limited to the single building type of schools. He further emphasised that the problems were unlikely to be limited to Scotland and were likely spread across all parts of the UK. Following on from the above, Cole notably did not limit his comments to Scotland. He was moved to comment on the way the modern contracting sector operates within the UK at large: The construction industry is a part of our economy that suffers greatly from the boom and bust syndrome, resulting in difficulty in maintaining the availability of highly skilled tradesmen because of the lack of a guaranteed continuity of work. The traditional and hugely valuable concept of building contractors employing and training tradesmen such as bricklayers and joiners through apprenticeships within their own workforce has also largely disappeared. (Cole, 2017, 22) The above quotation resonates strongly with the arguments made in the preceding chapters of the current book. It further reflects the findings of the Donaghy (2009) report some eight years previously. Of note is the way Cole cherishes the traditional notion of building contractors employing and training their own workforce. The ‘traditional’ is seemingly viewed with a degree of nostalgia. The implication is that things used to be better in the old days. This strikes a very different note from the prevailing debate on industry improvement which tends to lambast the ‘traditional’ as being hopelessly outdated and adversarial. Rather than criticise traditional approaches to procurement, Cole chose to target what he described as ‘recent changes’ to the established models of procurement. These were seen to be driven by a desire for greater efficiency, and an unachievable wish to transfer all risk away from the client. It is surely no coincidence that these were the very same tendencies that had been legitimised by the Egan (1998) report and its various derivatives. The perennial quest by clients to transfer risk to the supply chain was further cited as a contributory cause of the Carillion collapse (see below). Yet Cole’s contribution was to highlight how the drive towards ‘modernisation’ had ignored the need for an appropriate level of independent scrutiny. Bland narratives of modernisation too often risk achieving very little other than making its advocates feel good about themselves. Modernisation needs to be implemented with considerable care, with an appropriate degree of independent scrutiny. The same key lesson is also apparent from the Grenfell Tower tragedy. 11.6.3  Wall ties and head restraints

Much of the blame for the Edinburgh school collapse ultimately relates to the quality of the work done by the bricklayers, and the extent to which they were properly supervised. Cole refers to the practical difficulties which arise from building the inner and outer leaves of cavity walls at different times. Why this was considered necessary is not made clear, but presumably it was aimed

296  A Prevailing Sense of Permacrisis at making the building watertight as early as possible. Cole was further critical of the design of standard wall ties, and of the design and installation of head restraints. But the overriding difficulty was seen to relate to the common practice of paying bricklayers for the number of bricks laid, rather than for the hours worked. This practice of course is by no means new, but it has undoubtedly been exacerbated by the growth in subcontracting. The practice of payment based on the number of bricks laid follows directly from the privileging of productivity over other considerations, not least the craftsmanship of the bricklayer. The harsh reality is that bricklayers are not incentivised to install wall ties and head restraints correctly. There was also seen to be a problem with the recruitment and training of bricklayers, and hence with issues of competence. What goes unsaid is the extent to which main contractors have seemingly withdrawn from the act of supervision. Subcontractors are contracted to lay a specified number of bricks at an agreed price and are thereafter left to their own devices. Hence main contractors remove themselves from direct engagement in construction to focus on the commercial act of contract trading. Further comments are raised regarding the shortage of the essential skills of bricklaying, and tendencies towards de-skilling. Cole points not only to bricklayers but also to the shortage of clerks of works and building standards inspectors. The Farmer (2016) review had notably done little to promote these ‘old-fashioned’ occupations, preferring instead to focus on the benefits of prefabrication. There would hence seem to be an increasing divergence between the problems encountered on the ground and the broader narratives of industry improvement. Cole further recommends that the CITB should review the effectiveness of the apprenticeship arrangements for bricklayers. He might equally have suggested a review of the apprenticeship arrangements for all construction skills. There was a broad consensus among those interviewed by the Edinburgh Schools Inquiry that it had been difficult to attract young people into traditional skills for at least twenty years. This was not a new problem; it had been a long time in the making. The case of the Edinburgh school collapse also highlights the difficulty of holding transient subcontractors to account for the quality of their work. VB Contracts reportedly went into liquidation in 2008 having been initially incorporated in 2002. Despite several attempts the Inquiry failed to secure a response from the former Chief Executive. Attempts were made to contact the bricklaying subcontractors involved in the other schools within the PPP framework, with similar results. The main contractor on Oxgangs School had been Miller Construction based in Glasgow. However, the company had been acquired by Galliford Try for £16.57 million in 2014. The Chief Operating Officer of Galliford Try did deem to provide evidence to the Inquiry. He was further clear in his evidence that those responsible for the brickwork would have known that it was unsafe. He nevertheless accepted that it was incumbent upon the main contractor to ensure that buildings are built properly. Yet questions were also raised about the information that had been made available to the bricklayers, and whether they were in receipt of the structural engineer’s drawings in addition to the building elevations produced by the Architect. Yet the identity of the bricklayers who built the wall remains shrouded in mystery. The 66 witnesses who gave evidence to the inquiry did not include any representatives from VB Contracts, neither did they include any of the bricklayers. They were invisible when the wall was constructed, and they remained invisible at the time of the inquiry. The Cole (2017) report sheds no light on who these bricklayers were, or the basis upon which they engaged. And as invisible phantoms they were entirely disconnected from the apprenticeship system; we simply have no record of what training they had received, and we likewise know nothing about their level of competence. What we do know is that they were poorly supervised. The likelihood is that many of the bricklayers involved in the construction of Oxgangs School were migrant workers. It is further likely that they were engaged on a self-employed basis, or otherwise sourced through labour supply agencies or gangmasters. The main contractor most likely

A Prevailing Sense of Permacrisis 297 had little interest in how the bricklayers had been sourced, or the employment conditions under which they worked. As a tier 2 contractor VB Contracts probably relied on tier 3 labour-only subcontractors. In short, the bricklayers were simply viewed as a commodity to be deployed. They were the cannon fodder for what Farmer (2016) refers to as the ‘construction labour model’. Some may have been working illegally, some may even have been subject to labour exploitation. The suggested solution to the identified problem was an improved quality assurance process coupled with independent scrutiny. To investigate employment practices was not within John Cole’s remit and was hence not investigated. The sad reality is that to investigate employment conditions within the construction sector is never within anyone’s remit. The tragedy is that nobody cares. The overriding challenge is how better to integrate migrant workers into the fabric of the industry to which they contribute so much. It is undoubtedly a challenge which remains, and one which is exacerbated by the postBrexit increase in the numbers of migrants from non-EU countries. Many such migrants are even more likely to be vulnerable to exploitative employment practices. What the UK construction sector needs is a better regulated labour market; but this is not going to happen anytime soon. In the case of Scotland, there is perhaps a glimmer of hope to be found in the work of the Fair Work Convention (2022), but there seems little prospect of this baton being picked up by the CLC. Modernisation may well be in vogue, but it is a very selective version of modernisation which is on offer. 11.7  Carillion goes into administration 11.7.1  Modernisation takes a nosedive

The collapse of Carillion on 15 January 2018 sent further shockwaves through the construction sector. Carillion was at the time the UK’s second largest construction firm. The event attracted considerable coverage in the national press, and the armchair experts came out in force. The advocates of Modernise or Die were quick to cite the demise of Carillion as evidence in support of their pre-existing diagnosis that the construction industry is outdated and dysfunctional. The difficulty with this diagnosis is that Carillion hardly fitted the mould of the ‘traditional’ contractor. Indeed, Carilion was the epitome of how the ‘modern’ construction firm has evolved. The story was hence categorically not about how a traditional construction firm failed due to outdated ways of working. The demise of Carillion is best understood as a failure of modernisation, or at least the failure of a particular strand of modernisation. Carillion was born from the long-established construction and materials conglomerate Tarmac in July 1999. Tarmac was originally a roadstone materials business prior to expanding into housebuilding and contracting. In 1992 the company acquired the privatised government agency PSA Projects, thereby acquiring much of the government’s expertise in the management of projects. However, during the late 1990s Tarmac decided to consolidate its activities with a focus on its core business. The construction and professional services operations were hence demerged under the brand of Carillion. At the point of its demise in 2018, the company was only 17 years old – hardly old enough to qualify as ‘traditional’. From the outset, Carillion’s strategy was to diversify into new areas. It hence embarked on an aggressive programme of mergers and acquisitions to increase its presence in targeted sectors. By 2018 Carillion was responsible for a huge portfolio of UK Government service contracts spanning across the education, defence, transport, and justice sectors. Many of these areas had been initially targeted through Carilion’s involvement in PFI. As of March 2016, Carillion had a direct equity stake in 12 PFI schemes (Mor et al., 2018).

298  A Prevailing Sense of Permacrisis 11.7.2  Diversification through acquisition

Carillion could hence not reasonably be described as a traditional construction company. Indeed, they preferred to describe their core business as the provision of ‘integrated support services’. The progressive expansion into government support services was a key component of the adopted growth strategy. Their portfolio of government service contracts may not have returned high margins, but they provided opportunities for growth that were otherwise unavailable. Carillion was also one of relatively few UK contractors to maintain a sizable overseas presence as a buffer against the uncertainties of the domestic market. At the time of its demise Carillion was operating in Canada, the Middle East and the Caribbean. However, the background story was that the company was accumulating ever higher levels of debt. From December 2009 through to January 2018 the level of debt reportedly increased from £242 million to an estimated £1.3 billion. Yet Carillion was not borrowing money for the purposes of investment, or even for the purposes of expanding its revenue. Much of the debt was used for the purposes of paying dividends to shareholders. In the 8 years from 2009 to 2016 Carillion paid out £554 million in dividends. From 2012 to 2016 it paid out £63 million more in dividends than it generated in cash from its operations (Mor et al., 2018). And the most important shareholders are invariably globalised hedge funds who care little for the traditions of the construction sector, or the buildings that it produces. The Carillion collapse was subject to numerous subsequent investigations which shine an unprecedented light on the adopted operating model. Most of the information here presented is freely available within the public domain. But there is little reason to think that Carillion was especially unusual. In common with many other large tier 1 contractors, Carillion sought growth through diversification via acquisition. They also derived most of their profit from return on capital employed (ROCE). The management of cash flow was hence of central importance to their success. But they were crucially driven by short-term stock market criteria, not least the need to keep declaring dividends for shareholders (Smyth, 2018). Ultimately, their demise was accelerated by severe cost overruns on several high-profile projects, including: the £745 million Aberdeen bypass, the £235 million Royal Liverpool Hospital, the £475 million Midland Metropolitan Hospital in Sandwell and the £153 million Lincoln Eastern bypass. Carillion’s facilities management (FM) contract for public sector prisons in England and Wales was also losing £15million per year (Wylie, 2020). Carillion was further involved in a major dispute to the tune of £200 million in connection with the Doha downtown regeneration project in Qatar. Furthermore, at the time of its demise, Carillion had an estimated pension deficit of nearly £1 billion. It also apparently owed approximately £2 billion to 30,000 suppliers, subcontractors, and other short-term creditors. Many such creditors received very little of their money back following Carillion’s liquidation. The government was also significantly out of pocket having been forced to commit £150 million in taxpayers’ money to maintain essential services. 11.7.3  Recklessness, hubris and greed

The strategy adopted by Carillion was to create the impression of a healthy company by increasing dividend payments year on year. But this was only made possible through highly aggressive bidding and accounting practices. Carillion fell into the trap of bidding below cost to secure new projects as a means of subsidising current projects that were losing money. Such an approach is clearly unsustainable in the long-term. But continuing to accept unrealistically low bids was also a failure on the part of government. Indeed, some government departments continued to award contracts to Carillion even when it became blatantly obvious that the firm was in difficulty. The phrase ‘aggressive accounting’ refers to the practice of declaring revenue and profits based on optimistic forecasts

A Prevailing Sense of Permacrisis 299 in advance of the cash being received. A committee report from the House of Commons (2018) preferred to describe Carillion’s collapse as ‘a story of recklessness, hubris and greed, its business model was a relentless dash for cash’. These characteristics were of course by no means new having been previously exposed by the Poulson scandal in the 1970s. But it seems that the numerous ‘improvement initiatives’ imposed on the construction sector over the intervening years had made things worse rather than better. It might equally be argued that both Carillion and government were victims of a deviant strand of ‘bandit capitalism’ (Wylie, 2020). The term ‘bandit capitalism’ might further be applied to several of the firms involved in the Grenfell Tower tragedy, not least those who were responsible for marketing materials that they knew to be unsafe.

11.7.4  The financialisation of construction

If not bandit capitalism, the Carillion collapse can certainly be held as an example of the ‘financialisation’ of the construction sector. This refers to the increasing precedence of financial markets, financial institutions and financial actors over those involved in the physical act of construction (cf. Rafferty and Toner, 2019). Carillion failed because it privileged the short-term interests of shareholders over the interests of other stakeholders. The directors were incentivised by performance bonuses linked directly to financial indicators in support of the short-term goals of capital markets. Those in charge of corporate decision-making were seemingly prepared to sacrifice almost anything – accounting standards included – to the cause of maximising returns to shareholders. In contrast, there was little incentivisation in support of other key stakeholders such as Carillion’s employees, suppliers, and subcontractors. Hajikazemi et al. (2020) further argue that the collapse of Carillion was due to an accumulation of failures together with the gradual normalisation of deviations from good practice. Their analysis focuses on three distinct types of deviance which would have been immediately denounced by an objective detached observer: late payment to suppliers, aggressive accounting, and payments of high dividends to shareholders despite faltering financial performance. The contention is that such practices developed gradually over several years and hence ultimately became normalised. A similar argument can be made on the part of those involved in the procurement decisions within the various government departments. Ultimately, all parties were locked into a shared set of deviant practices. Subsequent questions were also raised about the integrity of Carillion’s auditors, KPMG, not least in terms of their alleged failure to flag discrepancies in Carillion’s accounts. This led in turn to much public criticism of the quality of audits across the UK more generally. The official receiver notably launched a £1.3 billion lawsuit against KPMG to recoup the losses suffered by Carillion’s shareholders. An undisclosed out-of-court financial settlement was finally agreed in February 2023. If the construction sector does indeed suffer from a regressive culture it would seem to be a condition that spreads throughout the broader political economy within which it operates. 11.8 Summary This chapter has provided a sad indictment of decades of debate on the topic of ‘construction improvement’. Coverage commenced with the appointment of Theresa May as Prime Minister in July 2016. Her premiership coincided with a growing sense of permacrisis within the construction sector, but the antecedents of the described events have been a long time in the making. They can perhaps be best understood as the unintended consequences of previous policy choices. The notorious ‘bonfire of red tape’ as implemented throughout the noughties is undoubtedly implicated. But the roots of the crisis are much deeper and span across several governments. The relentless policy

300  A Prevailing Sense of Permacrisis focus on innovation over a period of several decades had served to distract attention from the need for basic levels of competence. In simple terms, the chickens have come home to roost. In recent years the essential soundtrack has been provided by Farmer’s (2016) diagnosis of the construction industry as a ‘sick and dying patient’. Yet the solution offered is seemingly to innovate with even greater levels of enthusiasm. Yet Farmer’s diagnosis stands in sharp contrast with the optimistic storylines of Construction 2025 from just three years earlier (HM Government, 2013). Neither report in truth offers a remotely balanced representation of the construction sector. They are best understood as alternative narratives commissioned for different purposes. The Farmer report was commissioned to provide a convincing argument in support of offsite construction, and to justify a radical review of the CITB. The CITB had seemingly already been identified as a suitable scapegoat. In contrast, Construction 2025 was commissioned to provide an optimistic vision of the future in response to the criticism that government was not doing enough to support the sector. The shared storyline was that the sector needed ‘radical transformation’. Neither report seemed interested in the practicalities of implementing change, or in the reasons for the failure of previous such initiatives. Despite supposedly being commissioned to conduct a review of the construction labour model, Farmer strangely offered little advice on how it might usefully be improved. He was stubbornly disinterested in the way that employment conditions are undermined by an abiding commitment to labour market flexibility. Farmer seemingly preferred the safer premise of pointing towards the ageing demographic of the construction workforce, and the pending implications of Brexit for labour supply. Farmer’s solution was simple: the sector had no choice other than to modernise. Yet the advocated version of modernisation was highly selective, and heavily dependent upon a beguiling narrative of technological optimism. In fairness, Farmer was also clear that clients had to change too, not least in terms of their procurement approaches. Yet this not what his report is remembered for. The Farmer report is remembered almost entirely for its advocacy of MMC, which curiously was not even his preferred terminology. Consideration thereafter was given to the Grenfell Tower tragedy. The immediate assumption following the fire was that the firms involved in the refurbishment had been negligent. The underlying script for such an assertion was provided by Farmer (2016). But over time, the conversation responded to the emerging revelations from the public inquiry. Especially deserving of condemnation were the revelations of how the materials suppliers had gamed the certification system. Those involved had seemingly continued to market their products for use on high-rise buildings despite knowing they were highly flammable. The public inquiry further shed light on significant failings within the procurement process as instigated by the TMO. But it also revealed a failure of the regulatory system which had been decades in the making. The underlying causes of the Grenfell tragedy cannot be separated from a long-term commitment to deregulation which spanned across several governments. Much of the debate centred on the flawed guidance provided in ADB relating to the controversial ‘Class 0’ classification. If the culture of construction was toxic and dysfunctional, then so too was the culture that had been allowed to develop within government. Several commentators pointed towards years of institutional indifference to public housing, and especially to the residents therewithin. Others talked of blatant political neglect. Hence the conversation rapidly expands beyond issues relating to the competence of the construction sector to broader questions of social justice. Many were disappointed that David Cameron was not called in person to give evidence to the public inquiry. The prevailing sense of permacrisis was further fuelled by the Cole (2017) inquiry into the causes of the collapse at Oxgangs School in Edinburgh. The report was damning in its indictment

A Prevailing Sense of Permacrisis 301 of the quality of construction within schools in Scotland as procured through the PFI/PPP route. It was especially critical of the widespread reliance on subcontracting such that building contractors no longer employ tradespeople directly. Cole’s criticisms were notably not directed at traditional ways of the working, but at methods of organising that are eminently modern. The longstanding project of ‘modernising’ construction has hence become an intrinsic part of the problem. A further shock to the system occurred with the collapse of Carillion in January 2018. Carillion was in many ways the exemplar of the modern large contractor. Its collapse resulted primarily from privileging the short-term interests of shareholders over the long-term interests of the company. Phrased otherwise, the company fell victim to externally driven processes of financialisation. Aggressive accounting practices were central to Carillion’s mode of operating, aided and abetted by a flawed culture of auditing. The body of middle managers within Carillion were therefore the victims of wider forces which sought to extract cash from the company. The fault lay less with them and more with the system within which they worked. The same argument applies even more so to the tradespeople engaged throughout the extended supply chain. The working lives of those in construction are too often shaped by abstract processes of financialisation which operate beyond their control. Such processes can be compared to leeches in that they suck the lifeblood from a supposedly already sick and dying patient. And yet strangely Carillion continues to be cited as a further justification for the advocated agenda of radical and transformational change. What the construction sector really needs is a period of economic stability. Ensuring that existing ways of working operate to a minimum standard is at least of equal importance to the abstract cause of innovation. But rarely does it bring the same degree of kudos. Ultimately, the directors of Carillion must carry much of the blame for what occurred. Yet Carillion’s operating model was not very different from that of its publicly listed rivals. Interserve was another construction company that had been expanding into government outsourcing contracts. It notably went into administration in March 2019. Firms operating in the same field are invariably compelled to operate on the same basis if they are to remain competitive (DiMaggio and Powell, 1983). But the Carillion collapse was also a stark failure on the part of government policy – subsequently reinforced by the demise of Interserve. Throughout the noughties, the priority of government procurement was to spend as little money as possible while forcing contractors to carry unacceptable levels of risk. Many subsequently questioned the wisdom of placing so much faith in a single contractor. Meanwhile, MMC continues to be promoted as a panacea of the industry’s problems. References Adamson, D. M. and Pollington, T. (2006) Change in the Construction Industry, Routledge, London. Allain, J., Crane, A., LeBaron, G. and Behbahani, L. (2013) Forced Labour’s Business Models and Supply Chains, Joseph Rowntree Foundation, York. Apps, P. (2022) Show Me the Bodies: How We Let Grenfell Happen, Oneworld, London. Banwell, Sir Harold (1964) The Placing and Management of Contracts for Building and Civil Engineering Work, HMSO, London. Briscoe, G., Dainty, A. and Millett, S. (2000) The impact of the tax system on self-employment in the British construction industry, International Journal of Manpower, 21(8), 596–614. BSI (1962) Code of practice, CP3: Chapter IV: Part 1: 1962. Code of Basic Data for the design of buildings. Chapter IV Precautions against fi re. Part 1. Fire precautions in flats and maisonettes over 80ft in height, 1962: 8. Carrington, J. (2019). ‘Class 0’ and the End of Government’s Guidance on Building Regulations. Available at: https://www.law.ox.ac.uk/housing-after-grenfell/blog/2019/01/class-0-and-end-governments-guidancebuilding-regulations (Accessed 10 April 2023)

302  A Prevailing Sense of Permacrisis CIOB (2016) Building a Fairer System: Tackling Modern Slavery in Construction Supply Chains, Chartered Institute of Building, Bracknell. Cole, J. (2017) Report of the Independent Inquiry into the Construction of Edinburgh Schools, Commissioned by the City of Edinburgh Council, Edinburgh. Construction Industry Board (1996) Educating the Professional Team. Report of Working Group 9, Thomas Telford, London. DiMaggio, P. J. and Powell, W. W. (1983) The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American Sociological Review, 48(2), 147–160. Donaghy, R. (2009) One Death is Too Many. Report to the Secretary of State for Work and Pensions. Cm 7657, TSO, London. Egan, Sir John (1998) Rethinking Construction, Department of the Environment, Transport and the Regions, London. Fair Work Convention (2022) Building Fair Work in the Construction Industry, Fair Work Convention Construction Inquiry Report. Available from: www.fairworkconvention.scot Farmer, M. (2016) The Farmer Review of the UK Construction Labour Model: Modernise or Die, Construction Leadership Council, London. Flanagan, R. and Jewell, C. (2021) Guide to Quality Management in Construction: Site Production and Assembly, Chartered Institute of Building, Bracknell. Gibb, A. G. F. (2001) Standardization and pre-assembly – Distinguishing myth from reality using case study research, Construction Management and Economics, 19(3), 307–315. Gray, C. and Flanagan, R. (1989) The Changing Role of Specialist Contractors, Chartered Institute of Building, Ascot. Green, S. D. (2023) Procurement in the Finishes, Fit-Out and Interiors Sector, Finishes and Interiors Sector (FIS) Ltd, Solihull. Hackett, Dame Judith (2017) Building a Safer Future. Independent Review of Building Regulations and Fire Safety. Interim Report, Cm 9551. Presented to Parliament by the Secretary of State for Housing, Communities and Local Government. HM Government London. Hackitt, Dame Judith. (2018) Building a Safer Future. Independent Review of Building Regulations and Fire Safety. Final Report, Cm 9607. Presented to Parliament by the Secretary of State for Housing, Communities and Local Government. HM Government London. Hajikazemi, S., Aaltonen, K., Ahola, T., Aarseth, W. and Andersen, B. (2020) Normalising deviance in construction project organizations: A case study on the collapse of Carillion, Construction Management and Economics, 38(12), 1122–1138. HM Government (2013) Construction 2025: Industrial Strategy for Construction – Government and Industry in Partnership, Department of Business, Innovation & Skills, London. Hodkinson, S. (2019) Safe as Houses: Private Greed, Political Negligence and Housing Policy after Grenfell, Manchester University Press, Manchester. House of Commons (2018) Carillion, Second joint report from the Business, Energy and Industrial Strategy and Work and Pensions Committees, Session 2017–19, HC 769, London. Jones, P. (2012) Re-thinking corruption in post-1950s urban Britain: The Poulson affair, 1972–1976, Urban History, 39(3), 510–528. Kernick, G. (2021) Catastrophe and Systemic Change: Learning from the Grenfell Tower Fire and Other Disasters, London Publishing Partnership, London. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London. Mor, F., Conway, L., Turley, D. and Booth, L. (2018) The Collapse of Carillion, Briefing Paper Number 8206, House of Commons Library, London. Murray, M. and Langford, D. (Eds.) (2003) Construction Reports 1944–98, Blackwell, Oxford. OST (1995) Technology Foresight Report: Progress through Partnership, Office of Science and Technology, London. Rafferty, M. and Toner, P. (2019) Thinking like capital markets – Financialisation of the Australian construction industry, Construction Management and Economics, 37(3), 156–168.

A Prevailing Sense of Permacrisis 303 Sergeeva, N. and Green, S. D. (2019) Managerial identity work in action: performative narratives and anecdotal stories of innovation, Construction Management and Economics, 37(10), 604–623. Smith, D. and Chamberlain, P. (2015) Blacklisted: The Secret War Between Big Business and Union Activists, New Internationalist, Oxford. Smyth, H. (2018) Castles in the Air? The Evolution of British Main Contractors, The Bartlett School of Construction and Project management, University College London, London. Toner, P. (2008) Survival and decline of the apprenticeship system in the Australian and UK construction industries, British Journal of Industrial Relations, 46(3), 413–438. Wolstenholme, A. (2009) Never Waste a Good Crisis, Constructing Excellence, London. Wylie, B. (2020) Bandit Capitalism: Carillion and the Corruption of the British State, Birlinn, Edinburgh.

12 Unfulfilled Dreams of Technological Optimism

12.1 Introduction This chapter aims critically to examine the dominant narratives of technological optimism that at the time of writing continue to dominate the construction policy agenda. These narratives have in part emerged in response to the challenges and failures described in the previous chapter. However, some elements can be traced back much further. It is contended that such narratives have significant implications for how the construction sector operates and for the material fabric of the built environment. Policy narratives influence what practitioners give attention to, what they neglect, and what they prioritise. The prevailing assumption is that the problems of the construction sector can be solved by the adoption of modern technology. The beguiling prospect of radical transformation remains remarkably intact despite the lessons of history. Of particular importance is the continued belief in modern methods of construction (MMC). Following the lessons from the Grenfell inquiry, an increased emphasis might have been expected on the importance of appropriate regulation. But what was forthcoming was an ever more strident insistence on the need for radical transformation. The chapter commences with a review of the Construction Sector Deal published in 2018. This comprised an acclaimed strategic partnership between government and industry to transform the sector’s productivity through the application of digital and offsite technologies. However, it is important to put such initiatives in the broader context of the evolving political context. Attention is also directed at the prevailing uncertainties in the UK economy. It is argued that the recurring policy emphasis on pre-manufacturing cannot be understood without considering the influence of the offsite lobby. It must further be recognised that the distractions of Brexit did not end with the UK’s formal departure from the EU on 31 January 2020. On the contrary, the levels of political and economic uncertainty intensified, thereby serving to undermine the government’s aspirations of industrial strategy. The other significant disruption was caused by the Covid pandemic, which brought unprecedented challenges to the construction sector. Meanwhile, there was a fleeting recognition among policymakers of the harmful effects of the sector’s reliance on multi-tiered subcontracting. However, such concerns were soon dismissed in favour of the promotion of MMC as an assumed panacea for the sector’s problems. In light of the current pro-innovation bias in favour of MMC it is important to subject the commonly accepted supporting narrative to critical evaluation. Attention is initially directed at the antecedents of MMC together with issues of definition. Consideration is focused on the hubristic nature of the claims routinely made in support of MMC with scant recognition of the potential unintended consequences. Of particular concern are the claims made in support of the factory-based levels of quality supposedly achieved through precision engineering. Coverage is further extended to prevailing concerns relating to fire safety, and the extent to which these are routinely ignored. The chapter is concluded with a critique of the Construction Playbook which proposes yet another

DOI: 10.1201/9781003308133-12

Unfulfilled Dreams of Technological Optimism 305 ‘reset’ in the relationship between government and the construction sector. The key themes are summarised prior to an epilogue which addresses the contribution of the book as a whole. 12.2  Construction Sector Deal 12.2.1  Transformative deal between government and industry

Although the outline details of the Construction Sector Deal were formally announced on 29 November 2017 the full report was not published until the following year (HM Government, 2018). The sector deal was part of Theresa May’s cross sectoral industrial strategy initiative. It was viewed by many as a means of retaining market confidence amidst the uncertainties of Brexit. From the outset, the Construction Sector Deal was presented as a ‘transformative’ pact between government and the construction industry. The unlikely assertion was that it could add billions of pounds to the UK economy. In formulating the Construction Sector Deal, government had sought to engage with industry through the Construction Leadership Council (CLC). This was presumably on the basis that there was no other credible body to whom they could turn. There were however continuing concerns about the legitimacy of the CLC as the construction sector’s sole representative body. The advocated strategic direction drew heavily from Construction 2025 (HM Government, 2013) with little evidence of fresh thinking. The stated ambition of modernising the industry was superficially uncontroversial, likewise the need to respond to the challenges of demographic change and Brexit. The core claim of the Construction Sector Deal was that it would help construction firms build better performing buildings and infrastructure at greater speed and at reduced cost. Such hyperbole had by now become normalised. The required transformation was apparently to be achieved through the better adoption of digital and manufacturing technologies. £170 million of government investment was promised over a three-year period via the Industrial Challenge Fund. There was a further vague promise of an additional £250 million of matching funding from industry. The initial press release repeated the longstanding ambition to reform the Construction Industry Training Board (CITB). There was also a pledge to maximise the benefits of the apprenticeship levy. The continuing obsession with reforming the CITB was nothing if not predictable. It is likewise easy to imagine the extensive industry lobbying in respect of the apprenticeship levy. The initial press release of 29 November 2017 repeated the objectives previously specified in Construction 2025 (HM Government, 2013):

• • • •

33% reduction in the cost of construction and the whole life cost of assets; 50% reduction in the time taken from beginning-to-end of new build and refurbished assets; 50% reduction in greenhouse gas emissions in the built environment; 50% reduction in the trade gap between total exports and total imports of construction products and materials.

It was conveniently forgotten that the above supposedly ‘clear objectives’ were originally expressed only as aspirations. But rather more pertinently, it was also conveniently forgotten that no meaningful progress had been made since they were first launched in 2013. The press release further confirmed the launch of the Centre for Digital Built Britain (CBBB) as previously announced in the 2016 budget. The investment in CDBB formed part of the ‘Transforming Construction’ Industrial Challenge Fund. The stated aim of the broader industrial strategy was to create ‘an economy that boosts productivity and earning power throughout the UK’. For its part, the CDBB was tasked with developing a series of supporting technological devices, including building

306  Unfulfilled Dreams of Technological Optimism information modelling (BIM), sensors, data analytics and smart systems technologies. BIM had notably been previously heralded as a means of industry transformation without ever quite living up to the hyperbole (see Chapter 10). The advantage in pointing towards the ‘white heat of technology’ was that it did not threaten any of the industry’s vested interest groups. In truth, the very last thing that construction sector leaders wanted was transformational change. They would have happily settled for a little bit of economic stability. But there was nevertheless a shared interest in ensuring that the sector received its fair share of government funding. 12.2.2  Digital and manufacturing technologies

The full details of the Construction Sector Deal were subsequently published in a 48-page document on 5 July 2018 (HM Government, 2018). Publication had apparently been delayed following the collapse of Carillion. The report set out an ambitious partnership between government and industry aimed at improving the sector’s productivity. Under Theresa May’s premiership industrial strategy was seemingly back in vogue – at least in principle if not in practice. The tone of the published document was reminiscent of the technological optimism of Construction 2015 (HM Government, 2013). The foreword was written jointly by Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, and Andrew Wolstenholme of the CLC. They confidently claimed that the sector was experiencing the ‘early days of one of the greatest construction programmes in history’. Such a claim seems strangely at odds with the sense of crisis which prevailed at the time. But there was government money available, and it was hence important that the construction sector should be seen in a positive light. The price to be paid was yet another document full of hubris and hyperbole. Unfortunately, this set the tone for much of what was to follow. Inspiration was seemingly derived from the McKinsey Global Institute (2017) report Reinventing Construction. The authors of the Construction Sector Deal were presumably grateful for the overblown McKinsey claim that productivity gains of 50–60% could be achieved through the adoption of digital and manufacturing technologies. Consultancies of course are consistently adept at promoting solutions without worrying too much about the need for supporting evidence. Such sources were becoming noticeably more influential in shaping the parameters of the construction sector improvement debate. Much worse was yet to come. A tendency towards technological optimism can perhaps be forgiven, but the Construction Sector Deal edged dangerously towards hubris. This was to become characteristic of the subsequent premiership of Boris Johnson. Brexit was at the time testing British democracy almost to breaking point. Government hence had limited capacity for serious policy making. Indeed, the overall style of the Construction Sector Deal suggests that the authorship had been almost entirely outsourced to consultants. The Farmer (2016) review was the only previous construction sector report cited, yet strangely there was no mention of the infamous ‘sick and dying patient’. Such talk had seemingly slipped out of fashion. The reference to the Farmer review was further notably limited to the recommendation that transforming the industry would require shared leadership by the industry, its clients, and government. This was hardly a point of substance in moving the agenda forward. The Construction Sector Deal was however notable for referring to construction as a ‘sector’ rather than an ‘industry’. The boundary definition notably included contracting, product manufacturing and professional services. As ever, the system boundary changes in accordance with the arguments being promoted. If the purpose is to argue how important the sector is to the national economy, then it clearly makes sense to draw the boundary as widely as possible. The specified mechanism for achieving the required increase in productivity was increased investment in skills and technological innovation. The good news was that these were to be underpinned by changes in procurement practice. Yet there was no attempt to define what was meant by productivity, and how it might be construed differently for the three specified domains

Unfulfilled Dreams of Technological Optimism 307 of contracting, product manufacturing and professional services. Neither was there any recognition that poorly regulated technological innovation had contributed directly to the Grenfell Tower tragedy. Nor was there any mention of what Farmer referred to as the ‘construction labour model’. There was however considerable emphasis on the need to enable sustainable business models – presumably this was a belated amendment following the Carillion debacle. Further points of interest included an emphasis on standard approaches to the way that built assets are procured, based on whole-life asset value and digital designs. There was also a call for a new, fairer approach to contract and payment practices with a view to ensuring that SMEs are not unfairly disadvantaged. Such promises of course had been made before but had been consistently blocked by tier 1 contractors. That such a call was included was a rare failure on the part of their lobbying power. They were however subsequently successful in ensuring that the expressed commitment was watered down to such extent it became almost meaningless. 12.2.3  Commitment fatigue

In contrast to the Farmer (2016) review, the Construction Sector Deal was not widely discussed across the broader industry. It was largely a product of the CLC in collaboration with government. The CLC saw themselves as acting on behalf of the sector at large to secure additional funding. However, concerns about their legitimacy as the sector’s representative body had not gone away. Most firms in the sector saw little relevance in the Construction Sector Deal. They were hence cynical that it would have any impact on their business. Indeed, many had long since been suffering from initiative fatigue. There seemed to be an almost endless series of reports setting out targets and commitments only for them to be replaced a few years later with yet another largely meaningless set of targets. For those of a cynical disposition, the only purpose they seemed to serve was to develop the careers of those directly involved. Given the above it is easy to understand why the commitments set out in the Construction Sector Deal were largely received with disinterest. This was equally true of the commitments made by the CLC on behalf of the sector and those made on the part of government. The foreword notably referred to a ‘continued commitment to partnership across the construction sector, local and national government, universities and research institutes’. This seemingly only applied to a pre-selected set of universities and research institutes. Engaging with local government had also been rendered problematic due to decades of outsourcing. This was also true for many central government departments. The reality was that the systemic outsourcing of expertise left many public sector clients them little capacity to engage in partnerships. There were undoubtedly exceptions, but both the Carillion collapse and the Grenfell Tower tragedy cast a harsh light on public sector approaches to procurement. It remains ironic that the widespread imposition of compulsory competitive tendering (CCT) had been done in the name of ‘modernisation’. The high-level commitments specified within the Construction Sector Deal were derived from the government’s broader industrial strategy:

• • • • •

To be the world’s most innovative economy. To generate good jobs and greater earning power for all. A major upgrade to the UK’s Infrastructure To be the best place to start and grow a business. To have prosperous communities throughout the United Kingdom

The above commitments are generously best read as political slogans, or perhaps less generously as the outputs of some sort of propaganda unit. More pertinently, they are populated with

308  Unfulfilled Dreams of Technological Optimism

450 400 350 300 250 200 150 100 50 0 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Number of dwellings (thousands)

a series of actions on the part of both government and the construction sector. The general tone throughout is one of studied vagueness. There are very few specific promises that could be used to hold the parties to account. For example, government action to support construction included the pledge to make effective use of public procurement to encourage skills development in the construction supply chain. This same pledge had been made on numerous previous occasions with no discernible impact on the prevailing level of skills. Neither was there any agreement on how ‘skills’ might supposedly be measured. The emphasis throughout lay on driving investment in the skills allegedly needed to support modernisation and industry-led innovation. Some skills it seems are more important than others. Also of note is the recurring tendency to link ‘modernisation’ with ‘industry-led innovation’. There was seemingly little appetite for innovation led by other interested parties such as universities, trade unions or even construction sector representative bodies other than the CLC. ‘Industry-led’ tended to mean large firms, and especially those large firms who were most effective in lobbying. Other specified government actions included the re-cycled 2017 promise to adopt a presumption in favour of offsite construction by 2019 across all suitable capital programmes. The sole caveat was that it had to be seen to provide best value for money. There was no acknowledgement of any of the broader concerns regarding the prioritisation of offsite construction. Reference was also made to the government’s 2015 commitment to deliver a million homes by the end of 2020 and half a million more by the end of 2022. The first commitment failed to be delivered by a considerable margin such that these targets were subsequently unceremoniously abandoned. Figure 12.1 provides an updated representation of housing completions. It indicates even more starkly the state’s long-term retreat as a provider of mass housing. Little wonder there was limited appetite for any large-scale investment in MMC. A stronger pipeline of future work would have been much more persuasive than vague notions of technological optimism. A more immediate practical concern was the emphasis given to the ongoing consultations on retention payments. There was also the vaguely expressed intention to promote the use of unamended forms of contract on publicly funded projects where this was deemed ‘possible’. This is yet another prime example of a good intention being watered down to the point of being

Private enterprise

Housing associations

Local authorities

All dwellings

Figure 12.1 New homes completed by private companies, housing associations and local authorities in the United Kingdom (UK) from 1949 to 2020 (in 1,000s). (Sources: Department for Communities and Local Government (UK); Office for National Statistics (UK).

Unfulfilled Dreams of Technological Optimism 309 meaningless. The use of unamended forms of contract has been recommended in almost every construction sector report since Latham (1994), and yet no definitive action has ever been taken. The Construction Sector Deal further promised that the CLC would bring together the industry to ‘seek to develop an agreed set of proposals to improve contractual and payment practices and performance within the sector’. The phraseology of ‘bringing the industry together to seek to develop’ could hardly have been more tentative. The other useful suggested action was to reduce bureaucracy by developing a standardised cross-industry pre-qualification process that can be adopted across the public and private sectors. This would again seem to be another eminently sensible idea. But nothing ever happens in terms of any binding commitments. The Construction Sector Deal also made several promises in respect of the recommendations of the Hackitt report published in May 2018. The emphasis throughout lay on the competence of professionals working within the sector, with a recurring focus on the need for better training. Strangely, there is no mention of government complicity in the failure of the regulatory system. Mention however is made of the contribution to safety offered by the adoption of digital and manufacturing technologies. This was seen to be important in improving productivity, through-life building performance, and sustainability. The adoption of digital and manufacturing technologies was further seen as a means of building competitive advantage for the UK construction sector in the global market. It was even presented as a means of attracting a more diverse workforce. In short, the adoption of digital and manufacturing technologies was seen as a panacea for almost everything. It did not seemingly matter what problem needed to be addressed, the solution was always the adoption of digital and manufacturing technologies. No wonder so few in the construction sector took the specified commitments seriously. 12.2.4  Delivery plan

The Construction Sector Deal specified that CLC would lead on implementation. It was further promised that progress would be reviewed at its quarterly meetings. Given CLC’s abject failure to make any meaningful progress in the implementation of Construction 2025 (HM Government, 2013) this can only be viewed as a triumph of hope over experience. Reference however was made to the intention of setting up a series of sub-groups working closely with industry stakeholders. Specific reference was made to the inclusion of trade associations and professional bodies to ensure that the sub-groups were representative of the sector at large. There was also a promise to publish a delivery plan covering key objectives and milestones. At the time of writing few of these subgroups would seem to be operable, but there is little sense that they are working towards definable milestones. The Department for Business, Energy and Industrial Strategy (BEIS) subsequently posted a ‘one year on’ update on progress on 22 July 2019, just two days before Boris Johnson took over as prime minister. With the media elsewhere, it did not attract much attention. The update unsurprisingly re-emphasised the intention of improving productivity by increasing the use of digital and offsite manufacturing technologies. Mention was also made of increasing the number of apprentices and the level of investment in training/retraining. It further repeated the intention of improving payment and contractual practices to strengthen the construction supply chain. The overriding claim was that government and industry had been working together to make significant progress in implementing the commitments previously made. This must have been very reassuring for the plethora of SMEs struggling to keep their businesses afloat during a period of significant economic uncertainty. Further emphasis was given to the Transforming Construction Programme aimed at developing and commercialising the ubiquitous digital and manufacturing technologies. Of particular interest was the promised £72 million investment in the Construction Innovation Hub, a consortium which involved CDBB, the Manufacturing Technology Centre (MTC) and the

310  Unfulfilled Dreams of Technological Optimism BRE. There was no justification for why these partners were considered appropriate. The Hub was apparently working with universities, construction firms and public and private sector clients to ‘transform the built environment’. They could not be accused of lacking ambition, but it was unclear why they should succeed when so many previous such initiatives had failed. We further learn that the Hub was engaged in the development of standardised designs, platforms, and components for buildings such as schools and hospitals, and the required supporting manufacturing processes. This was immediately reminiscent of the Consortium of Local Authorities Special Programme (CLASP) formed in 1957 to develop a prefabricated school building programme. The resultant modular buildings used lightweight steel prefabricated frames. They were moderately successful in providing serviceable spaces. Unfortunately, they also made heavy use of asbestos for the purposes of fireprotection and insulation. Asbestos was at the time heavily marketed as the ‘perfect insulating material’. Unfortunately, it turned out to be highly toxic thereby initiating a major health and safety crisis in thousands of school buildings which continues to this day. This may perhaps have instilled the Construction Innovation Hub with an appropriate sense of caution, not least given prevailing safety concerns about supposedly modern building materials such as ACM cladding. The BEIS (2019) update also highlighted the CLC skills workstream, which involved bringing together the CITB with large and small firms to develop an appropriate skills strategy. It is surprising that the CITB had not thought of this previously. There was seemingly no update yet available on the plan to reform the CITB to ensure that it became more strategic, and thereby better focused on future skills needs. But the CLC workstream had published its Future Skills Report the previous month (CLC, 2019). This contained much recycled material from previous reports, but it also contained the following headline action: This report calls for clients to agree to a code of employment where those who contribute to a project are directly employed, thereby ensuring that it is in the employer’s best interest to train their staff and benefit from their improved productivity. (CLC, 2019; 3) For those who had followed the CLC since its formation the expressed support for direct employment was undoubtedly a surprise. The report went on to suggest that the construction sector could not hope to train the workforce of the future if they are not directly employed. This seemed to pick up the long-neglected arguments of the Donaghy (2009) report, and the recommendation of the more recent Cole (2017) report. Industry was encouraged to respond by increasing the number of people in direct employment throughout their supply chains. Clients and government were in turn urged to promote direct employment through procurement. The suggestion was that direct employment could be incentivised by adopting it as one of the scoring criteria used for the evaluation of tenders. It was further suggested that this could be done both ‘at head contract’ and throughout the supply chain. It was not made clear how much weight should be accorded to direct employment in the overall assessment, nor was it made clear how such an approach might be policed. The idea of incentivising direct employment was soon to be forgotten, never to be heard of again. 12.2.5  Procuring for value

The BEIS (2019) update on progress further referred to the intention to develop a model for ‘procuring for value’ with benchmarks that would allow performance to be measured clearly. This was indicative of how little thinking had developed over the years in respect of ‘building performance’. Government seemingly still struggled to understand that procuring buildings is not the same as procuring paperclips. Much of the same limited thinking is evident within the CLC (2018)

Unfulfilled Dreams of Technological Optimism 311 publication entitled Procuring for Value. The problem lies not in a failure to develop a uniformly accepted definition of ‘value’, but in the assumption that value is codifiable and lends itself to predetermination. Procuring for Value is thereby reflective of the recurring tendency to conceptualise buildings as fixed physical objects rather than socio-technical entities that are enacted in practice (Patel and Green, 2020). In essence, the perennial search for ‘best’ value is indicative of a failure on the part of modernism. The underlying assumption is that complex socio-technical systems can be improved – or even optimised – through the application of science (Rosenhead and Mingers, 2001). It is further taken for granted that the resultant ‘improvements’ serve the interests of all parties. Unfortunately, the construction sector is characterised by multiple interest groups looking to protect their own competitive position. The would-be optimisers of ‘value’ seemingly fail to recognise that the performance criteria through which value is supposedly measured are forever subject to renegotiation. Even the boundary definition of the ‘system of concern’ continuously shifts in accordance with the vested interests of those involved. The beguiling notion of ‘procuring for value’ hence stumbles at the very first question: value for whom? There is stubbornly little interest in measuring the value which accrues to SMEs, and even less in that which accrues to the construction workforce. Ultimately, ‘value’ is better understood as a word than is mobilised for the purposes of being persuasive (Green and Sergeeva, 2019). Such arguments are well-established within the research literature but did not prevent the Construction Innovation Hub from investing considerable time and effort in developing its ‘value toolkit’. In truth, professionalised expertise cannot be replaced by instrumental toolkits, not least because society expects its professionals continuously to learn in response to shifting expectations (Schön, 1983). Effort would have been better spent persuading the government to legislate in respect of the obligatory use of unamended forms of contract and fair payment practices. But this is not going to happen for as long as the prevailing policy emphasis continues to favour voluntary regulation. Similar arguments apply to labour market regulation as a means of supporting direct employment. The reality is that debates about construction improvement are forever shaped and constrained by the prevailing priorities of the broader political economy. It is in the absence of any coherent construction sector policy that supposed technological solutions such as MMC become persuasive. In fairness those seeking to implement the Construction Sector Deal they were charged with an impossible task in challenging circumstances. The uncertainties of Brexit were bad enough, but things were soon destined to take a further significant turn for the worse with the onset of the Covid pandemic. 12.3  Turbulence and disruption 12.3.1  Stumbling towards Brexit

Prime minister Harold Macmillan (1957–1963) was once famously asked what the greatest challenge was for a statesman. His reply was: ‘Events, dear boy, events’. The same is also true of those who purport to exercise leadership in the construction sector. Theresa May had struggled throughout her period as prime minister (2016–2019) to resolve the dilemma of Brexit. The difficulty was that there was no parliamentary majority in favour of any single version of Brexit. May called a snap general election in June 2017 in an attempt to secure an increased majority in parliament. Unfortunately, the plan backfired badly. The Labour Party, under the leadership of Jeremy Corbyn, performed much better than expected. The result was that the Conservatives lost their overall majority thereby forcing May into an unsavoury deal with the Ulster Unionists to remain in power. Such was the level of political crisis that policy making within government became largely

312  Unfulfilled Dreams of Technological Optimism moribund. Theresa May’s premiership was undoubtedly a period of significant political uncertainty. Following three parliamentary defeats on different versions of the Brexit deal, May was eventually forced to resign triggering a leadership contest within the Conservative Party. The leadership election was won by Boris Johnson who was duly installed as prime minister on 24 July 2019 – just in time for the summer recess. The political context however remained highly unstable. In common with his predecessor, Johnson had little freedom to act decisively. He was able to remain in power only because his enemies were so divided. Despite his overall position of weakness, Johnson insisted that the United Kingdom would leave the European Union (EU) by 31 October 2019 – with or without a deal. Johnson also seemed much less committed to the idea of industrial strategy. Indeed, he often struggled to maintain a clear policy position other than ‘getting Brexit done’. His premiership is widely understood to have been chaotic with little underpinning consistency (Selden and Newall, 2023). He seemed to have the tendency to tell people what they wanted to hear. He notably promised new investment in road and rail infrastructure while pledging to ‘level up’ the poorer parts the UK. Johnson was less consistent than May in signalling a bigger role for the state, but nevertheless he struck a different tone from that which prevailed during the preceding years of austerity (Richards, 2019). Construction sector interests welcomed the signal that there would be new investment in infrastructure, while at the same time noting that the government’s own economic forecasts were predicting that the economy would suffer as a consequence of leaving the EU. Johnson further notably purged his cabinet of any Brexit non-believers. In doing so he rejected the longstanding tradition of seeking to strike a balance between different wings of the ruling party. Previous prime ministers such as Harold Wilson had always ensured that his cabinets included representatives from different factions of the Labour Party. Even Margaret Thatcher’s early cabinets had included those from the ‘one nation’ tradition of the Tory Party. But this was categorically not the approach adopted by Johnson. Simply put, those who did not agree with Johnson’s vision of Brexit were out. This narrowing of political perspectives within Cabinet did much to set the tone for what followed including the government’s support for MMC as a totemic means of solving the housing crisis. Indeed, MMC was also destined to be recruited to the cause of ‘levelling up’. In common with Brexit, it was seemingly necessary to accept MMC as an act of faith. When parliament reconvened following the summer recess Johnson duly upped the political stakes by proroguing (suspending) parliament. However, his opponents were able to respond before the prorogation took effect by passing a bill which made it illegal to leave the EU without a deal. This in turn led to a further purge of those who had voted against him, including Conservative stalwarts such as Ken Clarke and Oliver Letwin. Johnson of course did not want a no-deal Brexit, he saw it primarily as a negotiating ploy with the EU (Richards, 2019). Ultimately, Johnson failed to achieve Brexit by the 31 October 2019 and was forced to ask the EU for an extension until 31 January 2020. The opposition parties, however, let him off the hook by agreeing to a fresh general election on 12 December 2019. Johnson won the election decisively on the slogan of ‘Get Brexit done’. He was duly returned as prime minister with an 80-seat parliamentary majority. The UK finally left the EU on 31 January 2020, albeit with a worse deal than that which had been negotiated by Theresa May. The construction sector looked on aghast. 12.3.2  The offsite lobby

The government’s ‘presumption in favour of offsite’ for capital build projects was initially included in the November 2017 budget with a view to implementation from 2019 onwards. Five government departments initially signed up to the presumption, including the Departments for Transport, Health and Education, the Ministry of Justice, and the Ministry of Defence. The basis upon which this decision was made remains entirely unclear. It likewise remains unclear the extent to which

Unfulfilled Dreams of Technological Optimism 313 the CLC was involved in the provision of advice. If the CLC was not consulted, it further raises the question of how seriously the government took the supposed partnership. The presumption in favour of offsite was nevertheless formally endorsed by the Construction Sector Deal (HM Government, 2018) for which Andrew Wolstenholme, on behalf of the CLC, was a co-signatory. The advocates of offsite construction were undoubtedly persuasive in purporting to offer an inherently technological solution to longstanding problems, not least those relating to construction productivity. Many within government were understandably hungry for solutions to the housing crisis. The solutions on offer were undoubtedly beguiling, but the supporting narrative was also inherently flexible. Offsite construction morphed into pre-manufacturing which in turn blended into MMC. There was also a widespread tendency to embrace futuristic notions of digital and manufacturing technologies. The overall tone matched well with the broader boosterism of the Johnson era. MMC was influential in part because of its implicit appeal to modernity. Dissenters could hence too easily be dismissed as out-dated defenders of the status quo. In November 2019 the UK Housing Minister Esther McVey unveiled a £30 million investment in the so-called ‘Construction Corridor’. The money was announced as part of the government’s drive to make the North of England a world-leader in the creation of modern, green homes. The recipient of the investment was Yorkshire based Ilke Homes, whose factory was apparently using precision engineering to create houses that were ‘good for the planet and good for the pocket’. The press release confidently stated that a ‘factory environment also allows Ilke Homes to ensure a high-level of quality and consistency is guaranteed for investors, developers and residents’. The investment was apparently aimed at ensuring that Ilke Homes could scale up its operation. The injection of cash reportedly formed part a £4.5 billion Home Building Fund to be delivered by the government housing agency Homes England. The press release further explained that: Modern Methods of Construction are a combination of offsite manufacturing and onsite techniques that provide alternatives to traditional house building, allowing homes to be built quickly, be more energy efficient and better designed. It can deliver high-quality housing at pace. By manufacturing offsite, the precision-engineered homes produced by Ilke Homes are delivered twice as fast as traditional methods of construction – while creating 90% less waste. Dissenting voices were not seemingly encouraged. McVey had been appointed housing minister when Johnson took up the position of prime minister in July 2019 – primarily it seems because she was an outspoken supporter of Brexit. In common with most UK housing ministers, McVey was not in post for long. She was subsequently dismissed in the cabinet reshuffle of February 2020. Mark Farmer was also formally appointed as the government’s Champion for Modern Methods of Construction in Housebuilding. The position was bestowed by Esther McVey as part of her efforts to make the UK a global leader in housing standards. McVey further charged Farmer with a role in the development of the Construction Corridor in the North of England whereby modular homes could be built in factories and thereafter assembled on site in a day. Or this at least is what was promised in a series of press releases from the Ministry of Housing, Communities and Local Government (MHCLG). Such was the nature of the government’s policy narrative at the time. The promotional success of MMC within the corridors of government was undoubtedly a triumph of the increasingly coordinated industry lobby group in favour of offsite methods. Such voices have in recent times been remarkably successful in promoting offsite as a panacea for the construction sector’s supposed ills. Farmer (2016) notably points towards the ‘good work’ done by the industry lobby group known as Buildoffsite. Buildoffsite was founded in 2003 and specifically cites the aim of lobbying government among its key pledges as stated on its website. At the time of writing, it notably lists Saint Gobain – the giant construction materials firm – among its members.

314  Unfulfilled Dreams of Technological Optimism Saint Gobain’s portfolio of products notably includes Celotex insulation as used on the Grenfell Tower. Perhaps even more bizarre is the inclusion of the CLC among Buildoffsite’s membership. It might be expected that the CLC would jealously guard its independence from such lobby groups, but seemingly not. Other notable members listed on the Buildoffsite website include the Construction Innovation Hub. Needless to say, there is seemingly no corresponding lobby group in favour of ‘traditional methods’. Meanwhile, Farmer’s (2016) proposal for a 0.5% levy on construction clients was quietly forgotten. It was presumably judged more productive to rally support around the unbridled potential of MMC. As highlighted in the preceding chapter, the irony is that MMC was not initially Farmer’s preferred terminology. Farmer (2016) specifies a range of terms used in what is referred to as the ‘realm of construction innovation’. Such terms include ‘off-site manufacturing’, ‘modern methods of construction’ and ‘pre-fabrication’. It was even suggested that the latter two terms are often viewed with suspicion due to their historical associations with the risk of insolvency and poor quality. Yet by 2019 the terminology of MMC was unstoppable. This remained the case until the inevitable problems started to occur, at which point the bandwagon moved on to ever more convoluted linguistic constructions. At the time of writing there is much enthusiasm for platform approaches supposedly aimed at enabling design for manufacture and assembly (P-DfMA). And the BIM groupies have progressed to advocating the benefits of digital twins. The self-appointed champions of innovation always like to be one step ahead, not least because it removes them from any liability for what has gone before. The ‘realm of innovation’ hence moves on leaving behind what is perhaps best described as the ‘realm of disappointment’. Ilke Homes ultimately fell into the realm of disappointment. It went into adminstration in June 2023 as the board and investors battled to save what the press described as a ‘loss-making business’. 12.3.3  The Covid pandemic

It would be an exaggeration to say that the world came to a standstill in March 2020. But it would not be much of an exaggeration. This was perhaps the ultimate ‘black swan’ event, i.e., a high-impact unexpected event that in retrospect appears inevitable. The initial lockdown in the UK was announced by prime minister Boris Johnson on 23 March 2020 ordering people to stay at home. Construction projects came to a standstill causing huge disruption and economic uncertainty. It was announced that only ‘essential workers’ should be going to work. But there was much initial confusion in terms of which workers were essential and which were not. Much to the surprise of its detractors, the CLC stepped up to the challenge by issuing guidance on site operating procedures. The guidance was updated and revised multiple times throughout the pandemic to reflect the changing advice from government. The CLC had seemingly found its purpose. Construction people are good at operational challenges. Most construction sites came to a standstill during the early weeks of the pandemic, although many gradually reopened once the first wave of infections receded. Onsite work, however, continued to be subject to stringent safety protocols. For many workers, the biggest challenge was how to travel safely to site. Those working in professional roles very quickly became used to working from home. The practice of working from home for perhaps 2–3 days per week has since become normalised in ways that were previously unthinkable. Offices that were once hives of activity may never be quite the same again. The luxuries of home working were not however available to the construction workforce, or to those involved in site-based project management. Nevertheless, slowly but surely, the construction sector proved itself highly adept at adapting to new ways of working. The impact of the Covid-19 pandemic on construction sector output was undoubtedly dramatic over the short term, but the recovery thereafter varied by industry segment (see Figure 12.2). The 2022 output of public housing and private commercial works was notably still lower than in 2019. However, new

Unfulfilled Dreams of Technological Optimism 315 Construction output in England, Scotland and Wales from 1997 to 2022 by industry segments 180 Index value, index =100

160 140 120 100 80 60 40 20

Public housing

Private housing Private commercial

New infrastructure

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2011

2012

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

1999

2000

1998

1997

0

Private industrial

All repair and maintenance

Figure 12.2 Construction output in England, Scotland and Wales from 1997 to 2022, by industry segments. (Source: Office for National Statistics (UK).)

infrastructure construction had increased by 19 percent since 2019. The pipeline for infrastructure work is invariably much longer than for other types of construction and hence it is less sensitive to short-term economic disruptions. It is further important to recognise that the pandemic was not a single event, but a process which played out over a two-year period. In essence, it comprised three discrete waves. Following the initial lockdown in March 2020 restrictions were gradually lifted. A new variant then began to spread thereby necessitating a month-long lockdown in November 2020. Restrictions were briefly lifted for the Christmas period promptly followed by a further lockdown. The second wave of infections peaked in January 2021 at over 1,000 deaths per day. The rate of infection receded only to be followed by a third wave commencing in July 2021. However, deaths and hospitalisations during the third wave were thankfully kept to a much lower level then previously due to the vaccination programme. Restrictions were finally lifted in phases during the first quarter of 2022. However, many migrant workers from the EU had by then voted with their feet. Some returned to their home locations, others chose to work in other European countries where the prospects for economic growth were stronger. Brexit had also undoubtedly dented their enthusiasm for living and working in the UK. Many domestic workers also voted with their feet by choosing to retire early, or otherwise becoming economically inactive. Such trends exacerbated the demographic timebomb highlighted by Farmer (2016). The skills crisis had suddenly become much worse as a consequence of the unanticipated Covid pandemic. The broader irony was that this was a government that was supposedly committed to reducing the role of the state in the economy. Yet Boris Johnson found himself in charge of the largest state intervention since World War II. Under the watch of the chancellor of the exchequer, Rishi Sunak, the government was obliged to borrow colossal sums to keep the economy afloat. The state also mobilised unprecedented powers to intervene in the lives of individual citizens. The imposed rules of social distancing were often insidiously enforced by the police. The ‘nanny state’ was seemingly back in fashion after a 40-year interlude. When the initial lockdown was announced Sunak had

316  Unfulfilled Dreams of Technological Optimism only been in post for a little over a month. Nevertheless, his economic rescue package was almost universally praised. The scale of the government intervention in the economy remains unmatched in modern times. Central to the government’s support for the construction sector were the emergency loan schemes designed to ensure that the banks provided struggling companies with financial liquidity. Of particular importance was the Coronavirus Business Interruption Loan Scheme (CBILS) whereby firms with an annual turnover of less than £45 million were offered loans of up to £5 million. A further initiative known as the Bounce Back Loan Scheme (BBLS) was designed to enable businesses to access finance quickly. CBILS provided lending banks with an 80% government guarantee on the loans provided. BBLS provided an even more generous 100% guarantee. Data obtained by Construction News from the British Business Bank in April 2023 suggests that across the two schemes 4,825 loans to construction firms are suspected as having been fraudulent. In total, the government is reported to having written-off £4.3 billion in fraudulent Covid loans. The scale of this write-off, and the government’s unwillingness to pursue the fraudsters caused the minister responsible for counter fraud, Lord Agnew, to resign in disgust in January 2022. He was quoted as saying that the government’s oversight of the loan scheme had been ‘nothing less than woeful’. The government was subsequently accused of making a ‘pitiful’ attempt to recoup millions of pounds that had been wasted on fraudulent Covid contracts for personal protective equipment (PPE). The alleged scale of fraud and corruption was such as to challenge the legacy of the Poulson exposé as the UK’s biggest post-war corruption scandal. Yet the government seemed happy to draw a line and move on. Of even greater significant was the Coronavirus Job Retention Scheme (CJRS), otherwise known as the furlough scheme. The scheme provided employers with direct grants so that they could retain staff by continuing to pay up to 80% of their wages during the Covid related lockdowns. Construction firms claimed just short of £5.5 billion up to 30 September 2021 (FrancisDevine et al., 2021). A separate arrangement applied to those in self-employment, known as the Self-Employed Income Scheme (SEIS). In essence, SEIS paid a grant worth 80% of profits up to £2,500 per month to those whose confirmed trading profit was less than £50,000 per year. Fraud was a common concern with both schemes. But many in the construction sector were unable to provide the necessary financial records and hence lost out. Those who worked in the construction sector’s grey economy were especially disadvantaged. Many migrant workers were especially illplaced to deal with the bureaucracy and hence chose to return to their home countries. 12.3.4  Political instability

The Covid pandemic was ultimately complicit in Boris Johnson’s downfall. His personal integrity was massively dented by the Partygate scandal whereby he was found to have presided over a succession of alcohol-fuelled parties within No 10 Downing Street during lockdown. There was much public anger at what seemed to be a clear case of double standards. Numerous such scandals culminated in Johnson being forced to resign following a cabinet revolt in July 2022. The ongoing instability within government inevitably exacerbated the prevailing sense of economic uncertainty within the construction sector. The economic outlook was further damaged by Russia’s invasion of Ukraine in March 2022, which immediately initiated a commodity price inflation crisis in the UK construction sector. Johnson’s resignation triggered another leadership election in the Conservative Party. The contest was won by Liz Truss who was appointed prime minister on 6 September 2022. She subsequently resigned on 25 October 2022 having been in post for only 49 days. Truss was forced to resign following a disastrous mini budget which included an unfunded £45 billion programme of tax cuts. The markets responded badly. The pound briefly fell to a record low against the US dollar

Unfulfilled Dreams of Technological Optimism 317 and the cost of government borrowing rose to a 30-year high. There was also a sharp rise in the mortgage rate. These were indeed challenging times. Immediately following Truss’s resignation, Rishi Sunak took over as prime minister and managed to convey a sense of stability to the markets. Once again, the construction sector looked on aghast. The baseline expectation of construction sector leaders is that the government should provide a degree of economic stability. At this point, the espoused partnership between government and industry was effectively broken. The assertion that the Construction Sector Deal would add billions of pounds to the UK economy was always unlikely, but by October 2022 it looked like empty bluster. 12.3.5  Distractions from reality

The experience of working during the Covid pandemic undoubtedly caused many construction professionals to upgrade their skills in digital modes of working. This was especially true of online meetings which rapidly became routine. Many such practices continued beyond the pandemic such that online meetings became an important part of the ‘new normal’. Those involved in the socalled ‘realm of innovation’ continued to engage in the various strands of activity initiated by the Construction Sector Deal despite the pandemic and ongoing sense of political crisis. The dominant narrative of technological optimism perhaps even gathered pace without the real-world distraction of construction sites. In truth, industry leaders had probably long since given up hope on any coherent construction sector policy agenda, so resorting to technological optimism was their only realistic hope. But the other narrative which gathered pace during the Covid pandemic was focused on the competence of those who worked in the construction sector. The conversation was initiated by the Hackitt (2018) report which offered an early response to the Grenfell Tower tradegy (see Chapter 11). Hackitt identified a lack of consistency in the processes and standards for assuring the competences of those who worked on high-rise residential buildings as a major flaw of the regularity system. This was indeed a shock to many who worked within the sector, thereby adding fuel to the prevailing sense of permacrisis. The Farmer (2016) report had legitimised the storyline of the construction sector being a ‘sick and dying patient’, and the Grenfell Tower disaster seemingly provided a salutary reminder. However, as described in the preceding chapter, the emergent findings from the Grenfell Inquiry progressively pointed towards failings within the regulatory system. The various inquiries into the Carillion collapse further highlighted a failure on the part of government procurement. They also pointed towards the corrosive influence of those who sought to extract excess profits from the sector. These were very different conversations from those that prevailed within the self-defining ‘realm of innovation’. Indeed, there was a dawning recognition among many that the relentless policy focus on innovation had long since become part of the problem. The mood of the time is well illustrated in an article in The Times (Lea, 2021) entitled ‘Construction after Grenfell: Toxic and dysfunctional industry in race to the bottom’. The article commenced by referring to several decades of official reports gathering dust in Whitehall having given fair warning of the industry’s problems. An alternative interpretation would see such reports as complicit in creating the industry which was now widely acclaimed as dysfunctional. The article went on to bemoan the ‘unsustainably long and poorly configured supply chain of subcontractors failing to survive on razor thin margins’. That such supply chains emerged as a direct consequence of government policy during the 1980s/1990s was strangely not mentioned (see Chapter 3). The Times was on safer ground in referring to poor payment practices in the industry. However, it might usefully have pointed towards a consistent reluctance on the part of government to legislate in respect of fair payment practices. Not least because it had long since become clear that voluntary

318  Unfulfilled Dreams of Technological Optimism codes of practice are not sufficient. Further reference was made to an industry trying to get its act together after Grenfell. There was little acknowledgement of the systemic nature of the failure which extended way beyond the boundary of the construction sector. The Times article quoted Graham Watts, longstanding chief executive of the Construction Industry Council (CIC), at length. Watts describes how the sector’s business model comprises a ‘lengthy and often unmanageable supply chain in which at the top is a tier 1 main contractor which effectively ends up only managing the project’. He further refers to the way work is routinely subcontracted down various tiers of contractors ending with very specialist contractors who sometimes comprise one-man (sic.) bands. Yet the CIC had been strangely silent when this business model was legitimised by the Egan (1998) report. It had also remained similarly silent when the same concerns were raised by the Donaghy (2009) report, and thereafter kicked into the long grass by government (see Chapter 9). The dysfunctional and opaque nature of construction supply chains had been identified by Cole (2017) as a contributory cause of the Edinburgh schools collapse. Such concerns are by no means new, but neither can they be attributed to ‘traditional’ ways of working. They are perhaps best understood as the unintended consequences of the adopted strategic model of structural flexibility. Watts as chief executive of the CIC has undoubtedly proven himself to be an astute political operator. He may therefore have had good reason in the past to have kept his opinions to himself, but he was notably strident in his criticisms of government in The Times: From 1979 onwards each government irrespective of whether they were Conservative, Labour or coalition, was totally obsessed with deregulation. As an exact result of deregulation by the time of the tragedy at Grenfell you could house the number of civil servants overseeing the construction industry in a Whitehall broom cupboard. (Lea, 2021) He further expresses his support for the proposed new government role of building safety regulator, and for the need to licence levels of competence for contractors. But Watts also alludes to the need for a ‘cultural shift’ within the construction sector. There have been many such clarion calls in favour of a culture change over the years, but none have had any noticeable impact on practice. What seemingly remains unspoken is that the culture of the sector is primarily a function of the political economy within which it operates. In the absence of any willingness to reform the broader political economy, repeated calls for culture change risk offering little more than distractions. Graham Watts of the CIC is further notable for having chaired the Steering Group on Competence for Building a Safer Future whose interim report Raising the Bar (2019) in response to the Hackitt (2018) report was published in August 2019. In describing the culture of the ‘construction industry’, Raising the Bar notably highlights the following: Low margins and the cyclical nature of construction also contribute to the lack of direct employment, and the proliferation of the sub-contracting model within construction. This lack of investment within a directly employed team, can lead to a lack of maintenance and development of workforce skills, which could hamper the safe and competent delivery of the project. The sub-contracting model is also at the heart of the lack of responsibility for outcomes as contractors are increasingly divorced from the point of execution on site, sometimes by up to four or five layers of contracts and often ending in the use of transient self-emplyed labour. (Raising the Bar, 2019, 13) There was therefore a fleeting period when many within the sector hoped (or feared) that the above issues were going to be addressed. The Raising  the  Bar (2019) report notably broadly

Unfulfilled Dreams of Technological Optimism 319 coincided with the CLC’s (2019) Future Skills Report short-lived prioritisation of direct employment. Under the premiership of Theresa May there was fleetingly a marginally more supportive environment for such arguments. This was perhaps informed in part by the notion of Good Work as set out in the Taylor (2017) review. But the space for such conversations rapidly shrunk once Boris Johnson took over as prime minister. The final report of the Competence Steering Group for Building a Safer Future was published in October 2020 (Setting the Bar, 2020). Yet strangely there was no mention of direct employment, workforce skills, or transient self-employed labour. Neither was there any explanation for their omission. The only point of continuity with the preceding interim report was the persistent demand for culture change. 12.4  Modern methods of construction 12.4.1 Antecedents

In recent years there has been much hype about the potential benefits of MMC. Policymakers have seemingly been seduced once again by the beguiling narrative of technological optimism. Yet defining precisely what is meant by MMC is by no means straightforward. Indeed, as noted previously, the inherent vagueness of such ideas is often an essential prerequisite of their success. The agenda in favour of MMC is superficially driven by longstanding concerns about productivity coupled with the latest manifestation of the ‘skills crisis’ (Farmer, 2016). Much of the debate takes place in the context of housing, where there is seen to be significant scope for economies of scale based on standardisation (RICS, 2018). Yet there remains little interest in any objective evaluation of the merits of the advocated approaches. The UK Government of course had already declared itself in favour of MMC and was seemingly prepared to advocate the use of pre-manufactured modular homes as a matter of faith. Given the broader lack of political stability, there were few other options available. Hence the debate never quite extends beyond how the barriers to implementation might be overcome. The attractiveness of MMC is undoubtedly enhanced by its appeal to modernity. Yet the popularity of supposedly modern methods has undoubtedly ebbed and flowed over time, with as many recorded failures as there are successes (Gibb, 2001). Certainly, there is nothing especially modern about prefabricated houses which are well-described as ‘architecture’s oldest newest idea’ (Blanchet and Zhuravlyova, 2018). Isambard Kingdom Brunel is rightly famous for his railway engineering, but he is also widely celebrated for his prefabricated hospital as designed and built during the Crimean War (1853–1856). Other antecedents of MMC include the use of prefabricated modules for the cast iron and plate glass structure built in London’s Hyde Park for the Great Exhibition of 1851. The so-called ‘Crystal Palace’ was subsequently relocated to South London where a neighbouring residential district was named in its honour. The structure is remembered to this day in the name of Crystal Palace Football Club. Looking back even further, the Scandinavian tradition of prefabricated houses can be traced as far back as the Vikings (Price, 2020). Of more recent note are the industrialised system building techniques which were widely adopted in the 1960s as a means of achieving the government target for council housing (Finnimore, 1989; Grindrod, 2013). Industrialisation has further played an important role internationally in the delivery of state-sponsored mass housing. It was especially important in the former Soviet Union where the stated challenge was to ‘liquidate the housing problem’ (Glendinning, 2021). Within market-based economies the substantial uptake of industrialised methods has invariably been dependent upon a degree of state subsidy to offset the risk of demand volatility (cf. Boughton, 2018; Rosenfeld, 1994). The common theme throughout is the perennial conflict between the phraseology of the ‘modern’ and the mythical idea of the ‘traditional’.

320  Unfulfilled Dreams of Technological Optimism In more recent times an important point of reference is provided by the Egan (1998) report which extolled the virtues of standardisation and pre-assembly in terms of four key attributes:

• • • •

speed of construction; lower cost; reduced need for skilled labour; zero defects.

The above attributes continue to be widely used for the purposes of justifying the adoption of MMC. The core argument is identical to that mobilised in favour of industrialised housing within the former Soviet Union: onsite productivity is improved through faster construction and reduced costs. There is also a shared focus on a reduced need for skilled labour onsite, and an enhanced level of quality which can only be achieved in factory conditions. It is further notable that the commonly adopted criteria in favour of current versions of MMC rarely stray from the narrow domain of ‘project delivery’. There is seemingly little interest in the material fabric of the building, or in its malleability over time. Furthermore, there is little consideration of how the requirement to invest in capital-intensive methods privileges the interests of tier 1 contractors. In theory, large firms are better placed to raise the necessary capital, often at preferential rates in comparison to SMEs (Gruneberg and Francis, 2019). But in practice modern tier 1 contractors tend to avoid making large-scale capital investments in production facilities, preferring instead to position themselves at the interface between clients and the supply chain. The default inclination is forever to offset commercial risk onto the supply chain. But tier 1 contractors are undoubtedly better placed in terms of developing the capability to ‘talk the talk’ which becomes yet another barrier to entry for SMEs. 12.4.2  Issues of definition

Anything which differs from the mythical idea of ‘traditional’ construction can seemingly be presented under the banner of MMC. The term is often used interchangeably with ‘offsite construction’. Notions of ‘prefabrication’ tend to be avoided because of their negative quality connotations. In terms of current usage, MMC is commonly understood as comprising the following (BSA, 2016):

• modular construction whereby three-dimensional units are produced in a factory and then transported to site where they are bolted together;

• non-structural pods (typically fully fitted kitchens or bathrooms) which are incorporated within load-bearing structures;

• panelised systems which are transported to site as flat panel units. There are used for the purposes of external cladding and are typically made of timber, light steel or concrete;

• sub-assemblies and components such as roof frames and floor cassette.

But the image of modernity is invariably enhanced by beguiling notions of technological optimism. Indeed, the advocated narratives of MMC often incorporate the principles set out in the Construction Sector Deal (HM Government, 2018):

• Digitising – delivering better, more certain outcomes using digital technologies; • Manufacturing – improving productivity, quality and safety by increasing the use of manufacturing; and

• Performance – optimising whole life performance through the development of energy efficient smart assets.

Unfulfilled Dreams of Technological Optimism 321 Table 12.1  Seven MMC categories proposed by MHCLG (2019) working group Category 1 – Pre-manufacturing – 3D primary structural systems Category 2 – Pre-manufacturing – 2D primary structural systems Category 3 – Pre-manufacturing – Non systemised structural components Category 4 – Pre-manufacturing – Additive Manufacturing Category 5 – Pre-manufacturing – Non-structural assemblies and sub-assemblies Category 6 – Traditional building product led site labour reduction/productivity improvements Category 7 – Site process led labour reduction/productivity improvements

Hence the previously listed cocktail of methods becomes flavoured with notions of digitalisation, precision engineering and advanced manufacturing. Ultimately, MMC is invariably communicated via an appealing narrative of seduction. A more formal ‘definition framework’ is provided by the MHCLG’s (2019) Joint Working Group on MMC. The framework comprises seven categories as indicated in Table 12.1. Most of the specified categories relate to well-established practices which Gibb (1999) refers to rather more prosaically as prefabrication, pre-assembly and modularisation. The MHCLG framework places great emphasis on the concept of ‘pre-manufacturing’ although it is unclear how this differs from what has gone before. MMC Category 4 notably comprises ‘additive manufacturing’, which might otherwise be referred to as 3D printing. Such technologies are claimed to enable the manufacture of highly specialised components which might otherwise be prohibitively expensive. This category at least would thereby seem to be straying beyond the script of standardisation. In contrast, Category 6 sounds eminently traditional and would probably be claimed by those responsible for the construction of the Great Wall of China. Category 7 likewise refers to traditional ways of working. But in this case, they are enhanced by techno-props such as exoskeletons and drones. There is also an intriguing reference to lean construction techniques which continue to defy meaningful definition. The MHCLG (2019) definition framework is further notable for introducing the idea of a measurable index known as pre-manufactured value (PMV). The inference is that any increase in the proportion of PMV self-evidently leads to an improvement in productivity. There is also once again a heavy emphasis throughout on reducing the reliance on onsite labour. The same emphasis was equally evident among those who advocated system building techniques in the 1960s. The clearest message from the definition framework is that MHCLG are seeking to encourage a reduced reliance on onsite labour through an increased reliance on PMV. But otherwise, the definition framework serves to confuse rather than enlighten. A particular source of confusion lies in the absence of any attempt to define what is meant by the ‘traditional’ – other than the fleeting suggestion that such approaches comprise ‘bespoke solutions, and bespoke processes’. Yet arguments in support of standardisation and pre-assembly can be traced back to at least medieval times. Ultimately, the notion of the ‘traditional’ perhaps only ever exists as a mythical entity used for the purposes of justifying the claim to be embracing modernity. Yet any sustained shift towards PMV would have significant implications, not only for buildings and infrastructure assets but also for the structure of the construction sector at large. Such externalities beyond the boundary of the individual project are invariably ignored by the advocates of MMC. Of further concern is the way the current over-hyped advocacy in favour of MMC implies that there is no meaningful alternative. In many respects the advocacy of MMC is eerily reminiscent of that which prevailed following the publication of the Egan (1998) report. 12.4.3  A solution in search of a crisis

One of the common features of MMC advocacy is the tendency to present it as a solution to a perceived crisis. Whether it is the ‘productivity crisis’ that afflicts the UK construction sector, or

322  Unfulfilled Dreams of Technological Optimism the ‘skills crisis’ that threatens its future workforce, MMC is portrayed as a panacea. Politicians are especially fond of citing industrialised construction as a means of solving the ‘housing crisis’. However, the over-simplistic nature of such narratives is part of the problem. The constituent arguments are invariably framed very narrowly, with little recognition of the contested nature of the supposed crises at which they are aimed. For example, those who focus on construction productivity rarely stray from issues of onsite labour productivity. Yet tier 1 contractors tend not to worry about onsite productivity; this is a risk they routinely delegate to the supply chain. In essence, their guiding business model of ‘contract trading’ aims to subcontract each individual work package for less than the submitted tender price. And if they can work the cash flow to their advantage so much the better. There is also a paradoxical relationship between prefabrication and the way productivity is recorded in the official statistics. If a firm were to shift the majority of its value-adding activities to an offsite factory location, it would cease to be classified as a construction firm. For statistical purposes it would become a manufacturing firm, and the economic activity would be transferred to the manufacturing sector. Hence any concerted move towards PMV would result in a reduction in the recorded output for the construction sector. But even more ironically, because of the activities which lend themselves to pre-manufacture, it would also result in a reduction in the recorded construction sector productivity statistics. Even more starkly, any investment in MMC would require new capital equipment, thereby shifting the focus of attention from labour productivity to capital productivity. But any investment would be dependent upon a given internal rate of return (IRR). The biggest risk would be a failure to utilise the full productive capacity of the factory. In the absence of guaranteed demand, there is hence a risk of poor capital productivity. The greater the volatility of demand, the higher the level of risk. If firms fail to achieve the required IRR they risk defaulting on the debt, thereby directly threatening the business. This notably happens with surprising regularity. Many modular start-ups are launched with great hype, only subsequently (and rather more quietly) to go out of business. One of the more highprofile failures in the UK market was the joint venture (JV) between Urban Splash and Japanese giant Sekisui. The JV was launched with great fanfare in 2019 only to enter administration in May 2022. The reality is that modular firms are invariably obliged to operate in a competitive market, and this means that there must be losers in addition to winners. Perhaps the highest-profile investor in modular homes was Legal & General (L&G). It was announced in May 2023 that L&G planned to close its modular housing factory in North Yorkshire putting 475 jobs at risk. The decision was predictably blamed on the weakness of the firm’s pipeline of orders for new homes. A second paradox relates to the claim that MMC comprises a solution to the skills crisis. The espoused aim is to replace traditional skills in local communities with manufacturing jobs in remote purpose-built factories. However, the unintended consequence is that this would exacerbate the skills crisis rather than alleviating it. The number of housing units produced in one year in any localised urban area will forever be tiny in proportion to the overall housing stock. Hence if the quality of housing is to be improved the priority must lie with the maintenance of the existing stock. Yet any marginal shift towards MMC in response to the skills crisis would result in the further de-skilling of the local community. Similar arguments relate to the energy performance of the housing stock. Incorporating appropriate technology into the design of new housing may well be beneficial, but the real challenge lies in the retrofit of the existing housing stock. Even if buildings become more ‘energy efficient’ in a narrow technical sense there is danger that more affluent households will re-direct the resultant savings elsewhere. They may for example choose higher levels of thermal comfort, or perhaps even accelerate frivolously spending on long-haul intercontinental holidays (Shove, 2018). One of the key arguments often made in support of MMC is that they can reduce the cost of construction. However, building houses more efficiently does not necessarily translate into making

Unfulfilled Dreams of Technological Optimism 323 them more affordable. The advocates of MMC tend to overlook the complex relationship between the production and the consumption of housing in the UK. The sale price of new homes is primarily determined by the buoyancy of the local second-hand housing market rather than the efficiency of the construction process. Hence the major housing developers often manage the build-out rate of new properties in any given area to ensure that it is not sufficiently large to disrupt the market price. Restrictive planning policies also play an important part in constraining housing supply. MMC hence fulfils a useful purpose in providing an easy soundbite for politicians who want to avoid addressing the difficult issue of planning reform. Investment in MMC is ultimately disincentivised by the uncertainty and volatility of the UK housing market (Gruneberg and Francis, 2019). Broader issues of relevance include interest rates, income levels and consumer confidence. Unless there is a significant change in government policy towards social housing provision, the key challenge of housing market volatility will remain. 12.4.4  Globalisation of supply chains

A further issue which is routinely ignored is the extent to which MMC relies on global supply chains. The increasingly globalised nature of the supply chain for prefabricated building components is readily observable in the available statistics. The latest 2023 figures from HM Revenue and Customs indicate a UK trade deficit for prefabricated buildings of more than US$200 million. But even more striking is the rapid increase in imports since 2019 (see Figure 12.3). Rather than creating manufacturing jobs in the mythical ‘construction corridor’, the data seems to suggest that it is more likely that such jobs will be shifted overseas. Given that the world’s largest exporter of prefabricated buildings is the People’s Republic of China, this is where a significant proportion of the pre-manufacturing jobs associated with MMC are likely to be created. So much for the ‘construction corridor’ in the North of England. The business case for investment in off-site manufacturing is much less problematic in managed economies such as China than in volatile market-based economies such as the UK. The size of the Chinese market is such that it only requires a marginal increase in productive capacity to enable a significant export operation. The managed nature of the Chinese economy further serves to alleviate the risk of demand uncertainty. Such factors combine to offset the cost of shipping

Figure 12.3 Imports of prefabricated buildings or modular construction in the United Kingdom (UK) from 2002 to 2021. (Source: OEC.)

324  Unfulfilled Dreams of Technological Optimism prefabricated components to remote markets. Hence the danger is that the continued incentivisation of MMC in the UK serves to shift jobs overseas, with fundamental implications for the skills base in the UK. Further concerns arise in respect of the mechanisms of global labour arbitrage. This is especially true when sub-assembly operations in China are routinely outsourced to lower-wage economies such as Vietnam and Cambodia. The danger is that jobs arising from MMC gravitate towards countries where the cost of labour is low and environmental regulation is minimal. Hence the lack of transparency in global supply chains is a major concern, not least in terms of the risk of ‘embedded slavery’. Such issues are undoubtedly important but should not deflect from the reality that the UK lacks a global competitive edge in manufacturing. The broader reasons for the decline of British manufacturing are much debated in the literature, but it cannot be blamed on the adversarial culture of those who work in construction. 12.4.5  Factory-based quality and precision engineering

Arguments in favour of the quality of MMC buildings too often rest on overblown claims of factorybased precision engineering. Consideration rarely extends to the problems that occur at the interfaces between different systems. Modular firms who otherwise place great emphasis on quality consistently describe how modules are ‘bolted together on site’ as if such connections are entirely trivial. The reality is that modular components are routinely installed on site by labour-only subcontractors. Too often the work is performed by transient semi-skilled operatives subject to a bare minimum of supervision. Given the 2016 wall collapse at Oxgangs School in Edinburgh due to incorrectly installed wall ties, it would seem reasonable to expect a ruthless focus on onsite supervision in the marketing materials produced by modular companies. However, such a focus is most notable by its absence. Those who install prefabricated components onsite remain strikingly invisible, and the critical importance of the connections between modular units is barely mentioned. There are important precedents from which we could learn. For example, the large panel system (LPS) approach to prefabrication widely used for high-rise residential blocks in the 1960s. The method comprised the vertical stacking of prefabricated concrete panels. It performed very well in terms of productivity; such prefabricated concrete systems were deliberately incentivised as a means of increasing housing output. Public trust evaporated following the Ronan Point collapse in Newham, London, in 1968. A subsequent public inquiry pointed towards appallingly poor workmanship in the connections between panels. Many such buildings were demolished within 15 years due to structural deterioration and sky-rocketing remediation costs. In 1984, Geoffrey Lofthouse MP famously presented the following question during a parliamentary debate on defects in systems-built housing: We must also ask whether sufficient time and money is spent in appraising new methods of building, and new components and materials. As an example, the Agrément certificate procedure is very weak, and gives little real assessment of how building will work out in practice. (Hansard, 12 March 1984) The above question remains especially pertinent in the wake of the Grenfell Tower tragedy of 2017 and the ongoing cladding crisis. Yet, at the time of writing, the UK government’s stated presumption in favour of offsite construction remains firmly in place. If there is factory-based precision engineering involved, it is seemingly taken for granted that quality is being achieved. If only construction were that simple.

Unfulfilled Dreams of Technological Optimism 325 Of further note is the way that ‘quality’ is forever related to construction as a product. Policymakers have seemingly forgotten that building performance should be judged at multiple points throughout the building’s life cycle, rather than at the single arbitrary point of ‘completion’. A distinguishing feature of the built environment is its longevity; malleability over time must therefore be an important consideration. Yet there is a clash here in time horizons. Off-site factories are essentially transient entities. Modular start-up companies are especially short-lived and on recent evidence rarely last more than a few years. Hence there is no guarantee they will be able to supply replacement components in the future. And the more manufactured components rely on ‘highprecision engineering’ the less malleable they are in terms of future adaptation. Huge questions therefore remain in respect of the malleability of modular buildings over time, not least in terms of their adaptability to changing patterns of use (Brand, 1994; Patel and Green, 2020). Further concerns relate to the extent to which modular buildings lend themselves to retrofit in accordance with the demands of the circular economy. Also deserving of attention is the thermal performance of modular prefabricated buildings. The relative lack of thermal mass of modular buildings can too easily lead to over-heating, especially during the summer months. Urban heat islands and localised micro-climates increasingly require bespoke designs rather than standardised units. Such concerns are by no means trivial given the accelerating rate of climate change. According to the UK Committee on Climate Change (CCC) the number of deaths per year due to overheating is set to triple to 7,000 per year by 2040. 12.4.6  Concerns about fire safety

But perhaps the biggest concern relating to MMC is fire safety. Of particular concern are the horizontal and vertical cavities between prefabricated modules. In the absence of properly installed fire stopping, such cavities potentially serve as avenues for the spread of fire, smoke and toxic fumes (Meacham, 2022). The difficulty is that there is no means of checking if the fire stopping has been properly fitted once the modules have been installed. Such issues are not insurmountable, but they require a ruthless focus on detail. They also require careful onsite supervision. Yet when the advocates of MMC promote modular forms of construction this is not what they emphasise, despite numerous disturbing precedents. For example, the Shetland Isles have recently seen two devastating fires involving modular buildings: the Fair Isle Observatory (2019) and the Moorfield Hotel (2020). Both buildings were less than ten years old, and both comprised factory-built modular units shipped to Shetland by sea. Both blazes were so severe that the fire crews were unable to contain the rapid spread of flames. It is further important to recall that the Grenfell Inquiry identified the installed aluminium composite material (ACM) cladding panels as the primary cause of the external fire spread on Grenfell Tower. The use of ACM cladding was undoubtedly legitimised by the prevailing narrative in support of innovative construction materials. The global materials industry can further be seen to have appropriated the narrative of MMC for promotional purposes. Despite the findings of the Grenfell Inquiry, numerous such firms continue to market their products under the legitimising label of MMC. In the wake of Grenfell, there is an urgent need to ensure tighter regulatory guidance and oversight relating to the use of MMC. New standards are required in terms of regulatory review and inspection, and new testing methods are required. This is important not only in terms of the composite materials but also for the connections between components and the void spaces between modules (Meacham, 2022). The call for new standards is exemplified in a position paper on MMC released by the National Fire Chiefs Council (NFCC) in December 2022. The NFCC expresses

326  Unfulfilled Dreams of Technological Optimism concern that the ambition to build homes quickly and sustainably should not be prioritised at the expense of building safety. They hence call upon the government for tightened rules for the testing of MMC. The underlying concern is very similar to that previously expressed by Geoffrey Lofthouse MP. The question that Lofthouse presented to parliament in 1984 was whether sufficient time and money is spent in appraising new methods of building, and new components and materials. The answer is still a categorical ‘no’. 12.5  The Construction Playbook 12.5.1 Overview

The Construction Playbook (HM Government, 2020) was launched on 8 December 2020. The espoused aim was to reset the relationship between government and the construction sector. The stated aspiration was to be more strategic and less transactional. The message was primarily aimed at those within the public sector responsible for the planning and delivery of projects and programmes. It was billed as a ‘compact with industry’, having been co-developed and endorsed by the CLC (and, rather more vaguely, the ‘wider industry’). The UK Government has long since sought to exercise its purchasing power for the purposes of achieving two primary aims: (i) value for money, and (ii) improving the competitiveness of its suppliers (HM Government, 1994). The difficulty is that these two aims often play out in tension. Throughout the years of austerity, public sector clients placed a renewed emphasis on value for money. This was in part an intuitive corrective following the PFI experience. Many of those responsible for public sector procurement felt that PFI contractors throughout the noughties had engaged in outright profiteering. By 2011 there was a broad consensus within government that PFI had provided the taxpayer with poor value for money. Hence the renewed focus on procuring construction work at minimum cost. This was undoubtedly in part necessitated by severe cuts in public sector spending. Grandiose talk about ‘procuring for value’ remained in vogue but too often translated in practice to a renewed insistence on low-cost tendering. The onset of the years of austerity hence heralded a very different competitive environment for the contracting sector than that which had prevailed during the noughties. The playbook further peddled back (slightly) on the rhetoric of competitiveness in favour of ‘industrial strategy’ which had by 2020 crept back into the acceptable lexicon. But in truth there was little in the Construction Playbook which was substantially new beyond a few bells and whistles. Coverage included schools, hospitals, prisons and major infrastructure. Attention was given to programmes in addition to one-off projects. The notion of a ‘playbook’ was seemingly derived, not from the kindergarten, but from the domain of American football. In recent years the term has been widely adopted by management consultants, especially within the context of digital transformation (cf. Satell, 2017). The core idea was ostensibly to specify a range of options, leaving the final choices to be made by the ‘players on the field’. 12.5.2  Scope and remit

The main body of the Playbook comprised 12 chapters which unfold loosely along a continuum of define, procure and manage. There were 14 key policies extracted from the body of the report to provide an upfront summary. Cross-cutting priorities included ‘health, safety and wellbeing’, ‘building safety’ and ‘building back greener’. The adopted approach was to go for the easy wins, and to avoid saying anything which was remotely controversial. Few commentators within the

Unfulfilled Dreams of Technological Optimism 327 construction sector noticed that the playbook was heavily derivative of the UK Government’s previously published Outsourcing Playbook (Government Commercial Function, 2019). The Outsourcing Playbook had been introduced as a direct consequence of the collapse of Carillion in January 2018. According to the Institute for Government (Sasse et al., 2019) many of its recommendations echo pre-existing policies. The contention was that such policies have long since been ignored because government departments have lacked the capabilities and/or incentives to implement them. Or alternatively, it could have been that the best intentions were marginalised by the policies of austerity. Of the 14 policies outlined in the Construction Playbook, 9 were seemingly directly carried over from the Outsourcing Playbook. The remaining five seemingly drafted specifically for construction procurement were as follows:

• • • • •

Portfolios and longer term contracting. Harmonise, digitalise and rationalise demand. Further embed digital technologies. Early supply chain involvement. Outcome-based approach.

The discussion which follows will address each of the above in turn, which a particular focus on the extent to which the various recommendations can be construed to be different from those which have gone before. 12.5.3  Portfolios and longer term contracting

There is seemingly a blind faith throughout the Construction Playbook in the benefits of adopting a ‘more manufacturing-led approach’. This same belief that a manufacturing approach will improve productivity and deliver better value-for-money was previously expressed in the Construction Sector Deal (HM Government, 2018). As discussed earlier, the extent to which the belief is justified is at best contestable, and heavily dependent upon the way the terms are defined. There notably remains little consensus on how either productivity or value-for-money might meaningfully be measured, but the obsession with the principle seemingly remains intact despite a startling lack of progress over several decades. Productivity and value-for-money are of course important, but they are ultimately abstract concepts which do not lend themselves to measurement. The playbook displays a strong commitment to the standardisation of elements of design, and where appropriate, to the use of longer-term contracts across portfolios. Neither of these ideas are new. Indeed, they are constantly re-cycled by each successful generation. One of the tests set out in the Construction Playbook is that a programme of works should have repeatable assets and/or strong potential for MMC. There is little comfort here for the advocates of vernacular architecture, and little emphasis on design quality more generally. The design quality indicator (DQI) has long since been abandoned. The adopted emphasis on longer-term contracts, coupled with a presumption in favour of MMC, would seem to privilege tier 1 contractors with significant capital assets. The same criticism has of course been repeatedly levelled at previous framework agreements favoured by government. Tier 1 contractors over the years have proved themselves to be highly effective at lobbying government despite the fact they are unrepresentative of the contracting sector at large. In mitigation, the Construction Playbook offers warm words about SMEs while at the same time exhorting prime contractors to adhere to the Supplier Code of Conduct. SMEs were largely unconvinced and continued to be subject to regressive procurement practices (Green, 2023).

328  Unfulfilled Dreams of Technological Optimism 12.5.4  Harmonise, digitise and rationalise demand

The commitment to ‘harmonise, digitise and rationalise’ demand is embedded within the argument that promotes MMC as an alternative to ‘traditional methods’. However, the distinction between the two approaches is never quite made clear. The Construction Playbook hence follows the trend in mobilising the mythical notion of the ‘traditional’. It further emphasises the need for public sector procurement to support investment in MMC and skills seemingly in ignorance of similar incentivisation schemes in the 1960s. As ever, the bolt-on reference to ‘skills’ reads like an afterthought. Indeed, there is a tendency throughout the Construction Playbook to commoditise the industry’s workforce as passive vessels for narrowly defined skills which serve the vaguely defined cause of productivity (cf. Donaghy, 2009; Ness and Green, 2012). There is little interest in the provision of ‘good work’ as defined in the Taylor (2017) report. Government’s short-lived interest in the notion of good work was seemingly ditched following the departure of Theresa May’s primary advisers after the 2017 general election. However, there is a strong commitment within the playbook to health, safety and wellbeing with an expectation that they should be embedded within the planning process. This would have been a minimum requirement for the CLC. Slightly more encouragingly, there are numerous references throughout the playbook to the use of procurement as a means of promoting social value. The emphasis seems to lie on ‘encouraging employment opportunities, developing skills and improving environmental sustainability’. The targeted beneficiaries are ‘local communities’, although it is unclear how they are supposed to benefit from jobs shifted to remote off-site manufacturing locations. A more obvious policy aspiration would be to rationalise and harmonise demand for the purposes of incentivising direct employment. Numerous reports cite the negative consequences of the dominant system of multi-tiered subcontracting which often culminates in the use of transient self-employed labour (Cole, 2017; Donaghy, 2009; Gospel, 2021; Setting the Bar, 2020). But as with many other government sources, the allegiance to modernisation within the playbook does not seemingly extend to the industry’s employment practices. Rather than being behind the times, it could easily be argued that the construction sector has been an innovative forerunner of the gig economy (Erlich, 2021). The government’s commitment to labour market ‘flexibility’ is seemingly irrevocable, despite the widely acknowledged adverse consequences for quality, safety and employment conditions. The widespread prevalence of self-employment in the construction sector is also widely held to have a detrimental effect on training in support of net zero carbon (cf. Clarke et al., 2020; Killip, 2020). The dominant discourse of the Construction Playbook is once again that of technological optimism. There is seemingly little value attached to those who engage with the materiality of construction. Many people who work in the construction sector take great pride in their work for its own sake. The perennial challenge is to ensure that this pride is enhanced by the experience of working with new technology, and not diminished (Sennett, 2008). Yet the purveyors of modernity seemingly place more pride in their digital models than in the materiality of what gets built. 12.5.5  Further embed digital technologies

The Construction Playbook contends that the volume of data relating to construction is rapidly increasing and that improving its consistency and quality will be ‘transformational’. As ever, the implication is that steady incremental progress is not enough. Reference is made to improving safety, enabling innovation, reducing costs and supporting more sustainable outcomes. Data is of course important, but it is not the same as knowledge. The meaning of data is entirely dependent upon our ability to interpret it. There is further mention of the UK BIM Framework and the need for BIM interoperability. As described in Chapter 10, there has been significant progress in the

Unfulfilled Dreams of Technological Optimism 329 digitalisation of the construction sector over the course of several decades. The playbook alludes to the current drive for an ecosystem of connected digital twins across the built environment. There is seemingly always yet another technology which must be adopted and disseminated before we reach construction utopia. Meanwhile, the problems of the construction sector remain stubbornly immune to technological solution. Productivity remains low, quality is consistently poor, and the roles and responsibility for ensuring building safety remain unclear (cf. Hackitt, 2018). The point is not to argue against the continued adoption of digitalisation. However, there is need for a much more balanced debate than currently prevails. The advocates of digital transformation too easily come across as a quasi-cult with entry barred to those who do not share their fervour for the fourth industrial revolution (cf. McKinsey, 2016; Schwab, 2016). As previously noted, Dainty et al. (2017) argue that the overblown hyperbole in favour of BIM risks propagating an ever-widening digital divide. The danger is that those who engage with (and care about) the materiality of construction become ever more disenfranchised from what Farmer (2016) describes as the ‘realm of innovation’. 12.5.6  Early supply chain involvement

Early supply chain involvement (ESI) is seen to extend the principle of early contractor involvement (ECI) by formally engaging the tier 1 contractor alongside tier 2 and 3 subcontractors and suppliers in the pre-construction phases. The notion of ECI dates to the time when tier 1 contractors did not routinely sub-contract the entirety of the work to what is now known (euphuistically) as the ‘supply chain’. Contractors have always been in favour of ECI but have consistently been wary of providing their expertise without being fairly compensated. Tier 2 and 3 sub-contractors have cause to be even more wary, despite the Playbook’s nebulous assurances about ‘trust’. The playbook further emphasises the importance of adopting a ‘mutually beneficial, open and collaborative approach’. The phraseology is seemingly borrowed from the long-since discredited concept of partnering (cf. Bresnen, 2007). Partnering was once lauded as the solution to the construction sector’s supposed adversarial culture (see Chapter 6). However, as previously argued, it can perhaps be more meaningfully understood as a means of offsetting the risks associated with systemic outsourcing. Such an interpretation is dependent upon an ability to remember the debates of the past. Unfortunately, government departments seem to have lost the capacity to learn from the past. There was a time when key government ministries such as Health and Education contained their own specialist architectural divisions (Duffy and Rabeneck, 2013). Much of this expertise ultimately found its way into the Property Services Agency (PSA) before being spilt up and outsourced in 1993. Hence the construction procurement expertise which once existed within government departments was shifted to the private sector where it was mobilised in the cause of commercial advantage (cf. Foxell, 2019). But nostalgia should be avoided for the way public sector procurement was organised in the past. The default preference for lowest cost tendering owes much to the Poulson scandal of the early 1970s (Jones, 2012). The PSA was also marked by its own corruption scandal which came to light in the early 1980s. Despite the Playbook’s emphasis on trust, corruption remains one the biggest potential threats to public sector procurement. 12.5.7  Outcome-based approach

Outcome-based performance specification is yet another idea re-cycled from the past. The Construction Playbook echoes the recommendations of the CLC (2018) in exhorting projects and programmes to ‘adopt an outcome-based approach focused on whole life value performance and cost’. This is seen to be the means of unlocking innovation and driving continuous improvement. It is

330  Unfulfilled Dreams of Technological Optimism further emphasised that clear and measurable outcomes should be set from the outset. Outcomebased specifications were previously recommended by the Government Construction Strategy (Cabinet Office, 2011) and can be understood more broadly as a response to the new public management (NPM) reforms of the 1990s (Sanderson et al., 2017). The potential advantages which can be achieved through new models such as outcome-based contracting should not be dismissed, but neither can they be taken for granted. Simply stated, outcome-based specifications seek to incentivise contractors through the transfer of risk. In this respect, it is the very same thinking as that which underpinned PFI/PPP. The shift to outcome-based specifications further presents new challenges to the regulatory system. Performance-based specifications in the context of fire safely have proven to be especially contentious (Meacham, 2022). The contracting sector has consistently argued against prescriptive specification on the basis that they are better placed to identify appropriate solutions. However, such arguments are dependent upon them taking responsibility for the quality of the work for which they are responsible. This would include mundane practices of ensuring that wall ties are correctly installed. It only takes one failure to undermine the efforts of the majority. It must further be recognised that the transaction costs associated with outcome-based contracting are often very high. Outcome-based approaches are especially threatened by so-called black-swan events, otherwise construed as risks which could not feasibly have been foreseen. They also serve to distract attention away from the materiality of construction in that it tends to be the financial models which are celebrated, rather than the quality of what gets built. Echoes here of the problems associated with the financialisation of Carillion’s operations (see Chapter 11). But even more damaging is the recurring assumption that the required functionality can be determined in advance. As argued previously, buildings are too easily conceptualised as fixed and static entities which are designed and built in accordance with predetermined criteria. There is little attempt within popular discourse to understand buildings as socio-material practices which continuously play out and evolve over time (Brand, 1994: Patel and Green, 2020). The harsh reality is that ‘value’ cannot always be pre-determined. Hence judgements made upon completion (or at any point thereafter) can only ever be provisional. Duffy and Worthington (1972) were making such arguments as long ago as the early 1970s. Yet the widespread belief that building performance (and hence ‘value’) is dictated by pre-determined criteria remains remarkably intact. It is this same misguided belief which underpinned the Construction Innovation Hub’s value toolkit. 12.6  Summary The preceding discussion provides a rather sobering note upon which to conclude. The Construction Sector Deal, launched with such fanfare in 2018, has undoubtedly failed to deliver the proposed transformative deal between government and industry. Despite the beguiling narrative of technological optimism, it had remarkably little impact on the operational realities of the construction sector. It was perhaps a hostage to fortune from the outset. It was written for the purpose of ensuring that the construction sector received a fair share of Theresa May’s industrial strategy fund. Although it was successful in its immediate goal, it is difficult to be positive about the long-term outcome. But the same is true of all such initiatives reviewed in the current book. The Construction Sector Deal undoubtedly suffered because of circumstances beyond the control of those tasked with delivery. However, ultimately it promised much and delivered little. The underlying tone of technological optimism can perhaps be forgiven, but the authors were guilty of spilling over into hype and hubris. In this respect they took their lead from Construction 2025 (HM Government, 2013). Digital and manufacturing technologies undoubtedly have much to contribute to the ‘realm of innovation’. Those who develop and adapt such technologies are deserving of

Unfulfilled Dreams of Technological Optimism 331 respect. But the realm of innovation is not the same as the construction sector. As each advocated technology fails to live up to its promise the consistent response is to advocate more advanced technologies. The difficulties lie in bridging the gap between the so-called realm of innovation and the construction sector at large. Improving practices in the former is not quite the same as impacting on the latter. Phrased slightly differently, dreaming up new toolkits is never going to help without understanding how the sector operates. Of particular importance is the extent to which the incentives of different parties are routinely misaligned. It is this misalignment that renders radical change a pipedream. The recurring insistence on ‘construction transformation’ says more about the self-identities of its advocates than it does about the realities of the construction sector. There remains little interest in understanding why such transformative recipes so often fail. Any attempt at change will inevitably meet resistance from the industry’s vested interest groups. This lesson was previously learnt by the Strategic Forum for Construction, but this did seemingly not prevent the CLC from having to learn the same lesson again. In truth, those involved are only too aware of the conflicting interests of the various representative bodies with whom they are obliged to work. Hence it is much easier to resort to the over-hyped benefits of the ‘white heat of technology’. The debate then becomes analogous to a metaphorical arms race in terms of who can hype up the benefits of different technologies. But those who fall victim to hubris should not be so easily forgiven. They are the antithesis of the professionalism that the construction sector needs. But it must also be recognised that hubris is a characteristic of the age in which we live. This is certainly true for the UK, which undoubtedly fell victim to populism in voting to leave the EU in 2016. The consequences for the construction sector have been huge, and the implications will continue to play out for decades. In the author’s mind, the advocacy of MMC shares many characteristics with the advocacy of Brexit. There is little interest in any sort of balanced debate, and little interest in the need for unbiased evidence. The modern tendency is seemingly to disparage the opinions of independent experts in favour of persuasive soundbites. In the case of Brexit, dissenters were marginalised even to the point of being labelled ‘enemies of the people’. Dissenters to the cause of MMC are similarly marginalised to the detriment of balanced evaluation. The two narratives arguably coalesce around UK housing policy, where politicians too easily resort to MMC as an alternative to a coherent policy. This would be almost comical if the consequences were not so serious. Attention has further been directed at the way the advocacy of MMC may serve to shift jobs overseas, with direct negative consequences for the UK’s balance of payments deficit. Additional concerns have been raised about the transparency of global supply chains, and the possibility that MMC may facilitate labour exploitation. Even the core argument that MMC produces better ‘quality’ remains contestable. But the biggest concern relates to fire safety. There is a danger that modular construction comprises another building safety crisis in the making. Yet it must also be emphasised that none of the above adverse outcomes are inevitable. There are no predetermined consequences of MMC. It is best understood as a highly flexible discourse that is mobilised in different ways in different contexts. To be pre-warned about the potentially negative consequences is to be pre-armed. Yet the current over-hyped policy narrative addresses only the potential positive outcomes. This lack of balance should be of concern to all those who care about the safety and longevity of the built environment. The construction sector deserves better than an endless succession of false panaceas. MMC is perhaps already falling victim to what might be described as the ‘beyond the beyond myth’ (cf. De Cock and Hipkin, 1997). In response to an increasing catalogue of failures, the promoters of MMC often claim to have ‘moved beyond’ MMC to become advocates of some other ill-defined recipe. ‘Platform approaches’ are currently popular, and equally vague. In short, the champions of modernisation quickly move on to the next ill-defined recipe while denying any responsibility for the shortcomings of what came before. The danger is that this process continuously repeats itself.

332  Unfulfilled Dreams of Technological Optimism Finally, the Construction Playbook was subject to critical evaluation. It was argued that it was in part a consequence of the Carillion crisis. The playbook highlights that clients not only have a responsibility for ensuring value-for-money but also for procuring in a way that supports the longterm capacity of the sector. The balance between these two aspirations has undoubtedly ebbed and flowed over time, not least in accordance with the fluctuations of the economic cycle. Yet valuefor-money in practice is too easily equated with low-cost tendering, which is often contrasted with collaborative ways of working. But the notion of collaborative working is also problematic, and prone to distortion because of the power differentials between contracting parties. There is much within the playbook that is well-intentioned, but little that has not been said before. The likelihood is that the Construction Playbook will sink into obscurity in common with its various predecessors. This will in time provide the opportunity for a new generation of policymakers to rediscover the same ideas. They will no doubt talk about some new variant of partnering or collaborative working, and the importance of integrated supply chains. They will also inevitably lay claim to the cause of modernisation, while at the same time pointing towards the limitations of supposed ‘traditional’ ways of working. The next generation of industry leaders will especially emphasise the importance of modern technology. We can only hope that they do not fall victim to hubris, as is so often the case with the current generation. The prevailing tendency towards hubris should be of concern to all those who care about the materiality of the built environment. The construction sector needs innovation, but it needs a more balanced and realistic approach than that which currently prevails. It also needs a more effective regulatory system. References BEIS (2019) Policy Paper: Construction Sector Deal: One-year on, Department for Business, Energy & Ind­ustrial Strategy, London https://www.gov.uk/government/publications/construction-sector-deal/constructionsector-deal-one-year-on (Accessed 11th June 2023) Blanchet, E. and Zhuravlyova, S. (2018) Prefabs: A Social and Architectural History, Historic England, Swindon. Boughton, J. (2018) Municipal Dreams: The Rise and Fall of Council Housing, Verso, London. Brand, S. (1994) How Buildings Learn: What Happens after they’re Built, Viking, New York. Bresnen, M. (2007) Deconstructing partnering in project-based organisation: Seven pillars, seven paradoxes and seven deadly sins, International Journal of Project Management, 25(4), 365–374. Building Societies Association (BSA) (2016) Laying the Foundations for MMC, BSA, London. Cabinet Office (2011) Government Construction Strategy, Cabinet Office, London. Clarke, L., Sahin-Dikmen, M. and Winch, C. (2020) Transforming vocational education and training for nearly zero-energy building, Buildings and Cities, 1(1), 650–661. Cole, J. (2017) Report of the Independent Inquiry into the Construction of Edinburgh Schools, Commissioned by the City of Edinburgh Council, Edinburgh. CLC (2018) Procuring for Value, Construction Leadership Council, London. Construction Leadership Council (2019) Future Skills Report, Construction Leadership Council, London. Dainty, A., Leiringer, R., Fernie, S. and Harty, C. (2017) BIM and the small construction firm: A critical perspective, Building Research & Information, 45(6), 696–709. De Cock, C. and Hipkin, I. (1997) TQM and BPR: Beyond the beyond myth, Journal of Management Studies, 34, 659–675. Donaghy, R. (2009). One Death is Too Many. Report to the Secretary of State for Work and Pensions, Cm 7657. TSO, London. Duffy, F. and Rabeneck, A. (2013) Professionalism and architects in the 21st century, Building Research & Information, 41(1), 115–122. Duffy, F. and Worthington, J. (1972) Designing for changing needs, Built Environment, 1(7), 458–463.

Unfulfilled Dreams of Technological Optimism 333 Egan, Sir John (1998) Rethinking Construction, Department of the Environment, Transport and the Regions, London. Erlich, M. (2021) Misclassification in construction: The original gig economy, Industrial and Labor Relations (ILR) Review, 74(5), 1202–1230. Farmer, M. (2016) The Farmer Review of the UK Construction Labour Model: Modernise or Die, Construction Leadership Council, London. Finnimore, B. (1989) Houses from the Factory: System Building and the Welfare State 1942–74, Rivers Oram. Foxell, S. (2019) Professionalism for the Built Environment, Routledge, Abingdon. Francis-Devine, B., Powell, A. and Clark, H. (2021) Coronavirus Job Retention Scheme: Statistics, House of Commons Library, London Gibb, A. G. F. (1999) Off-Site Fabrication: Prefabrication, pre-Assembly and Modularisation, John Wiley & Sons, New York. Gibb, A. G. F. (2001) Standardization and pre-assembly—Distinguishing myth from reality using case study research, Construction Management and Economics, 19(3), 307–315. Glendinning, M. (2021) Mass Housing: Modern Architecture and State Power—A Global History, Bloomsbury, London. Gospel, H. (2021) Direct Employment: A Study of Economic, Business and Social Outcomes, Report to the Joint Industry Board for the Electrical Contracting Industry. Joint Industry Board, Swanley. Government Commercial Function (2019). The Outsourcing Playbook: Central Government Guidance on Outsourcing Decisions and Contracting, Cabinet Office, London. https://www.gov.uk/government/ publications/the-outsourcing-playbook Green, S. D. (2023) Procurement in the Finishes, Fit-Out and Interiors Sector, Finishes and Interiors Sector (FIS) Ltd, Solihull. Green, S. D. and Sergeeva, N. (2019) Value creation in projects: Towards a narrative perspective, International Journal of Project Management, 37(5), 636–65. Grindrod, J. (2013). Concretopia: A Journey Around the Rebuilding of Postwar Britain. Old Street, Exeter. Gruneberg, S. and Francis, N. (2019) The Economics of Construction, Agenda, Newcastle-upon-Tyne. Hackitt, J. (2018) Building a Safer Future. Independent Review of Building Regulations and Fire Safety: Final Report, Cm 9607, HMSO, London. HM Government (1994) Competitiveness: Helping Business to Win, Cm 2563. HMSO, London. HM Government (2013) Construction 2025: Industrial Strategy for Construction – Government and Industry in Partnership, Department of Business, Innovation & Skills, London. HM Government (2018) Industrial Strategy: Construction Sector Deal, Department for Business, Energy and Industrial Strategy, London. HM Government (2020) The Construction Playbook: Government Guidance on Sourcing and Contracting Public Works Projects and Programmes, Cabinet Office, London. Jones, P. (2012) Re-thinking corruption in post-1950s urban Britain: The Poulson affair, 1972–1976, Urban History, 39(3), 510–528. Killip, G. (2020) A reform agenda for UK construction education and practice, Buildings and Cities, 1(1), 525–53. Latham, Sir Michael (1994) Constructing the team. Final Report of the Government/industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. HMSO, London Lea, R. (2021) Toxic and dysfunctional industry in race to the bottom, The Times, 3th May. https://www. thetimes.co.uk/article/toxic-and-dysfunctional-industry-in-race-to-the-bottom-kmd8n7ct9 (Accessed 6th June 2021) McKinsey (2016). Industry 4.0 after the initial hype: where manufacturers are finding best value and how they can best capture it. McKinsey & Co. McKinsey Global Institute (2017) Reinventing Construction: A Route to Higher Productivity, McKinsey Global Institute. Meacham, B. J., 2022. Fire performance and regulatory considerations with modern methods of construction. Buildings and Cities, 3(1), p. 464–487. https://doi.org/10.5334/bc.201

334  Unfulfilled Dreams of Technological Optimism MHCLG (2019) Modern Methods of Construction: Introducing the MMC Framework, Ministry of Housing, Communities & Local Government. Ness, K. and Green, S. D. (2012) Human resource management in the construction context: Disappearing workers in the UK, in Human Resource Management in Construction: Critical Perspectives, (eds. A. Dainty, M. Loosemore) Routledge, Abingdon, pp 18–50. Patel, H. and Green, S. D. (2020) Beyond the performance gap: Reclaiming building appraisal through archival research, Building Research & Information, 48(5), 469–484. Price, N. (2020) Children of Ash and Elm: A History of the Vikings, Allen Lane. Raising the Bar (2019) Raising the Bar: Improving Competence, Building for a Safer Future, Interim Report of the Industry Response Group Steering Group on Competence for Building a Safer Future. Construction Industry Council, London. Richards, S. (2019) The Prime Ministers: Reflections on Leadership from Wilson to Johnson, Atlantic, London. Rosenfeld, Y. (1994) Innovative construction methods, Construction Management and Economics, 12(6), 521–541. Rosenhead, J. and Mingers, J. (2001) Rational Analysis for a Problematic World Revisited, John Wiley & Sons. Royal Institution of Chartered Surveyors (RICS) (2018) Modern Methods of Construction: a ForwardThinking Solution to the Housing Crisis? RICS, London. Sanderson, M., Allen, P., Gill, R. and Garnett, E. (2017) New models of contracting in the public sector: A review of Alliance contracting, prime contracting and outcome-based contracting literature, Social Policy & Administration, 52(5), 1060–1083. Sasse, T., Guerin, B., Nickson, S., O’Brien, M., Pope, T. and Davies, N. (2019) Government Outsourcing: What Has Worked and What Needs Reform? Institute for Government, London. Satell, G. (2017) Mapping Innovation: A Playbook for Navigating a Disruptive Age, McGraw-Hill, New York. Schön, D. (1983) The Reflective Practitioner: How Professionals Think in Action, Basic Books, New York, NY. Schwab, K. (2016) The Fourth Industrial Revolution, World Economic Forum, Davos. Selden, A. and Newall, R. (2023) Johnson at 10: The Inside Story, Atlantic, London. Sennett, R. (2008) The Craftsman, Yale University Press, New Haven. Setting the Bar (2020) Setting the Bar: A New Competence Regime for Building a Safer Future. The Final Report of the Competence Steering Group for Building a Safer Future, London. Shove, E. (2018) What is wrong with energy efficiency? Building Research & Information, 46(7), 779–789. Taylor, M. (2017) Good Work: the Taylor Review of Modern Working Practices, Department for Business, Energy and Industrial Strategy, London.

Epilogue

It would be inconsistent with the aim of the current book to offer any grand conclusions in terms of how the performance of the construction sector might meaningfully be improved. The focus throughout has been to tell the story of how construction improvement has been debated over time. The unfolding narrative of construction improvement has been shown to be full of twists, turns, human endeavour, and frequent misguided attempts to resolve difficulties using constructive ambiguity. The very definition of the ‘construction sector’ has been continuously disputed and spun in different ways to suit different arguments. In more recent years, the debate has also unfortunately been characterised by an increasing degree of hubris. This latter characteristic is not unique to the construction sector but it does have potentially serious consequences for the material fabric of the built environment, and for the safety of its occupants. Those who strive to improve construction sector ‘performance’ (however defined) are continuously obliged to mediate between competing interests. A step forward for one set of interests is very often a step backwards for another. But it is also inherently a political story, not least because the performance criteria by means of which we evaluate construction sector performance forever change in accordance with the priorities of the prevailing political economy. Those seeking ‘performance improvement’ are hence forever chasing a moving target. Such targets are continuously negotiated through the medium of narrative but are also continuously contested. It follows that the construction sector is perennially adapting to the changing context within which it operates and to the contrasting needs of multiple stakeholders. It is hoped that the current book might slay the myth that the construction sector is immune to change. At risk of slipping into cliché, change is the only constant. Construction sector policy within the context of a modern liberalised economy undoubtedly differs from that which prevailed within the more centralised command economies of the past. Yet there are a host of differences even within these two over-simplified categories. For example, relatively liberal economies such as the UK differ starkly from social market economies such as Austria, Germany, and Sweden. Social market economies tend to be characterised by more government intervention, and higher social welfare standards. Hence construction sector improvement policies tend to emphasise worker participation and collective bargaining. And the preferred form of innovation is invariably incremental rather than disruptive. In contrast, construction sector improvement policies in more liberalised countries tend to emphasise the importance of labour market flexibility in support of market competition. In this context, the desired mode of innovation is invariably focused on ‘creative destruction’. But almost all economies are involved in a process of transition, and this will inevitably continue to be the case in the future. Policy narratives are directly implicated in such transitions, not least those which relate to the construction sector given its broader economic and social importance. Construction sector policy is hence ultimately shaped and constrained by the meta-narratives of the broader political economy. Few would argue that

336 Epilogue competitive markets are not important for the purposes of driving efficiency. But even fewer would argue against the need for such markets to be subject to appropriate regulation. Yet the heroes of the current book are undoubtedly those who work in construction. Those who continuously strive to do the right thing despite the circumstances in which they are obliged to work. And despite the improvement initiatives to which they are subjected.

Index

Note: Italicized page numbers refer to figures. Accelerating Change (Strategic Forum, 2002) 74, 104, 105, 178, 192–206; client leadership 198–199; cross-cutting issues 204–206; culture change in people issues 202–204; progress since Rethinking Construction 193–197; remit and vision 192–193; strategic direction and targets 197–198; supply side integration and integrated teams 199–201 agency labour 52, 163 apprentices 8, 9, 25, 50, 74, 77, 260, 276, 295, 296, 309 apprenticeship levy 276, 305 Arconic, involvement in Grenfell Tower 288–290, 293 Armitt, John, chair of Network Rail 184 Asda: as an exemplar of partnering 137–138; as an influential client 50 Association of Consultancy and Engineering (ACE) 180 BAA plc 50, 84, 95, 99, 112, 223; advocate of partnering 136; Heathrow Terminal 5 215, 233, 246, 252; market power 146, 172; privatisation 30–31, 57, 105; regulated quasi-monopoly 31, 35, 97; withdrawal from client leadership 215 Balfour Beatty 57, 180, 185, 235 Banwell (1944) report 1, 8, 10, 31, 50, 61, 130, 134, 160, 214, 217, 241; contract procedures 10–11; contractor selection 281–282; dangers of labour casualisation 55, 78; direct labour organisations (DLOs) 9; lack of standardisation and repetition 241; placing and management of contracts 9–10; team metaphor 10, 82; undermined by events 13–14 Barbican, industrial dispute 14–15, 28, 47, 71 Be Valuable (Saxon, 2005) 220–226 benchmarking performance 83, 97, 99, 105, 107–108, 110, 115, 117, 212 best practice networks 212–213 best value 8, 60, 63, 96, 197, 199, 207, 218, 233, 247, 281, 285

Bew, Mark, URS/Scott Wilson 252 Blair, Tony (MP): as an advocate of the ‘Third Way’ 176, 180–183; as Prime Minister 64, 78, 94–95, 177–185; commitment to modernisation 176; criticisms of PFI in opposition 63; PFI, schools and hospitals 178–179; sets up the Construction Task Force (CTF) 95–96 Blacklisting 53, 56–57, 185, 246, 276, 281 Boles, Nick (MP), Minister for Skills 265, 271 Bouygues 265, 288 Bovis 95; management contracting vs construction management (CM) 68–72 BRE Environment Assessment Method (BREEAM) 62 Brexit 266–267, 270–272, 275–278, 283, 297, 300, 304–306, 311–313, 315, 331 Briefing 77, 80, 100, 106, 115, 128, 130–131, 179, 198, 217, 242, 248 British Gas privatisation 26–27 British Property Federation (BPF) 84 British Rail privatisation 33, 57, 60 Broadgate development 28–29, 70–72, 77, 84, 215, 219, 247 Brown, Gordon (MP): as Prime Minister 214, 232, 239; at the Treasury 177–178; criticisms of PFI in opposition 63 Build UK 265 Building Britain 2001 (University of Reading, 1988) 61, 72–77, 107, 114, 240; backcloth of change 73, 74; changing client requirements 75; disrupted legacy 67–77; employment and training 74–75; recommendations for action 76 Building Fair Work in the Construction Industry (Fair Work Convention, 2022) 297 building information modelling 21, 100, 131–132, 239, 244, 246, 249, 251–253, 258, 262, 267, 305–306, 314, 328–329 Building Research Establishment (BRE) 5, 222; lean consultancy service 160–161; privatisation 60–62; testing services (Grenfell) 292–293 Building Schools for the Future 182, 239

338 Index Buildoffsite, industry lobby group 313–314 Burnley Football Club 177 business process re-engineering (BPR) 119–132, 135, 141, 150, 157, 168, 171, 197, 206, 215, 231; enabling technologies 127–128; enthusiastic endorsement 119–121; focus on processes 128–129; generic design and construction process protocol 129–132; influence on policy agenda 85–89, 97–107, 115; information technology and process improvement 127–132; lessons from other sectors 121–122; linked with downsizing 111, 124, 126, 146, 215; management gurus 125; persuasive appeal 125–127; playing on historical significance 126; playing on insecurity 125–126; playing on patriotism 126; playing on political resonance 127; shared characteristics with partnering 132–147; shoot the dissenters 123–125; vagueness of definition 122–123 Burton, Tony, chairman of Construction Industry Council (CIC) 265–266 Cable, Vince (MP), Secretary of State for Business, Innovation and Skills 239, 250, 253, 255, 267; co-chair of Construction Leadership Council (CLC) 262, 264–265 Callaghan, James (MP): and the IMF loan 16–18, 40; as Prime Minister 16, 64 Cameron, David (MP) 93; as Prime Minister 239–242, 262, 270; commits to Brexit referendum 259, 264; commitment to deregulation 244, 254, 267; Grenfell public inquiry 300; London Olympics 244–245; loses Brexit referendum 266, 270 Campaign Against Building Industry Nationalisation (CABIN) 7, 132 Campbell, Alastair 177, 188 Canary Wharf 28–29, 36, 77 Carillion 57, 180, 235, 330, 332; goes into administration 295, 297–299, 301, 306–307, 317, 327 Centre for Strategic Studies in Construction (CSSC) 61, 72 Celotex, use on Grenfell Tower 284, 292–293, 314 Chartered Institute of Building (CIOB) 68, 275, 294 Code for Sustainable Homes 267 collaborative working 52, 58, 60, 70, 72, 82, 164, 181, 185, 189, 207, 217, 225, 229, 232, 235–236, 243–244, 247–248, 280, 332; commonalities with partnering 132, 147, 183 Costain 57, 185 Clark, Greg (MP), Secretary of State for Business, Energy and Industrial Strategy 306 Clarke, Ken (MP) 312

Clegg, Nick (MP), Deputy Prime Minister, Leader of the Liberal Democrats 239–242, 244–245, 262 Commission for Architecture and the Built Environment (CABE) 38, 63, 99, 192, 218, 219 compulsory competitive tendering (CCT) 25, 35, 43, 59, 63, 215, 233, 241, 281, 285, 307 Confederation of British Industry (CBI) 227–228, 249, 254, 256–257, 266, 279 Consortium of Local Authorities Special Programme (CLASP) 310 Construct IT 61, 121 Constructing Excellence 110, 207, 210–213, 220, 224–225, 229, 231 Constructing the Team (Latham, 1994) 79–85, 88, 90, 114, 117, 119, 187; key recommendations 80–82; Latham in context 79–80; main contractors take the hump 82–83 Construction 2050 (HM Government, 2013) 254–267, 270, 278, 291, 305; contrast with Farmer (2016) review 272; drivers of change 259–262; failure of implementation 309; industry and government in partnership 254–255; large type and stirring photography 255–246; leadership 262–264; omission of fire safety 280, 300; strategic context 256–258; strategic priorities 258–259 Construction Best Practice Programme (CBPP) 96, 109, 112, 165, 176; justification of investment 211, 233; lack of supporting evidence 190, 198; merger into Constructing Excellence 211; responsibility for collating best practice 114–116, 196, 197, 200, 202 Construction Commitments 246–249, 262, 263; lack of support 267; proposal to update 265 construction corridor, in the North of England 313, 323 Construction Clients’ Forum (CCF) 80, 111, 145, 215; early struggles 80, 84–85, 90, 96; endorsement of partnering 136–137; pact with industry 96, 112–114 Construction Clients’ Confederation 111, 114, 192, 203–204, 215 Construction Industry Board (CIB) 76, 85, 90, 114, 211, 215; demise 192, 199; endorsement of business process re-engineering (BPR) 121, 282; endorsement of partnering 132–135, 137, 140, 143, 145, 235; formation 83–84; marginalisation post-Egan 109, 111–112; responsibility for strategic direction 191; working groups 83, 85, 95, 107 Construction Industry Council (CIC) 21, 165, 192, 253; attempted re-launch of Strategic Forum 265–266; common learning outcomes 203; development of design quality indicators 196; silence on key issues 318

Index  339 Construction Industry Training Board (CITB) 165, 192, 203, 260, 296; as a target for reform 271, 276–277, 283, 300, 305, 310 Construction Innovation Hub (CIH) 221; development programme 309–311; support for offsite 314; value toolkit 311, 330 Construction Leadership Council (CLC) 250, 271, 291, 297, 306, 308, 329; brief for Farmer (2016) review 271, 279; commitment fatigue 307; concerns about legitimacy 263, 265, 280, 283, 305; construction supply chain payment charter 263; endorsement of Construction Playbook (HM Government, 2020) 326, 328; failure of implementation 309; procuring for value 310–311; rises to the Covid challenge 314; scapegoating of CITB 276; strategic leadership role 256, 259, 262–263, 309; successor to the Strategic Forum 263, 267, 331; support for direct employment 310, 319; support for offsite 313–314 Construction Lean Improvement Programme (CLIP) 151, 160–162, 164 Construction Playbook (HM Government, 2020) 11, 255, 304, 332; early supply chain involvement 329; further embed digital technologies 328–329; harmonise, digitise and rationalise demand 328; outcome-based approach 329–330; overview 326; portfolios and long-term contracting 327; scope and remit 326–327 Construction Products Association (CPA) 192, 202, 265–266 Construction Research and Innovation Strategy Panel (CRISP) 165, 192, 206 Construction Round Table (CRT) 84, 85, 111, 112, 114, 165 Constructing Improvement (CCF, 1998) 112–114 Construction Sector Deal (HM Government, 2018) 304, 305–311, 313; beguiling notions of technological optimism 320; commitment fatigue 307–309; delivery plan 309–310; digital and manufacturing technologies 306–307; failure to deliver 317, 330; procuring for value 310–311; transformative deal between government and industry 305–306 Construction Skills Certification Scheme (CSCS) 202 continuous improvement 60, 113, 189, 192, 329; as a component of partnering 132–133, 135, 139–141; as a component of lean thinking 150, 153, 164, 170; as a culture 197, 206; contrast with radical change 97, 197, 231; endorsement by Construction Industry Board (CIB) 83; ever-increasing demands on sub-contractors 186; shared responsibility 196

Corbyn, Jeremy (MP), leader of the Labour Party 266, 270, 311 corporate social responsibility (CSR) 39, 99, 116, 179, 204, 215 cost-in-use 98, 218 Covid pandemic 304, 311, 314–316 Crane, Alan 110, 111 Crossrail 57, 246, 265 culture change 85–86, 197, 216; accelerating culture change in people issues 202–204; as a component of business process re-engineering (BPR) 124, 128; as a component of partnering 135, 138, 145, 164, 186, 198; as a component of the Egan (1998) agenda 92, 107, 111–112; as a meaningless soundbite 200, 208, 216, 217, 264, 282, 318; cross-cutting issues 205; repeated calls 217, 264, 318–319 customer responsiveness 68; as a component of business process re-engineering (BPR) 128; as a component of partnering 146; as advocated in Constructing the Team (Latham, 1994) 80–81; as an enticing discourse 75, 117, 119, 154, 207, 224; cult of the customer 96, 109; damaging side effects 215 Defence Estates 58, 189, 190 Defence Infrastructure Organisation (DIO) 58 Department of the Environment, Transport and the Regions (DETR) 95, 96, 109–111, 114–115, 190–191, 219, 233 Department of Trade and Industry (DTI) 83, 192, 196 Democratic Unionist Party (DUP) 270, 311 deregulation; as a promoter of change 36; culture within government 229, 267, 290–292, 300, 318; financial services 28–29, 77; Singapore-on-Thames as an exemplar 277 Design Build Foundation (DBF) 77, 165, 192, 211 design for manufacture and assembly (DfMA) 278, 314 design quality indicators (DQIs) 38, 196, 214, 218, 327 direct employment, 64, 163, 182, 184–185, 204, 248, 274, 280–281, 318, 328; as encouraged on Heathrow Terminal 5 215; as encouraged on London Olympics 2012 245–246; associated fixed costs 54; barriers presented by migration status 225; consensus in favour 14, 50–51, 78; constraints of prevailing political economy 311, 318; economic reality test 55, 203; support by Construction Leadership Council (CLC) 310; tension with competitive strategy 55–59 direct labour organisations (DLOs) 6–7, 9, 24–25, 95, 101, 184, 186, 242, 280–282

340 Index early contractor involvement (ECI) 10, 60, 130, 160, 242–243, 329; early contractor engagement 261 early supply chain involvement (ESI) 242, 327, 329 Eastman, Chuck 100, 251 Edinburgh schools 294–297, 318 Engineering and Physical Sciences Research Council (EPSRC) 120–121, 129 European Construction Institute (ECI) 61 European Monetary System (EMS) 77, 93 European Union (EU) 270, 312; Brexit referendum 259, 266; migrant workers 315; procurement rules 288; red tape 291; uncertainty caused by Brexit 304, 312, 331

Group of Eight, visit to Margaret Thatcher 21, 251, 280

Fallon, Michael (MP): as business minister 291; as Minister for Construction 255 false/bogus self-employment 52, 133, 204, 210, 212, 225, 230, 274 Farage, Nigel 264 Faster Building for Commerce (NEDO, 1988) 68, 77–79, 90, 107, 114, 117; labour-only sub-contractors 78, 114; lean resourcing 79; reflective of a bygone age 89–90; teamwork, trust and cooperation 82 fast-track construction 29, 68–70, 74, 77 Foot, Michael (MP), leader of the Labour Party 26, 93 procurement frameworks 96, 99, 167, 169–170, 172, 182, 186, 219, 243, 327 Future Skills Report (CLC, 2019) 310, 319

Ilke Homes, 313–314 Industrial Challenge Fund 305 Industry transformation: as advocated by the Construction Best Practice Programme 114–115; as advocated following the collapse of Carillion 301; as advocated in Accelerating Change (Strategic Forum, 2002) 205; as advocated in Construction 2025 (HM Government, 2013) 239, 254–255, 258, 266–267; as advocated in Modernise or Die (Farmer, 2016) 272–282, 300; as advocated in the Construction Playbook (HM Government, 2020) 326–332; as advocated in the Construction Sector Deal (HM Government, 2018) 304–306; as embodied within the fourth industrial revolution (Industry 4.0) 278, 329; lessons from the Egan agenda 231 industrialisation 241, 267, 319–320 integrated teams 52, 69, 98, 207, 233; as advocated by Banwell (1964) 10; as advocated by Emmerson (1962) 8; as advocated in Accelerating Change (Strategic Forum, 2002) 197, 199–206, 229; heady talk and rhetoric 210, 225; in the context of lean construction 170 International Group for Lean Construction (IGLC) 161 Interserve 301

gangmasters 49, 51, 229–230, 259, 274, 296 Gangmasters and Labour Abuse Agency (GLAA) 276 Gangmasters Licencing Regulations 229–230 Generic Design and Construction Process Protocol (GDCPP) (Kagioglou et al., 2000) 129–132 Good Work (Taylor, 2017) 319, 328 Gove, Michael (MP) 266, 270, 290 Government Construction Clients’ Panel (GCCP) 112, 190, 215 Government Construction Strategy (Cabinet Office, 2011) 240–244, 249, 261, 267, 330; oneyear progress report 249–251 Great Wall of China 321 Green Deal 258, 260 Grenfell Tower 227, 280, 283–294, 300, 304, 307, 314, 324; bandit capitalism 299; building a safer future 284–286; construction after Grenfell 317–318; deregulation on steroids 290–292; gaming the system 292–294; independent scrutiny 295; merry-go-round of buck passing 287–290; overview 283–284; technological innovation 307, 314, 325

Hansford, Peter, Chief Construction Adviser 253, 256, 265 Health and Safety Executive (HSE) 192, 226, 228, 286 Heathrow Terminal 5 215, 233, 246, 252 Higgins, David 255, 262, 265 Highways Agency 10, 58, 60, 84, 190 Hobson, John, head of the DETR construction directorate 110, 115 Homes England 313 human resource management (HRM) 123–124, 144, 153, 163–164, 167–168

Japanese management practices 75, 77, 150–155, 158, 166; Japanese automotive industry 107, 126, 150–153, 158; Toyota manufacturing system 100, 106, 126, 151–153, 161, 166 Javid, Sajid (MP), Sectary of State for Housing, Communities and Local Government 284 Johnson, Boris (MP): as Mayor of London 245; as Prime Minister 306, 309, 312, 313–315, 319; getting Brexit done 266, 270, 312; resignation as Prime Minister 316 just-in-time (JIT) 37, 97, 100, 129, 141, 154, 164

Index  341 key performance indicators (KPIs) 38, 169, 216; as a reinforcement of pre-existing mechanistic mindset 217–218, 223; as championed by Constructing Excellence 212, 223; as indicative of New Labour government 186, 190; in respect of payment practices 264; recurring policy obsession 85, 97, 206–207, 218, 231; relating to Egan (1998) targets 97, 110–111, 117, 249, 255, 273; relating to people issues 202–203; relating to post-Egan (1998) targets 194, 196, 199, 249 Kingspan, involvement in Grenfell Tower 284, 292–293 Kinnock, Neil (MP), leader of the Labour Party 33, 76–77, 93, 94 Kier 57, 264 knowledge management 14, 130, 215 labour market flexibility 10, 116, 260, 275, 300, 328 labour-only subcontractors (LOSCs) 46, 230, 297; adverse implications 81; as a characteristic of leanness 48–54, 163; as highlighted in Building Britain 2001 (University of Reading, 1988) 74, 77; as highlighted in Faster Building for Commerce (NEDO, 1988) 78, 90, 114; with reference to MMC 324 Leadbitter 288 Laing, Martin 204 Laing O’Rourke 57, 64, 185, 245, 264, 265 Last Planner 151, 161–162, 164, 170 lean construction 50, 115, 144, 150–172, 213, 234, 280, 321; as advocated in Rethinking Construction (Egan, 1998) 106–107; in critical perspective 151–155; in the construction context 159–163; meaning of leanness 163–171; understanding diffusion 155–159 Lean Construction Institute (LCI) 106–107, 161, 166 Lean Thinking (Womack and Jones, 1996) 150–153, 156, 161, 166, 171 Letwin, Oliver (MP) 312 Lewis, Brandon (MP), Minister for Housing and Planning 271 LGBT+ 260 Lipton, Stuart 29, 61, 219 Livingston, Ken, Mayor of London 245 Local Government Task Force (LGTF) 112, 192, 211 Lofthouse, Geoffrey (MP) 324, 326 logistics 100, 105, 160, 202, 248 London 2012 Olympic Games 239, 244–246, 266, 267 long-term relationships 58, 76, 136, 169, 291 Lorimer, John, Manchester City Council 252 Low Carbon Construction (HM Government, 2010) 240, 249

Mace 71–72, 75, 245 Macmillan, Harold (MP), as Prime Minister 251, 311 Machine that Changed the World (Womack et al., 1990) 106, 151–152 Major, John (MP): as Prime Minister 32, 76, 78, 92, 114, 250; budget cuts 228; election victory 33, 43, 77; political struggles 93, 177; private finance initiative (PFI) 62, 261; privatisation programme 33, 41, 57 Major Contractors Group (MCG) 82, 192, 203 Maude, Francis (MP), Minister for the Cabinet Office 249 May, Theresa (MP): as Prime Minister 270, 271, 282, 299, 312; hostile environment policy 275; industrial strategy 305–306, 330; political struggles 283, 311–312, 328; support for direct employment 319 McDonald’s restaurants 81, 85 McVey, Esther (MP), Minister for Housing 313 migrant workers 49, 227, 315–316; conflation with casualised employment 49, 51, 55, 132, 248, 274, 296; from Eastern Europe 74, 208, 270; historical importance 21, 274; regional migrants 30; vulnerability to exploitation 184, 214, 225, 259–260, 275–276, 277, 297 modern management techniques 6, 9, 31, 38, 68, 89, 105–107, 114, 129 modern methods of construction (MMC) 18, 167, 253, 258, 304, 308, 313, 319–326, 331; antecedents 200, 319–320; appointment of Mark Farmer as government champion 313; as a panacea 290, 301, 312, 321–323; as advocated in the Construction Playbook (HM Government 2020) 327–328; concerns about fire safety 325–326; confusion in terminology 277, 300, 314; factory-based quality and precision engineering 324–325; globalisation of supply chains 323–324; issues of definition, 320–21; presumption in favour of off-site construction 279–280; re-branding of pre-existing ideas 5, 81, 100, 168, 221; technological optimism 270–271, 295; the offsite lobby 312–314; trade deficit in prefabricated buildings 323 modern slavery 275–276; embedded slavery 324 modernisation 73, 167, 236, 254, 276, 278, 295, 297, 300; as a New Labour project 176–192; as a panacea 251, 271–273; as a rhetorical device 273; as an anecdote to the failings of the traditional 281–282; as enacted under Thatcher 27–28, 40; as synonymous with nationalisation 5–6, 61, 222, 273; in the age of the planned economy 2–19; unfulfilled dreams of technological optimism 275, 304–332

342 Index Modernise or Die (Farmer, 2016) 254, 270–283, 284, 290–291, 307, 329; appointment of Mark Farmer as government champion of modern methods of construction 313; construction as a sick and dying patient 300, 306, 317; demographic timebomb 315; fragmentation as a critical symptom 273–275; implementation framework 282–283; in search of root causes 280–281; inherent vagueness of modern methods of construction 319; levy too far 278–279, 314; lionising innovation 277, 293; modern slavery reconfigured 275–276; modernisation as a panacea 271–273; presumption in favour of offsite 279–280, 296; problematising the traditional 281–282; review of construction labour model 271, 297, 300, 307; search for a scapegoat 276; summary 299–300; the realm of construction innovation 314; white heat of technology 277–278 Modernising Construction (NAO, 2001) 176, 177, 185–192; improving construction performance 187–189; improving the performance of departments and contractors 189; on message in an expanding market 185–186; partnering takes great strides 186–187; performance measurement 190; recommendations for action 191–192 modularisation 46, 81, 87, 90, 167, 248; as a component of modern methods of construction (MMC) 313, 319–325; CLASP 310; concerns about fire safety 325, 331 Morrell, Paul, Chief Construction Adviser 249, 253 Movement for Innovation (M4I) 10, 76, 109–111, 176, 185, 192, 231, 233; demonstration projects 108–111, 116, 189, 191, 193–196, 207, 212, 234; respect for people initiative 123, 125, 163, 196–197, 202, 220; subsequent mergers 192, 211 National Contractors Group 73, 75, 76 National Economic Development Office (NEDO) 68, 77–79, 82, 89–90, 114, 117 National Highways 58, 60 National Infrastructure Plan 261 Never Waste a Good Crisis (Wolstenholme, 2009) 211, 231–235, 253, 257, 271, 273, 280, 282, 291; review of progress 234–235; re-writing history 232–234; ten years on 231–232 New Engineering Contract (NEC) 81 New Labour 90, 95, 107, 163, 176–184, 239, 242, 266, 291; commitment to modernisation 176, 185–194; commitment to performance targets 97–98, 101–104, 197, 213–216; efficiency and risk in service provision

180–181; endorsement of the enterprise culture 40, 78, 94, 109, 114, 138, 206, 250; enterprise meets social democracy 179–180; espoused commitment to the ‘Third Way’ 92, 176, 180–181, 183–184, 207; dilemmas unresolved 210–238; from hope to cynicism 101, 111, 177–178; partnerships in delivery 180–184; PFI, schools and hospitals 62–63, 178–179, 221, 225, 241, 326 Nissan UK 95, 99, 106; as a Japanese transplant 153–154 Office of Government Commerce (OGC) 84, 190, 191, 192, 206 off-site construction 194, 262, 271–283 off-site manufacturing/fabrication 166–168, 194, 248, 252, 314, 323, 325, 328 Ogunshakin, Nelson, Association for Consultancy and Engineering (ACE) 265 One Death is Too Many (Donaghy, 2009) 214, 228–230, 233, 274; consistently ignored 211, 244, 260, 271, 318; government response 230–231, 286; transient selfemployed labour 295, 310, 328 Olympic Delivery Authority (ODA) 245–246, 255, 274 Osbourne, George (MP); as chancellor 239, 250, 254, 262 partnering 10, 50, 110, 115, 132–147, 182, 243, 280; as advocated in Accelerating Change (Strategic Forum, 2002) 198–202; as advocated in Constructing the Team (Latham, 1994) 79–81, 90, 231; as advocated in Modernising Construction (NAO, 2001) 186–192; as advocated in Never Waste a Good Crisis (Wolstenholme, 2009) 234–235; as advocated in Rethinking Construction (Egan, 1998) 96–100, 107, 117; as advocated in the Construction Playbook (HM Government, 2020) 329, 332; associated risks 105, 160–161; buying power and the rhetoric of seduction 136–137; commonality with business process re-engineering 86, 119–120, 122, 146–147; defining characteristics 132–134; demonstration projects 194–195; exemplar case studies 139–142; in the context of lean construction 150, 160, 162, 164, 166–169, 171, 217; legitimisation of subcontracting/ outsourcing 212, 215; living up to the rhetoric 137–138; morphs into collaborative working 207; paradoxes 142–145, 183; public sector suspicion 112; success requires faith and commitment 134–135; transcending organisational boundaries 135–136; trust and power 145–146

Index  343 payment practices 103, 243, 309; in support of fair payment practices 247, 261, 307, 311, 317; lukewarm support for fair payment practices 263–264; irresponsible procurement practices 278; unhelpful behaviours 286 Pickles, Eric (MP), Secretary of State for Communities and Local Government (DCLG) 287, 292 pre-assembly 200, 202; as a component of modern methods of construction (MMC) 167, 321; as advocated in Progress through Partnership (OST, 1995) 87; as advocated in Rethinking Construction (Egan, 1998) 20, 96, 100, 115, 117, 279, 320 prefabrication 46, 87, 248; as a component of modern methods of construction (MMC) 200, 275, 277, 296, 319–322; negative connotations 4, 5, 221, 241, 267, 277, 314, 320, 324; recurring advocacy 8, 29, 46, 81, 167–168, 194, 202, 275, 296, 321 pre-manufactured value (PMV) 321–322 Prescott, John (MP) 94–95, 116, 154, 177, 180 Private Finance Initiative (PFI) 34, 44, 297; as a means of integration 206, 221; as endorsed in Rethinking Construction (Egan, 1998) 100, 109, 115; contractor responses 185–186, 207, 223, 233; Edinburgh schools 294–297, 301; introduction by John Major 62–63, 181; PFI discredited 236, 241, 243, 253, 261, 326, 330; under New Labour 178–179, 181, 184, 186, 221, 233 procuring for value 57, 222, 310–311, 326 Property Service Agency (PSA) 60, 62; corruption scandal 58, 329; loss of expertise 112, 215, 242, 329; privatisation 44, 57–58, 77, 80, 297 quality and value in building 222–223 Raynsford, Nick (MP), Construction Minister 110, 116, 231 Reading Construction Forum 61, 72, 77, 97, 133, 137, 165, 192, 211, 220 Reisner, Alastair, Civil Engineering Contractors Association (CECA) 265 retention payments 11, 47, 71, 247, 264, 308 Rethinking Construction (Egan, 1998) 17, 39, 76, 92–117, 122, 210, 218, 243, 248, 279, 283, 321; antecedents 68, 73, 75, 77, 79, 83–84, 89, 282, 295, 318; attempted implementation 107–117, 219; background 93–96; commitment to the cause 107–109; debate moves on 247, 249–250, 252–253, 255, 257–259, 261, 266, 271–273; drivers for change 97–99; endorsement of business process re-engineering (BPR) 119–123, 129, 131, 223; endorsement of lean construction 150, 152, 154, 158, 162–163, 166–167,

171; endorsement of modern management techniques 105–107; endorsement of partnering 122–123, 132–133; endorsement of standardisation and pre-assembly 20, 96, 115, 117, 320; improving the project process 99–100; need to improve 96–97; privileging of innovation 100, 108, 109–112, 213, 291; progressive re-interpretation 176, 182, 187–199, 202–205, 207, 214–216, 219; targets for improvements 101–105, 213, 223, 227, 246; ten years on 211, 231–236 Richards, Mervyn 251–252 Right-to-buy, 23–24, 55, 257 Rogers, Peter 29, 70; as chairman of the Strategic Forum for Construction 132, 246–247, 249 Ronan Point 3–5, 18, 81, 273, 287, 324 Royal Academy of Engineering 218 Royal Institute of British Architects (RIBA) 21, 129, 165, 280 Royal Institution of Chartered Surveyors (RICS) 21, 280, 319 Sainsbury’s: as an exemplar of partnering 136–140, 144; as an influential client 50, 85 scientific management (Taylor, 1911) 113, 205, 216; advocacy of universal principles 106, 108; similarity with business process re-engineering (BPR) 123, 129, 168, 216; within nationalised industries 6, 38 serial contracting 8, 13, 99, 242 Sinfield, John, chair of the Construction Products Association (CPA) 266 Sir Robert McAlpine 57, 185 Skanska 57, 180, 264, 265 Smith, John (MP), leader of the Labour Party 94 standard forms of contract 11, 81, 243–244, 278, 286, 308–309, 311 standardisation and pre-assembly 167, 248, 321, 327; as advocated in Accelerating Change (Strategic Forum, 2002) 194, 200; as advocated in Government Construction Strategy (Cabinet Office, 2011) 240–242, 267; as advocated in Rethinking Construction (Egan, 1998) 20, 96, 100, 115, 117, 320; as applied to components 88, 113, 278, 310; economies of scale 319, 241 Strategic Forum for Construction 29, 70, 74, 105, 132, 165, 176, 210; Accelerating Change (Strategic Forum, 2002) 192–206, 219; as ignored in Modernise or Die (Farmer, 2016) 273, 276; attempted re-launch 265–266; comparison with Construction Leadership Council (CLC) 262, 264; Construction Commitments 246–249, 267; continued target setting 213–216; declining influence 249, 253, 256, 262; promotion of integrated teams 104, 144, 164, 167, 215, 229, 233

344 Index Sunak, Rishi (MP): as chancellor 315–316; as Prime Minister 287, 317 supply chain management (SCM) 186, 200; as a euphemism 60, 72, 138, 164, 212, 243; as an improvement recipe 50, 106, 107, 115, 144, 146, 150, 166–167, 169, 190, 195, 202, 225 sustainability 207, 216, 278; as a marginal interest 40, 60, 70, 89, 98, 104, 114, 116, 122, 124, 154, 205, 215, 233; as prioritised on London 2012 Olympics 244–246; belatedly embraced by policy makers 215, 246, 265, 309, 328; increased lip service 179–180, 193, 195–196, 198, 204–205, 214, 291; social sustainability 182, 225–226; triple bottom line 115, 216, 224 system-building techniques 4, 261, 273, 319, 321

a component of the enterprise culture 37–38, 70; as a management fashion 157–158, 160; as endorsed in Rethinking Construction (Egan, 1998) 105, 107; tension with business process re-engineering (BPR) 89, 101, 119, 123, 127, 133, 146, 231 Toyota production/manufacturing system 100, 106, 126, 151–152, 161, 166 traditional (craft) skills 87, 117, 227, 296, 322 Transfer of Undertakings (Protection of Employment) (TUPE) 59, 182 Transport and General Workers’ Union (TGWU) 16, 47 Truss, Liz (MP): as Prime Minister 316; resignation 316 trust and power 145–146

teamwork 130; as a desirable characteristic 67, 134, 138, 167, 169, 187, 200; as a form of behavioural compliance 124, 135, 141, 217; as a precursor to collaborative working 82; as advocated by Emmerson (1962) and Banwell (1964) 1; as endorsed in Constructing the Team (Latham, 1994) 80, 82–83, 124, 187; as endorsed in Rethinking Construction (Egan, 1998) 97, 113, 150; seductive rhetoric 71, 90, 123, 136–137; continuous reinvention as a management idea 201 Tesco 146; as an exemplar of partnering 97, 100, 136–138; as an influential client 50, 85, 95, 103 Thatcher, Margaret (MP): abolishment of NEDO 78–79, 114; as Prime Minister 9, 39, 53, 62, 76, 78, 153, 216, 250, 312; commitment to privatisation 22–23, 26–27, 30–31, 33, 41, 139; deregulation 228; enterprise culture 19, 26–28, 29–32, 34–36, 40, 63–64, 116, 127; legacy 94, 117, 178, 183, 239; monetarist policy 17, 20–22; ousted from power 93; poll tax debacle 32–33; providence intervenes 25–26; replacement by John Major 32; right to buy 23–24, 257; visit by Group of Eight 21, 241, 251, 280 total quality management (TQM) 72, 164; as a component of partnering 139, 141; as

Union of Construction Allied Trades and Technicians (UCATT) 7, 16, 47, 185, 228; policy engagement 21, 73, 256; sponsored report on false self-employment (Harvey, 2001) 52 value agenda 210, 220–225 value engineering 67, 168, 187 value management 97, 105, 107, 115, 117, 187, 218 value toolkit 221, 311, 330 Vinci 57 vulnerable workers, 48, 63, 163, 184, 210, 214, 225–226, 230, 259–260, 276, 297 Watts, Graham, chief executive of the Construction Industry Council (CIC) 318 Wilson, Brian (MP), Minister for Construction 192, 251 Wilson, Harold (MP): as Prime Minister 1, 12, 250, 312; social contract 13, 16; white heat of technology 251, 278, 306 Wolstenholme, Andrew: Never Waste a Good Crisis (Wolstenholme, 2009) 211, 231–235, 253, 257, 271, 273, 280, 282, 291; responsibility for Heathrow Express rail link 233; responsibility for Heathrow Terminal 5 233; role within the Construction Leadership Council (CLC) 265, 271, 291, 306, 313