Behind The Built Environment Episode 23

David: This is Behind The Built Environment, and I'm David Frise. Today I'm joined by Mark Farmer, founder of CAST Consultancy, author of the landmark Modernise or Die report, a former champion for modern methods of construction and now a leading voice on the Construction Leadership Council's People and Skills agenda. Mark has spent years warning that construction's traditional labour model is running out of road.

Today we'll ask whether the industry really has a skills problem or a deeper capacity problem, and whether our approach to competence and regulation is still too thin to deliver safer, greener and more productive buildings. Mark, welcome.

Mark: Thank you, David.

David: So, Mark, we always start with some quickfire questions. Yes or no only. That sets the kind of agenda for what we're going to discuss. Are you ready?

Mark: I'm ready.

David: Great. Has construction genuinely modernised since Modernise or Die?

Mark: No.

David: Does construction talk too much about skills and not enough about productivity?

Mark: Yes.

David: Is regulation moving faster than industry capability?

Mark: Yes.

David: Is the industry still too reliant on cheap, flexible labour?

Mark: Yes.

David: Are clients part of the problem?

Mark: Yes.

David: Hope that doesn't cause you a problem.

Mark: I had to think about some of those answers, but I've stuck to the rules.

David: That's why we never give them to you beforehand. It's always more difficult than you think because you really have to think about it, and most of them are a bit grey around the edges. But thanks for the clear, concise answers. So let's start with the main body. Since Modernise or Die, has anything really changed, or what has changed, do you think?

Mark: It's been 10 years since I wrote that report and I think it's fair to say a lot has happened in the interim. A lot has happened within the industry, but a lot has also happened in terms of external events that have probably shaped the course of that journey. I think it's fair to say there has been some modernising, but there's been a lot of dying as well.

If you think about the corporate failures we've had and some of the businesses that haven't stood the test of time, I think we've got a mixed bag. In reality, that was always going to be the case. It wasn't a binary scenario where suddenly the industry at large was going to flip to a different way of doing things.

It was always really about individual businesses and their decisions as to what that meant for their corporate health and welfare going forward. It's clear that one of the biggest defining influences on where the industry is now has actually been the economic backdrop. If I look back to 2016, there was a lot of good work happening between 2016 and probably 2022, when industry started to respond to that broader challenge.

That was probably helped by a broadly positive economic backdrop. I'm conscious that I'm talking about the COVID period and a lot of people will say, what are you talking about? Looking back, COVID was a short-term interruption for the industry. There was still a lot of business done and, if anything, there was a boom at the back of the pandemic.

What really started to impact the trajectory of the industry was probably the economic downturn from 2022. That affected industry output and significantly impaired its capacity to think differently, including about modernisation. Ultimately, where we are now, and certainly the journey to where we are now, is characterised by an industry that seems to have gone back to some of its survivalist tendencies.

It's pretty much day to day and doing things the way we've always done them. But other events have also led to us having a very different industry. We've obviously had the whole Grenfell story play out during that time, which has led to the Building Safety Act, so we have a different regulatory backdrop.

There are lots of drivers acting in different directions. It is a different industry and I would say that is a net positive, but we're nowhere near where we need to be or where I was setting out in 2016.

David: Is it just too fragmented an industry to get a cohesive response to that, to modernisation?

Mark: Yeah, clearly, when we talk about the industry, it's not a thing or an entity. It's an agglomeration of tens of thousands of businesses, including many microbusinesses. So when you talk about industry change, you're talking about lots of individual component parts. It's an atomised industry in many respects.

To understand how you change an industry at large, you have to understand its structure and shape. Driving change in such a fragmented industry was always going to be very difficult, you might argue impossible. One of the things you need to understand is how you have the biggest impact for the amount of effort you put in.

What are the levers that you can push and pull to drive as much change as possible across a proportionate representation of the industry? Clearly, the biggest challenge is getting that driven down to the lowest levels of the SME supply chain. They are technically part of the industry, but often they will be in their own channel, doing their own thing day to day, and don't necessarily feel any connection with the bigger sector picture.

So fragmentation is clearly a big challenge that the industry will continue to face in the future.

David: So would consolidation on a greater scale be good for the industry in terms of its ability to modernise?

Mark: It would on paper. The issue I see is that the basic structure of the industry has evolved over many, many years, and it's not accidental. It has evolved in relation to what is clearly a very difficult and cyclical trading environment. I've already talked about the downturn that's happened in the last four or five years.

That is a recurring feature of our industry. We trade in a boom-and-bust environment. Capital spending and construction are discretionary for many people, so they go up and down, particularly in the housing market, but also in commercial construction. The shape of the industry has evolved to reflect that. The biggest by-product is subcontracting, and subcontracting beyond that, devolving responsibility for holding payroll and fixed costs.

The idea of being a fleet-footed business with minimum standing or fixed costs and the maximum ability to tap into a variable cost base, including an itinerant workforce, is one of the big features of our industry now. So the idea of consolidation cuts across that and feels theoretical. It feels like a distant position from where we are now.

It doesn't mean that the way the industry is organised at the higher levels, around the hierarchy of contracting and so on, couldn't see consolidation. But that's not the engine room of the industry. The engine room remains below, which is the doing part of our industry, the trades and operatives who physically work on sites.

The contracting and consulting parts of the industry are very much about direction, management and setting the direction for what everyone on site is doing. So I see two different challenges there, one that is potentially further atomisation and fragmentation, and one that might be further consolidation around cost reduction and efficiencies.

David: Yeah, but I guess when you're a really small business, it eats up a lot of time and resource. Just completing PQ processes, for example, doesn't leave much room for innovation or thinking about how you modernise your business when you are chasing payment, winning work, keeping your workforce employed or finding materials. All of those things are kind of counterintuitive to a modernising industry, aren't they?

Mark: Yeah, and I think the scenario you set out there is the reality for many businesses on the ground. Going back to this dichotomy between what is potentially capable of happening in the upper echelons of the industry, where you do have a bit more bandwidth and time to think.

In some instances, it's people's day job to think about innovation, change and process efficiency. But in your typical small business, there's very little bandwidth for that. It is about chasing the next job or chasing payment and managing the day to day. Recognising that an innovation strategy for the industry at large has to cater for both ends of the spectrum is a really important reality.

Changing all of this makes it really difficult in reality. It's something I talked about in Modernise or Die and something I continue to talk about. How do we instil change at the lowest ends of the supply chain in a way that is practical, inclusive and respects the challenges everyone has, particularly in the current economic environment?

I come back to that again. It's even more difficult when times are tough. When times are better, even SMEs can get their heads around a different way of thinking and perhaps be a bit more adventurous. Certainly when it comes to skills and training, they might have a different appetite for doing things. But if the work isn't there, we live in a demand-led industry where decisions around investment in skills, training, modernisation and innovation are completely correlated to how much work you've got.

David: I think we'll come on to this later. But skills and training, particularly for someone who is, say, a mechanical contractor, require different thinking. Different thinking is really difficult, and therefore you don't devote time to it because by the time you've got your head around it, you're chasing something else. But let's talk about the fact that I rarely go to a meeting nowadays where somebody doesn't mention that we've got a skills shortage.

And I think you argue that it's not a skill shortage, it's a capacity issue. Could you define what you mean by that?

Mark: There are probably a couple of things that come out of that. I do challenge it. I think it's quite lazy thinking to just say we've got a skills shortage. It is self-perpetuating to an extent through what you see in the media and what people say.

I think the reality is a lot more nuanced. The first point I'd make is that a lot of people say we have a skills crisis characterised by an attraction problem for young people coming into our industry. I challenge that because I don't sense we have a shortage of young people who want to come into our industry.

We have, if anything, an absorption issue. We're not able to absorb the young talent that wants to come into our industry. We're not able to take on the number of people on post-16 construction and engineering services-related courses. They are not finding their way into the industry. There's a problem between people deciding that is what they want to train and learn about post-16 and their eventual ability to find paid employment in the industry.

So there's an absorption issue rather than an attraction issue. On the capacity point, I talk about the three Cs around the skills debate: capability, competency and capacity. They mean slightly different things, but they're all related. Capability is your potential to perform a role or piece of work on paper.

Competency is your proven ability to do that piece of work to a proven standard, and capacity is how much of it you're able to do in total. Those three Cs, capacity, capability and competency, are all interrelated. It brings in the fact that it's not just a headcount issue. It's also a quality issue involving the existing workforce and what they are trained in, which is competency.

To convert capability into competency, you have to ensure the quality of your workforce is at the right standard. Quality and quantity together drive capacity. All too often, everyone resorts to a headcount debate: we haven't got enough people. I think that's myopic because it ignores other parts of the equation, including what we have already got and how competent those people are.

For me, there's a direct correlation between competency and capacity, driven through productivity. The more competent you are, the more likely you are to be more productive. That applies to everyone from a designer to an installer or operative on site. So we need a broader debate about workforce improvement. It isn't just about press-ganging a load of people into our industry, which, as I've said, is not the debate.

We have plenty of people in the pipeline. It's more about what they're being trained in and how we influence the quality of the existing workforce, including their ability to do the job properly without rework, defects, going back or wasting time, all of which affect productivity.

David: This may be an urban myth, although I don't think it is. But you mentioned COVID and during that period there was a bit of a boom. Productivity, I think, increased because there was a requirement to do more planning before you started work. As an industry, we're a bit hurry-scurry, aren't we?

We haven't properly designed it or thought it through, but we get on site and get people busy because nothing looks better to the client than having people on site being busy. But that's really unproductive. Is that part of the culture that needs to change? Payment release, for example, only starts when you're on site. Do all of those elements feed into this culture?

Mark: Yeah, I think the COVID experience you quoted is really instructive. When the rules of engagement were published by the CLC in terms of social distancing and all the restrictions we adhered to, it absolutely drove a culture of pre-planning logistics and ensuring that the reduced available workforce was put to best use.

At an individual or gang level, that improved productivity. As you said, all the statistics I heard, and conversations with lots of people at the time and since, indicated that productivity per worker, gang or team improved through that pre-planning. The issue is that if the reduction in workers is such that the improved productivity does not offset the overall quantum of work done, there is an overall capacity challenge.

Coming back to this interconnection, what's the price being paid for having fewer workers? But if you have more workers, what's the disproportionate downside of having to do more and more rework and leaving a downstream legacy of things that need to be put right, perhaps 12 months, 24 months or even longer into the future?

There's a really interesting debate about how sometimes less is more, but there's an equation there. You have to think about the optimum workforce for any given operation on site. I do a lot of work in residential construction and it's quite clear to me that labour intensity on site is particularly significant around fit-out.

That includes mechanical and electrical services, finishes and interiors, joinery and so on. When you have the most people crowded on site and crawling on top of each other, productivity falls away and the risk of rework increases to the maximum. A lot of the claims you see in terms of defects correlate with that.

David: So, in theory, the Building Safety Act and its gateways should improve that, shouldn't they? It forces people to plan properly, programme properly and think about design properly before starting that hurry-scurry activity.

Mark: The theory behind achieving Gateway 2 compliance is that the ability to pre-plan your design to a greater level of detail than you might have done before the Building Safety Act requirements creates a great opportunity to bring in the supply chain. That means thinking not just about how you're designing it, but how you're going to build it.

And it's that challenge that we've historically faced in the industry in that things have been designed in a vacuum. The interface between the design and the construction is procurement, which is a commercially led function. That means that what happens in that design bubble doesn't always work in the construction bubble on the other side of the commercial interface.

I think Gateway 2 and the Building Safety Act have challenged that in a good way. If you're going to have a successful Gateway 2 submission, it promotes much more integrated thinking with your supply chain, including the people who are actually going to do the work.

My experience on the ground today is that it's a mixed picture. It's not always playing out like that. There are still elements where the commercial and transactional imperative remains, which potentially prevents Gateway 2 from maximising the opportunity for more integrated design, construction and collaboration, a term that is often overused in our industry.

Ultimately, collaboration is seen in some quarters as carrying a cost and making construction more expensive. Speaking as a quantity surveyor by training who spent much of my career involved in the commercial aspects of the industry, I think there is some justification for being sceptical sometimes about the idea of collaboration.

The industry has to prove the benefit of collaboration in a tangible way to clients and their advisors. Collaboration should be a means of driving a better solution and taking waste out of our process. Our entire design and construction process is laden with waste at every turn.

That should drive cheaper construction. So why is collaboration seen as more expensive? There is an interesting challenge that we need to get to the bottom of: what does good collaboration actually deliver as a bottom-line benefit?

Lots of people think it's an easier, less adversarial process, but that it comes with a price. It shouldn't be like that. If we're doing good collaboration, we should be producing quicker buildings, cheaper buildings and higher-quality buildings.

David: Without contractor input at an early stage, don't you end up with a building that the client cannot afford and that is unbuildable?

Mark: Yeah, and I think that comes back to how you drive good collaboration. A contractor's role in the current landscape is to orchestrate a process on site that is delivered by subcontractors. What you want in successful collaboration and integrated design, procurement and construction workflows is everyone playing to their strengths.

Collaborative processes should involve all the main players around the table early. It's not just a tier one contractor; it's the main design and installation subcontractors, the client and the design team. You should go through an iterative loop in which the design evolves with feedback from all of those players.

The issue is that, historically, when that's happened, procurement mechanisms have come back into play and there's been a round of better buying the job: let's see if we can get a better price from someone. Suddenly, the people who contributed to that process are not the ones who end up building it.

If we're going to have successful collaboration, the people who were around that table absolutely have to own the outcome. That leads to a different debate about multiparty contracting, alliance forms of procurement and a whole load of more philosophical points about contract and procurement forms that promote different behaviours, which by and large have not been adopted in our industry.

David: Oh, we're talking about trust, aren't we?

Mark: Yeah, fundamentally, it's about trust, but trust based on delivery. Trust is not just a nice, comfy, cuddly word put out there like collaboration, where everyone signs a charter and says we're going to be nice to each other. It's trust based on proven outcomes. In my experience, when that happens, you get more work because if the client sees the end benefit, they will procure again and it becomes embedded.

If trust is used in the wrong context, as in trust us, we'll do a good job, and you actually end up with the same job, that isn't a good advertisement for trust. I think there is a lot of damage being done by all quarters of the industry. This is not a blame game.

This is about understanding the behaviours that drive our industry, which in many instances are commercially driven. Attempts to modernise how we procure and organise project teams have effectively been ambushed by those long-standing commercial imperatives sitting just below the surface.

David: Wouldn't it be fair to say that opposition to the Fair Payment Bill currently going through is based around this to a degree, particularly the abolition of cash retentions? How will we deliver a defect-free building unless we hold money? Is that a lack of trust? Actually, the answer is to procure better.

Procure from companies you can trust to do the work. As a contractor, it takes years to build a reputation and no time to destroy it, so you never walk away from a project. I've never quite understood that. Surely, if you procure well, you won't have a problem.

Mark: Yeah, and I think that is part of the tangible outcome. The retentions debate is interesting because it's born out of everyone expecting a job to have defects. Everyone assumes you won't get it right first time. It becomes a self-fulfilling prophecy.

Issues are expected to be found during the defects period and beyond, so money has to be held back. That's the commercial model that has evolved. Moving to a regulated position raises the big debate about what sureties and other financial instruments can be put in place to offset that risk.

We're much better off discussing how to achieve a better level of assurance that does not need retention, or that can be insured if it does. Assurance and insurance are linked principles: the more you can assure an outcome, the more insurable it is. If you need a surety bond or some other financial instrument, it's linked to the capability and competency of a business and the individuals in that business to deliver an outcome.

At the moment, our industry is hardwired to what happened in the past and, you could argue, what happens in the present. Getting people to think differently, recognising that the risk of failure can be reduced actively through the procurement mechanism, seems to be a blind spot.

The way businesses prove and assure their outcomes needs to be better presented. We need hard evidence, proven empirical evidence, of a business's defects history, its ability to put work right and whether it delivers compliant work in the first place. That is part of the culture we need to move towards, where evidence drives decisions by clients and their advisors about who to use in the supply chain.

It puts pressure back on procurement. Lowest-price-wins procurement is clearly at the heart of some of what we end up picking up the pieces from. But, coming back to the point I made earlier, it shouldn't be the case that if you're a better contractor, you're automatically a more expensive contractor.

There is a difference between making money in the supply chain and avoiding waste. You can be a cheaper contractor by having less waste, doing work right first time and still making the profit you need. That's the intelligent debate we should be having. We should deliver cheaper projects for clients while everyone in the supply chain makes more money. The whole focus of the industry should be on how we do that.

It should be about cutting out transactional and physical waste and integrating design and construction so that what we design is buildable and more productive. All of those debates need to be brought to the fore in a way that evidences outcomes. When you prove it with proper metrics, rather than a report full of fluffy words, there aren't many commercial or public clients who would say, why wouldn't I do that?

At the moment, I would suggest we have a proven data gap.

David: We actually ran a project in Actuate UK to try to get people to provide evidence of their defects and develop that very metric. We couldn't get it to fly because people would not give us their data, even though it was anonymised through a third party.

The industry has a toxic relationship with information requests. The first question you ask yourself is, how will this be used against me, rather than how could this make the industry better?

Mark: Unfortunately, we're stuck in a loop in that regard. I've come across it in the productivity debate as well. I did work with the Construction Productivity Task Force where, in the early days, we were trying to get data so that we could establish what we thought productivity levels really were.

Even then, people couldn't give you a definitive answer about the industry's productivity at macro, sector or project level. There are all sorts of different ways of measuring it, and it comes down to this aversion to sharing data, even in an anonymised scenario.

There is a general nervousness that it will be used against someone. Some of what it says about the present and the past is probably not good reading.

David: No, probably not. You've suggested that construction operates a very thin layer of regulatory compliance. What did you mean by that?

Mark: I suppose I was alluding to the fact that our industry, for many of the reasons we've already discussed, including the pressures of doing the day job, running businesses and the way we've structured ourselves, is very much in a box-ticking mentality.

The idea that you have to do something is seen as an obstacle to clear before getting on with the work, rather than asking what's the right thing to do, how do we improve ourselves, how do we address productivity and waste reduction, and how do we get it right first time so that we can prove we're a safer bet and win more work? Instead, everyone thinks, right, let's just get over that hurdle and then carry on doing what we've always done.

I fear that the way the Building Safety Act is currently configured, although a lot is still to play for and I'm not suggesting this is a done deal, feels like another version of that. There are parallels with procurement rules. Take social value as an example. It has been seen as a good thing because it's about driving much broader value in construction for society and the economy.

A lot of the way procurement has evolved in that part of the agenda has been box-ticking. It has been, yes, prove you can do all of that, but give us your cheapest price. There is a danger that if we don't link the regulatory environment to proven outcomes and, more importantly, rewire the culture and behaviour of the industry, we will get only superficial change.

That's what this thin compliance layer looks like to me. It's a superficial sprinkling of, yes, we've done that. But if you dig beneath the surface, have the people involved actually changed the way they think? Are they more competent? That is probably the biggest thing we need to track as an outcome.

How do we prove competency and record it? How do we link competency to better outcomes, safer buildings, fewer defects, quicker delivery and cheaper buildings? Those are the hard variables the industry should be measured by.

Having Gateway 2 sign-off does not mean you will have a safer building until it is delivered through Gateway 3 and you have proved that what you designed is what you built. That cannot simply mean taking thousands of photographs. Something more has to sit beneath the surface and change the whole way things are done.

Surveillance of that process is going to come into serious question. Technology is probably the biggest game changer when it comes to tracking the journey from Gateway 2 to Gateway 3 and proving that the building has been delivered as intended and that everyone has done what they should have done.

Ultimately, you're trying to orchestrate hundreds, potentially thousands, of people on most jobs who are responsible for creating a system. The systemic nature of our industry is the real challenge. You have individual competency and collective corporate competency, but everyone is working in a system that doesn't always allow them to be competent.

It's a complicated answer, but my fear is that we could end up with a veneer of, yes, we're safer now and we have compliant buildings, in inverted commas. But have we actually averted another Grenfell? In my opinion, many things need to change beyond the Building Safety Act.

David: Does the way the industry is set up create a danger that the Building Safety Act will give us well-sealed, fire-protected buildings that are not properly ventilated, for example? We stop the fire risk but create a health issue 10 or 15 years down the road because we've value-engineered the ventilation.

Mark: I think there is a big debate, which has played out recently during hot weather, around this trade-off between building performance from a fire safety and environmental perspective, the push towards Passivhaus and other standards, and what that means for building quality, particularly air quality, ventilation and overheating risk. Those things are not necessarily mutually exclusive.

You can have a high-performing building that is well ventilated. But there are practical aspects and common-sense considerations that need to be thought about. There is definitely a risk that pushing in one direction creates an unintended downstream problem in another.

David: Yeah, the industry is very well set up to deal with projects and problems one by one. Aren't we looking at disparate problems that all need to be solved by one process or another?

Mark: You would argue that's building control, building regulations and the approved documents. There are lots of different imperatives facing the industry that need to be resolved, and they require institutional direction from MHCLG and the evolution of building regulations. We've seen a lot of that.

We've just had the Future Homes Standard released. You've got the whole Building Safety Act overlay on fire and structure, but it should all be coordinated. Coordinated approved documents and holistic reform of building regulations are where we need to be. It can't be piecemeal, with each approved document looked at in isolation.

It has to be joined up so that we can avoid some of these unintended consequences.

David: At BESA, we divide the market into thirds. One third of companies understand regulatory change, cultural change, competence requirements and compliance requirements. They get it completely, become competent and compliant, and get ahead. The middle third say, I have no idea why I'm being asked to do this, but I want to work in this industry and continue, so I will do it.

Then there's one third who say, there's a regulation for this, but we're not going to do it. How do we drive that one third either into the middle, so they become compliant, or out of the industry altogether? At the moment, the companies in the other two thirds lose work to this one third.

Mark: I think what you've characterised there, although you can argue about the proportions, is absolutely right in terms of the different tiers of mindset and outlook. I see it every day. The lowest tier you described is fairly nonchalant, disconnected from the wider agenda of change and doesn't understand why it has to do it.

The harsh reality is that the only way to bring them to the party is through regulation or another requirement to meet a minimum standard and get over a bar, or you exclude them from the industry. The latter is quite dramatic, particularly at a time when we keep talking about a capacity crisis and needing people, albeit caveated by what I said earlier.

Sometimes it's better to have fewer people of a higher quality than headcount alone. My view is that we need a much more controlled environment at the bottom end of the industry. There are a lot of emotive discussions around this. I'm personally a big advocate of moving towards digital competency passporting for the whole industry.

Is that a CSCS card? No, it's way beyond that. We're talking about evidencing personal competency dynamically, so it isn't just a qualification at a point in time. It's an ongoing requirement to prove you're competent to do a particular piece of work. You don't get onto a construction site unless you have that card and proven competence.

That's beyond organisational competency; it's personal competency. At the lower end of the supply chain, it becomes about a licence to practise and creating a barrier to entry. One of the good things about our industry is that it is inclusive.

It enables people to come into our industry and have a great career, but we can't do that at any cost. We have a responsibility to ensure that people entering our industry take responsibility for what they do. It's a no-brainer when it comes to safety-critical operations, but it should be the case across everything.

If you're a painter and decorator or a general tradesman working in the domestic sector, you should have standards. We have a difficulty at the moment because that part of the sector tarnishes the wider sector. The aura of the cowboy builder is pervasive and we need to address it. That will be tough and could become really emotive because creating a barrier will prompt a lot of pushback.

Even the recent changes around the CSCS card, the removal of grandfather rights and the industry accreditation system caused enough of a hoo-ha. You can imagine what moving towards proven minimum competency requirements across the whole industry would look like. But that's probably what we'll have to do if we're serious about addressing it.

The other point I would make is the role of procurement in levelling the playing field. Some businesses that aren't engaged in responsible behaviour, investing in skills and training or modernising their approaches win work at the expense of those that are. There is clearly a role for procurement.

Coming back to that discussion, what mechanisms can procurement use to level the playing field? How can responsible clients drive that from a commissioning perspective? How can tier one contractors mirror it? How can house builders, as procuring clients, drive it into their ways of building so that they don't simply select on the lowest price?

If we can do that while ensuring the businesses we're talking about do good work without being prohibitively expensive, everyone is a winner. At the moment, there is a perceived correlation between how much you invest and your cost to the employer.

Our challenge as an industry is to reach a point where it isn't a cost. We train people and recover that cost through having fewer defects and being more productive, so it equalises. But the reality is that this is often seen as a premium price because people are investing in things they cannot reflect in a cheaper tender price.

David: Going back to your point about a thin layer of compliance, we have long had a technical audit within the BESA membership requirements. PQ processes typically have 400 questions, but not one that asks whether you can actually do the job. That's the bit we introduce. We've removed members who cannot meet that requirement, but achieving it comes at a premium for our members.

Now we're bringing it into the supply chain to ensure that it runs throughout. Isn't that something clients should recognise and say, well, I've discharged my duty of care in selecting a services engineer?

Mark: Yeah, and I think what you're touching on is that there is still an emotional disconnect between clients and the industry, particularly those I would call occasional clients, who engage with construction as a means to an end for their core business.

Developers, for instance, dip in and out of the industry based on the health of the development market, which, as we know, is cyclical. Commitment from clients is driven by the extent to which they feel responsible for thinking differently about procurement.

Unfortunately, in a market like the one we're in, most clients will not feel able to pay more. Advisors and consultants need to give clients the right advice about the right price for a job and the characteristics of businesses that will do the right thing.

As you say, that inherently helps discharge legal duties. Some of this relates directly to the client's legal responsibilities under the Building Safety Act and their dutyholder obligations. There will also be grey areas in non-regulated work about the right price for better assurance of the outcome.

For me, if we can reach a world where a more assured outcome costs the same or less because it involves less waste and quicker, more productive delivery, reflected in the price, it becomes self-fulfilling.

We're not there at the moment. We have a two-track industry where doing it on the cheap literally means a cheaper price for the client, which is tempting. What we need is for doing it right to be cheaper.

David: And it builds a better industry. The image then looks after itself because you build a reputation for delivering on time, on budget and with quality.

Mark: Yeah, and it becomes self-fulfilling. Coming back to the retention debate, people will say we don't need retention on this supply chain because it has proved itself to be right first time. Or, if we do need some kind of surety, it can be minimal and insured because the outcome is assured.

Assurance of outcome will increasingly become the buzzword, particularly as technology and AI enable better assurance of complex, system-led processes. We need to aspire to a situation where doing it better is cheaper.

At the moment, I think the assumption is that competence is expensive because you're paying for more, when in reality you're paying for a better process that is actually cheaper and delivers the outcome. That mindset change feels quite distant, and getting there will require a lot of rewiring of industry processes.

Businesses can be better but are made more expensive by things outside their control. You need a closed-loop ecosystem in which to experiment with a completely different way of doing things and prove the case that better is cheaper.

David: That seems like a good point to finish, except I've got one final question. You're king of the industry for a day, although some would argue you already are. What one thing would you change that would make a big difference?

Mark: Yeah. I come back to the backdrop within which the industry operates. If I had a superpower, it would be to influence government to use our industry much more intelligently as a tool of economic growth. By that I mean smoothing our pipeline and giving us certainty. The biggest destructive features we're seeing are a variable pipeline and short-term thinking. We need to know that we're going to have a certain amount of workload on a more constant basis.

It doesn't have to boom, but we don't want busts, so we need more certainty. Government has a role in creating that economic backdrop through how it uses the public pipeline and policy more generally, giving the industry the confidence to invest in people and processes, come rain or shine.

David: Mark Farmer from CAST Consultancy, thank you very much.

Mark: Thank you, David.

David: That was our latest episode of Behind The Built Environment. I hope you enjoyed it. If you did, please like, review and share it with colleagues, and come back next time for the BESA podcast. I'm David Frise. Thank you very much.