Examination of Witnesses (Questions 20-39)
CONSTRUCTION CONFEDERATION,
CONSTRUCTION INDUSTRY
COUNCIL, CONSTRUCTION
PRODUCTS ASSOC.
23 OCTOBER 2007
Q20 Mr Bone: It is on the contracting
point, Chairman. I used to run a plc. We sub-contracted to contractors,
we did have enormous problems. One of the things that has come
up previously is, if you are tendering for a government contract,
say with the Highways Agency, and then you are going to contract
with a different department, you still have to go through all
the pre-approvals in both contracts. Surely, would it not be easier
to get one pre-approval from the Government for the company which
could then apply across any government contract?
Mr Fison: Absolutely. It would
be of great assistance and we could find ourselves submitting
non-standard documentation but on the same subject—for instance,
health and safety as an example—to thousands of different
departments, whereas it could be managed by one. To date there
have been a couple of attempts to do so, but none have succeeded
and are being employed by enough of the industry and enough of
government to make it effective.
Mr Bone: Thank you. On the manpower issue,
I was slightly surprised about the shortage because, if I pick
a date at random, say 1997, there are more people unemployed now
than there were at the end of 1997 in my patch and it seems to
be that it is not that there are not the people there, it is just
that the industry would prefer to have migrant workers, who may
be better skilled and perhaps have more of a work ethic, is that
right, rather than a shortage of people?
Mr Hoyle: Or work for less.
Q21 Mr Bone: That is another issue
in my area, yes. There is certainly some sort of evidence that
they are in fact undercutting; in fact sometimes not even working
for the minimum wage.
Mr Fison: I think there are two
points to make around this. Firstly, ConstructionSkills are training
a huge number of people and we are taking on a huge number of
apprentices, and I do not believe that the construction industry
is anti-British workers, and where we can see a long-term workflow,
I believe we will use ConstructionSkills to train up British workers
and bring them through the pipeline. Of course, the danger is
that our industry is fundamentally short term—we have short-term
projects—and you cannot deny the attraction of being able
to bring in and take out a resource, and there is this conflict
which exists. So, the more we can get long-term programmes which
enable us to recruit, to use the ConstructionSkills people to
train up and use British workers the better.
Q22 Chairman: We are not spending
long on skills today because we are having a separate session
later on in our inquiry when we will be looking at skills in more
detail, but can I check a couple of things before we move on.
What you are saying really is that there is not actually a shortage
at the grassroots end, but you do have some problems with retraining
adult learners. So it is not actually about the basic training
for the people actually on the construction sites, the shortages
are further up the industry. The project managers are in short
supply.
Mr Fison: The industry is probably
at the highest activity that I have known, probably higher than
in the late eighties, and so it is true to say that there are
shortages or there are tension points right the way up and down.
None of those cannot be overcome by the appropriate engagement
of clients through the whole supply chain.
Q23 Chairman: Your objection is not
that there is a lack of adequate training facilities, for example,
through the old technical college system that we used to have
which was so strong; it is a different problem?
Mr Fison: Yes, I think there is
adequate training there. We are not that clever as an industry,
in terms of the way we procure, to make sure that we get a smooth
flow of people out of those colleges into our industry.
Q24 Chairman: We will look at that
in more detail later. The other thing I want to highlight from
your evidence, which I find fascinating (and we heard this weekend
from the Royal London Hospital, we heard this there anecdotally),
you are actually saying the flow of migrant workers to the UK
has actually been a barrier to innovation.
Mr Fison: Certainly it is my personal
view, my company's view, which is what we expressed, Peter, to
you.
Q25 Chairman: I met someone the other
day who built a power station in India many years ago who said,
"I did not need cranes, because there were so many guys I
could just use ladders and bullets." It is that point, is
it not? The availability of labour means you do not need to innovate.
Mr Fison: Yes, but there was a
point that I made earlier about capacity. I believe that if you
face a cliff there are plenty of solutions to solve it. We as
the UK construction industry know how to do it. Of course, when
you have options, you will choose the one which is most expedient
to you.
Mr Clapham: Chairman, before we leave
the skills area: is there much more that the Construction Industry
Training Board could be doing? I was amazed to learn when we met
last week that we only had 5,000 apprentices in London. It just
seemed to me that you are one of the industries that still has
a training board and we ought to be using that training board
much more effectively. Is there much that you see that could be
done through the Industry Training Board?
Q26 Chairman: Quite briefly, because
we are going to deal with training later; a snapshot impression.
Mr Raynsford: If I could very
briefly respond to that, as I serve on the ConstructionSkills
Board as a representative of the professional services side. There
is a lot of work being done by the CITB—ConstructionSkills
to both enhance the craft training and to deal with the problem
the Chairman raised earlier of the need for on-going in-service
training and particular career advancement for people in middle
management. There are some areas where there are particular capacity
pressures at the moment, but I think we are heartened by the reversal
in the trend for more participation in higher education. In the
last couple of years we have seen a real increase in the number
of students enrolling and initiatives such as the Inspire Scholarships
to encourage people into that sector, which is run by ConstructionSkills
and gives all the help they can to change the image of the industry
and to recruit more people. There is a lot to do but I think it
is moving in the right direction, and the CITB—ConstructionSkills
plays a very important role in that.
Q27 Mark Hunter: My key questions
are about what government can do to encourage capacity growth,
but I do want to press you a little bit further on a recurring
theme so far, and that is the negative perception of the industry.
David mentioned it earlier on; Nick has just talked about it again;
a couple of minutes earlier you referred it to as having a dangerous
and dirty reputation. I am intrigued to know, because I am sure
there must be lots of things that the industry itself is doing:
could you tell us a little bit more about the industry's initiatives
to overcome that perception problem and what you feel is the way
forward? Do you feel it is more for government to do than it is
for yourselves, or are there a whole list of things that you are
already doing and that are succeeding in changing that image problem
that perhaps we do not know about?
Mr Raynsford: Shall I kick off
but I think my colleagues will probably want to add. I think the
first point to make is that the industry is enormously varied
and large, and while it is absolutely world-class, at the top,
the public's perception is often conditioned by what they see
in terms of the builder who comes to do a repair job in their
home, who may not be in that same category. If that is the case,
the public perception is conditioned by their own experience rather
than all the examples they see of the wonderful buildings, and
it is one of the paradoxes that research tells us that the public
love the products of the construction industry, they think that
the outcome, the products, the buildings, the civil engineering
projects, all the infrastructure that the industry builds is marvellous,
but they are still not as positive about the industry. What is
being done about it? Considerate Constructors Scheme, I think,
has been hugely important and influential in trying to reduce
unnecessary grievance to the public by either unsightly, noisy
or anti-social behaviour on sites. I think that is a big contribution.
The image of the industry: ConstructionSkills, the Sector Skills
Council, has been doing a lot recently to try and focus on the
dichotomy I have just mentioned that the public love the product,
just reminding the public that actually the product is produced
by the industry, and that the top end of the industry is world-class
and very, very good; and it is working on that, I think, plus
measures to ensure that we are better at helping to recruit people
into the industry and training them so they will be able to do
the jobs, particularly in areas of regeneration and things like
that that I have already referred to. All of those things can
make a difference. So a lot is being done, but there is still
a lot more to do.
Mr Colley: I think the issues
at the manufacturing end are perhaps slightly different. They
are much more issues about getting high quality engineers, mining
engineers, these sorts of people, to come into the construction
industry. A lot of work is being done, and many of the manufacturers
are building much closer relationships with the universities in
terms of presentations, in terms of putting research work to them,
certainly my own organisation is and plenty of others, as a way
of building the reputation of the industry as being a good quality
industry for good quality graduates to move into.
Mr Fison: I think a great deal
is being done in the physical sense, whether it is through ConstructionSkills,
whether it is through doubling the number of apprentices, whether
it is through starting a GCSE. So there is an enormous number
of actions aimed at bringing individuals in, but that is a slightly
different question from the image, and the CITB—ConstructionSkills
have run some TV advertisements, to my knowledge the whole of
the contracting industry goes to schools. We started going to
schools partly to try and make it safe, to encourage kids not
to hurt themselves on our sites, but actually more and more we
are finding it an opportunity to talk to children and try and
sell it. But, of course, how many schools do we get into in a
year? I have no idea, but I guess it is a low percentage overall,
and so I do think it is an area where we need to combine all the
forces, both private and public, and try and get the message into
schools that there is a good career and, I think most importantly,
it is a stable career. As these pipelines of work get more secure,
as the methods of procurement provide stability for workers, I
think that is a key attractiveness which in the past has not been
there.
Q28 Mark Hunter: As a last word on
this, do you think the image problem, the perception problem,
is more or less of an issue now than it was five or 10 years ago
or about the same?
Mr Fison: Less.
Q29 Chairman: What do young people
want to do now? We keep on hearing every industry has an image
problem. What do they want to do?
Mr Fison: Fortunately, more and
more of them are applying to engineering graduate courses, so
at least that is beginning to be recognised.
Anne Moffat: My son is a bricky!
Q30 Mark Hunter: If I can move on
to my main questions, the evidence memorandum that you have submitted
to us talks about the need for the public sector specifically
to outline more clearly its long-term investment programme so
that the construction industry itself can invest in capacity.
I am interested to know, do you think that the industry receives
accurate and, dare I say, timely information of the Government's
investment plans and particularly so when those plans change?
Perhaps, with respect, John and David might have a go at this
before Nick does.
Mr Colley: I have to say, I think
the situation is better than it was some years ago. First of all,
we have the Comprehensive Spending Review, which does lay down
some indication of spending plans for the future, which is helpful.
Secondly, if you take something like zero carbon homes by 2016
and the early announcements that we are going to see significant
building regulation changes in 2010-13, that is also helpful to
us, because we have a better idea of what we are shooting at and
clearly we can start creating some of our own forecasts around
what may or may not happen then. In terms of the Government and
its own targets, the point I would make there is from our perspective
our interest on targets: it is numbers of schools which are going
to be built or refurbished, it is the number of hospitals which
are going to be built, and so from our perspective again, knowing
the targets and seeing the progress towards that is very helpful
as well, because that, again, gives us confidence to invest for
appropriate capacity to match these sort of demands. I think there
are a lot of positives in that area. Of course if the Government
does not hit its targets, then that is a bit more of a problem
to us, or if the Government does not measure progress towards
targets that is a bit more of a problem to us as well, such as,
for instance, refurbished schools, for which it is generally very
hard to get hold of any kind of figures. So, for us it is output
targets, not input spend, which interests us. Governments often
talk that they are going to spend a billion or two billion more
in this area. That is of less value to us.
Mr Fison: I totally agree with
John. A much improved position but could be possibly better—the
age-old school master's report—particularly when things
change. Things do change from time to time—we are totally
realistic in that—and then honesty is possibly not very
quick onto the table. The transportation 10-year policy is an
obvious example. When programmes are being cut, I think it would
help if we knew quicker. The other message is just how much efficiency
can be driven in and, therefore, how much public spending can
be used to achieve more when there is a programme. When you can
put together your supply chain right the way through, you can
make real savings and, therefore, get more for your money, but
it does need the time to put that supply chain together, to consult
it, to get all the expertise together.
Q31 Mark Hunter: You both say it
is better now than it was but it could be better still. If I were
to say to you: is there a single specific, not a golden key to
the solution here but a single initiative that might be taken
to try and improve it still further, is there any one thing that
stands out that the industry perhaps thinks is blindingly obvious
that is not currently being done at the moment, or is it more
a case of there being lots of small things that might be done
to take it on still further?
Mr Fison: If I was to give one
answer, it would be: be realistic about the delays that always
enter into your programmes; they are a fact of life. They are
a fact of life everywhere. The statement of what is going to be
achieved and then the reality; there is a certain consistency
in the drop-off.
Mr Colley: I think for me probably
one of the issues with building regulations, which do have a very
big impact on materials demand and the type of materials demand,
whether it is one type of material or something totally different
which some other supplier makes, sometimes these are actually
determined at the very last minute before they are enacted, or
as enacted, and that can be a major problem. You could have bills,
you could spend a huge sum of money on some capacity and find
it favours some other material and that you have just wasted your
money, frankly. So perhaps to have a more forward vision on the
precision of the building regulations would actually be helpful.
Having said that, the situation we have now is still a lot better
than it was some years ago.
Q32 Mark Hunter: That is helpful.
As a former council leader you will understand if I do not want
to get too involved in a debate about building regulations today,
but the point is certainly taken. Can I ask you finally on this
section from me—this is for all three of you—about
what you see as being the barriers to the wider adoption of collaborated
and integrated working across the construction industry? You indicated
earlier on that you felt there was more potential for working
together. What do you think that the obstacles are there at the
moment given the statement of the obvious that such practices
would be potentially beneficial to all concerned? Is it culture?
Mr Colley: I think the main barrier
is sometimes a slightly misguided outlook around how to let contracts;
that sometimes there is a belief that, if you break a contract
down into every minute bit and then tender it off individually,
you will somehow get a better price. Where you possibly get a
better price; you will not get better value. So to some extent
it comes from the client perspective about the contracts to actually
open it up to integrated teams so that there is a manufacturer,
there are distributors and there are contractors—in effect,
a supply chain, who will bid against another supply chain—and
from that, for instance, from my own industry, we will design
or help design the technical installations and, clearly under
pressure from competition, you will design out costs, you will
design out waste, you will organise site deliveries in an efficient
and effective manner, whereas if all of those are bid off separately
that cannot happen. It is a bit like, if you like, plasterboard
systems with performance requirements. You can buy the steel separately,
you can buy the plasterboard, but you have not, first of all,
got any performance which comes with it and certainly you are
not going to get the technical expertise to actually make that
system perform; so most of it is the way that the plastering contract
is actually structured.
Mr Raynsford: Could I just add
that the Strategic Forum's Task Group on Integration has looked
at this in some detail and produced a report quite recently which
identified five main barriers. If I can very briefly summarise
them, the first was traditional industry culture with a focus
on low-costs and adversarial relationships; secondly, industry
capabilities and capacity. It is absolutely essential to have
an intelligent client if you are going to get better integration.
So, where you have got clients like BAA setting the standard,
things work very much better than if you do not have that. Thirdly,
procurement arrangements, where there is enormous scope. The NAO
produced a report 18 months ago suggesting there could be savings
of between half a billion and 2.6 billion from the adoption of
best practice in procurement. I did refer to that earlier as one
of the areas where we think government could do more; if that
was driven forward more energetically, the conclusions of that
report and the work of the OGC and the Public Sector Construction
Clients Forum. The fourth was the engagement with the supply chain,
a lack of early engagement, for which there are a number of reasons,
but that does act as a serious obstacle.
Q33 Mark Hunter: That is very interesting
and pertinent to the point. Do you think it is possible for us
to have a copy of that document as part of our evidence as well?
Mr Raynsford: Yes, of course,
we can arrange for that.
Chairman: I have a couple of colleagues
who want to come in before we move on.
Q34 Mr Bone: Mr Colley, on the contracting
side, when I was contracting for government contracts in nationalised
industries—this is many years ago now—in those days
the contracts were so detailed that they would tell us how to
build the clocks that we manufactured, and we knew the best way
of doing it and we went back and pointed out to them they were
adding an enormous amount of unnecessary cost because they wanted
it in a specific way which did not enhance performance in one
way at all. Have they gone away from that now or are they still
micro-managing those details?
Mr Colley: I think the situation
is better. I would not say it is perhaps exactly the same as with
the private sector, but I think it is better in that there is
more flexibility, and so manufacturers' proposals and suggestions
are perhaps much more likely to be taken up if they clearly cut
costs and cut waste.
Q35 Chairman: Our problem was, once
they had issued a tender document with this specific detail, you
had to do that. Though we went back to them and said, "This
is daft", they would not change the tender document. Are
they a little bit more globally based on what the product wants?
Mr Colley: I am certainly not
an expert in that area, but my view is that they are more flexible.
Q36 Mr Clapham: Nick, coming back
to the point you made about the NAO and the model you referred
to, I suppose the nearest that we have seen in the application
of that model would be T5, and yet we have not seen, if you like,
a replication as we move towards building the stadium for the
Olympics. Is there any reason why that template that was so successful
with Terminal 5 is not being replicated for other projects in
London?
Mr Raynsford: I think it is fair
to say that the team that have been selected to build the main
stadium (and, of course, there are number of other projects as
well) is the team that built the Emirates stadium, which was a
considerable success story. One of the problems we have is of
a media which does focus on the problems. If you look at the construction
projects that have attracted publicity over the last two years,
it has not been T5, it has not been Emirates, it is Wembley because
that was problematic. The product is magnificent, but the process
was not, and I am afraid that attracted an enormous amount of
attention, but the picture is better than just T5 and BAA. There
are many other construction companies doing extremely well and
moving the integration debate forward, but it needs to go faster.
Mr Fison: Very much so. There
is very good integration with a number of utility companies where
they are following the BAA model, adapted, obviously, to their
own circumstances. I think the key on the BAA model is early involvement
and, of course, it was not based upon fully competitive tendering,
and I keep coming back to that. The competitive tendering model
has real pluses but it has some real minuses when it comes to
driving integrated behaviour. I think if you want to address that,
we have to look at the people who place tenders and make sure
that the procurement officers in government are empowered to make
judgments away from price-only: because I can see that if I was
one of them I might be quite frightened to step away into that.
So I think that is an area where you can really help.
Q37 Chairman: What Nick was saying,
and you are endorsing, is that the role model here is the private
sector. The BAA model, you would say, is being rolled out in other
major projects, not the public sector. Is there any evidence the
public sector has learnt from the T5 experience and the Emirates
experience?
Mr Fison: The Highways Agency
is a very clear example; the MoD is another very clear example.
Mr Raynsford: There are definitely
good examples in the public sector. The position is a bit patchy,
I think, is the—
Q38 Chairman: I am sorry.
Mr Raynsford: The application
is patchy.
Q39 Chairman: Overall, marks out
of ten for government procurement in the construction sector?
Mr Raynsford: It is probably not
for me to say.
Mr Colley: I do not think it is
for me to say either.
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