Behind The Built Environment Episode 25

David: This is Behind The Built Environment. I'm David Frise. Today I'm joined by Paul Beeston, Partner and Head of Industry and Service Insight at Rider Levett Bucknall. Paul has more than 25 years of experience across the built environment. He works with clients, industry leaders, and government to improve the way projects are planned, procured, and delivered.

His work focuses on innovation, governance, and commercial reform, and on helping the industry achieve better project outcomes. Paul has also recently joined the board of the Construction Leadership Council, where he is leading work on reforming construction's business models. We'll look at procurement, payment, risk, and productivity, and ask what meaningful reform looks like in practice.

We will also explore how the industry can deliver safer buildings, stronger businesses, and better long-term value. Paul, welcome to the podcast. Thank you.

Paul: Thank you for having me on.

David: Very pleased to have you here. As we say, we always start off with the question, did you choose the career or did the career choose you?

Paul: Probably a bit of both. So I did have family in the industry. So my dad was a town planner by profession. And when I went to university to study, I did a degree that could have let me specialise partway through and either be a project manager, quantity surveyor, or a building surveyor. And during my first break from university after the first year, I actually got some work experience in industry.

With what was then called Buckle Austin. I still work for that company after all these years, and really it was that insight that made me sort of specialise in quantity surveying to start with. So that was where I sort of cut my teeth first into the industry.

David: So family, but then an interest through—

Paul: Yes, so a bit of a nudge and a bit of a chance encounter through my work experience, probably, in truth.

David: That's usually a common story that somebody has, you know, something leads you there. So we do five quickfire questions, yes or no, far more difficult than it sounds, just to set the agenda effectively. So here we go. Yes or no, please. Has the industry done enough to create fair commercial relationships?

Paul: No.

David: Is the lowest price procurement ever the right approach?

Paul: No.

David: Can better governance improve project outcomes?

Paul: Yes.

David: Can construction improve productivity without sacrificing quality?

Paul: Yes.

David: And finally, should retention payments be banned across construction?

Paul: Yes.

David: Just as well really, because we hope they are.

Paul: Yes, some easier than others in that.

David: Ever the case, ever the case. Can we kick off with, you talk a lot about governance, and you've argued that industry needs better governance rather than simply more government intervention. It's, you know, what can the government do for us kind of approach. What does good governance look like across a construction project?

Paul: I think it starts with leadership, and very often client leadership can set the entire tone for a project, or for a programme, or portfolio of work. So I think client leadership is an underrated skill actually in industry still. But setting that right governance can drive so much through a project team towards better outcomes.

And I think actually leadership then, just the way projects come together, leadership also needs to be every participating organisation so that there is a lot of leadership happening in projects. And each of those can drive better governance by coming together with a strong view. I think one thing that is important is clear decision-making, so knowing who, how, and why people are making decisions is incredibly important and sets the tone for good governance.

And with that probably comes transparency as well, just making sure that everybody understands what decisions are being made. And increasingly now the transparency also applies to the data that people are using to drive the decision-making, which can be a challenge because we're very often drowning in data, many organisations, many projects. There can be paralysis by dashboards is another thing that we are seeing, so getting the right information into the hands of the right people to make the right decisions is what can drive that good governance process.

And I think it's a skill sometimes to recognise what data, good data, looks like to help decision-making. Very often a project will have to make decisions based on incomplete information, and knowing when that's a good judgement call to make and when actually it's better to pause and wait for better information actually is, is quite a skill and comes with that sort of leadership from clients and from the businesses that are participating throughout the supply chain.

David: You talked about the importance of decision-making. Where do you see that most often breaking down on projects?

Paul: Often done in haste is probably the best description of when it can break down, when things need to move quickly or things need to move with incomplete information. And very often, if people aren't aware they're making a judgement to make a quick call rather than the sort of call with perfect information, that is where decision-making can start to break down.

But also, when people don't consider the wider ripple effects of decisions, and particularly through a supply chain, is when construction can be quite fragmented. It's difficult to get the sort of right information and the 360 view of what a decision will impact and sort of ripple through a design team, project team, delivery team.

David: So we're drowning in data, basically, but very little information quite often.

Paul: Yes, and too much data without the insight over it is—drowning is a good analogy, yes. So turning it into actionable insight is, of course, the aim and the trick that we're all driving towards.

David: You've recently joined the CLC to look at business model reform. What's wrong with the current model? What needs reforming?

Paul: A couple of things I'd say is it's not fundamentally broken in many places. There's lots of good projects delivered. And there's lots of good practice that industry can point to and say, well, there's a success. The challenge when we try and describe the construction industry as a single entity, of course, is that it's very different.

It's very vast, different sectors, different geographies, different parts of the supply chain. So making changes to industry is therefore complex, but also what can appear to work in one place often doesn't in another. I think what has changed is clients, and a lot of our research actually into procurement trends points to this, clients are asking for more from their supply chain.

So more by way of ESG, more by way of social value. So clients are asking for more just at the same time that the market generally is getting more volatile. So we've had a period probably since, probably even as far back as the global financial crisis, but certainly COVID, coming out of COVID supply chain difficulties, the invasion of Ukraine through to tariffs, changing geopolitical sort of situation around the world, the Iran conflict more recently.

There's a lot of volatility. And so what we've got is clients are asking for more as the world's become more volatile. The supply chain generally is therefore facing into more risk. And many businesses have looked at contractors, subcontractors, some big failures over the last few years, looking at them and recognising that that's almost a perfect storm and they need to pay attention and get more risk aware.

So when we look at some of the commercial behaviours, even some of the procurement routes, they span back decades in many, many instances, and probably clients were buying the bricks and mortar in a simpler way, and the operating environment may have been slightly more stable, less volatile than it currently is. So I think it's a combination of needing to deliver more in a more volatile world is probably what is sort of for me, the important impetus for change with business models.

David: I think many of our BESA members would describe a situation when almost everybody starts off on a project with good intent and they want lots of ESG, they want lots of sustainability until you price it and go, well, actually, this is a building you can't afford. And then that tends to disappear. Is that still true?

Paul: Look, I mean, there's many projects that will have started with an aspiration of a BREEAM Outstanding or something like that.

David: Stirling Prize winner.

Paul: Yes. And slowly it's value engineered through the passage of time. I think the thing that we are seeing change is the link between a completed asset and its ESG credentials and its longevity in holding value. Particularly with ESG criteria, it really means that in many instances some of this stuff isn't the green sprinkles to be put across the top of a project.

Actually, it's fundamentally contributing to the underwriting of the value. So I think that's why we are seeing, certainly with things like ESG, clients getting better at articulating their requirements and sticking to them, and making them a key part of whether the project stacks up. But the other thing that we are seeing is clients getting better at monitoring and measuring the output and the outcome as well.

So not just about buying a certificate to put on the wall of the completed building, but it's about some sort of performance metrics other than here's the keys to your new building.

David: I guess after the summer we've had at the moment, climate risk mitigation is probably climbing up the ladder quite strongly at the moment.

Paul: Yes.

David: You mentioned that clients frequently, and I couldn't disagree with this, drive behaviours or drive the whole process through the whole supply chain. Does it go beyond even the client? Does it go to investors? Do the decisions investors make about what they value also drive behaviour?

Paul: It's quite difficult with some investors. Some will have sort of lending criteria, investment criteria, and parts of that process can end up being a bit tick box. And if the tick box was generated in a different market, 5 or 10 years ago, it might not be the right tick box for the current state of the market and the current project.

Where I've seen investors adapt and listen to the advice that they're given by their professional team around them, I do think investors can change the way and the things they ask for.

David: So certainly investors can set the tone, but I've also seen them adjust to market realities to get the right outcome. We're seeing a trend in our legal team at the moment of investors and clients reaching for, shall we say, financial tools to secure their contracts. In effect, they see some high-profile failures and they think, well, actually what we need here is liability or parent company guarantees.

Are they reaching for the wrong tool? Shouldn't they be procuring better to reduce that risk rather than using a financial tool?

Paul: Yeah, it's an interesting conundrum really, isn't it? As I say, many investors, many clients will have sort of the go-to levers that they think they can use, particularly, you know, as we look ahead to the retention ban. Clearly, the sort of look ahead is going to be concerned about financial standing and bonds of various types to give clients and investors that protection.

For me, it's a safety net, and a project delivered well with the supply chain bought into delivering right first time with the right attention to quality is a better security measure than actually having something to call upon if everything goes wrong. Now, it's quite difficult, as you say, against some of the headline-grabbing insolvencies that have been out there, to have that conversation with clients and to give them the comfort that the project team, the contractor, the subcontractors, down to people delivering physical activity on sites, have got that mindset to give them a right first time, and therefore that's the protection they need.

But certainly I'm hopeful that it will be more of a focus on quality, will give clients more projects right first time.

David: I think anybody within the industry though recognised the companies that were high risk. And yet they were still winning contracts. You know, Carillion were winning tunnel contracts for HS2 when they couldn't really do a paint and decorating job in Leeds. And so when the whole industry knows that this is a dodgy company, why would you go for the wrong lever, shall we say, pull the wrong lever instead of better procurement?

Paul: You know, I've certainly been in projects where you've got a standout sort of low-bidding contractor that has gone through prequalification checks and sort of ticked every box, and the price just doesn't look right. And it's quite difficult to dissuade a client from, but we've got X amount of price difference, should things go wrong, we've got a buffer before they're— So I think the bit that clients often miss is that mindset of, well, it might be painful and hard work for everybody, but we'll get through it, sets entirely the wrong tone for delivering the right project with the right outcomes for them as clients.

David: So what does sensible risk allocation look like, do you think? Because it gets pushed down the supply chain inevitably and the pyramid is inverted. What does sensible look like?

Paul: The sort of textbook answer to risk management is allocate risk where it's best dealt with and where a person's got the best ability to control it. I think what we've seen over the years is, as you say, clients have been concerned to the point of just pushing risk down, and main contractors look at their margins and how they win the work, and the only way they can do it is then push it down and down the supply chain.

So I think it's being aware of what risks there are and actually having open, transparent conversations with the supply chain, both in pre-procurement activity, early market engagement, all the way through. And some of the best projects I've sort of worked on, we've actually done a sort of risk review with all the contract documents out, with an entire team around the table looking at where the gaps, where the risks are, and really driving it through and just tackling them before blindly carrying on.

It's grasping the nettle there and then and just hammering out what the issue is and how to deal with it.

David: Kicking the can down the road for a later problem isn't the best move. And do construction contracts help that process or hinder it, do you think?

Paul: Latham sort of 30 years ago looked at the state of contracting and we have the NEC contracts that came out of it. I would say I don't think the contract per se drives the approach because you can amend an NEC contract to be the most aggressive thing that anybody's ever dealt with and allocate risks entirely on the supply chain.

I think the contract facilitates it, but I think it comes down to those collaborative behaviours. But probably more openly is the transparency. So heavily amended contracts with pages and pages of amendments, with all the nasty clauses tucked away at page 45 of 60, is not the most open and transparent way to do it.

So I think it's about sensible allocation of risk and transparency, even if the contract can facilitate an aggressive approach.

David: We have four lawyers working at BESA answering contract queries. So that tells you all you need to know really about the industry as a whole. RLB has just recently published the Procurement Trends Report for 2026. That threw up some interesting discussions around retention payments and some potential unintended consequences of that. What did you conclude from that report?

Paul: I think part of what I concluded is there's a lot of work to turn the Bill that's currently working its way through Parliament into a commercial behaviour out there in industry that works. Now, what our research did say is that contractors were likely to be vetting supply chain more closely and probably putting in place more retention bonds down the supply chain, which of course for SME subcontractors might be more of a challenge.

So I can certainly see that we need to work hard to make sure that we don't replace retention with something else that causes SMEs to be turned away from industry. We've got a capacity issue as an industry, and we need supply chain to be engaged and plugged in at the appropriate levels, delivering the appropriate things.

And as I say, as we talked earlier, there's been some high-profile sort of main contractor insolvencies of big players. And actually, the size isn't really the point. It's what are people delivering on the ground. And I'd, you know, as I say, I'd probably rather have an SME subcontractor that was absolutely tuned into quality and getting it right first time.

And I'd rather put my money there than perhaps a bigger subcontractor who might be close to going insolvent and is cutting every corner to make, you know, to cut the cloth accordingly.

David: I think it's generally true. I obviously talk to a lot of member companies who are MEP contractors. Something like 80 to 85% of the work is repeat work.

Paul: Yeah.

David: And you don't get that by walking away from defects. You have to deal with them.

Paul: Clients will say you're taking away a lever to get the supply chain to come back to site, particularly at the end of a defects period. Many of those same clients will also then describe that when they've got that lever, it's still a challenge to get the supply chain to come back and finish off defect work.

So, you know, people aren't typically walking away from obligations under contracts.

David: Do you think the Building Safety Act is going to make a difference in this regard?

Paul: You know, it's interesting, Hackitt really called out the race to the bottom as being a contributory factor in the Building Safety Act, and clearly the Act has legislated and made everybody sit up and pay attention to the quality of what's being delivered on site. And I think it's an interesting intersection of, you know, building safety, quality, commercial practice and sort of culture and behaviours. They all come together and really need to address the way the industry is working, because it's difficult to read anything regarding the Grenfell Inquiry and conclude that the industry didn't need to put a lot of hard work into reform.

David: We refer to in BESA a say-do gap, the difference between what companies say they do and what they actually do. We're kind of believing that the Building Safety Act will close that gap because you have to evidence that you've been compliant. Is that a view you have?

Paul: I think with any legislation, it's complex and it takes the industry a while to adjust. Any legislation, and it doesn't matter if it's in our industry or not, will come with groups of people, parts of the industry that pay little attention to it and carry on as normal. I think for me it's about changing the collective mindset and behaviour, and government legislation gives everybody the wake-up call to shift behaviour faster and quicker than any incremental change across industry could.

So, do I think the Building Safety Act solved all the problems that it was intended to? Possibly not, but it's a very different, better place, I think, in the industry now than it was before the legislation.

David: We describe an industry where it's divided into thirds. One-third get stuff straight away and do it. One-third go, I have no idea why I'm being asked to do this, but I'm generally compliant, so I'll do it. And one-third go, what, there's a regulation for this? And that's the third we either shift into the middle or out of the industry.

You talked about leadership being really, really important at the beginning, and where does that leadership come? Is it the investors, the clients, the main contractors, or?

Paul: I think it is industry coming together, and, you know, the Construction Leadership Council, you know, is one mechanism where the industry can come together and display that leadership. I, you know, we haven't got the capacity to sort of completely wipe out the bottom third of the industry. We need to make them more compliant, more understanding, and delivering better outcomes for clients.

So for me, it's a determined approach to work on that bottom third to get them into the top third rather than to push them out of the industry. But I do think it is every part of industry coming together to work on some of these problems.

David: Yeah, a highly fragmented industry. And I guess another facet of highly fragmented industries is around productivity, which has been an issue for decades. We've already described that there's a capacity issue in the market. How do we increase productivity?

Paul: You know, as an industry, I do think sometimes we like to give ourselves a good kicking, and sometimes it's very deserved and sometimes it isn't. We have seen in the last 2 or 3 years actually construction sector making some progress towards improvements in productivity. The nuance, as ever, is in the data and what the data is actually measuring and telling us.

And I think there are some challenges ahead. CITB just put out a report regarding how workforces generally now are valuing work-life balance better and less inclined to work away from home. And I think when you look at some productivity measures for our industry, we've been better at productivity output per worker than per hour.

And I think there are some continued challenges ahead looking at some of those productivity challenges. But I'd also—let's not forget that the outcomes aren't always measured in terms of productivity and pure output financial metrics. You know, some of the social value stuff, some of the ESG, even the mental health of the workforce, for me, is really important stuff. We need to focus on a broad range of metrics to drive better outcomes for industry and for society.

David: Do you measure productivity on projects, and how do you do that?

Paul: There are some measures, but it's a challenge. Most clients don't actually get down to project-level productivity. Most of the data and the stats is actually at an industry level, sort of ONS-level statistics. There was some work done looking at sort of how MMC improves productivity. Again, I think it's all good, valid stuff, but for me it's about looking at outcomes in the round and making sure that construction is driven towards better outcomes rather than focusing and fixating on single measures.

David: You talked about the model, business models, but is it the construction project model that's wrong? We're a very hurry-scurry industry. Get to site, start building, and you're almost instantly into build and design. But it's very difficult to get people to invest upfront in a building so it's fully designed before they start. Is that ultimately where we need to end up?

Paul: It would be nice if every project could have the luxury of a fully designed, fully coordinated, perfect BIM model that tells you everything you need to know. A couple of things I'd say is, one, that perfect planning often doesn't survive the real world. So, you know, suddenly something will happen in the market, the available labour or materials might change, even the client brief might change over the period of pre-design activity, pre-construction activity or even construction.

So, I think it'd be naive to say we just need to design everything really well to start with.

David: Yeah.

Paul: I think the intelligence is knowing how much, how much is the right amount of upfront design, how much is likely to change, and right-sizing it rather than just rushing everything to site.

David: Is a key facet of this defining value that we talked briefly about, you know, the social value and the ESG? Is the way that we currently define value correct, and is it helping or is it hindering?

Paul: I mean, there's been a lot of work done on value over the, over the years. One of my former colleagues, Anne Bentley, who's now retired, did a lot of work for the Construction Leadership Council on procuring for value. She did, I remember, yes. So there's lots of good material out there as to how to manage and define what value means.

The challenge, of course, is that clients often have varied stakeholder groups. And there's no single definition in a client group of what value actually means. So you're partly using the definitions and the tools to manage and to almost negotiate between different stakeholders what the most important value metric is. It's still the case, and it amazes me, that our Procurement Trends Report still shows 40% of procurement activity selected purely on price alone.

So, whilst it is complex, to do nothing and just procure on price alone is probably the definition of insanity.

David: Different budgets, whole life costing is such a sensible approach, but it's a different budget. So, we have a heavy focus on capital costs, do we not?

Paul: We do. And, you know, whole life cost has again come into that sort of definition of value. Very often, the person incurring those costs can be a completely different entity to the person procuring it in many instances, in many buildings. The one sort of good news story, I think, is that ESG being baked into value for the long term will mean that more and more clients have to focus on what the building performance is like.

And to be honest, if it's a carbon equation, it's also a cost equation in the running costs. So I think it's more important than it's ever been, and I can only see that getting more important.

David: 90% of us spend 90% of our time in a building, so the social impact of a built environment that works is massive.

Paul: Yes, absolutely.

David: Learning across the sector, so you've worked in other sectors as well. Have you seen examples of other sectors that really work well and you think, if only construction could do that?

Paul: Industry improvement has often looked elsewhere to other sectors and said, well, we'll just have a bit of that. That's the secret sauce. We'll just put some on construction and expect everything to change. And very often, with the nuance of our industry and how it comes together, it's very easy to be swayed by the latest management trends from whichever industry sector it might be and try and borrow some of the principles.

I think in many instances we've kind of got many of the levers that we need that have been developed over the last 20 or 30 years. In many cases, people just are forgetting them or don't think to reach for them. I do think as we move through the next five years with data, with AI, I suspect there will be some innovation, some business models that look fundamentally different to those of the last 20 years. But we do know that partnering works, that alliancing works, all the good work that went into Project 13. There are lots of good instances of where industry best practice, deployed well, can make a real difference to delivering better outcomes.

David: You're king of the industry for the day, you can change one thing to make the industry better, what would it be?

Paul: Having sort of talked a bit about how our industry is fragmented and complex, I kind of feel that one thing to change for the day probably isn't going to go very far in truth. So I guess my one thing would be that everybody in the supply chain understands the connection between the value that they contribute and the outcome that we're trying to achieve, be that for the client or for society.

So that connection between people's contribution and the outcome would be what I would ask for, for the day.

David: And on that basis, Paul Beeston from RLB, thank you very much.

Paul: Thank you.

David: And thank you for listening to Behind The Built Environment. If you enjoyed the conversation, please like, share, and subscribe on your preferred podcast platform. You can also leave us a review. It helps more people across the building engineering community discover the podcast. I'm David Frise. Thank you.