So who pulls the So who pulls the strings?

I wrote an article recently titled "No more boom and bust." In it I referenced the problems companies such as Balfour Beatty and Sir Robert McAlpine had had with difficult projects which subsequently have impacted upon business perception and performance.

I talked about how the culture of the industy was wrong and how we have been approaching things in the wrong way for too long.

The article has been published in a few places including my own blog and on linked in.

The response has been phenomenal. So many people took the time to support and add to the article. I even had responses from senior directors at Balfour Beatty supporting the sentiment of the article.

Also when I deliver talks or speak to people generally there is huge support for change.

What is puzzling me is that if there is so much support where is the support and drive coming from for how we do things now. Who is pushing for the adversarial approach? Who is promoting disjointed procurement.

It seems to me that actually no one really believes how we do things now is the right way. I suspect there are thousands of people in the construction industry who keep doing what they are doing and what they know day after day. The reality is they neither agree or disagree they just do their job.

 

I think it's fair to day they suffer from chronic apathy. This apathy was rife in the 90s and 2000s when it was easy to do things as we had always done them particularly when this made money.

What is different now there are people passsionate and supportive of change. There is little resistance as there aren't any supporters of our current culture

There is a new breed in the construction industry today who are passsionate about a better way and who will not tollerate current behaviours

We need to continue to disrupt the industry and grow adoption by example. Those who are apathetic will then change or die.

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I wrote an article recently titled "No more boom and bust." In it I referenced the problems companies such as Balfour Beatty and Sir Robert McAlpine had had with difficult projects which subsequently have impacted upon business perception and performance.

I talked about how the culture of the industy was wrong and how we have been approaching things in the wrong way for too long.

The article has been published in a few places including my own blog and on linked in.

The response has been phenomenal. So many people took the time to support and add to the article. I even had responses from senior directors at Balfour Beatty supporting the sentiment of the article.

Also when I deliver talks or speak to people generally there is huge support for change.

What is puzzling me is that if there is so much support where is the support and drive coming from for how we do things now. Who is pushing for the adversarial approach? Who is promoting disjointed procurement.

It seems to me that actually no one really believes how we do things now is the right way. I suspect there are thousands of people in the construction industry who keep doing what they are doing and what they know day after day. The reality is they neither agree or disagree they just do their job.

 

I think it's fair to day they suffer from chronic apathy. This apathy was rife in the 90s and 2000s when it was easy to do things as we had always done them particularly when this made money.

What is different now there are people passsionate and supportive of change. There is little resistance as there aren't any supporters of our current culture

There is a new breed in the construction industry today who are passsionate about a better way and who will not tollerate current behaviours

We need to continue to disrupt the industry and grow adoption by example. Those who are apathetic will then change or die.

No more BIM

The term BIM or Building Information Modelling has been in "general circulation" since around 2006/7. The term has done wonders for moving the construction industry towards a digital revolution. We have benefitted from improving hardware and software and emerging generations who don't see technology as an add on but a necessity.

 

Whilst the term BIM was not first used by Autodesk they invested in the term and promoted it as it very effectively communicated what they were trying to achieve with technology. Clearly with a better understanding of the value of their software and its value sales would increase.

 

From someone who has spent a career fighting against many of the things considered acceptable in the construction industry BIM and all of the associated software was music to my ears. We bought our first copy of Revit parametric software back in 2000. This was even before Autodesk had bought the company.

 

The marketing of the term BIM pushed everything up a level with the final vindication being in May 2011 when the then Government Chief Construction Advisor Paul Morrell mandated that a 3D coordination and data or BIM should be included in government projects by 2016.

 

Coupled with the mandate the government invested in the BIM Task Group who helped to define the specific requirements and what level 2 actually means.

 

Within the public sector it is still work in progress however huge strides have been made within early adopter departments such as the Ministry of Justice.

 

The private sector has identified the value itself and has embraced new technologies and processes largely off the back of the good work carried out by government.

 

However now the term BIM is far too generic and can cause confusion. It is so commonly used now that it can lose impact. This is similar to the term Partnering which was adopted in the late 90s. Many people used the term but how many people truly understood it and worked in this way.

 

We have all heard people and organisations say yes we do BIM or can you do BIM. The term is now working against the vision and objective and we must be far more specific and less generic.

 

What BIM actually was, was the catalyst for change across the construction sector. We are now in the middle of a revolution to Digitise the Construction Industry. We have to be more specific about what we are doing and what we are trying to achieve.

 

For example we will author models or federate them. We may extract data which can be used in the operation of the building. We may use the federated model to extract quantities or link elements to the programme. All of this could be referred to as "BIM" if we adopt the term how it is currently used. We often end up with lots of debate about what is BIM and what isn't or is this level 2 or level three.

 

Who cares? This is all theory. We are digitising the Construction industry so we can improve our product, process and perceptions. We must deliver better value to our clients and demonstrate we understand their business and their issues and that we are able to respond intelligently and positively.

 

 

How mad is the construction industry?

Balfour Beatty announced another profit warning to the stock exchange this week for £30million only 8 weeks after the last one.

Balfours are a great business with a fantastic heritage and some great people.I know better than most having worked with them over the past 20 years.What is happening to them is a symptom of the boom and bust of the construction industry. The challenges which Balfours are facing is why we want to "rethink your world" at Space Group.

We can't go on like this as an industry, swaying from boom to bust, gambling on who will win and who will lose. It is ridiculously expensive, stressful and means we lose any consistant improvement or skills development.

If we want to change we need to change something! 

The industry needs to fundamentally rethink its whole culture. It has nothing to do with BIM or technology but is all about culture, procurement and contracts.

I have written extensively about the different generations and their impact on change. The baby boomers have held the reigns for many years now and it is time for them to hand over to the young gen X and emerging gen Y.

If we take the Balfour Beatty story as an example to demonstrate what the construction industry goes through. In 1997 a new Labour Government was elected and on the back of a financial boom and growing tax receipts there was a public sector building boom.

By the late 90s clients had been convinced that a design and build contract reduced their risk and improved value. Builders became "contractors" The clue is in the name. It was all about the contract and the sub contracts and how these were played out rather than the process or product. Main contractors built pre construction teams who were excellent at bidding and winning work.Their delivery teams managed the subcontractors as they jettisoned their direct labour. At the same time their commercial teams grew. The risk moved to the main contractor from the client and design team which meant they held the power.

As public sector spending grew through the 2000s main contractors started to win the construction gamble. D and B is all about risk and with large budgets from government they were making huge profits. Sub contractors were squeezed so we had little skill development or investment in the industry but main contractors we becoming cash rich as they held onto cash as profits grew.

These cash piles were then invested into PFI and again they won big when clients wanted bidders to take interest rate risk. With falling interest rates PFI became hugely lucrative. This was a fantastic business model and through the 2000s shareholders of companies such as Balfour Beatty did very well.This was more of a financial model than a construction process. At Balfours Ian Tyler,accountant rather than a builder, was in charge and helped Balfours to grow revenue and profit,

However when the spending slows and the cash reduces the strategy falls apart as it is not a sustainable  model. An early example of this was Jarvis who were using cash receipts from rail work.

Construction companies have burned through their working capital over the last few years and have not been able to invest. To cover overhead projects have been bought with low margin. Again this is a  gamble and unfortunatley it is more likely you lose in a falling market. It is particularly tough on subcontractors who are squeezed at both sides. This is what has happened to the Balfour Beatty M and E business. They have gambled and lost. 

The mad thing is, that for Balfours to keep going they are selling their assets. These are the PFI assets they invested in during the boom. So by the end of this decade Balfours will have sold all if the assets which they amassed through the 2000 and will be back to where they started 20 years ago.Boom and Bust!

So who has won and who has lost.

The winners are the shareholders through he 2000s. The losers are the great staff of Balfours who unfortunatley have been through all of the pain of the past 5 years. The other loser is the construction industry. We have not moved forward, we have not improved and we have lost skills.

There is a different way. I think I will leave that for a future blog.

Rethink your world.