Report Final

1 UK Construction Industry and Adversarial IssuesFinance and Core Skills

HASNYAN HAIDER1599891

UK Construction Industry and Adversarial Issues

Executive Summary

The construction industry is vital to the UK economy and is one of the largest sectors. However for -

the last two decades the construction industry has been criticized for being adversarial. Contractors exploiting other contractors and driving their own benefits forward at the expense of others has created a hostile industry. The need to change has long been about but now the pressure is increasing. Many solutions have been put forward to tackle this but the most optimal is ‘Collaborative Working’. If this method is implemented into the projects in this industry, contractors and other participants are more likely to work together and achieve the same aims and objectives and thus this should decrease the amount of adversarial behaviors in the industry.

Keywords: Adversarial, Collaborative, Industry, Economy, Construction

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ContentsExecutive Summary...............................................................................................................................1

Keywords:.........................................................................................................................................1

List of Figures.........................................................................................................................................3

List of Tables..........................................................................................................................................3

Introduction...........................................................................................................................................4

Aims and Objectives..............................................................................................................................4

Literature Review..................................................................................................................................4

Methodology.........................................................................................................................................5

Results...................................................................................................................................................5

What is Adversarialism.....................................................................................................................5

Why is the UK Construction Adversarial...........................................................................................6

Discussion..............................................................................................................................................7

How can this Change.........................................................................................................................7

Why is there a need for change........................................................................................................8

Conclusions and Recommendations....................................................................................................11

Reference List......................................................................................................................................12

Appendices..........................................................................................................................................13

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List of Figures

Figure 1.1: Construction Industry in the UK

Figure 1.2: UK Construction Import and Export

Figure 1.3: Benefits of Rethinking Construction

Figure 1.4: Project Performance

List of Tables

Table 1.1: Contractors and Objectives

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Introduction

The UK Construction Industry was traditionally said to be adversarial. What does that mean and has this changed?

The UK construction industry is a complex system that is consistently expanding and growing. The construction industry also plays a vital role in the UK economy and is one of the back bone industries this country is built on. There are many specific sectors and variety of roles within the industry itself which come together to make one of the UK’s largest sectors of economy. ‘It contributes almost £90 billion to the UK economy (or 6.7%) in value added, comprises over 280,000 businesses covering some 2.93 million jobs, which is equivalent to about 10% of total UK employment’ (Department of Business Innovation and skills. A, 2013).

As a consequence of this there are many different views and opinions on this sector. The industry is traditionally criticised for being adversarial. This report will explain the meaning of this and whether there has been a change or development.

Aims and Objectives This report aims to clarify the meaning behind adversarial within the construction industry. Also to review the reason to why it is traditionally said to be adversarial. Finally to give an opinion on whether it still is adversarial while taking into consideration the different views and aspect to come up with a conclusion on the matter.

Literature Review The department of business innovation and skills (2013) stated that the UK construction industry plays a vital role within the economy and generates a lot of profit and jobs for the UK. The vast market in the modern day now exports and imports a lot of projects. This created a pressure in the supply chain within the construction industry and with this pressure and the need for improving the performance of the industry.

With this pressure on the industry came a lot of criticism, one of which was outlined by an organisation called Genie Belt (2014) who conducted a study and found that the UK construction industry is quite adversarial epically compared to the construction industries of other countries such as the USA and France. Similarly Bishop D (2008) also argued that the UK construction industry is adversarial, he believed that contractors exploit and undermine each other which has created a hostile situation in the industry and has brought upon the distrust in projects.

Latham’s (1994) knew of a solution to this problem and that was to bring about a ‘win-win’ solution for everybody. This meant that rather than one person benefiting and another losing out that contractors should come to a mutual agreement where they both win. Thomas (2005) further expanded on Latham’s statement by agreeing with the basic concept, that a ‘win-win’ solution would work however, there can be barriers and situations where other members of the project won’t win in the same value as others.

Morrell (2015) agreed with the previous statements and said that the best way that adversarial behaviour can be reduced is through implementing collaborative working into projects. This would influence participants and contractors to work together and towards the same objectives which

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brings along long-term benefits. Similarly Kristen (2000) agreed and found that the best solution for adversarialism within the industry was through coalition and team working within projects. However she felt that the entire blame should not just be on the contractors but the clients. Seeing as they play an influential role on the attitudes contractors have within projects.

The poor performance within the industry is common knowledge and has been for a long period. Reports dating back to the early 1930’s to 60’s have all recognised and investigated into the future short comings of the construction industry. Reports such as the Simon Report (1944) investigated the influences and the effectiveness of how managing contracts can help the construction industry. This report was seen as one of the first to criticise the industry but had little impact.

The Emmerson Report (1962) and the Banwell Report (1964) also criticised the construction industry but instead came up with a solution to the problem, this was ‘team relations’ and the different forms of contracts for the different types of work. Links to these report can be found in the appendices.

So even though reports were commissioned nothing drastically was put into action until the 90’s era. This was the critical turning point in which change began to occur. Two significant reports helped with this change, ‘The Latham’s Report 1994 and ‘The Egan Report 1998’.

The Egan’s report stated that ‘the construction industry in the UK has consistently performed in a way that is thought to be wasteful compared to other industries’ (Egan 1998). The report came up with a method for success which are the five drivers for change. These are committed leadership, a focus on the customer, integrated processes and teams, a quality driven agenda and commitment to people. Links to these reports can be found in the appendices.

Methodology

The methodological approach taken was to research different views, opinions, and discussions on a controversial statement. This was a desk top study therefore there was hardly any opportunities at the time to retrieve primary information. Most information retrieved was secondary and qualitative. Some quantitative information was gathered from two government documents on the UK construction industry. Most of the information however, was gathered from three books, one spoke about collaborative working and the need for change, another spoke of the UK construction industry its supply chain and scale and finally the last one spoke of the importance of client and contractor relations.

Previous journals and reports already relating the topic were taken into consideration and helped build up on the discussion. These helped voice opinions of individuals and groups and gave different aspects in the sensitivity of the topic relating adversarial behaviour in the UK construction industry.

Results

What is Adversarialism

Adversarial, is pertaining to or characterized by antagonism and conflict (Dictionary, 2015). In many projects within the UK you will find the different disciplines disagreeing on specific matters, matters which normally relate to money and decision making. This therefore is Adversarialism in the UK construction industry.

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It is common knowledge that in order for a project to be successful there must be a certain degree of team work and coalition. The better the participants within a project interrelate the easier it will be for them to achieve set objectives for the project. A certain level of interrelations must be established within a project between different participants to help the projects performance. Nonetheless, in the UK construction industry this aspect of the sector is often criticised and is in need of improvement.

Adversarial behaviour within the construction can be dated back to the last two decades. In the modern day this has become a serious concern and the performance of the British construction industry is in question. In modern day construction projects it is believed to be a social norm where adversarial forms of contracting is common and Contractors exploiting and undermining each other.

This has created to a hostile environment for project management and the need for a proposed solution has become greater.

Why is the UK Construction Adversarial

Construction work is broad field, each project is different and unique it its own way. They can span from a few days to several years but the basic principles of how they work are the same. Client’s would normally decide their requirements and appoint contractors to take responsibility and meet these requirements.

Depending on the scale of the project there can be many roles within the construction process; there can be main contractors who have subcontractors and even temporary contractors for certain stages of the project. With the vast number of layers within the process and the size of the supply chain there are many opportunities for each contractor to drive their own return through the structure of the production (Bishop, 2008).

Thus, adversarialism is a widespread of the construction industry, its stated that ‘given the adversarial, low-trust environment that has dominated the construction sector for many years, a considerable amount of correction is required if the correct ‘win-win’, high trust, team working mind set is to take hold’ (Thomas, 2005).

It was stated that within projects there have been many conflicts and disagreements. It’s the same story QS’s, Design Teams, PM’s and contractors all having a go at one another and disagreeing to a stage where it can only be resolved in the courts. However, you will mainly find this in the UK construction industry.

A study was conducted on the cooperation within construction projects it was found that the US, Denmark and France all have a better cooperation within their projects compared to that of the UK’s (Genie, 2014).

It is thought to be due to the UK construction culture. Dating all the way back to the post war regeneration period. The situation was created where nearly any potential construction client was a monopoly, this also meant any party tendering for any of the works was an effective free market. This then lead to the exploitation, clients therefore tried to reduce costs, especially at the costs of the contractors (Genie, 2014).

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It was argued that the nature of interrelationships determines the overall performance of that project. Each individual effects the overall outcome, this article also went on to include that each individual must be satisfied within a project and must have a certain level of satisfaction from the work they do to perform optimal enough for a successful project. However, this article also argued that there are two levels of satisfaction for each participant within a project.

Level one is just the basic satisfaction each participant has themselves towards the work, the second level is the work others produce for the project. This therefore means that for an individual to be fully satisfied to a specific level where they can work optimally and most efficiently for the project’s success, they need to be satisfied with their own performance and the performance of others within the project. This concluded that work co-operation is a vital aspect for project success and that harmonious work relations are needed to reduce the overall adversarialism (Kristen 2000).

Discussion

How can this Change

The challenges faced in today’s construction industry is how to tackle the problem, it’s easy enough to enforce the ‘win-win’ situation but not everyone will agree. It has been agreed by many that the way forward is collaborative working. Collaborative working within the projects enable everyone to agree on the same objectives and aims and help each other achieve them. This has the potential to promote more knowledge and learning within the industry and will enable long term benefits.

Clients trying to reduce costs and contractors trying to produce work, thus the stalemate. But can this change? It is believed that everyone within a project all share the same objective, which is to achieve a successful outcome. With an overall objective of success it can be done, but then again different teams also have their own objectives.

These are stated below:Table 1.1: Contractors and Objectives

Client Will be happy if he gets a building which is finished on time, is up to the quality required and is, of course, within budget.

Design Team and Consultants

Will be happy if they secure their fees for the projects and if the Client and project team wants to work with them again.

Contractors and sub-Contractors

Will be happy if they get paid on time, secure a good profit and ensure that the project team, their workers and most importantly, the Client, wants to work with them again.

Other Parties Will be happy if they complete a project, and were a part of a team, that they can all be proud of.

(Genie, 2014)

Chris Blythe the chief executive of CIOB stated that change is impossible to achieve without the wide collaboration of the industry. In 2014 the Commission published a report on collaboration for change called the ‘Edge Commission Report on the Future of Professionalism’. This report concludes that there is a pressure for change and it can be achieved. The main points to take into consideration are:

• Ethics and the public interest, and a shared code of conduct

• Education and competence

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http://www.edgedebate.com/?p=2786

http://www.edgedebate.com/?p=2786


• Research and a body of knowledge

• Collaboration on major challenges, including industry reform in the interests of a better offer to clients, climate change and building performance (Morrell, 2015)

With the change of professionalism and the pressure for more collaboration within the industry this will help reduce adversarialism.

Conversely it is not so easy to implement into the industry due to the barriers. One barrier that has been recognised for the implementation of collaborative working is at the beginning stage of the project. The client plays a vital role in the project and the client’s attitude towards the work and method it is carried out. It was noted that if the client’s attitude was not that influential on the contractors then collaborative working would not be as affective. If however the client emphasises the importance of collaborative working at the beginning stages of the project then the contractors are more likely to implement this method into the project.

There is also another barrier with this outcome as not all clients are even able to provide the support needed to implement and influence the project for collaborative working to succeed (Bishop, 2008).

Why is there a need for change

The UK construction industry is continuingly growing, there are many drivers for growth, such as foreign markets. The global and domestic opportunities arising in construction calls for a capable workforce to provide the performance needed.

The construction industry plays a vital role in the UK economy, so the success of the industry is required. This table below shows the technology advantages in construction for different countries.

Figure 1.1: Construction Industry in the UK

(Department of Business Innovation and skills. A, 2013)

So the UK does have the technological advantage when it comes to most of the other countries, along with this advantage the UK also exports many services to other countries.

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Figure 1.2: UK Construction Import and Export

(Department of Business Innovation and skills. A, 2013)

With the UK exporting services and having a lead on other countries within the industry there is a larger pressure for performance and results from the industry. This could then lead to a lot of criticism if they do not perform to a specific standard.

This can be related to the issues surrounding adversarial performances. So due to these statistics it is easy to see why there is a need for change. The change is necessary for the industry and will bring many benefits to the economy.

A study was conducted to see the ways in which construction could be improved overall in the UK. One of the main issues highlighted in the interviews and reports was the effects of behaviour within projects.

Behavioural issues within projects have been identified as important and thus the need for positive improvements. Interviewees recognised contractors and project managers as having a key role within the positivity of a project. Project managers therefore have a correlation between project performances. (Department Of Business Innovation and Skills. B, 2013)

The chart below shows what the interviewee’s said would help improve construction performance overall. The majority concluded integration within the workforce and collaborative working.

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Figure 1.3: Benefits of Rethinking Construction

(Department Of Business Innovation and Skills. B, 2013)

There is a need for change for the future of the construction industry, it has been researched that in the modern day projects too many participants within a project are working towards their own objectives rather than the objectives of the entire project. This leads to certain individuals obtaining their own objects being disregarding the objectives of others (Kristen 2000).

This is due to the vision of individuals, many people argue that those individuals who only wish to obtain their own objectives and only have short term vision, which means gaining small success by achieving just their own objectives. If however, they had the long term vision most would realise that if they obtain the overall objectives of the project rather than their own this would make for a better work force, a more successful project outcome and would possibly lead to more business opportunities for these individuals for the future. This does not only benefit the individual but the entire construction industry as well.

Figure 1.4: Project Performance

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Contractor

Organisation

Performance attributes

Objectives

Project Performance

Roles within Project Coalition

Contractors Performance

Client Performance

Contractor Performance


Latham once encouraged participants within the construction industry to strive towards a ‘win – win’ solution. This was basically where all the participants within a project would aim to obtain the same goals thus leading everyone to satisfaction. By obtaining the overall objectives and with the same goals in mind this would then satisfy not only the participants working in the project but the clients. This would eventually lead to more employment by the clients for the industry (Latham, 1994).

Conclusions and Recommendations

As it has been outlined adversarial behaviour has been an issue for a long time within the UK construction industry, but as the industry is now growing and expanding year by year the pressure for improvement has risen, especially as resources are being exported from the country. We can agree that the main solution for this problem is to implement more collaborative working within projects, with more team working between contractors. In addition, clients should take some responsibility due to their vast influence in projects not just contractors.

It has been realised that if contractors and participants work together to achieve similar aims and objectives this would create a better and more efficient work force with a more successful outcome for the project. Therefore with this development there would be more long term benefits for both businesses, clients and the UK economy.

Reference List

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1. Bishop, D., Felstead A, Fuller A, Jewson N, Kakavelakis K, Unwin L, (2008), “Learning as Work”, Teaching and Learning Processes in Contemporary Work Organisations, (13), pp 2 – 17.

2. Department Of Business Innovation and Skills. A, (2013), An Economic analysis of the sector. London: BIS.

3. Department Of Business Innovation and Skills. B, (2013), Supply Chain Analysis into the Construction Industry. London: BIS. No 145.

4. Dictionary, (2015) , ‘Adversary’, [Online], Available from: http://dictionary.reference.com/browse/adversarial , [Accessed on 18/10/2015]

5. Egan, J., (1998), ‘Rethinking Construction’, [Online], Available from: http://constructingexcellence.org.uk/wp-content/uploads/2014/10/rethinking_construction_report.pdf, [Accessed on 15/11/2015]

6. Genie Belt, (2014), ’The Nature of UK Construction is Adversarial’, [Online], Available from: http://blog.geniebelt.com/2014/04/the-nature-of-uk-construction-is-adversarial , [Accessed on 18/10/2015]

7. Kristen, P., (2000), The performance of the project coalition in the UK construction industry, a conceptual optimisation model, 2, (2), pp 104-110.

8. Latham, M., (1994), “Constructing the team”, Final report of the government/industry review of procurement and contractual arrangements in the United Kingdom construction industry, HMSO, Department of Environment, London.

9. MORRELL, P., (2015), Collaboration for change: The edge Commission Report on The Future of Professionalism. [Online], Available from: http://www.edgedebate.com/wp-content/uploads/2015/05/150415_collaborationforchange_book.pdf. [Accessed on 2/10/ 2015]

10. Thomas, G., Thomas, M., (2005), Construction Partnering and Integrated Team working, Oxford: Blackwell.

Appendices

1. Simons Report (1944) Link:

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http://www.edgedebate.com/wp-content/uploads/2015/05/150415_collaborationforchange_book.pdf

http://www.edgedebate.com/wp-content/uploads/2015/05/150415_collaborationforchange_book.pdf

http://blog.geniebelt.com/2014/04/the-nature-of-uk-construction-is-adversarial

http://constructingexcellence.org.uk/wp-content/uploads/2014/10/rethinking_construction_report.pdf


http://dictionary.reference.com/browse/adversarial


http://www.designingbuildings.co.uk/wiki/Simon_Report

2. Banwell Report (1962) Link:

http://www.designingbuildings.co.uk/wiki/Banwell_Report

3. Emerson Report (1962) Link:

http://www.designingbuildings.co.uk/wiki/Construction_industry_reports

4. Egan Report Rethinking Construction link:


5. Latham’s Report (1994) link:

http://www.cewales.org.uk/cew/wp-content/uploads/Constructing-the-team-The-Latham-Report.pdf

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http://www.designingbuildings.co.uk/wiki/Construction_industry_reports

http://www.designingbuildings.co.uk/wiki/Banwell_Report

http://www.designingbuildings.co.uk/wiki/Simon_Report

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