黑洞社区

Brisbane might be 10,000 miles from London, but the challenges and opportunities facing those working in the construction market in the Australian city are not dissimilar to those experienced in the UK.

Regardless of where a project is located, issues around procurement, risk and regulation affect all members of the project team and ultimately have an impact on design and delivery, for better or worse. Market conditions and legislation are also driving change, so it is imperative to take these into account when exploring challenges and opportunities for the sector.

It was timely, then, that a recent roundtable discussion in Brisbane 鈥� hosted by international property and construction consultant Gleeds and chaired by 黑洞社区鈥檚 Jordan Marshall 鈥� shared views on what needs to be done to support construction. The discussion, which was held before the covid-19 pandemic gripped the globe, centred on the challenges facing construction projects throughout the lifecycle of schemes and on how tackling them correctly could bring huge benefits to the global construction industry.

There is an ongoing issue about the relationship between the construction industry and government as to 鈥� how procurement and risk are managed

Ben Slack, Urbis

Procurement as it stands

Ben Slack, regional director at consultant Urbis, said: 鈥淭here is an ongoing issue about the relationship between the construction industry and government as to how they approach projects, what the rules are, what sort of regulations there are, and how procurement and risk are managed.鈥� He added that the recent shift in procurement strategy in many sectors, including higher education, was unsurprising given the structural challenges of the construction industry.

Fabby Ernesta, acting director for the properties and facilities division at the University of Queensland, which has A$500m (拢263m) of projects under construction on campus and a A$1bn (拢526m) pipeline of work, agreed that this was the case at his organisation.

鈥淲e used to do a lot of lump sum contracts, where we would control everything and then get it out to tender, but now we鈥檙e going more towards the D&C [design and construct] style contract,鈥� he said. 鈥淭hat鈥檚 got its challenges because as a sector we don鈥檛 really understand it.鈥� The challenges with this procurement route had meant projects had not got off the ground, Ernesta said.

There鈥檚 a role to have independent auditors through the construction and delivery process. There are plenty of industries that use audits

David Lane, Thomson Adsett

Glen Mallett, director at architect Nettleton Tribe, said the shift to design and build was also causing headaches for architects. 鈥淲orking within a design and construct procurement method requires a process of working collaboratively with contractors to produce well-considered design documentation. To achieve a quality outcome with a reduced design timeframe is a challenge.鈥� In his view, the problem of proper design documentation is embedded in the design and build methodology.

The distribution of risk

Kris Kowalski, managing director of Kris Kowalski Architects, said the design and build approach Ernesta mentioned, which often sees risk transferred to the contractor very early in the process, means consultants are working with their hands tied behind their backs. 鈥淲ith the early shift of risk to the contractor, this means that consultants are being engaged when scope has already been agreed, meaning the way things are done is not necessarily the best way.鈥�

Quentin Palmer, estimating manager at Lendlease, agreed the transfer of risk is often happening much too early. He said that when clients sell the risk associated with design, this is often pushed down the supply chain and ends up squeezing those at the bottom 鈥� leading to another significant issue for the sector. 鈥淯nder pressure, organisations cut corners and it鈥檚 that cutting corners that can ultimately lead to unsafe practices and bad quality.鈥�

Gleeds chief executive Graham Harle highlighted the importance of defining where the design risks lie at the risk transfer stage, especially on building safety in the wake of well publicised safety failures such as the Grenfell Tower tragedy in London. This created a very nervous insurance market and led to professional firms fighting for professional indemnity insurance. 鈥淧rofessional firms are having to look at every building that they have been involved with over the last 12 years to ascertain the cladding types and fire engineering solutions to maintain insurance,鈥� he said. 鈥淔or Gleeds, that鈥檚 several thousand projects鈥�.

Lessons to learn

Andy King, a director at Gleeds, said construction could learn a lot from the mining industry when it comes to eliminating risk at the planning stage of work: 鈥淭here鈥檚 a massive team involved, a big budget and you look at all of the project options.鈥� He cited an example of a project Gleeds is working on in north Queensland where it is looking at project options that range in construction cost from A$150m (拢79m) to A$20bn (拢11bn).

King said: 鈥淓ach of those options serves a different purpose for that business, whether it鈥檚 first ship through the wharf, or the best value for the longest time 鈥� whatever it may be. But there鈥檚 an entire team that evaluates one and then that goes to the board.鈥�

The team would then move on to the next option and then the next, he explained, with this whole process taking 12 months 鈥� a level of baseline planning that construction should consider adopting. King added that safety is built into these projects, while the construction projects are let as discrete parcels of work managed by a central contractor.

Like King, David Lane, partner at architect Thomson Adsett, believes there is much construction can learn from other sectors: 鈥淭here鈥檚 a role to have independent auditors through the construction and delivery process and they have a different role to a certifier, and they can be random,鈥� he said. 鈥淭here are plenty of industries that use audits. My own sector, which is care homes, has random audits and it鈥檚 serious 鈥� they shut down the facility if you don鈥檛 perform.鈥� He said this system would stop construction from 鈥渙perating in the grey鈥�.

When it comes to tackling challenges around the sharing of risk, Paul David from Hutchinson Builders reckons part of the solution is clear 鈥� move away from design and build contracts: 鈥淎 collaborative approach to solving a problem has got to be better than design and construct. By its very nature D&C has got to be combative; it just has to be.鈥�

Early engagement

Chris Gill, state development manager at the Australian Catholic University, said his organisation has been working to combat this by getting contractors on board early. 鈥淲e get the builder in; we let them understand the key performance criteria for our buildings for what we try to actually do. We pay them as a consultant to give us advice,鈥� he said. 鈥淚f you bring them in early, you can help them to understand what is driving the project, what you鈥檙e prepared to negotiate to change, and what you鈥檙e absolutely not prepared to do. It鈥檚 better for all involved.鈥� In typical design and build deals, the contractor may exploit a specification that is open to interpretation and choose the cheapest route, while there is also the risk that the client may have to pay more if the contractor has to take on an unreasonably high level of risk due to a lack of design clarity when tendering, he said.

James Mantis, general manager of aged care provider Bolton Clarke, agreed that taking a less combative, more collaborative approach would benefit the whole sector. 鈥淲e need to be taking a longer-term view in terms of what we want relationships to look like and not just think on a project-to-project basis,鈥� he said.

We need to be taking a longer-term view in terms of what we want relationships to look like and not just think on a project-to-project basis

James  Mantis, Bolton Clarke

Embracing technology is another must for the sector if it wants to reduce its exposure to risk, said freelance real estate expert James Hepburn. He believes embracing modular approaches is vital: 鈥淵ou have to be thinking about modular build if you want to reduce risk and you want to manage things in a better way. It is the perfect option.鈥� Hepburn also pointed to the sustainability benefits of modular and timber-frame construction.

Regardless of where firms are working, concerns around risk sharing and fairness at the procurement stage affect the supply chain just the same. While the industry certainly has its challenges, those working within it appear hopeful that those challenges will become gateways to further opportunity.

Whether it is by working more collaboratively, tweaking project timelines or taking on board lessons from other sectors, there are plenty of ways for construction to progress 鈥� which it must do if it wishes to break free of wafer-thin margins, intolerable levels of risk and the cycle of boom and bust.