Procurement reform pressure mounts

News that Network Rail is to banish retentions and move its future projects onto a Project Bank Account set up is welcome news, especially for Tier 2 contractors in the wake of the Carillion collapse.

Some good news is needed for construction procurement after some fairly astounding things being heard at the Grenfell Tower disaster public inquiry that comes immediately after publication of Dame Judith Hackitt’s damning Independent Review of Building Regulations and Fire Safety.

Clear evidence has emerged that there was a culture of failure surrounding the Grenfell Tower’s construction and operation that may be widespread. Failings of procurement practices and the contractual framework underpinning the building and maintenance and operation of Grenfell Tower are emerging as key faults.

One of the findings of Dame Judith’s Independent Review of Building Regulations and Fire Safety was that poor procurement practices can kick-start ‘bad behaviour’ on projects, setting the tone for the relationship between clients, designers, contractors, sub-contractors and other stakeholders.

Features of what the report regards as poor procurement sounds like a fair description of what is in fact fairly standard practice of clients towards contractors and contractors towards the rest of the supply chain, and so on down the line.

The report highlighted inadequate specifications at tender stage with a focus on low cost and adversarial contracting. This can make it difficult and more expensive to produce a safe building the report said. In extreme cases it might be making it impossible.

Increased regulatory oversight and enforcement powers look to be on the cards after Dame Judith said current fire and building regulation is too complex and fails to clarify who is responsible for what.

Clients are not blame free of course, as the report acknowledged saying it was incumbent on clients to ensure ‘correct behaviours’ are driven through the supply chain. Safety should be considered from the invitation to tender and safety requirements should be scrutinised.

The sort of contracts commonly used in construction are criticised for encouraging poor behaviour. The focus on lowest price leads to larger contractors passing risk down the supply chain to sub-contractors who do not have the resources to deal with risk. More pressure is placed on the supply chain by late payments and retentions and other payment malpractice.

The report’s main impact should rightly fall on the priority given to fire safety to avoid anything like the Grenfell Tower disaster happening again. But there is also much highlighted about contractual and procurement practices that also obviously need reform; and the pressure is mounting.

Much must be done before the way that construction projects are procured and managed measures up to the achievements made by the industry’s suppliers, architects, engineers, surveyors and other professionals on the ground every day.

Carillion and Grenfell together could provide the impetus that has been lacking for so long; the tragedy is however that it took a disaster on the scale of Grenfell Tower to provoke it. CL

Nick Barrett
Editor