好色先生TV

It鈥檚 10 years since Sir John Egan delivered Rethinking Construction and the industry saw itself through the eyes of an experienced industrialist. It wasn鈥檛 a pretty sight. 鈥淧rojects are widely seen as unpredictable in terms of delivery on time, within budget and to the standards of quality expected,鈥� he said. 鈥淚t too often fails to meet the needs of modern businesses and rarely provides best value for clients and taxpayers.鈥�

The report rocked the industry. 好色先生TV鈥檚 editor at the time wrote in his leader: 鈥淭he instinctive reaction of many in the industry to the Egan report will be unprintable.鈥� Egan, who these days is chairman of Severn Trent Water, agrees. 鈥淭o start with, a lot of construction companies weren鈥檛 too pleased with what we said. People were quite aggressive.鈥�

Having got the construction industry鈥檚 attention by slapping it in the face, Egan鈥檚 report set seven targets for cutting costs, improving predictability and eradicating defects (see box below). Egan also told the industry to adopt the 鈥渓ean鈥� production techniques pioneered by the car industry (although Egan was chief executive of BAA at the time, he had worked for Jaguar.)

A decade on, what impact has Rethinking Construction had? Most in the industry say the Egan report is still on the agenda. But although the industry is moving in the right direction, we are well wide of his targets.

Last month the Office of Fair Trading accused 112 construction companies of anti-competitive behaviour. This is the most striking recent sign that the industry is still some way off from Egan鈥檚 collaborative nirvana. Research from Constructing Excellence, which measures progress towards the Egan goals, confirms this (see graphs attached). The data shows that we have missed all seven targets. For example, the industry has cut defects: customer satisfaction has improved from 65% in 2000 to 73% in 2007. Yet Egan鈥檚 wanted defects cut 20% a year.

What about the adoption of lean techniques, such as off-site construction and collaborative working? Brian Swain, founder of the Lean Construction Institute, says 鈥淟ean is alive and well but it is developing slowly. Only about 15% of companies are achieving what Egan recommended.鈥�

These firms, he says, tend to be the big players. What about the smaller contractors? Peter Kilby is chief executive of 拢80m-turnover Cornhill Construction in Kent. He says: 鈥淎t our level the Egan report has not meant much. Health and safety on smaller jobs is still appalling, for example, and we still suffer dramatically because we haven鈥檛 trained anybody for 20 years.鈥�

At our level the Egan report has not meant much. Health and safety on small jobs is still appalling.

Peter Kilby, Cornhill construction

What went wrong?

John Connaughton, a partner in Davis Langdon, is an Egan disciple. He was on the board of the Movement for Innovation, which was formed in 1998 to implement Rethinking Construction; it became part of Constructing Excellence in 2004. He says when the report first came out, the industry鈥檚 smarting soon gave way to interest in its suggestions. 鈥淎t the time, a huge number of people felt they were being got at, but a positive spirit quickly developed. There was lots of energy around boardrooms and people were genuinely excited by the idea of applying modern manufacturing to construction.鈥�

If the report was generally well received, why haven鈥檛 more of its recommendations been implemented? Connaughton says the OFT investigation into bid rigging shows much still needs to change. 鈥淚t proves we still have a long way to go.鈥�

Another disciple, Sunand Prasad, president of the RIBA, lays the blame with the government, whose procurement habits he says have been less than effective. PFI and PPP contracts have not been done well. Public clients have gone to the market insufficiently prepared and insufficiently connected to the design team.鈥�

He says the Egan report has created less, rather than more, integration. The aim of an integrated design and construction process has been crudely assumed to mean contractors should employ designers, Prasad says. 鈥淭his is happening through design and build, in which the architect is treated as some sort of subcontractor. History has shown a direct relationship between the client works best and I鈥檓 afraid one of the side-effects of Egan has been damage to this relationship.鈥�

Gary Sullivan is managing director of logistics firm Wilson James, so makes his living from the lean techniques Egan recommended. He says: 鈥淪ome of Egan鈥檚 ideas were unrealistic. The whole partnerships thing is a nonsense. We can鈥檛 have partnership when one has the cheque book.鈥� He adds that collaborative working is possible 鈥渁nd there is more of it because of Egan, but I would say that his report was only a qualified success鈥�.

Don Ward, chief executive of Constructing Excellence, is also lukewarm. 鈥淚 am flabbergasted by the slow take-up of lean production. We have more examples of small companies doing lean than large companies. At site level, lean works.鈥�

The Egan agenda was hugely ambitious and I think everyone realises that it will take more than just 10 years to reach his targets.

John Connaughton, Davis Langdon

There are pockets of good practice at larger firms such as Thomas Vale and Shepherd Construction, he adds, but he reckons there has been little incentive to implement lean techniques because market conditions have been so good for the past few years. That may be changing.

The lean approach, Ward says, can only happen if 鈥渢ruly collaborative arrangements鈥� are in place, another area where the industry has more to do. 鈥淭here are lots of frameworks, and they are one way to work collaboratively, but we have only done the groundwork.鈥� He adds that collaborative working 鈥渨ould get rid of cover pricing鈥�, one of the bid-rigging practices the OFT is investigating.

There is still hope

Despite this, Egan鈥檚 disciples have not lost their faith. Connaughton proclaims himself 鈥渟till fairly positive鈥� about the Egan doctrine. 鈥淲e could say that nothing has changed but Egan has put lots of issues on the agenda.鈥�

He says that although the industry has not yet done what Egan suggested, it has moved forward on all seven targets. He points to the Movement for Innovation鈥檚 work, which was mainly to encourage model projects that demonstrated Egan鈥檚 ideas. Constructing Excellence says 525 demonstration projects have been completed, collectively worth 拢13bn. 鈥淲e have left a legacy showing how things should improve,鈥� says Connaughton Ward agrees. 鈥淲e have not hit Egan鈥檚 targets but the report still had a massive impact. So much has improved since 1998, and 90% of this is down to the Egan report.鈥� He highlights the government鈥檚 Egan-inspired Achieving Excellence procurement strategy. 鈥淚t鈥檚 absolutely not true that the government buys based on lowest price. Health, education, highways, prisons all use frameworks now, which involves an extra layer of rigour when selecting suppliers. I also know of tens of local authorities who use frameworks.鈥�

Engineer David Newell, group retail director at WSP, says he welcomes the way teams work in post-Egan construction. 鈥淏efore, there was a great divide between the architect, client, QS and engineer. At the end of a project meeting the engineer would be asked if he wanted to say anything. Now we are being approached at the same time as the architect and we have just as much of a voice.鈥�

Connaughton sums up what most in the industry seem to think: 鈥淲as the whole industry revolutionised by Egan? No. The Egan agenda was hugely ambitious and I think everyone is grown-up enough to realise that it will take more than just 10 years to reach his targets. We haven鈥檛 achieved Egan鈥檚 targets yet, but the clarion call helped, it has set us on the right path.鈥�