Report says buyers should consider the long-term integrity of buildings ©AFP/Getty Images
Report says buyers should consider the long-term integrity of buildings ©AFP/Getty Images

Construction buying in need of makeover

The UK’s building industry has been slammed after criticism of procurement around Grenfell

Two reports have questioned buying practices in the construction sector, the first concerning Grenfell Tower and the second covering modern slavery. Both are critical of late payment, retentions, lowest cost tendering and a lack of collaboration between stakeholders. 

Procurement “sets the tone” for the relationship between clients, designers and contractors, said Dame Judith Hackitt’s review of the Grenfell Tower fire. 

“The procurement process kick-starts the behaviours that we then see throughout design, construction, occupation and maintenance,” it said. “Issues at this stage, for example inadequate specifications, focus on low cost or adversarial contracting, can make it difficult (and most likely, more expensive) to produce a safe building.”

The fire last year, which spread so fast because external cladding did not meet fire resistance standards, killed 72 people and left hundreds homeless.

Hackitt’s report said buyers must prioritise safety, “thinking carefully about the content of contracts”, considering the long-term integrity of buildings and prioritising best value not lowest cost.

Shaun McCarthy, director of Action Sustainability, told SM Hackitt’s report was a “sad reflection of a broken industry sector”.

“The trading of risk down the supply chain, usually to the organisation least able to bear it, is a contributor to the Grenfell disaster, the collapse of Carillion and the presence of modern slavery,” he said. 

Lowest cost tendering, late payment and a lack of supply chain visibility are among “aggressive” practices driving slavery in the sector, according to the Chartered Institute of Building (CIOB).

One supplier told CIOB: “Procurement managers are under so much pressure to save money, they’ll do anything to save their jobs.”

The Better Buying scheme, under which apparel firms are rated by suppliers on their buying practices, could possibly work for the construction sector, said CIOB. If the scheme were adopted by the public sector, which accounts for about half of construction procurement in the UK, it could “force a step change in buyer behaviour”.

“By flipping the power relationships within procurement, Better Buying, or something like it, would give procurement teams a far better understanding of how their behaviour impacts companies lower down the chain,” said the report.

Chris Blythe, CIOB chief executive, called for the industry to rebuild business models: “The constant pressure on prices is forcing out ethical players.”

Michael Gallucci, MD of consultancy MPG, said: “It’s plain to see from the number of construction contracts ending in dispute that there are fundamental issues with the procurement process. The problem was officially recognised with the launch of the [RICS] Conflict Avoidance Pledge, which aims to get firms to look at their working practices, and the new FIDIC books, which encourage parties to work together.”

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