The National Audit Office has called for integrated construction teams. But why is it so hard to recreate what earlier generations took for granted?

Deputy prime minister John Prescott launched a 拢3bn challenge to housebuilders earlier this year to provide 50,000 extra homes for his regeneration schemes at a cost of 拢60,000 each. Meanwhile, a challenge to government, to save a mere 拢2.6bn a year wasted by poor management of public sector construction projects, came from the National Audit Office report, Improving Public Services Through Better Construction. The NAO鈥檚 challenge is better news for the industry, because it does not involve the usual downward-only risk transfer, screwing down margins yet another notch.

The 拢2.6bn represents only 8% of the government鈥檚 拢33.5bn annual spend on construction. If the NAO鈥檚 overarching recommendation of integrated project teams was fully and enthusiastically applied, the potential savings could exceed 20% of the annual spend. This is because true integration avoids most

of the direct and indirect costs of conflict and adversarial inefficiency. The savings come from process improvements rather than margin reductions.

It is the distancing of the two principal players in construction contracts 鈥� the client who pays and the constructor who builds 鈥� by a growing raft of supervising consultants, regulators and registrars, who create the organisation and management structures from hell that waste so many resources.

These structures are overlaid with:

  • Architects, who are given authority over the design, without responsibility for its cost;
  • Independent quantity surveyors with authority over cost but without much responsibility;
  • Principal contractors and subcontractors, whose margins have been squeezed down through the Treasury鈥檚 鈥渃ompetitive tensions鈥�, regularly paying late and, at the end of the contract, withholding 10% of the contract sum for 18 months;
  • Other peripheral project managers and consultants.

The result of all these layers, from the constructors鈥� point of view, is yet another project from hell.

The accountants at the NAO have now realised that we can no longer afford to create these fragmented adversarial management structures. We must have direct, single-responsibility, integrated construction groups carrying out the bulk of UK construction鈥檚 workload, in both the public and private sectors. So why weren鈥檛 these perceptive auditors brought into M4I or Constructing Excellence?

Designers will have to share the team鈥檚 risk on costs, just like in the days of Christopher Wren

Remember, we have seen it go wrong several times before. Sir Michael Latham鈥檚 review initially aimed at integration via design-and-build, but to keep the RIBA on board it softened this approach to 鈥�partnering鈥�. Sir John Egan鈥檚 key recommendations centred on full integration, but this was soon diluted to partnering between client and consultant only.

In the early days of M4I, architects even suggested that they should have their own designers鈥� M4I. To cries of 鈥測ou cannot be serious鈥�, this was hastily withdrawn. But it soon reappeared in the form of CABE, a taxpayer-funded organisation promoting the independence of architects from the construction process. CABE鈥檚 designer-led project solution is totally at odds with the NAO鈥檚 recommendation that full integration of the team is best for the client.

To be fair, there are many architects who have accepted that integration is the only way forward. For others, challenging role reversal lies ahead. Architects will have to satisfy project teams that they have the design flair, technical ability and discipline to keep up with the rest of the team. They will have to prove they can design within a budget while adding the bit of magic that earns their fee.

Designers will have to take their fair share of the integrated team鈥檚 risk on the cost of their designs, just like in the days of Christopher Wren. The standard procurement method will be a fixed-price design鈥揷onstruct contract. To avoid scandals such as the Scottish parliament, all design competition submissions will be from fully integrated teams with guaranteed maximum price.

And the 拢60,000 house? The best of these integrated design鈥揷onstruct teams will beat John Prescott鈥檚 challenge hands down.

Colin Harding is chairman of Bournemouth-based contractor George & Harding