Reason 1:  We could double our profits

“The construction industry spends around 1.6% of its total expenditure in the UK on legal services, double the economy’s median spend of 0.8%.” Oxford Economics 2018

This stat really says it all, but the reality is these costs have been rising since – levels of adjudication increased by 10% last year.  If we think about it another way, as a sector the level of profit we generate is very close to legal spend, so if we can reduce our legal expenses to the norm, we double our profits!

Reason 2:  Culture is essential to sector change

The Reading Report into Contracting and Procurement Behaviours in the Finishes and Interiors Sector talks of a dysfunctional approach to business, adversarial behaviours manifesting from the introduction of onerous clauses introduced by clients either of their own volition or on the specific advice of their professional advisors.  These clauses set the tone for distrust and conflict from the outset of a project.  The Conflict Avoidance Process is about setting a different tone, it is something we can use collectively to encourage change.

Reason 3:  A dysfunctional design process undermines construction

If required to submit design information for approval, how often do you receive a decision within the specified contractual limit?

Source: Reading Report 2023

This chart is terrifying when you think about how the Design Development Process is supposed to work.  Design is an iterative process, contracts need to be clear and problems solved collaboratively.  We must define responsibility and incentivise a collaborative approach.   Passing the buck and dumping risk means disputes germinate and build from the moment we start the negotiation – our processes are set to a default mode that fuels dispute.  The Conflict Avoidance Process encourages us to think about this before we sign, pre-empt problems and enter into the work with a different mindset.

Reasons 4, 5 and 6:  Safety, Sustainability and Skills Shortages

Reasons 4, 5 and 6 really are lumped together because they are intrinsically linked.  FIS Research in 2021 highlighted that only 2% of dryliners are never asked to start work on site without sufficient design information (82% frequently or always!).  The ultimate result of this is 17% of drylining is re-work.  We are 70% more likely to have an accident doing re-work.  We waste 17% of our material.  We are wasting 20% -25% of our labour, an increasingly scarce resource.  Disincentivising the right conversations at the start of the job leads to disputes at the end of a job.

Reason 7:  We can’t Afford to Waste Time and Delay Payments
Beyond the cost of disputes, anything that slows the flow of cash can kill companies (insolvencies in construction are at all time highs).  Avoiding conflict will save time and allow money to flow which will ultimately help improve resilience in the supply chain and in our projects (not to mention saving the costs and heartache associated with insolvency on all parties involved).

Reason 8:  It is the law!
For Government contracts, according to the Construction Playbook, procurement should be considering Conflict Avoidance mechanisms.  For all, the Building Safety Act has reframed the regulatory environment – it is built around duties.  Principal Designers and Contractors, Designers and Contracts.  Clients have a duty too to ensure that the right conversations happen at the right time and to appoint competent people, allowing reasonable time and resource to do the job.

Reason 9: If the builder is not insured, the building is not insured

The CLC’s Professional Indemnity Insurance Working Group has identified that too often standard form contract terms are being amended, to include liabilities and obligations that are disproportionately onerous for the nature of the work.  This means that if a client seeks to claim for loss or damage, “it cannot be relied upon that it will be settled by the PII insurers, and the consultant/contractor potentially faces financial ruin, and the client left with a claim that cannot be recovered. This is not in the best interest of any party.”

Deciding not to amend a contract is a good place to start any conflict avoidance process (yes, I do recognise the irony here that using the Conflict Avoidance Process requires a change to the JCT contract, but at least NEC have during Conflict Avoidance Week recognised the process – I will save a rant about JCT for another day!).

Reason 10: The human cost of conflict is to high
Many people in construction are running on empty.  Commercial tension is draining, we need to be more human in the way we work.  I speak to many specialists who are exhausted, ground down and at the end of their tether.  A 2020 study found that 83% of construction workers have experienced a mental health issue and suicide remains workers in construction were at some of the highest risk of suicide in the country, at 3.7 times higher than the national average.

It is Conflict Avoidance Week, sign the pledge…help change the culture, every signature adds weight.  Remember Conflict Avoidance isn’t a panacea, it doesn’t mean we will never have a dispute, but it means we are learning and evolving around a proven process that supports necessary change.

If you need more convincing, you can see the short event RICS ran on Monday with experts Stephen Blakey FRICS, FCinstCES, FICW , Liam Forry MCIArb Len Bunton – Bunton Consulting, Edward Schryver MRICS and Anthony Armitage) here – you can skip through my bit now as it is laid out above.

Find out why you should sign the Conflict Avoidance Pledge 

Sign the Conflict Avoidance Pledge

FIS is supporting The Conflict Avoidance Process as part of our Responsible No Campaign

The Procurement Act 2023 and the supporting Procurement Regulations 2024 come into force on 24^thFebruary 2025.

The Act, along with the Procurement Regulations 2024 and the National Procurement Policy Statement provide a new regime for awarding public contracts in England, Wales and Northern Ireland ending the obligation for the UK to comply with EU Procurement Directives. The Scottish Government has opted not to join the rest of the UK having transposed EU Directives into their own statute book. However, the Act does apply to contracting authorities in Scotland which are either cross-border bodies or exercise wholly reserved functions.

The reforms open up public procurement to new entrants such as small businesses and social enterprises so that they can compete for and win more public contracts. The Act also embeds transparency throughout the commercial lifecycle.

The primary purpose of the Procurement Act 2023 is to overhaul and improve the public procurement process in the UK.  The Act aims to ensure that public funds are used efficiently and effectively, delivering the best possible value for taxpayers.  Vitally to companies in the finishes and interiors sector, it emphasises the need for procurement processes to deliver broader social, environmental, and economic benefits to society as a whole.

Some key points it covers includes:

1. Principles and Objectives: The Act emphasizes value for money (not necessarily lowest cost), public benefit, transparency, and integrity in procurement processes.
2. Simplification and Unification: It consolidates over 350 different procurement regulations into a single regime, making the system quicker, simpler, and more transparent.
3. Competitive Tendering: The Act outlines procedures for competitive tendering, including preliminary steps, award criteria, and conditions of participation.
4. Direct Awards: It provides guidelines for direct awards in special cases, such as protecting life or switching to direct awards.
5. Exclusions and Modifications: The Act includes provisions for excluding suppliers based on various criteria, such as national security threats or improper behaviour.
6. Frameworks and Dynamic Markets: It introduces frameworks and dynamic markets to facilitate competitive awards and streamline procurement processes.
7. Transparency and Accountability: The Act aims to deliver world-leading standards of transparency in public procurement, ensuring that every pound spent goes further for communities and public services.

The Construction Products Association have produced an excellent introduction to the Act (made available to FIS members by virtue of our membership of the CPA).  This is available here

Recognising Culture and behaviour, as well as law, must change if we are to make the most of the opportunity the new system presents.  An important aspect of the Act is that Procurers now have more discretion about how to design and evaluate public procurements. Using the flexibilities the new system presents wisely is likely to be one of the keys to success.

To this end the Construction Leadership Council have produce a publication that sets out best practice, points out the potential un-intended consequences of certain approaches, and addresses common misperceptions that may be driving behaviour. It also offers very practical and detailed advice on market engagement, evaluation methodology and ensuring that contractors deliver. This has all been designed with the new procurement system in mind, and complements the formal technical guidance produced by the Cabinet Office.

Launching the Guide, the claim of the joint chairs of the CLC Working Group, Steve Bratt of the Electrical Contractors Association and Isabel Coman Director Engineering and Asset Strategy. TfL claim

“If there is a gap between the aspirations for your project, and the outcome of your procurement evaluation, this document is likely to tell you why, and what you might be able to do to fix it.”

If you have any questions on the Procurement Act, don’t hesitate to contact FIS CEO, Iain McIlwee or call the FIS office on 0121 707 0077.