Examination of Witnesses (Questions 460-479)
CONSTRUCTION CLIENTS'
GROUP, BAA
15 JANUARY 2008
Q460 Mr Bailey: So do you think it
is less effectively applied when local government is the client?
Mr Cunningham: Potentially, yes.
Q461 Mr Bailey: That was very diplomatic.
Mr Cunningham: Thank you.
Chairman: Potentially, yes. We will take
that as a qualified yes.
Q462 Anne Moffat: My question is
on the private sector. Do you think there is sufficient best practice
guidance available for infrequent private sector clients?
Mr Cunningham: Obviously we have
the Construction Clients' Charter, which is there to help provide
guidance to those organisations.
Q463 Chairman: We will turn to it
in some length in the next few questions.
Mr Cunningham: Okay. If you are
asking me, the guidance that currently organisations or infrequent
clients get, I would say, is fairly partial. What I mean by that
is, for example, where organisations provide guidance for clients
it tends to be from perspective of the stakeholder group that
they are representing in the supply chain. For example, if RIBA
(Royal Institute of British Architects) were to produce some guidance
for the client, then it would primarily be from the perspective
of the consultant in the process. So I do not think there is any
global guidance, but the Charter is aiming to do that in the future.
Q464 Chairman: Is there anything
else on the Charter that we could do?
Mr Cunningham: Like I said, various
members of the supply chain or organisations that represent stakeholders
within the supply chain have produced guidance for clients to
follow, but it is partial guidance. There is the role of the client
adviser to provide guidance to occasional clients and to all clients,
but if you are asking me about specific, written guidance for
private sector clients, then apart from the Charter and what we
advocate, I do not think there is a global piece of guidance.
Q465 Chairman: Can you explain how
some infrequent projects, such as the Emirates Stadium, work really
well and succeed and others, such as Wembley, fail?
Mr Cunningham: In a nutshell!
I will take the two in turn. I will take the best case one first,
the Emirates Stadium. What we were dealing with Arsenal Football
Club was a client that knew what they wanted. They had a clear
brief. They knew that to compete in the Premier League they had
to move from a 35,000-seater stadium into something which was
more adequate for it to compete with the Manchester Uniteds of
this world. They knew exactly what they wanted, they needed to
move to a 60,000-seater stadium, they knew exactly what additional
revenue that was going to bring in, in terms of gate receipts
and sponsorship, et cetera, and as a result of that they
were able to have an informed view of what their budget was going
to be for the stadium. As a result of that, you had strong client
leadership, there was absolute commitment in bringing the construction
team in at an early stage—I think they were working for
a year on it before they moved into construction—and as
a result of that you see the benefits and the results that you
get. Conversely, looking at Wembley, you had a client that really
did not know what it was doing. It was managed by committee, therefore
you have different stakeholders trying to do different things,
wanting different things, and inevitably there was scope creep—the
scope changed during the project—and that had an impact
on the delivery, and we all know what the consequences of that
were. In summary, what I would say is that the benefits of what
happened at the Emirates Stadium were a client was absolutely
dedicated to understanding what the construction process was,
engaging the supply chain at an early stage and knowing exactly
what they wanted as a client. Conversely, Wembley was none of
those things.
Q466 Mr Binley: A supplementary first,
if you will allow. Having spent 40 years in the private sector
before coming to this place, my experience is that service providers
very often use client training to become good clients within their
sales pitch because it is in their interests to do so.
Mr Cunningham: Yes.
Q467 Mr Binley: A service provider
cannot afford not to have a good client because it costs them
money. Do you find that in the construction industry?
Mr Cunningham: What, that the
supply side or the clients are using training
Q468 Mr Binley: I am talking about
a supply chain where a service provider provides a given service
to a client, that in a sales pitch they will very often include
client training for work with a service provider because it is
in their interests to do so—it is a part of the normal process,
that is what I am saying—and it seems to me that there is
a view that it does not take place as much as it should do. It
may not be bureaucratized but it is a part of the process in many
instances. Do you find that in construction?
Mr Cunningham: What we find in
construction is that it is a fragmented industry. Our role as
the client group is to get the client into a position whereby
we are utilising the best practice from our frequent clients,
which is all about engaging the supply chain at an early stage
and then utilising that to educate occasional clients. A key part
of that process is engaging the supply chain at an early phase.
Unfortunately, with occasional clients what typically seems to
be the case is that there is late engagement of the supply chain
(or this is what my supply chain peers would advocate), therefore
it is very difficult for them to impact upon what happens with
the project. In answer to your question in a round about way,
would it be useful if the supply chain were to train the client?
Q469 Mr Binley: I am saying it is
a normal part of the practice, when a part of the supply chain
sells to the prime contractor that he does train that customer
as a part of that process, and I think we are missing that particular
point.
Mr Cunningham: I think that we
would welcome that, we would welcome the opportunity for that
to happen, but also it is the engagement below that tier one supply
chain and actually getting down to tier two, tier three and the
specialists.
Q470 Mr Binley: That is exactly what
I want to come on to, and you lead me in nicely. There are three
problems with regard to supply chains. The first is about quality
and quality performance, the second is monitoring—that is
a difficult exercise for the main contractor—and the third
is dissemination of information. They are all interlinked, but
they are the three prime areas. My concern is that too many main
contractors do not spend enough time ensuring that all of those
things are just as relevant at the very lowest level of management
decision-making as they are at the top. You have explained the
purpose of the Construction Clients' Charter, but will you tell
me how it actually works in respect of ensuring that all of the
levels in a supply chain are aware of the need for quality, how
the quality protocols work, how that information is disseminated
and how the main contractor actually monitors that particular
process?
Mr Cunningham: The Clients' Charter,
as it currently stands, is focused on four key areas of activity.
One is client leadership and leadership of the supply chain, the
next one is looking at integration and collaborative working,
the next one is quality, as you said, and then people, which involves
health and safety. There are rigorous processes in place for accreditation
and, unfortunately, this has had a kick-back to us which has been,
from our perspective, a perceived low-take up of the Clients'
Charter. Would you like me to go into some figures on this?
Q471 Mr Binley: It is all very well
having these lovely things in place, but if they do not actually
work, in practical terms, and do the job that the client wishes
them to do, they fail. My concern is how you ensure that the information,
in terms of quality and all the other requirements, gets through
to the every lowest level of the supply chain and how you monitor
it to ensure that it has happened: because a charter is fine,
but unless it has practical purposes in that respect, all you
are doing is selling us a PR exercise.
Mr Cunningham: The original charter
was based on the Egan principles from the 1998 report Rethinking
Construction. We have conducted a major review of the Clients'
Charter over the last 18 months and we are now focusing the new
Charter on the 2012 Construction Commitments, which advocate those
areas, plus others, including sustainability, which is fairly
high on the political agenda at the moment.
Q472 Mr Binley: These are lovely
management words.
Mr Cunningham: Let me finish what
I am saying.
Q473 Mr Binley: Answer the question.
Mr Cunningham: Basically, what
we will be doing is focusing on the clients, on getting them signed
up to the Commitments, getting their supply chain signed up to
the Commitments, and then we will be benchmarking their performance
so that they attain a specific standard in performance to attain
the status of this new charter, whatever we call it in the future.
Q474 Mr Binley: How do you monitor
that?
Mr Cunningham. We will benchmark
performance against the construction industry key performance
indicators.
Q475 Mr Binley: So you tell them
what you want, but how do you monitor that it is being done?
Mr Cunningham: Exactly.
Q476 Mr Binley: How do you do that?
Mr Cunningham: By benchmarking
their performance and capturing the information off the projects,
utilising that as best practice and then driving a continuous
improvement process to constantly improve performance across projects.
What more do you want than that?
Mr Binley: I want to know how you get
in there to make sure at the very bottom level that what you want
to happen is actually happening.
Chairman: I think it is the practical
things: what you actually do to deliver those fine words; what
does that mean in practice; who will do what; which people will
you employ? That is right, is it not, Brian?
Q477 Mr Binley: Yes.
Mr Cunningham: You are talking
about how you go through your selection.
Q478 Mr Binley: How do you monitor
it and make sure it happens?
Mr Cunningham: The important thing
here is that the evidence we are getting from the way that frameworks
are operating in both public and private sectors is that rigorous
processes are being gone through to actually select and procure
construction supply chains. Then what is happening is that those
organisations are being monitored on their performance and what
they do, on how they meet specific targets that are set by the
client and then how they utilise that information and data to
drive continuous improvement, not just with that specific contractor
but across all the contractors in that framework, and that is
what is happening. I talked about the benefits that the Birmingham
City Council are deriving from that, significant costs benefits,
and it is the same for the likes of Manchester City Council.
Q479 Mr Binley: I would be grateful
if we could have the information about that so we can actually
see it is really working in practice.
Mr Cunningham: That is fine. I
can provide that. There is some guidance that we have captured
the benefits and learning from implementing frameworks across
local authorities, and I will forward you that information.
Mr Binley: Thank you.
Chairman: I do not think you have asked
your main question.
Mr Binley: We know what the Construction
Clients' Charter's purpose is, quite frankly.
Chairman: Let us move on and ask some
more questions about the Construction Clients' Charter, which
is what we are really looking at now.
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