Longworth Commercial Director Karl Smith, contemplates a question

Its the second in a series of 5 blog posts and Longworth’s SHEQ Manager, Melissa Fazackerley, asks each of the Longworth company directors a question about their area of work in relation to the construction industry as a whole. Blog post number 2 is from Commercial Director Karl Smith. Here is what Melisa put to Karl:

How do you think the construction industry can develop commercially and what will it take?

The industry has been undergoing a positive move in the right direction in the last few years. Fantastic new supply chain partnering initiatives are forming a solid foundation for the industry to work towards a less antagonistic approach. This benefits not only the commercial aspect of the construction, but also the performance and general mutual co-operation of the construction participants.

Coming out of the recession, many of the leading Contractors have taken to this route. Picking a select few specialists in each discipline and working towards the best all around bid with a vetted and collaborative sub-contractor, rather than shopping around and just going for the best price. This decision is largely the result of many Contractors now looking back at total project costing dating back to the cheapest price norm during the recession.The necessity for cheapest price with unqualified sub-contractors, did, on a reasonably regular occasion, lead to project over-runs, poor quality and years of costly snagging and making good for which the legacy costs have now come to fruition. Lessons have been learnt, and the practice for many of the larger organisations is now leaning towards what would be classed by the academics as ‘best practice,’ at least at Director level and the front end of procurement.

Where the industry still falls short, in my opinion, is at the front line of the construction team. More often than not, the directives and philosophies from Director level, do not flow down to the front line where hostility and disputes still remain, more than it should do. This can be down to a number of factors, from too much emotional involvement, poor awareness of initiatives and company cultures or perhaps just a clash of personalities on site. Whatever it is, these situations whereby both parts of the team become entrenched in their own position only ever lead to a more hostile environment and a protracted contractual final account where there are no winners. For all of the good intentions, such situations are still far too common.

So back to the question, what can we do to develop and improve this? Clearly the Commercial teams right through the supply chain should be briefed on the Contractors and Sub-Contractors supply chain agreements, with a focus to buy into the spirit of mutual trust and co-operation that these initiatives promote. Beyond that, it has always been positive to have what is sometimes referred to as a ‘supply chain champion’, who, on behalf of the Contractor, acts as a regular point of contact to help with mediation and resolution when the project teams hit an impasse.

In summary, it is clear that the industry has made huge strides towards best practice in the last few years. Things have undoubtedly improved both commercially and in terms of all around performance, but as is such in any form of Construction, it is often the last 20% of any task that proves the most difficult to complete/ implement. If the industry can keep pushing in the right direction and keep driving our positive intentions through our entire businesses, then we will have come a very long way from the Commercial jungle of the last recession.

Commercial Director Karl Smith