How to fix procurement after Grenfell

Steve Malone
12 March 2020

With phase two of the Grenfell Tower inquiry now underway, questions are coming thick and fast about the procurement and product specification decisions that led this high-rise residential building to be in such a dangerous condition.

Evidence is emerging of an unrelenting drive to cut costs which is likely to have affected the performance and quality of the tower’s refurbishment. I believe this shows the lack of procurement expertise right across the construction process.

Indeed, the interim report from the Competence Steering Group – set up to tackle failings highlighted by Dame Judith Hackitt – identified that ‘dedicated, competent procurement professionals are not currently involved in all required procurement activities identified for HRRBs’.

Development teams are not engaging enough construction professionals with robust procurement knowledge. Procurement activities are too often being carried out by individuals who are not fully qualified or competent, which results in poor decision-making and a focus on price rather than building safety. This lack of procurement expertise drives poor behaviours throughout the supply chain.

The problem is how to change these behaviours in a sector where ‘racing to the bottom’ has become the norm when pricing jobs. I’ve seen these pressures first-hand and believe there are some key ways in which the balance between margin and safety can be reset.

1. Social housing providers must take a lead. They are just one part of the wider construction industry, but their social purpose and procurement experience in balancing social value, quality and commercial priorities makes them well placed to be a cultural change agent.

2. Share best practice. Practical examples, showing how quality and safety can be considered equally alongside cost in sourcing, tendering and contracting must be communicated widely across the sector.

3. Innovation is critical. To balance quality with price, the construction sector must think differently. Increased standardisation, better use of data analytics, digitised services and a different partnering approach in the supply chain (with more emphasis on growing skills in-house) are some examples.

4. Build a robust procurement environment. Developing a well-considered, holistic procurement approach that combines commercial insight, attentive contract management, meaningful supplier engagement, insightful data strategy and operational optimisation will help to create a healthy foundation for balancing cost with safety.

5. Address contractor concerns head on. Contractors may worry that by following the new procurement regime proposed by the Competence Steering Group, they could lose out to competitors who price lower and cut corners. Work needs to be done to reassure both sides that quality can be considered equally to price without any damaging effects.

For years, construction business models have been built on rock bottom prices. Better education, inspiration and example sharing is critical to changing this culture and achieving an even-handed approach to commercial decision-making. The sector I work in, social housing, is well positioned to lead this change. 

Steve Malone is managing director at Procurement for Housing.

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