Recent construction
industry reform
16. Since the industry came out of recession
in the early 1990s there have been various drives to reform practices
across the sector. The first concerted effort came in 1994 with
the publication of Sir Michael Latham's influential Constructing
the Team report. This was an independent review of construction,
commissioned jointly by government and the industry. Its main
recommendation was that "the client should be at the core
of the construction process" and that the route to achieving
client satisfaction was through "team work and co-operation".[27]
As one of our witnesses said, it "remains one of the most
effective and well considered studies of the industry".[28]
Indeed, its central message that the role of the client is key
and that team working is the necessary response to the fragmented
nature of the industry, remains relevant 14 years on. The Housing
Grants, Construction and Regeneration Act 1998 (usually referred
to as the Construction Act), which sought to deal with
the endemic problems of poor payment practices and disputes in
the sector, was a direct consequence of the Latham report.[29]
17. Four years later, the Construction Task Force,
led by Sir John Egan, reiterated the same themes in its 1998 report
Rethinking Construction. It acknowledged that while the
industry's "capability to deliver the most difficult and
innovative projects matches that of any other construction industry
in the world […] there is deep concern that the industry
as a whole is under-achieving". The report identified five
key drivers of change: committed leadership; a focus on the customer;
integrated processes and teams; a quality driven agenda; and a
commitment to people. In support of these, the Task Force set
three-year targets for improvement in areas such as project delivery
time, cost and quality, and for on-site accident reduction. It
also set up a demonstration projects programme, designed for organisations
from across the industry to bring forward schemes that demonstrate
innovation and new ways of working. This programme has been at
the heart of the implementation of what became known as the 'Egan
agenda'. In the intervening 10 years there have been almost 500
such projects, worth around £12 billion and involving more
than 1,100 organisations.[30]
18. While the construction industry and its clients
responded positively to Rethinking Construction, actual
progress in the years after its publication was described by the
industry as 'slow and patchy' and we were told that "partnering
and team-working arrangements have often appeared to be 'skin
deep' or have excluded the supply chain".[31]
Government's response to this was, in 2001, to establish the Strategic
Forum for Construction. Its role is to oversee the implementation
of the industry reform movement through its member bodies, including
Constructing Excellence, ConstructionSkills, the Union of Construction,
Allied Trades and Technicians (UCATT) and the main Construction
Umbrella Bodies.[32]
Chaired by Sir John Egan, the forum's first output was the 2002
report, Rethinking Construction: Accelerating Change. Building
on the previous report, this set new targets for achieving industry
reform in a range of areas by the end of 2007:
- 50% of construction projects
by value to be undertaken by integrated teams and supply chains.
(An integrated project team comprises the client's team and the
supplier's teams, including contractors, specialist suppliers
and those involved in design. An integrated supply chain is made
up of all the parties responsible for delivering the end-product.
Such supply chains often stay together from project to project.);[33]
- 50% of construction activity
by value to be procured by clients that embrace the principles
of the Clients' Charter. This sets minimum standards for clients
to attain in areas such as procurement, health and safety, and
environmental sustainability;
- A 50% increase in applications
to built environment higher and further education courses;
- By 2006, a total of 300,000
qualified people to have been recruited and trained in the industry;
- By 2010 an increase in the
annual rate of apprentice completions to 13,500;
- By 2010, a fully trained, qualified
and competent workforce on all projects; and
- By 2004, 500 projects to have
used the Design Quality Indicators (DQI), and 50% of all publicly-funded
and PFI projects (having a value in excess of £1 million)
to be using them. DQI is an online tool for evaluating the design
quality of buildings.
19. Although the Strategic Forum has reported
good progress against most of the targets set by Accelerating
Change, particularly for skills, the most notable exceptions
have been in adoption of the Clients' Charter and in promoting
greater use of integrated teams and supply chains.[34]
On the latter the Construction Products Association (CPA) told
us it had proved difficult to measure exactly what was going on
in the industry because what would be defined as an integrated
project team in one part of the supply chain would not be integrated
for another part. Nonetheless, the CPA told us "there is
no hiding from the fact that we have not moved anything like as
quickly as the Accelerating Change report intended or we
would have liked".[35]
The Minister responsible for construction also accepted this view
in evidence to us.[36]
We will refer back to the industry's performance against its recent
targets throughout this Report.
20. At the time the Committee was taking evidence
for its inquiry, the Accelerating Change targets were near
or at the end of their lifetime. The Construction Industry Council
told us it felt "the momentum has to some extent been lost"
and that "it is important to find new ways in which a new
thrust of energy can be injected to ensure that we are driving
ahead on […] some of the big policy challenges".[37]
It is encouraging, then, that the Strategic Forum has recently
launched a new set of targets to push forward the Egan agenda
for the period up to 2012. These are set out in Table 2 below.Table
2: The new Egan targets for the period 2008 to 2012
