Apparently, Winston Churchill first declared, in 1934, that we should “never let a good crisis go to waste”.
And in 2009 Constructing Excellence published their report “Never Waste A Good Crisis”. This report argued for innovative responses to the economic downturn from the construction industry to improve performance in the longer term. Andrew Wolstenholme, the Chair of the review team who produced the report, now chairs the Construction Leadership Council.
Earlier this week, I attended Constructing Excellence’s members’ forum to present back the work of the asset management task group, which I chair and saw a very interesting presentation by Tom Crane, Economist at Glenigan, summarising their 2014 UK Industry Performance Report . Tom’s presentation left me asking myself if we have indeed wasted a good crisis, the economic downturn we are now moving out of to improve industry performance.
Whilst the report’s Key Performance Indicators (KPI’s) show an industry succeeding in a number of areas, they have worryingly declined in a number of key areas.
As a consequence of increasing demand, material and labour costs have increased leading to extended delivery times and 60% of projects not being delivered on time, one of the worst levels of performance ever recorded by the survey.
Growth in volumes of work has led to increased staff turnover, reduced investment in staff training and a reduction in workforce diversity.
Worst of all client satisfaction has fallen for the last three years, with ratings for service and value for money having declined further during the last year.
Like me, many old enough to remember the last economic downturn of the early 1990’s will see a pattern repeating itself. The industry supply and demand balance being played out as a difference in negotiating position between client and supply chain. The key consequence of which are
- Contracting organisations suffering heavy losses as they misjudge material and labour inflation, missing the economic turning point and
- Clients getting poor service and value for money as demand expands beyond the capacity of the industry reduced during the downturn.
So we’ve wasted this crisis, let’s not waste the next.
John O’Brien is Chairman of CE’s asset management task group, founder and MD of consultancy LCMB. LCMB help clients improve their return on build asset investment by improving the productivity and performance of buildings and estates and by improving their whole life financial and sustainable performance. If you are interested in understanding more about CE’s asset management task group or how we can help you deliver better value projects on time, then please contact John O’Brien.
