Examination of Witnesses (Questions 40-59)
CONSTRUCTION CONFEDERATION,
CONSTRUCTION INDUSTRY
COUNCIL, CONSTRUCTION
PRODUCTS ASSOC.
23 OCTOBER 2007
Q40 Chairman: David, come on, you
have got to tell us then. Five?
Mr Fison: I had six out of ten
and I had the private sector as seven out of ten.
Q41 Chairman: The Highways Agency
would get a high—
Mr Fison: They would be eight;
they are better.
Q42 Chairman: It is their job, is
it not, construction?
Mr Fison: And they have thought
it through, they are very clear.
Q43 Mr Binley: A lot of the stuff
that you are tendering is coming from local government now, and
that seems to me to be in most respects the worst area possible.
Is it much too cumbersome, much too expensive and do we have to
do something quite seriously and quickly there?
Mr Raynsford: If I can kick off,
and my colleagues will probably add, I think the difficulty is
the one-off or inexperienced client, and it is much easier if
you are using experience. BAA had the experience of a number of
previous projects—Stansted and so forth—before T5.
Most local authorities, looking at the Building Schools for
the Future programme as a classic illustration, are starting
more or less from scratch, which is why it is essential that there
is a central unit, Partnership for Schools, which has been established
and is bringing co-ordination to that. So, that is the right response,
I think, by government to have a central unit to support and to
extend best practice among the 150 local authorities who will
all be participating in the Building Schools for the Future.
That seems to me to be the right way to handle it.
Q44 Mr Binley: Can I just push you,
Nick. Have you seen a real improvement in those terms since the
creation of that department?
Mr Raynsford: I think it is going
slowly at the moment. I think all of us would feel it is going
in the right direction but slowly. One of the interesting things
is that Tim Byles, who is the Chief Executive of Partnership for
Schools, was previously Chief Executive of Norfolk County Council
and he led the local government taskforce on the implementation
of Egan, so he understands the application of the Egan principles
and has got experience in this field, but I think he would be
the first to say that the local government experience was patchy.
Q45 Chairman: This is not unique
to construction, the problem of smaller localised procurement
and the lack of expertise in the procurement process applies pretty
well across the whole procurement process, as I think this Committee
may or may not say in a report shortly. Can I ask you two quick
questions before we move on to a different theme? Long-term collaborative
relationships—you have talked about the merits of them,
particularly you, David. Does that risk locking out the small
and medium-sized firms in the process? Does it only play with
the big boys?
Mr Fison: Yes and no. Yes, in
simple terms. If you are going to enter a long-term framework,
I suspect that that favours the larger players, but the larger
players in the UK do not self-perform even the majority of their
work, it is a minority, and so they immediately form relationships
with local suppliers. I think we are getting a very strong and
clear message from some local authorities in this area that, in
order to work in their patch, they expect us to bring the expertise
that comes with the larger players but they also expect us to
use the local supply chains. We are very relaxed with that, and
so I think it can work, but it does need careful handling.
Q46 Chairman: This Committee's concern
is obviously always public policy—we do not want to stick
on those in the private sector and how it conducts its business—but
given that public sector procurement is about a third of the construction
industry sector give or take, still two-thirds is in the private
sector, what role could government have to improve procurement
and other issues in your sector, the private sector's contracts,
if any?
Mr Fison: I possibly would have
gone the other way around. I think there are some lessons from
the private sector which could go to the public sector, but they
challenge some of the principles of lowest cost always wins. The
private sector are better at moving things forward once they decide
to move things forward. Maybe that is not surprising, because
they are spending their money. Once they press the button, it
tends to move very much quicker; so I think it is the other way
round.
Q47 Chairman: Are there any other
mechanisms you can suggest, other than the obvious ones like secondment
between private sector organisations and the public sector, to
improve that? It is a very helpful comment.
Mr Raynsford: I would simply add
that the whole industry improvement programme from Egan onwards
was very much predicated on sharing best practice across sectors.
Q48 Chairman: I thought it was setting
the clients a course here; it is the clients we are talking about
improving?
Mr Raynsford: Yes, but engaging
the clients in both public and private sectors so that they understand
the best practice across the board and not simply focus on their
own sector.
Q49 Mr Bone: I want to talk a little
bit about budgets and delivery. How does the construction industry
measure in getting things built on time for the price suggested?
Mr Fison: The evidence is not
brilliant. I do not know how reliable the evidence is, but what
evidence we have is that we are improving year on year on delivering
on time and that probably something like two-thirds of all projects
come in on time now. The definition of "on time" is
always a moot point though, because projects do get delayed for
good reasons and changed for good reasons.
Q50 Mr Bone: And on budget?
Mr Fison: I am told that the evidence
suggests that it is about 50%.
Q51 Mr Bone: That is pretty appalling,
is it not? Only 50% is on budget and only two-thirds is on time.
Mr Fison: If you had asked me
personally I would have given a number much higher than that,
but the evidence that I have is that it is 50%.
Q52 Mr Bone: Perhaps a more interesting
statistic for this Committee would be is there a significant difference
between private and public performance? My gut feeling is that
it is much better when you are working for a private customer
than it is when you are working for the Government. What would
your views on that be?
Mr Fison: If I look at my particular
projects, I do not believe that is the case. I think there is
a tendency for the clients in the private sector to be more accurate
in their forecasting prior to commencement, and that has been
a problem with some government contracts, but once the contracts
are entered into and the thing is bottom down, I do not personally
see a huge difference.
Q53 Mr Bone: Perhaps the Olympics
is an unfair example, but when the Government said it was going
to cost this amount of money right at the beginning, nobody believed
them, because we knew it would not, it was just a matter of how
many times you multiplied the cost to what it would actually be.
If it is a private company they just cannot afford to get those
sorts of things wrong, can they?
Mr Fison: No. Correct.
Q54 Mr Bone: Moving on to PFI projects,
how does that relate to time delivery? Are they better or is there
no difference?
Mr Fison: The evidence is they
are better, and the reason for that is probably because you are
placing 100% of your responsibility in one person's hands and
that person has to get the banks to agree it too. So, there is
enormous rigor imposed by the banking system on the contract,
the clarity that the client (often the Government) has expressed
in their requirements, which clarity may not be required in another
contract, and then the proposals to deliver that. So, I think
one of the big differentiators between PFI and non PFI is the
rigor that is imposed by the financial disciplines.
Q55 Mr Bone: If it was a non PFI
project, say it is a large project, do you think there is a tendency
for companies to accept a price or put in a price that they know
they cannot do it for but also know that there will be plenty
of room to renegotiate the budget through the project and, therefore,
it will be okay at the end, and sometimes when it does not happen
you find that companies go bust along the way?
Mr Fison: It certainly has happened.
All I would say is that it is a very inefficient way of doing
business from both people's sides, very inefficient from the contractor's
and the supply chain and very inefficient from the client's.
Q56 Chairman: I was interested in
the implication of some of your remarks just then. Does it mean
that banks are tougher task-masters than the Treasury?
Mr Fison: Much.
Chairman: Fascinating. Thank you.
Q57 Mr Clapham: Can we turn to health
and safety? We are talking about a modern industry, we are talking
about 2.3 million workers across the country, we are talking in
terms of a product that the public like and at the same time we
have an industry that is marred by its health and safety record.
Why is it that last year we saw the number of fatalities increase?
It went up to, I think, 77 last year. Why do you think it increased?
I understand, by the way, at the same time there has been an increase
in major injuries as well.
Mr Fison: Any single accident
is an accident too many, and that we know, so straightaway we
are not trying to defend anything at all. I think you can easily
put it down, if you want to, to the increase in industry activity,
and that must be part of the cause. Across the MCG and the Construction
Confederation we have worked incredibly hard over the last five
years to increase our safety performance and typically we have
made a three-fold improvement. Speaking from my company's point
of view, we have done slightly better than that, probably because
we started slightly worse, but, interestingly, along that path
we have twice had problems where the graph stopped going down
and blipped up. Why? Did we get complacent? Did we change the
mix of work? Something happened and we had to renew our efforts.
Since the Prescott Summit we have managed to drop the accidents
quite dramatically. Last year it went wrong; unforgivable. It
went the wrong way. Yes, we have got to look at the sectors where
it occurred. There is some evidence that there is a difference
between the different sectors of the market, but we have actually
just got to get back on our bikes and work harder at it. We have
got to engage with the workforce. We have got a much more competent
workforce through the CSCS cards and we can see, as the CSCS cards
go up, in direct correlation the accidents come down. So, the
relationship between the qualified workforce is there. Now we
have got to get the relationship with an engaged workforce which
is both qualified and engaged, and that is where the effort is
going in, and we have just got to renew our vigour and go for
it harder and harder and harder. I believe that if we can engage
with the workforce—and we have a quality workforce now—we
can get back on that track going downwards again.
Q58 Mr Clapham: One of the things
that you said earlier, David, is that there is an increased use
of migrant labour. I understand that in those 77 deaths there
were five migrants. That is what has been given to me verbally.
I have not got anything on paper to verify that. Does that not
suggest, if that is so, that we need to perhaps be looking at
how we control agency working, because I understand that much
of the migrant labour that comes into the industry is offered
through agencies?
Mr Fison: I think the other thing
to remember is high many migrant workers we have got here. The
current estimates are seven to 10%. If we are awful about it and
we just look at the statistics, 7% to 10% of 77 would equate.
The migrant workers, the ones that we come across, are pretty
skilled—they work under exactly the same regime on major
construction sites as everyone else, they go through exactly the
same induction, they wear exactly the same PPE (Personal Protective
Equipment)—so I do not see that the migrants per se
are the cause. It may be the type of jobs people go on. I think,
again, we have got to be careful that we look at a long-term picture,
that this is dropping, something went terribly wrong last year,
but over the last five years we have been improving and we have
got to get back onto that improvement trend.
Q59 Mr Clapham: It could be a trend
for the future, and I say that because I am told that so far in
the first six months of this year there have seen 36 fatalities
in the industry, which is disturbing. From your experience are
the fatalities in any particular sector of work or any particular
area in the country, and, if so, is there much that we could do
in focusing more onto that particular area?
Mr Fison: The evidence that I
have is that there is some suggestion that there are more serious
accidents on refurbishments and on housing projects, and so my
suggestion there would be that we should look at whether we are
succeeding in keeping a qualified workforce in these locations,
whether we have the same percentage of qualified people working
there or whether they in some shape or form attract the slightly
less qualified, and if that was the case, then clearly we should
put more effort into those sectors to increase the CSCS carding
and the engagement with the workforce.
Mr Raynsford: Could I add two
observations? One is that there is no question that taking responsibility
at the highest level is absolutely critical, and that was the
message at the safety summit that the former Deputy Prime Minister
held. Before that fatalities were in excess of 100 a year; so
there has been a really significant reduction in that period.
In the year before this last one, the level was 60, which was
the lowest on record; so the overall context is one of improvement.
The second thing is that the industry as a whole has really taken
responsibility and understood its responsibility, and this is
not just the contractors. Onto the professional side there is
a real focus on the way to improve safety in design, to ensure
that the way that buildings are envisaged right from the outset,
not just the way they are built, does help to build in safety,
and it is that acceptance by the industry it has got to go on
driving down, not just fatalities but also injuries and, indeed,
health problems, because wider health issues are particularly
important in relation to materials, and so on. So the culture
has got to be driven from the top of the industry and I think
there is growing acceptance. The Strategic Forum certainly has
given this very high priority.
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