Safety culture needs a new business model
The collapse of ISG just two weeks after the publication of the Grenfell public inquiry report was a tragic illustration of why industry reform remains a distant prospect, writes David Frise – CEO of BESA.
The tragic irony of the timing of ISG’s collapse, just two weeks after the publication of the Grenfell report, would not have been lost on the many in our industry who are still counting the cost of the similarly disastrous failure of Carillion, which happened just a few months after the fire. There’s a pattern here – and not a happy one.
In his recent article for Building magazine, industry reform champion Mark Farmer said construction had repeatedly proved that it was incapable of change. “The industry’s trading model of adversarial and layered transactions to maximise risk transfer has been set and established over decades in response to inevitable boom and bust cycles,” he wrote.
He added that the industry would always find a way to “game the system” and “demonstrate superficial conformity” – whatever that system looks like. You could probably include the multiple late payment ‘codes’ and ‘initiatives’ we have seen over the past several decades that have singularly failed to change much.
“Even a much overdue return to process and competency-driven regulatory oversight in the wake of the Grenfell fire is too little and too late to force a wholesale rethink on business models,” said Farmer.
Culture
At BESA, we have been calling for proper reform of the industry’s so-called ‘business model’ for years because embedding a universal culture of safety, competence and professional compliance is all but impossible without it.
The unfinished projects ISG left behind are gradually being picked up, but we are already hearing the all too familiar stories about specialist contractors being offered ‘renewed terms’ to finish their work – which often means accepting lower payment rates. And just recently the safety body Collaborative Reporting for Safer Structures (Cross UK) issued a ‘red alert’ about remedial cladding work because some of it is has been so badly botched it is blocking smoke ventilation systems.
Is that not the ultimate irony? Trying to put one safety problem right by creating another. That’s what happens when you keep doing things the same way and expect to get a different result.
Farmer expects reform to remain a “pipe dream” without “a massive legislative effort covering prompt payment, project bank accounts, responsible procurement, self-employment v PAYE incentives, workforce licensing, more stringent building regulations and a consumer rights revolution”.
However, successive UK governments have shown little appetite for this level of intervention at least in part because the current dysfunction often works in their favour by, as Farmer put it, “dispersing risk and protecting budgets”.
And our new Prime Minister has already promised to “back the builders not the blockers” by removing “red tape”, which suggests even our shiny new building safety legislation could be in trouble.
In the real world, outside public inquiries and government offices, everyone is pushed for time because there isn’t enough money, so the pressure is on to force the deadlines, and get the work started whether it is designed or not.
On top of that, the industry faces an unprecedented workforce crunch, with the average age of a construction worker now 53. As the skilled workforce shrinks, the industry loses even more room for manoeuvre.
The Grenfell Inquiry panel was right to accuse many of the people who worked on that particular refurbishment of negligence, but they could have investigated hundreds of similar projects around the country and found the same issues – it is only luck that has prevented more Grenfells.
Some people are greedy, others are negligent, some are naïve about the level of risk they are accepting in a contract. So, was everyone greedy or, like most in the industry, were they just trying to make some sort of profit from an underpriced contract?
Collapse
Sadly, seven years after Grenfell and six since the collapse of Carillion this is still the way our industry operates. None of this excuses anything but it does explain why we are in such a mess.
And while awareness of the Building Safety Act is clearly rising, a survey carried out by AMA Research on behalf of BESA found that very few companies have actually done anything about it. Just 9% of respondents reported making “significant changes” to help them comply with the legislation, the vast majority still say it has had a minimal impact on their businesses despite most saying they were “aware”.
At last year’s Building the Future conference, delegates were asked if the Building Safety Act was having an impact on “the viability of construction projects” – 78% answered “yes”. Firms are also reporting delays of up to six months at the new planning gateways. If projects are not ‘viable’ they will not get built or they will only get built once they become viable again, once they have been ‘value engineered’. The safest building is one that isn’t built, but that is hardly a recipe for social progress.
Reform, therefore, means creating a more professional industry – which must start with the finance, but must include more sophisticated working models including better use of information and digital tools.
During a recent BESA podcast, experienced government property specialist Steven Boyd highlighted the serious disconnect between the construction and operation phases with a lack of joined up working meaning vital information was lost at handover so undermining the safety and quality of the building in use.
“Whilst lots of information is gathered...a few months after the handover, normally, a great deal of that has been lost, which is such a shame and such a waste of money and means that having a genuine whole life perspective is really quite a challenge,” he said.
“We need to smash through the ‘glass ceiling’ at handover that stops the smooth transfer of information into the operational phase,” added Boyd.
So, the elephant in the room: the industry has been branded reckless, greedy and incompetent by the Grenfell inquiry, but what happens now? More regulation? Overseen
by a regulator already struggling to cope and, dare we say it, suffering from its own skills shortages, lack of competence and experience?
Last year, BESA used its regional meetings with members as ‘focus groups’ over a six-month period to gauge take-up of measures introduced under the Act and awareness of roles, responsibilities and risks associated with the legislation.
The main finding was “total lack of engagement” from clients with our members reporting that “not a single client” had discussed compliance with them. They also asserted that, far from finding evidence of any significant culture change, the pressure to deliver projects faster and more cheaply was increasing at the expense of quality and safety.
Suspicion
Members from all UK regions confirmed that project decisions remained primarily driven by cost and speed, particularly by owners and developers whose buildings were not classified as ‘higher risk’ (HRBs). This confirmed the suspicion that most clients believe the Act only applies to this type of building.
The real issue for government is how to balance its growth agenda, which involves building things, with the need to enforce safety – and get clients interested in meeting their responsibilities.
You can’t turn buildings into safety ‘fortresses’ and you can’t compromise on the things that keep people healthy as well as safe like indoor air quality, acoustics, access to lighting and space etc.
All of which costs money and needs expertise to deliver, and can be done, but not with the current financial model which thrives on ‘value engineering’. The headlong dash to the bottom on price, inevitably, leads to the undermining of safe and sustainable design intent.
The industry should reform itself, but it won’t unless the economics of construction change – and the government, which is the industry’s biggest client, cannot duck this, otherwise they won’t have an industry able to deliver anything, let alone anything safe.
BESA’s report can be downloaded at: https://www.thebesa.com/building-safety-act/industry-report
For detailed information about the Building Safety Act: https://www.thebesa.com/building-safety-act
