Construction Journal February-March 2018 by RICS

Construction Journal Clearer view How to account for inflation in modern construction projects PG.

The way forward

Knowing by site

Bargaining chips

What progress is being made on RICS standards?

Linking industry and academia for built environment students

How you can improve your negotiation skills at work

PG.

February/March 2018

rics.org/journals

RICS CON ST RU CT I O N JO U RN A L

A DV E RTI S I N G

THE NASC membership audit and application process is now accredited to SSIP Registered Member

CPD IS LIVE: TWO DAY MANDATORY CPD COURSES PRIOR TO RENEWAL OF SCAFFOLDING CARDS “HSE welcomes the introduction of this into the CISRS scheme ... it will have a positive effect, particularly for those who may not have received any formal training for years.” Ray Cooke, Head of Construction Sector Safety Unit, HSE

www.cisrs.org.uk For further information go to:

To ad ve rtise con t a c t C h r i s C a i r n s +44 ( 0) 2 0 7 8 7 1 0 9 2 7 or c hrisc @wearesu nday. c om 2 F E B R U A R Y/ M A R C H 2 0 1 8

C O NTENTS

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contents

Front cover: © Shutterstock

CO N TACTS CO N STR UCTI O N J OU R NAL Editor: Hannah Ramsden T +44 (0)20 7334 3757 E hramsden@rics.org The Construction Journal is the journal of the Project Management and Quantity Surveying & Construction Professional Groups

4 2020 vision

14 Giving a good account

Justin Sullivan explains how PG2020 is intended to transform RICS’ structure to fulfil our international aspirations

Joe Martin of BCIS offers a clearer view of accounting for inflation in construction projects

5 Update 7 Coming over the hill

Advisory group: Helen Brydson (Faithful+Gould), Gerard Clohessy (Arcadis), Christopher Green (J. Murphy & Sons Limited), David Cohen (Amicus), Andrew McSmythurs (Schofield Lothian), David Reynolds (Property & Construction Consultant), Tim Fry (Project Management Professional Group Chairman), Alan Muse (RICS), Rachel Titley (Arcadis), Steven Thompson (RICS)

The traditionally conservative construction industry needs surveyors to take ownership of impending challenges – or face irrelevance, argues Mark Farmer

Construction Journal is available on annual subscription. All enquiries from non-RICS members for institutional or company subscriptions should be directed to:

Between legacy projects and future uncertainties, construction business leaders are presented with a number of challenges, writes Jason Farnell

Proquest – Online Institutional Access E sales@proquest.co.uk T +44 (0)1223 215512 for online subscriptions

8 Taking a lead

9 The way forward

Published by: Royal Institution of Chartered Surveyors, Parliament Square, London SW1P 3AD T +44 (0)24 7686 8555 W www.rics.org ISSN: ISSN 1752-8720 (Print) ISSN 1759-3360 (Online) Editorial and production manager: Toni Gill Sub-editor: Matthew Griffiths Designer: Will Williams Advertising: Chris Cairns T +44 (0)20 7871 0927 E chrisc@wearesunday.com Design by: Redactive Media Group

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RICS Director of Professional Standards Ken Creighton talks about progress made in the past year to establish standards for the profession, and the work that lies ahead

10 On the side of the agents With the role of employer’s agent still seen as ambiguous, Kelvin Hughes introduces a new RICS guidance note that is designed to clarify matters

12 Clean bill of health

16 Knowing by site Fostering positive relations between industry and academia can provide valuable learning opportunities for built environment students, as Joseph Rizzuto and Indira Chauhan explain

19 Growth chart Sebastian Chambers identifies three key factors crucial to progress in the construction industry

20 Bargaining chips Negotiation is vital to construction, so Chris Green advises how to improve your skills at the table

22 First among equals Carrie de Silva tells the inspirational life story of Irene Barclay, the first woman to qualify as a chartered surveyor, who did pioneering work in social housing and slums 25 Escape notice Shy Jackson reviews a 150-year old ruling on nuisance, highlighting its applicability to modern land and construction cases

David Low celebrates the success of the Department of Health’s construction procurement framework ProCure22

While every reasonable effort has been made to ensure the accuracy of all content in the journal, RICS will have no responsibility for any errors or omissions in the content. The views expressed in the journal are not necessarily those of RICS. RICS cannot accept any liability for any loss or damage suffered by any person as a result of the content and the opinions expressed in the journal, or by any person acting or refraining to act as a result of the material included in the journal. All rights in the journal, including full copyright or publishing right, content and design, are owned by RICS, except where otherwise described. Any dispute arising out of the journal is subject to the law and jurisdiction of England and Wales. Crown copyright material is reproduced under the Open Government Licence v1.0 for public sector information: www.nationalarchives.gov.uk/ doc/open-government-licence

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RICS CON ST RU CT I O N JO U RN A L

CH A I R M A N ’S CO L U M N

CHAIRMAN'S COLUMN 2020 vision

PG2020 aims to transform RICS’ structure to fulfil our international aspirations, says Justin Sullivan

In 2014, RICS Governing Council embarked on GC2020, to make RICS’ top-level strategy-setting group more agile and relevant in our changing world. At the same time, the council recognised that our professional group (PG) board structure should be fit for purpose to reflect the needs of RICS members and market demand for standards. The council delegated the task of reviewing this to a working party of council members and Knowledge Board. Our current structure of 17 PG boards in the UK doesn’t scale in a manageable way into the world regions – if we did this for each country in which we operate, we would have 2,482. That is a lot of resource. As our PGs are important, we need to change the way we are organised. November and December last year saw the membership vote in some of its new council members, and the council in turn approved work on PG2020 so far. This has been through a number of rounds of consultation with existing PG board members and other stakeholders, and

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we will now start to implement the model we have developed. At present, PGs comprise professionals qualified in relevant areas, such as quantity surveying and project management, who work across disciplinary and geographical boundaries. They are: bb standard-setters, responsible for developing all professional and technical standards content bb promulgators of insight and knowledge bb advisors to the governance of RICS, the council, profession and wider world. Our consultation found that the further you travelled from our London HQ, the less engaged the PGs felt with Governing Council’s strategy. The creation, implementation, delivery and regulation of RICS standards remains our top priority, and we need a structure to support this. The consultation showed both a desire and need for cross-disciplinary collaboration. Our markets see RICS professionals as thought leaders who have both broad and specialised areas of expertise, and our standards programme must reflect this. It was also apparent that we need better member engagement, greater diversity and better use of technology. We need to connect with our world regions more effectively and gain market insight that can inform the creation of standards. When considering

how to translate these considerations into a scalable model, the working party decided that future PG membership would expect a digital environment to enable engagement across the 146 countries in which RICS professionals practice. The proposal for which Governing Council voted also includes a joint standards and regulation board – a working title – comprising professional members, standard-setters and regulators, and below this sits the new replacement of the current professional group board structure. We will have a model made up of leaders’ forums, standard-setting committees and wider global communities, open to all. bb These will have global leaders from the profession or wider sector, whoever has suitable expertise. bb Standards are developed by expert standard-setting committees. bb They convene in person or online, at regional or global level, to address issues and risks, explore themes and devise standards, professional statements and guidance. bb Global leaders and standards-setting committees are appointed by the profession with independent input. We are now creating the leaders’ forums and the digital platform. This work is led by an implementation group of professional members from RICS regions and PGs, and is chaired by myself. We will

be working with all existing PG boards and carrying out further consultation. PG2020 plans should enable many more professionals to become involved in standards, insight and guidance regionally or globally. A fundamental aim is to move away from the current UK-centric approach to standards, ensuring more involvement from a wider range of individuals with appropriate expertise on a global portfolio of consistent standards responding to genuine, substantive market risks and expectations. While there is a distinction between RICS’ recognised role as a self-regulating body in the UK and the enforcement of our standards in other markets, in the latter we aim for our standards and the way they are monitored and enforced to be consistent while attuned, where appropriate, to regional norms or national requirements. If you want to get involved with PG2020 and be part of shaping the future of our profession, please do get in touch. b

Justin Sullivan FRICS is Chair of the Global and UK RICS Quantity Surveying and Construction Professional Group Boards qsandc.professionalgroup@ rics.org

UPDATE

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UPDATE ICMS guidance published to support implementation

EVENTS RICS Commercial Management in Infrastructure Conference 8 March, London

n www.rics.org/ cmconstruction2018

RICS Quantity Surveying & Construction Conference 10 May, London

How can the sector adapt and modernise to remain competitive and resilient? As the continuing skills shortage and uncertainty over Brexit dominate the industry, you can hear first-hand views from our expert speakers, including CEOs, economists, developers and contractors, to discover how to tackle these issues. n www.rics.org/qsconference

Since the launch of the International Construction Measurement Standards (ICMS) in Canada in July 2017, we have been speaking to many professionals and users about their implementation. Governments in the UK, Canada, South Africa and Qatar are showing an active interest in the standards, and several large global consultancies are already using them in practice, including Turner and Townsend, Arcadis and Faithful+Gould. With this in mind, we have developed an ICMS user guide for RICS members, ICMS Explained, which was published in December (www.rics.org/icmsexplained). This technical document sets out the purpose, context and philosophy of the standards, unpacking the structure and cost classifications to give practitioners a step-by-step guide to using them. In addition, we have developed a data standard for ICMS, to be published in spring 2018. This will allow the standards to be embedded in software, and enable data processing and the collection of costs in ICMS format. To integrate ICMS into RICS’ standards and regulation framework, we have also begun to develop a global professional statement on cost prediction. This will add detail and process to the standards’ application in practice. ICMS are the first of RICS’ global standards in quantity surveying and cost management, marking an important milestone for the profession. The publication of ICMS also requires minor alterations to be made to the RICS New Rules of Measurement (NRM) suite of documents to ensure the two are compatible, and these changes are due to be made later this year. The ICMS user guide includes a sample mapping model between the two. The components of the Black Book will continue to undergo revision to bring the content up to date, and a new edition will be published towards the end of 2018. Part of this work will be the completion and publication of the final two parts of the Black Book.

STANDARDS Forthcoming

The role of commercial managers in IT guidance note n rics.org/standards

Recently published

Employer’s agent: design and build guidance note n rics.org/employersagentdb

Whole life carbon assessment for the built environment professional statement n rics.org/wholelifecarbonps

k Zoe King MRICS (left) and Eve Mallon MRICS (right)

Young Surveyors of the Year named The annual Young Surveyor of the Year Awards ceremony took place on 17 November at the Hilton London Bankside Hotel. The Project Management winner was Eve Mallon MRICS from Faithful+Gould’s Glasgow office. The winner of the Quantity Surveying and Construction Award was Zoe King MRICS from Turner and Townsend’s Newcastle-upon-Tyne office. Congratulations to both for their success and championing diversity in the profession.

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LEA DER

What’s that coming over the hill? The traditionally conservative construction industry needs surveyors to take ownership of impending challenges – or face irrelevance, maintains Mark Farmer

The sense of an impending change about to sweep over the construction industry shows no signs of abating. If anything, there are unprecedented forces challenging the status quo in our traditionally conservative industry and washing over every part of the sector, from SMEs to the largest consultancy and construction supply chain businesses. I have written in Construction Journal before (April/May 2017, p.15) about the impact that this might have on construction-related surveyors and the urgent need for a new, futureproofed

skill set; but it is worth rehearsing what I believe are now increasingly critical issues for members of RICS.

Digital clarity There is no doubt that digital technologies have created such low-hanging, accessible fruit that even the most die-hard traditionalists cannot ignore them. Do not confuse the term “digital technology” with building information modelling (BIM), though. BIM is more than the application of software and hardware and embodies collaborative working, common data environments and workflow management. Where technology relies on joint efforts, our industry – however much some would like to say otherwise – is unlikely to adopt it at scale or speed. The power of digital working must flow from initial design development, schedule and cost prediction through

The profile of a modern chartered surveyor will need to look very different from what we have seen in the past. If it isn’t, I fear that our profession, alongside others, will no longer be relevant

to premanufacturing, on-site assembly, construction and, finally, asset management. Encouraging this when our procurement models are traditionally fragmented and our commercial practices are adversarial will always be a case of trying to make a silk purse out of a sow’s ear. Many of the solutions necessary to achieve modernisation lie with the project management and quantity surveying professionals who are often advising commissioning clients on procurement and on risk management, as well as acting for all parties in the supply chain. Unfortunately, integrated, multi-party working is not something our industry has practised at scale, and is all too often viewed with suspicion – often quite rightly, given our experiences of its misuse by parties on all sides of transactions who continue to deploy poor behaviours.

Force of change What is coming over the hill now includes transformation that will force different behaviours, while at the same time all built environment professionals, technicians and tradespeople will need to navigate the growing impacts of a skills and capability crisis. More importantly, the industry will, I believe, be increasingly forced by disruptive new entrants to use different organisational models that are inherently more integrated and efficient. I am already seeing emerging models, for instance, that will require no traditional quantity surveyors or project managers and involve much less transactional management. An urgent programme of change is needed now, and RICS has to play a major role itself in completely reforming its technical and professional accreditation platform, CPD requirements and the associated training partnerships it has with

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higher and further education institutions. The profile of a modern chartered surveyor will need to look very different from what we have seen in the past. If it isn’t, I fear that our profession, alongside others, will no longer be relevant. The traditional barriers between different professional institutions and between consultants and contractors will increasingly change and blur. Digital data and workflows will disrupt some of the silos in which we have operated. RICS members need to develop a new proposition, adding value for clients in areas other than measurement, process management, financial and contract administration to instead focus on interpretive analysis, value-based outcome procurement, waste reduction, risk management and predictability. They also need to be able to offer a human overlay on what are increasingly likely to be artificial intelligence-led, digitally enabled real-estate and construction processes. If they are unable to rise to this challenge quickly enough then chartered surveyors will face a negative disruption rather than a positive one. Whether you are an existing qualified professional, a business owner or indeed a training provider, you should consider what this means for you. Ultimately, RICS needs to show leadership in advancing this agenda. b

Mark Farmer is Founding Director and CEO of Cast mark.farmer@ cast-consultancy.com

Related competencies include Client care, Data management

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RICS CON ST RU CT I O N JO U RN A L

L E A D E RS H I P

Taking a lead Between legacy projects and future uncertainties, construction business leaders are presented with a number of challenges, writes Jason Farnell

ver the past three years, the leadership at many major contracting groups has had to deal with portfolios of legacy projects – that is, jobs secured during the economic downturn that had to be completed as the industry was contending with building cost inflation.

Loss leaders There are major players still coming late into this situation, with consequent depletion of shareholder value and the need to recapitalise balance sheets to sustain their viability. The role of the leadership in these loss-stricken organisations has been to assess each project objectively to determine and implement a strategy for their completion. In parallel with this, businesses have had to evaluate what constitutes the core of their operation, and have sought to divest themselves of assets that are not considered essential to future trading – in the process realising the cash to reinvest and to make good their trading losses. Leaders put in post to effect business turnaround will invariably have been appointed to replace the board that presided when the loss-making projects were secured. The market demands that such leadership be detached, focused on results and capable of returning a business to an underlying profitability in a relatively short time. But those capable of doing so are unlikely to be suited to managing, organising and growing a business once it has returned to stable profitability – managers who can turn projects around are often not interested or are unsuited to running restructured businesses, so at this point we usually require a different kind of leader. Not surprisingly, major contractors are determined not to repeat past mistakes by taking on work that suits neither their capability and capacity nor their risk appetite. In such circumstances, business leaders need to ensure they have developed and articulated a clear strategy for the type of projects the 8 F E B R U A R Y/ M A R C H 2 0 1 8

organisation will undertake, in terms of scope, procurement route and contracting risk, and have processes in place to support this strategy’s implementation consistently and objectively. Different organisations will identify sectors, value ranges and contracting arrangements where they think they can achieve consistent returns with properly managed strategies.

Selective and specialist It is likely that this selective and specialist approach will create its own organisational issues: businesses cannot afford to be restricted by their own size and structure when implementing their leaders’ strategic vision. The question will no longer be “What work do we need to maintain the organisation?” – rather, “What organisation do we need to service the work available to us in our selected markets and work streams?” Construction and property clients and their advisors, including end users and developers, have also identified that their relationship with contractors and specialists must be different in the future if they are to be certain about the timing, quality and cost of project outcomes. This has meant that there has been a perceptible move away from the comprehensive risk transfer to contracting styles in which greater control – and subsequently, risk – has been retained by the client body. Business leaders may shape and structure their respective businesses to suit their intended markets and procurement routes, but there are wider issues that will affect the effectiveness of their leadership in the next decade. Putting aside the uncertainty of the political landscape, the construction and property industry faces huge challenges from an acute skills shortage, the changing characteristics of employment and career styles, and the allocation and management of design responsibility.

Compelling career Currently, 22% of people working in the construction and property industry are more than 50 years of age, and 15%

of them more than 60; even with rising statutory retirement ages and pension pressures, there will be an exodus of skilled and experienced professionals from the industry in the next 10 years. The task for industry leaders is to attract graduates and school-leavers and make a compelling case for construction being a career path of choice, to identify innovations that will improve both the professional environment and its outputs, and to create training opportunities. With businesses rigorously pursuing work through selectivity and specialism, a contractor’s ability to maintain, and indeed the desirability of maintaining, substantial staff resources continuously is likely to be diminished. This, combined with the growing trend for migrant workers proactively developing the CVs they wish to create, means talent management will become increasingly difficult. The role of leadership will be to engage, retain and motivate individuals who are not directly employed by them. Over the past decade, the design and construct contracting model has become prevalent. However, with recent events such as the Grenfell Tower fire and the Robin Rigg offshore wind farm as well as case law developments, the implications for contractors and specialists assuming design responsibilities have become oppressively onerous. The challenge for the industry leaders, from all interest groups, will be to determine a risk-sharing model that supports the industry’s objectives appropriately. An individual leader may adapt their style to suit particular circumstances – dealing with a school-leaver differently to a seasoned construction professional, for instance. But the construction and property industry demands the opposite of this: different leaders to deal with changing circumstances appropriate to the times. In an industry that is inherently cyclical, there will always be a need for leaders who can develop strategies for growth, volume reduction, difficult contracting conditions and steady-state running. It is a rare individual indeed who can operate effectively across these. b

Jason Farnell is Owner and Director of Commercial Risk Management Ltd, a practising adjudicator and an accredited mediator jason.farnell@ commercialrisk.management.com

Related competencies include Business planning, Leadership, Risk management

STA NDA R DS

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RICS Director of Professional Standards Ken Creighton talks to Construction Journal about what has been achieved in the past year to establish standards for the profession, and the work that lies ahead

The way forward Q

What’s your overall assessment of the past financial year in terms of standards?

Standards cover both professional behaviour as well as the technical aspects of chartered surveying. We are working on standards across this spectrum; in the past year we have accomplished a lot. For example, we produced major professional statements on conflicts of interest, which came into effect this January. We also carried out in-depth research on professionalism to get the market insight that would guide our standard-setting. Thus we have projects focused on key issues such as money laundering, ethics and data security. On the technical side, we made advances in property measurement standards, including residential and industrial; we also published the updated valuation Red Book. The International Construction Measurement Standards (ICMS) were launched in Vancouver, Canada, in July. This is a major suite of international standards supporting the benchmarking, measuring and reporting of comparable construction costs across the world. Moreover, land measurement standards and business valuations are other big technical areas where we have made great advances in the past year. For instance, in business valuation we have launched the credential Certified in Entity and Intangible Valuations (CEIV). This is for professionals who perform fair-value measurements for businesses and intangible assets. The project originally came about after the US Securities and Exchange Commission expressed concerns about professionalism in valuation. Working with other key stakeholders and professional bodies such as the American Institute of Certified Public Accountants and the American Society of Appraisers, we jointly launched CEIV.

Q A

What has been the biggest challenge you have faced?

Our biggest challenge relates to how we actually deliver these standards as a profession. Creating standards is just the first step. The challenge is to have those standards adopted and used in the marketplace so that they benefit the market in the public interest. Each standard starts as simply words on a page; they need the professionals to do the work for the benefit to be realised. We need the conferences where they will be discussed and explained, the training and all the related support to ensure professionals and the market realise the benefits of adopting and using these standards. The challenge is not just to create the standards, but have them make a positive impact. This is the role of RICS, and where we need to succeed.

Where are the opportunities for adoption of standards and growth of the profession?

There are a few specific areas with great opportunities. I mentioned ICMS: we have already had amazing take-up, with major firms and governments around the world using them to compare costs on their projects. For example, the province of Ontario in Canada, the Irish government and the UK government have all been looking at ICMS to examine and compare their spend on infrastructure projects. This is a real opportunity for RICS, as we add value by speaking to the world about how ICMS can benefit such a substantial part of the market. Another example is the International Property Measurement Standards (IPMS). Along with the IPMS for Office Buildings, we are soon publishing an updated professional statement to cover

“ The challenge is

to have standards adopted and used so that they benefit the market in the public interest

residential and industrial buildings. Now entities with warehouses, residential and office space can compare space consistently across their portfolio. We can develop the skills in the profession and the numbers employed by getting companies, governments and individuals to adopt our standards and hire the professionals to use them. That in turn makes people want to become professionals, maintain their professional status and take advantage of the training and products we offer. It’s an opportunity to connect those standards through adoption to growth of the profession. There is a lot of good work ahead. b

Ken Creighton is RICS Director of Professional Standards kcreighton@rics.org

Related competencies include Client care, Conduct rules, ethics and professional practice, Legal/regulatory compliance

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RICS CON ST RU CT I O N JO U RN A L

B L ACK B O O K

On the side of the agents With the role of employer’s agent still seen as ambiguous, Kelvin Hughes introduces a new RICS guidance note designed to clarify matters

rom the Standard Form of Building Contract with Contractor’s Design 1981 to the current JCT Design and Build Contract 2016, the role of the employer’s agent has been seen by many practitioners as, at best, confusing. The recently published Employer’s Agent: Design and Build guidance note (www.rics.org/employersagentdb) is the result of a long development process involving a working group chaired by Andrew Smith, comprising quantity surveyors and project managers, with additional support from the RICS Professional Group. 1 0 F E B R U A R Y/ M A R C H 2 0 1 8

Contractual clarity The purpose of the note is to prevent any confusion by providing clear and comprehensive professional guidance and recommendations to anyone who acts as an employer’s agent on a JCT Design and Build Contract, or in Scotland, on an SBCC Design and Build Contract. While it is not mandatory for RICS practitioners to comply with the guidance note, the publication identifies what is seen as best practice and what in RICS’ opinion constitutes a high standard of professional competence in that role. As such, the note relates to the latest version of the JCT Design and Build Contract and the Scottish equivalent, as well as current legislation and any relevant case law. Probably the main reason for the apparent confusion regarding the role

of the employer’s agent is that there are only six references to it in the whole contract, the primary reference being to the “employer” rather than their agent. The agent’s role is relatively straightforward, however: they act on behalf of the employer in all matters, unless the employer states expressly in writing to the contractor that they would like to act for themselves, or to appoint others to act for them on certain aspects of the contract. Having said that, there are certain actions that will always remain the responsibility of the employer: 1. providing possession of the site, as this belongs to the employer 2. making payment to the contractor in compliance with payment notices; the employer and the contractor are the Image © iStock

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contracting parties, so no one else can pay the contractor 3. issuing a notice to the contractor following a non-completion notice, stating that the employer may require payment of, or may withhold or deduct, liquidated damages. The role of the employer’s agent is to issue payment notices without deduction for liquidated damages, although the employer’s agent must advise the employer of their rights and responsibilities in this respect. The guidance note also compares the seemingly similar but in reality very different roles of the architect or contract administrator under other JCT contracts, as well as the project manager under the NEC contracts, thus identifying the unique role the employer’s agent plays.

APC alignment The note covers the various issues at three levels. These align with those of the APC, and will therefore be familiar to RICS practitioners and other readers: bb general principles (Level 1: Knowing) bb practical application (Level 2: Doing) bb practical considerations (Level 3: Doing/Advising). Although the guidance note refers to best practice in the post-contract stage, Level 3 also includes reference to pre-contract activities such as tendering and contractor selection, which are seen as quasi-project-management duties under the contract, rather than those of an employer’s agent. Level 1 examines the background to design and build contracts as a

procurement method, and the general principles of the employer’s agent role. Level 2 then considers in some detail the timing of the employer’s agent’s involvement, their relationship with the employer and their powers under the JCT Design and Build Contract. In doing so, it establishes a parallel with the architect’s or contract administrator’s role under the other JCT contracts, and with the project manager’s under the NEC contracts. This section goes on to consider the specific duties of the employer’s agent under the JCT Design and Build Contract, such as giving instructions, dealing with quality issues and instructing and evaluating changes. As previously mentioned, references in the contract are to the “employer”, so the guidance note clarifies the role that the agent plays in acting on their behalf. Payment processes and procedures under the contract also refer to the Housing Grants, Construction and Regeneration Act 1996, supplemented by the Local Democracy, Economic Development and Construction Act 2009. Level 2 then concludes with reference to the employer’s agent’s role in terms of claims, termination, practical completion and disputes. In addition to the specific duties under the contract, Level 2 also considers the general management duties of the employer’s agent in terms of project control documentation, meetings and project status reporting mechanisms. Level 3 in turn considers the role and responsibilities of the employer’s agent and their relationship with the employer in the context of the law of agency, as well as the relationship with the contractor. It also looks at pre-contract activities such as tendering and contractor selection. While it is not uncommon for the same person to advise the employer at the pre-contract stage, this is seen as a project management function rather than the true role of an employer’s agent under the JCT Design and Build Contract. b

Kelvin Hughes is Senior Partner at KH Consultants LLP kelvin.hughes@khconsultants.co.uk

Related competencies include Contract practice, Procurement and tendering, Project administration

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RICS CON ST RU CT I O N JO U RN A L

P R O GR A M M E M A N AGEMENT

Building information model of a repeatable room in 3D

Clean bill of health

NEC contracts

David Low celebrates the success of the Department of Health’s construction procurement framework ProCure22

roCure22 or P22 is a construction procurement framework administered by the Department of Health (DH) to develop and provide NHS and social-care capital schemes in England. It represents the third iteration of the DH framework that provides design and construction services for use by the NHS and social-care organisations. This continues to build on the principles of its predecessors by streamlining the procurement process and helping clients, principal supply chain partners (PSCPs) and their own supply chains develop stronger partnerships, increasing efficiency and productivity while enhancing clinical outputs for patients and environments for staff and visitors. The frameworks have provided more than 850 publicly funded NHS projects at a value of £6bn over the past 15 years. P22 is a suitable approach for the following types of work: 1 2 F E B R U A R Y/ M A R C H 2 0 1 8

integrated teams to address the public sector’s poor performance in respect of project completion, and specifically to improve outcomes in terms of time, cost, quality and patient experience. These defining principles still hold true for P22, where experienced, integrated design and construction teams are essential: not only are healthcare and social-care projects technically and logistically challenging, they must also be flexible to adapt and accommodate the ever-changing needs of the NHS and an ageing population. Under P22, 852 projects have been completed with time and budget compliance consistently more than 90%. Client satisfaction has also consistently exceeded 80% and there has been no litigation on any project, saving the NHS more than £150m. This represents a step change in public-sector construction, where in 2001 only 26% of schemes were completed on time, and 28% on budget, with 3% of the capital programme being spent on litigation.

bb service planning or reconfiguration reviews bb major works or refurbishments bb minor works, in which each task value does not exceed £1m bb refurbishments bb infrastructure upgrades – roads, plant and so on – and non-healthcare buildings such as car parks bb feasibility studies and masterplanning.

Principles and performance The first framework, ProCure21, was developed in response to the challenges laid down in: bb the Latham Report, Constructing the Team; this was the 1994 report on the government and construction industry’s review of the latter’s procurement and contractual arrangements bb the Egan Report, Rethinking Construction, the 1998 report of the Construction Task Force on the scope for improving the quality and efficiency of UK construction. Both of these aimed to promote collaborative working and develop

Use of the NEC form of contract on the first framework in 2002 was a novel approach for the NHS. In particular, its encouragement of proactive project management and robust risk management, with payments based on actual costs, was a relatively new concept. Clients and their advisors were typically inexperienced in using such contracts, necessitating significant training and development to support them. Over the years and frameworks, their expertise and knowledge has developed exponentially, reflected in improved performance. Nevertheless, use of NEC3 during the pre-construction phase with associated activity schedules can still present a cultural challenge for designers and others new to the framework. As a consequence, there is an ongoing training provision for clients, stakeholders, PSCPs and their supply chains, provided by the DH. A recent addition to this is e-training, available from the P22 online portal.

Other key features P22 has enhanced the best features of its predecessor frameworks, offering a fast-track, compliant route to market for clients, as well as benefits such as: bb free usage bb free VAT advice service bb free training and implementation support bb free access to and use of design Images © Department of Health/Kier

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information from previous projects bb free use of award-winning repeatable room designs bb post-occupancy evaluation and project-end review templates bb proven contract templates, developed and improved over 15 years.

Control process Clients will manage their own framework projects, but will follow the proven procurement process and P22 contract template, which is based on and complements NEC3 Option C. Both process and contract templates are bespoke, to mirror the NHS business case approval process, allowing clients to ensure their projects remain on budget at each stage. There are break clauses, without penalty, throughout the design and development pre-construction period. Clients use the process and the partnership with their supply chain to ensure as much value as they can, often establishing long-term relationships with them to add value on their objectives. When a final design is agreed, costed and market-tested, the PSCP and client agree a guaranteed maximum price (GMP) for the project, limiting client liability to price increases, risk and poor performance. P22 uses a pain–gain process that provides incentives for both parties to work collaboratively to minimise costs. If the scheme is completed below the GMP then the PSCP and client split the first 5% of the underspend – the gain – taking half each. Savings in excess of 5% of the GMP go 100% to the client; conversely, the PSCP share for anything more than 100% of the GMP is 100% – that is, the PSCP takes the pain.

Repeatable rooms This programme was a particular highlight of the P21+ Framework. It involved expertise from each PSCP and their primary supply chain designers, prioritising the most common rooms in Example of a repeatable room

hospital designs to produce exemplary, evidence-based designs that could be adopted and repeated nationally. This has resulted in savings in design and construction cost and time, and an increase in off-site prefabrication. It also means that staff become familiar with the layout of and equipment in a room, which in turn improves safety and the quality of patient care. NHS trusts that use repeatable rooms have saved time with clinical approval and sign-off due to the rigorous development process. The repeatable room development process has involved many stages, to ensure a robust evidence-based design. Literature and design reviews have been compiled, with patient workshops adding a user perspective to emerging best practice. Expert review panels were convened, with representatives from the Royal Colleges, the NHS and the construction industry, to comment on the initial design proposals. A series of technical reviews were undertaken to test the designs, using real-life processes and full-size mock-ups. From a standing start, the P21+ programme developed 11 repeatable rooms for the acute sector in 18 months. These have been followed by repeatable bedroom designs for functional and organic mental health conditions, and accompanying components suitable for mental healthcare environments.

Standard components Along with the repeatable rooms, a range of standard components, based on those most commonly recurring in hospital designs, has been developed in conjunction with suppliers, following a competitive process. This provided cost-effective facilities for hospital projects that also complied with DH building notes. Many standard component agreements offer additional benefits such as extended guarantees and savings of up to 30%.

The latest round of standard component agreements are in the procurement stage with suppliers, and will be in place when the current agreements expire. These current supplier agreements cover a range of products, such as: bb hard and soft flooring bb suspended ceilings bb sanitary ware bb lighting bb partitions bb doors and ironmongery. The Construction News Awards 2016 recognised the collaboration undertaken to develop the repeatable rooms and standard components, and after review by a panel of 70 expert judges, Procure21+ won the Supply Chain Excellence award. The judges commented: “The focus on reaching all parts of the supply chain, as well as customers, hospital staff and patients, is both innovative and market-leading. Through collaboration, the team of PSCPs has been able to add value, improve design and eliminate waste to deliver outstanding results.”

Construction strategy The DH construction procurement team has worked closely with other government departments under the Government Construction Strategy (GCS) 2010–2015, where it saved 15.1% on capital construction costs, and this work continues under the current strategy. Many of the initiatives such as repeatable rooms and standard components formed a key part of the DH’s action plan under the GCS, and this work will continue. A current priority for the construction procurement team at the DH is to embed building information modelling (BIM) Level 2. Although the framework strives to provide a streamlined and consistent approach to BIM, making it easier for clients and industry alike to adopt new digital information opportunities and efficiencies, it does remain one of the more significant challenges. b

David Low is P21+/P22 Cost and Policy Manager david.low@dh.gsi.gov.uk

Related competencies include Client care, Contract practice, Design economics and cost planning, Procurement and tendering, Programming and planning

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ACC O U N TI N G P R I N C IPLES

Giving a good account Joe Martin of BCIS offers a clearer view of accounting for inflation in construction projects

ecently, projects such as Crossrail, the Battersea Power Station redevelopment and the Hinkley Point C nuclear plant have all been in the news because of increased costs. Reports have tended to be negative; however, it is important to understand the causes of such inflation, many of which may have already been accounted for as part of the planned delivery and contracting process. Likely causes of cost increases that may occur during delivery must be considered and correctly accounted from the a project’s outset, so a sufficient budget can be set. As Crossrail has noted, its Tier-One contracts – those that are directly employed by the client – were not awarded as fixed-price jobs and the contract value at award did not reflect the risks retained by Crossrail Limited, for which an allowance had been allocated.

Risks come in many forms, but RICS new rules of measurement – order of cost estimating and cost planning for capital building works 2nd edition, April 2012, identifies and defines the following: bb inflation risk bb design development risk bb construction risk bb employer change risk bb employer’s other risk. Inflation risk also comes in various forms of its own, including changes in the tendering context and in the cost of resources, so it is important to identify who will carry the risks of inflation and how they will be accounted for.

Identifying inflation risks Inflation will affect the out-turn price in two ways. bb There will be inflation in market prices until contracts are agreed with the constructor. bb There will also be inflation in the

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BCIS General Building Cost Index

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BCIS Building Market Conditions Factor

Market conditions factor

Index

General example showing tender prices, input costs and market conditions

constructor’s costs during the delivery period. Long contracts may contain market-price risk for major subcontracts as well, which are to be placed at various stages in the delivery period. The different movement in tender prices, as measured by the BCIS Tender Price Index (TPI), and underlying resource cost, measured by the BCIS General Building Cost Index, is shown in Figure 1. This also demonstrates the BCIS Market Conditions Factor, which rises when prices are rising faster or falling slower than costs, and falls when costs are rising faster or falling slower than prices. Inflation in market prices will reflect the underlying cost of resources, but will also be affected by tendering conditions and changes in the market, such as increased prices associated with demand, the availability of particular resources, and the effect of major projects on specialist works, trades, work-package and labour-only subcontractors. These demand and supply pressures can be local, national and international, occurring, for example, when other countries buy major quantities of raw materials. Demand and supply can also be affected by how the UK is viewed by markets; for instance, the fall in the value of sterling has affected the cost of imported materials, while the supply and cost of EU labour will be influenced by how attractive it is to work here rather than in other countries. It is important to identify who will carry the risks of inflation and how these will be accounted, although ultimately, the client will pay for the increased costs or the contractor’s assessment of them. The client will always bear the risk of inflation, too, up to the point where the contracts are agreed; they may or may not take this Image © Alamy

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Accounting for inflation Contracts with inflation adjustment clauses differ in the way that they account for this, but most commonly they apply indices, agree a weighting of resources at the outset and calculate a single index for each valuation. This has a distorting effect on longer contracts, though, where the resources used at the beginning differ from those used towards the end. Figure 2 shows the differential movement in the cost of ready-mixed concrete and steelwork over the period from January 2014. It shows that the effect of steel prices on the cost of the project would differ considerably depending on when it was incurred, but using a standard set of weightings might under- or over-recompense the contractor for inflation. BCIS produces the Price Adjustment Formulae Indices (PAFIs) that were devised by the industry for use with inflation adjustment clauses, but a variety of other indices are occasionally used (www.rics.org/pafi). The use of a single generic index may not represent the inflation experienced on a project; modelling an index based on the resources and expenditure profile of a particular project will therefore reduce

Figure 2 Structural steel and ready-mixed concrete (based on Price Adjustment Formulae Indices, Series 4 – Civil Engineering and Related Specialist Engineering) 115 110 105

Index

100 95 90 85 80 75 70

Jan -14 Mar -14 Ma y -14 Jul14 Sep -14 No v -14 Jan -1 5 Mar -1 5 Ma y -1 5 Jul15 Sep -1 5 No v -1 5 Jan -1 6 Mar -1 6 Ma y -1 6 Jul16 Sep -1 6 No v -1 6 Jan -17 Mar -17 Ma y -17 Jul17

risk during the delivery period, but will always pay either for the inflation or for the constructor assuming the risk. On projects with a fixed-price contract, the inflation risk should allow for the movement in tender prices to the point where the contract is agreed and for increases in costs that the constructor will bear during the delivery period, which may also include some market risk. On projects that have a single fluctuating-price contract, the client also takes the risk of underlying inflation in resource costs during the delivery period. The most common way to reimburse this cost is by the use of indices. On projects with multiple contracts let over a protracted period, the inflation risk should consider the delivery programme, and the risk of any changes to the content of the individual contracts and the timing of their award. This will shift the balance of the market-price and resource-cost inflation impacts. On large, long-term projects, the forecast of the programme of the contract awards, the overall profile of expenditure and the expenditure profile in each contract are often as important as the forecasts of inflation.

4/CE/13 Ready-mixed concrete

the risk of inflation for both the contractor and the client. BCIS has published six golden rules for choosing an index: 1. be clear about what you want to measure and how you want to apply it 2. choose an index measuring the costs that most closely matches the characteristics defined in point 1 3. if you are using the index to link costs in a contract or agreement, be clear that it meets your needs, particularly in respect of: • the frequency of publication – monthly, quarterly, annual • your updating and revisions policy 4. understand the inputs to the index and the calculation methodology 5. read the notes and definitions 6. never choose an index because of its past performance. The PAFIs have been designed to allow for price adjustment on contracts such as NEC, under its Option X1 Price adjustment for inflation; BCIS and Crossrail produced a case study on how PAFIs were applied on the latter’s contracts (www.rics.org/paficrossrail). Separate PAFI series are available for: bb building bb civil engineering bb highways maintenance bb specialist engineering.

4/CE/ST/02 Structural steelwork materials

bb expenditure profile on each contract bb market prices reflecting the different resources for each contract bb inflation in costs for the resources to be used during each contract. Identifying when different forecasts should be applied will change the inflation risk. An assessment of the impact of delaying or accelerating the award of contracts should form part of the risk analysis. BCIS publishes five-year forecasts for tender prices, market conditions and resource costs for both building and civil engineering (www.bcis.co.uk). In addition to these, BCIS produces bespoke forecasts for clients and contractors on individual projects, sectors and locations (www.rics.org/bcisforecasts). An inflation forecast that reflects the resources and the programme of a particular project will provide a better understanding of the inflationary risk than a generic forecast. b

Joe Martin is Lead Consultant at BCIS jmartin@bcis.co.uk

Forecasting inflation Assessing the risk of inflation on a project requires forecasts of: bb the contracting profile, to identify when contracts will be let bb how inflation in the delivery period will be dealt with on each contract

Related competencies include Commercial management of construction, Design economics and cost planning, Procurement and tendering, Project financial control and reporting, Risk management

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E D U CATI O N A N D TR AINING

Knowing by site Joseph Rizzuto and Indira Chauhan explain that fostering positive relations between industry and academia can provide valuable learning opportunities for built environment students

t the University of West London (UWL), visits to construction sites form an important part of the student learning experience, because they help develop an understanding of how theoretical knowledge is applied in practice and provide an invaluable insight into industry practices and the work environment. A site visit for students on built environment courses typically begins with a presentation from the site management team, with a health and safety site induction that is followed by a guided tour and commentary on the construction works in progress. This article considers the relevance and scale of construction site visits on built environment courses, and how academics and industry support and organise them. Fostering links between the construction industry and academic institutions is essential, as allowing students to visit important construction works will inspire the next generation of professionals. Students on built environment degrees are required to gain a good 1 6 â&#x20AC;&#x192; F E B R U A R Y/ M A R C H 2 0 1 8

understanding of building construction methods and processes. In the first year of study on the BEng Civil and Environmental Engineering, BSc Construction Project Management, BSc Building Surveying and BSc Architectural Design and Technology, modules such as Building Technology, Building Materials, Civil Engineering Construction, Quantity Surveying and Civil Engineering Practice underpin the use of traditional building materials and the construction processes associated with them. These modules are significantly enhanced by well-organised site visits.

Scope and scale The scale of the sites visited by UWL students varies in nature, and has included high-rise commercial buildings of concrete and steel-frame construction, excavations for foundations and piling, and complex demolition projects. Each visit is generally unique in nature, but all enable a better understanding of site operations. Staggered site visits at different phases of a project allow students to see the gradual progress of construction works. On one visit, students were taken to a large residential apartment construction

project on the waterside in west London when the ground works were in progress. The management team provided commentary on the initial site development activities, covering the site appraisal and in particular where the existing services were located. To avoid costly disruption and having to decommission these services, the team explained the challenges they would face and the methodology they would use. During the site tour, students could see continuous flight auger-piling rigs in action and piles being cast. Students were subsequently invited to the next phase of the project some months later, where they saw the superstructure construction in progress and studied the project drawings, enabling them to relate to the site as well as the environmental constraints. The innovative responses that had been made to these constraints were highlighted by the site team. On another site visit, the students saw how a self-contained formwork system of slip-forming was used to construct a reinforced-concrete lift shaft in a high-rise development. They watched the rising of the formwork at the steady rate of 300mm per hour that allowed for the continuous pouring of concrete, Images ÂŠ Joseph Rizzuto and Indira Chauhan

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UWL students after their tour of the site

UWL students reviewing project drawings before a site tour

demonstrating the differences between the use of slip-form techniques and the jump-form system that was covered in the classroom. At a specialist demolition project, meanwhile, students were given an informative presentation by the project manager on the different demolition techniques available. The site was in a congested area of central London and surrounded by listed buildings, so the students were able to gain an appreciation of why specific demolition methods were chosen. The experience of observing actual demolition from a viewing platform reinforced their learning of demolition protocols. By attending a range of site activities on projects of diverse scales, students are able to see construction works in progress, can understand factors such as environmental issues, or will experience, for example, the effective management of cranes adjacent to railway lines. After each visit, a debriefing session is held back in the classroom in the form of a group discussion. This allows students to reflect on the various project processes, site constraints and approaches used. As part of the module assessment, students are required to write a reflective essay on their visit, highlighting any unique challenges and how these were managed. A similar set of visits takes place in the second year of study at UWL, often to complex construction works, where students’ increased knowledge and understanding allows greater appreciation of the techniques used.

Student perceptions Construction videos and simulations give students a two-dimensional or three-dimensional experience of various processes. However, it is important to consider whether these provide the right stimulus for understanding the scale and impact on an actual site. A recent straw poll of a number of first-year students on the built environment courses at UWL suggested that site visits were a remarkable and distinctive experience that no classroom learning could replicate. One student commented: “It is great to be able to ask the site team questions and get an insight into the complexities of project planning and management.” Another student, who could see the benefits of exploring real projects in action, observed: “Sometimes, it is hard to imagine the dimensions and scale of work that takes place on construction sites. A visit enables a better visualisation of n F E B R U A R Y / M A R C H 2 0 1 8 17

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how things actually work.” Many students who have experienced virtual site visits and then compared these to actual visits indicated that the live sites provide a much more rewarding experience. Many full-time students said that they had an unforgettable experience when they stepped the other side of the hoardings on their first site visit. The signage had an impact, and vividly reinforced the importance of health, safety and welfare on site. The site office environment and the variety of construction materials and processes used all contributed to this experience. Part-time students on the courses shared similar views to their full-time peers on the importance of site visits as part of their learning on the construction-related modules. Planning constraints, materials and site traffic management, and use of specialist technology are some of the areas that these students valued the most. Most students expressed a preference for visiting sites in groups of not more than six because it was then easier to shadow the person giving the tour while being able to hear what was being explained to them.

Constraints and challenges Accommodating large class sizes on site visits poses a major challenge, as it requires the course leader to find appropriate sites with sufficiently large management teams. This often means groups are split, with possibly two or three senior managers involved in showing them around. This may be a deterrent for some project managers, as such visits invariably require more detailed organisation, additional resources and probable disruption to the works. Other challenges include finding a steady supply of ongoing local construction projects that, ideally, tie in with the theoretical material being covered in the classroom. Sites located close to university premises are convenient as this means less travel time, minimising timetable disruption. Accessibility is often problematic, however, as many construction companies offer site visits to projects that can be located hundreds of miles away. Professional bodies such as RICS, the Chartered Institute of Building and the Joint Board of Moderators (JBM) help with site visits for students on construction and engineering courses on a regular basis. These visits are open to students from all UK universities, but places are allocated on a first 1 8 F E B R U A R Y/ M A R C H 2 0 1 8

come, first served basis. The visits are organised with painstaking care taken by management teams to give an overview of the project and an explanation of the processes. Students from different year groups often take up such opportunities; unfortunately, due to the popularity of such visits, only limited numbers are able to do so.

Risks and hazards Safety is a top priority while visiting sites, as construction activities are subject to a number of significant risks. These can be a result either of unique construction features with an unpredictable environment, or any complex processes being used. Although visits to construction sites are not prevented by health and safety legislation, it is essential to carry out risk assessments to ensure the safety of visitors – indeed, all those on site. Thus, all visits entail a risk assessment being completed by both the site team and the organising academic. As an essential part of this, all UWL students are fully equipped with the appropriate personal protective equipment, which fully complies with health and safety requirements. Site teams are sometimes justifiably reluctant to allow visitors on to certain construction sites. This may be due to the specialised risks encountered, such as confined spaces or asbestos removal; work involving heavy plant movement or very high noise levels are other factors that restrict possible visits.

Effective learning A live construction site can engage students as active learners and have a long-lasting impact on how they learn. The effectiveness of site visits as a learning vehicle is enhanced when experienced professionals accompany students. Such professionals on UWL’s Industrial Consultative Committee continue to support and organise site visits. The learning opportunities provided by a live site can be enriching, particularly if several visits to the same project at different stages are possible. Along with site operations and project management practices, the complexities of a project and how it evolves over time will be seen. Site visits also provide an excellent opportunity for construction companies to showcase what industry has to offer. They allow students to engage directly with the construction process and to speak to members of site and project teams. These experiences contribute to the development of more confident, work-ready graduates. We, as the authors, would like to urge all chartered surveyors working on projects to reach out to local universities and help with site visits to projects that are near a university campus. b

Outreach In addition to the professional bodies mentioned above, many large construction companies have established links with academic institutions and are able to offer visits to readily accessible sites. The Industrial Advisory Boards and Industrial Consultative Committees at university schools or departments provide a platform to work with academics and offer project visits for students. For some companies, it is simply a case of finding and establishing the right contact in the academic institution to organise such visits. All major contractors have corporate and social responsibility policies in place as part of corporate governance, and one of the core principles of these is to build relationships with communities. Encouraging site visits can provide the opportunity to enhance these relationships, so establishing and fostering good links between industry and academia is a way to ensure that a structured approach is taken.

Joseph Rizzuto is Head of Engineering and Built Environment in the School of Computing and Engineering at UWL joe.rizzuto@uwl.ac.uk Indira Chauhan is Course Leader for the BSc (Hons) Building Surveying in the School of Computing and Engineering at U WL indira.chauhan@uwl.ac.uk

JBM’s Guidelines for Developing Degree and Further Learning Programmes http://bit.ly/2Ba5kIL

Related competencies include Construction technology and environmental services, Design economics and cost planning, Health and safety, Programming and planning, Team working

C O MMER C IA L MA NAG EMENT

Growth chart Sebastian Chambers identifies three key factors crucial to progress in the construction industry

t a recent round-table discussion, CEOs from the construction and building products sector, investors and advisors deliberated the challenges and opportunities they foresaw over the coming years. While investors and advisors talked about cyclical risks in the context of Brexit, all the industry leaders focused on two things: skills shortages and productivity challenges. This may have been characterised as a split between London and the rest of the UK. Construction in the capital – where most advisors and investors are based – has had a good run over the past few years, with a sharp rebound after the financial crisis and strong investment in commercial property, infrastructure and housing. However, London is now experiencing something of a mid-cycle correction, particularly in the market for luxury apartments, while much of the rest of the UK eventually started to recover from the recession in 2013. There is now a strong outlook in areas such as affordable housing and infrastructure outside the capital. Cyclical risk is ever present in the construction sector, and is something for which industry leaders and advisors must prepare. However, there are also other important factors that affect the sector and the success of businesses in it. To gain detailed insight, management consultancy CIL has recently conducted research among 140 construction firms

“ The consistent

undersupply of skilled workers in construction goes back to 1998

of varying size, covering a wide range of skills, locations and sectors. This shows a clear correlation between successful, growing companies and three key factors: employee engagement, strong relationships with subcontractors, and the use of technology (http://bit.ly/2yqT31G).

Skills for success We separated the firms into three categories. First there were share winners, businesses with sales growth of more than 5% per annum. Second came the share decliners, businesses with falling sales; and third, there were the non-movers, those with sales growth of between 0% and 5% a year. Turning to the possible reasons for these positions, the skills shortages now faced by the sector are not new. Even allowing for the recession, there has been a consistent undersupply of skilled workers in the construction industry since the beginning of RICS records in 1998 (rics.org/ukconmarksurv). This looks set to continue as, according to research from the Office for National Statistics last year (http://bit.ly/2B5r9w5), the number of workers in the construction industry is still 200,000 below its 2008 peak, while trainee numbers keep falling. CIL’s research shows that the companies taking market share consistently reported a more engaged employee base, compared to those who are losing ground: 41% of market share winners described their employees as highly engaged, compared to just 12% in the market share decliners. Engagement is key to winning the battle for talent. The ability to develop strong subcontractor relationships through collaborative working is another key factor for success – 29% of market share winners strongly agreed that they have loyal subcontractors, compared to just 10% in the share decliner category (http://bit.ly/2D4TzV6). Those firms most willing to engage with technology and new building practices will be better able to encourage efficiencies and increase sales, thus

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improving performance. The research showed that 31% of market share winners reported that their on-site processes are becoming much more efficient, compared to 15% of market share decliners. The tight labour market in the sector also means the more enlightened firms that focus on recruitment and retention of talent are best placed to succeed. Of the market share winners, 27% report a well-structured apprenticeship scheme, compared to 13% of market share decliners. When it comes to hiring graduates the growing firms are again ahead of the pack, with 24% recruiting from higher education institutions, compared to 7% of those in decline. With just one in 20 construction workers being female, successful firms also place much greater emphasis on engaging with women, and 36% are actively working to improve the work environment for female staff. Training is also crucial to develop expertise and improve productivity – and again, the market share winners far outpace the lesser-performing firms in this regard.

Winning the war for talent Much of the UK construction and infrastructure sector is growing robustly, and there is an increasing shortage of skills to meet demand. For this reason, companies that are taking market share are winning the war for talent, are maintaining a loyal subcontractor base and are promoting productivity. CIL’s report makes it clear that executives and investors need to take key performance indicators on team engagement seriously. For every initiative around technology, order books, sales pipelines, operations and productivity, there needs to be an equivalent emphasis on recruitment, diversity, career development and retention. b

Sebastian Chambers is Partner and Head of Construction and Building Products Practice at CIL Management Consultants schambers@cilconsultants.com

Related competencies include Business planning

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P R O J E CT M A N AG E M E NT

Bargaining chips Chris Green explains why negotiation is vital to construction, and how to improve your skills while upholding ethical and professional standards

he valuation of variations, extensions of time and a project’s final account should all be matters of fact and entitlement, as in the amount of time or money calculated exactly in accordance with the contract change control mechanisms. However, it is commonplace in construction and infrastructure to have to negotiate agreements, particularly where the form of contract contains variation and extension of time mechanisms requiring one party or the other to make a fair and reasonable assessment of entitlement. In these circumstances, it is helpful to develop a clear negotiating strategy that will enable the parties to reach an amicable and equitable agreement.

Establishing positions The level of disagreement between the parties will dictate the strategy required to reach an amicable settlement. The following five positions describe the level of disagreement and the appropriate intervention strategies for resolving them. Note that an amicable agreement will not be reached until the parties move to position 1. 1. Proactive problem-solving Both parties agree what the problem is and want to solve it within agreed timescales without blame. This requires a general openness about people and information; the parties establish a mutual problem-solving team that focuses on building consensus. No intervention strategy is required. 2. Disagreement Self-protection is uppermost in the 2 0 F E B R U A R Y/ M A R C H 2 0 1 8

parties’ minds, although there is some desire to help. Effort tends to be concentrated on inadequacies in the other party, with growing emotional pressure. Parties will withhold critical information. Intervention strategies will focus on trust and team-building, to move up to proactive problem-solving. 3. Contest The parties have developed false perceptions and assumptions and dialogue is uneasy. In this case, the intervention strategy is to create a structured approach with firm ground rules, to help move towards proactive problem-solving. 4. Fight The parties have developed a desire to withdraw or to hurt and humiliate each other. Winning on principle becomes more important than proactive problem-solving. The intervention strategy will be for each negotiating team to exert strong leadership and overcome aggressive factions in their number, then to move up through the phases above. 5. War The parties seek to destroy each other using any means. Intervention is needed to enforce separation of the parties and expel disruptive team members.

Preparation It is important to spend time ahead of negotiation to prepare properly. A few issues to consider are as follows: bb examine the causes, possible interventions and range of outcomes of the dispute bb try to establish the other parties’ interests and goals in order of priority bb think about who should attend the preliminary meeting

bb consider the venue, equipment and seating plan for the meeting. You should ask yourself these questions. bb What facts are missing, and what facts will be required for the negotiation? bb What documents need to be prepared for whom, by when? Do they need to be exchanged in advance? bb What are the time limits for the negotiation, and what are the implications of breaching them? bb What are the current target settlement and worst case reservation numbers and other variables? bb What are the past patterns of interaction between parties, and what might go wrong during the sessions? bb What are the preferred negotiating patterns for the other party? bb What authority to settle do the parties have, and will they need to consult with third parties during the negotiation? bb What doubts will parties air to support their views and destabilise your position? bb What are the possible and probable outcomes for this negotiation?

Opening the negotiation Negotiations inevitably start with opening offers from the parties and can be typified as detailed in Table 1. It is important to understand how your opening offer will be viewed and the effect it will have on the opening positions of the parties. There is then the question of how to make the opening offer, which can be done in four different ways. 1. High or low, soft: this involves the offer of a high price, but with a hint of willingness to negotiate; or the offer of a low price, but the indication of a willingness to increase. These offers will be just inside the insult zone, but will elicit questions for clarification from the other side, on which negotiations can build. Image © Shutterstock

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Table 1 Range of opening offers Non-starter offer

Insult zone

Credible offer

Dangerous, as parties will: • walk away • find alternatives • seek revenge • litigate • do themselves reputational damage.

Typified by lack of objective criteria and weak justification. Start negotiation here if the other party knows there is a deal to be done and is set up for a protracted negotiation.

These offers are starting to look interesting, but a better deal is still possible elsewhere. Both parties need to add extra variables with high value to the other side and low cost to themselves.

2. Reasonable firm: this will be received as an opening offer if credibility has previously been established. It can also be used to close down an element of the overall deal. It is often more acceptable from more senior negotiators, and is a good way to open if you have sound, objective criteria from which to work. 3. No offer – start with problem-solving: this is a good technique for increasing the range of variables available to the parties. 4. No offer – start with silence: sometimes it’s just good to hear what the other party has to say.

Common mistakes Inexperienced negotiators are liable to make several mistakes during a negotiation. A few of these to watch out for are as follows. Preparation Failing to prepare in advance of the negotiation will weaken your position. Assembling all facts and evidence in support of your position ahead of the negotiation helps to affirm and strengthen your arguments. It is also worth reflecting on any constraints that may be imposed on any potential settlement such as internal governance and examining possible weakness in your position. People Make sure you invite the right people to the negotiation. Remember that you will need to create a proactive problem-solving forum to be successful. Employing people specifically to prove the other side wrong, such as lawyers or experts, can be a mistake. Make sure you have a person who has authority to make a settlement. Tactical mistakes It is easy to lose sight of the negotiating process and focus purely on the substance and detail of issues in dispute.

Try to maintain an oversight on the whole process and do not get fixated on defending singular issues or staying on difficulties for too long. Try to emphasise the points on which agreement has been reached and set up a monitoring process to record individual agreements as progress is made. Conduct Be aware of the behaviours you and your team display. Failing to listen, acting on assumption and using questions poorly can exacerbate a dispute. Avoid talking about “justice” or “fairness” and instead focus on the market price for the resolution of the negotiation. Finally, avoid personal insults and the targeting of individuals.

Dealing with difficult people From time to time, we all come across difficult people with whom we need to negotiate successfully. The following strategies can help to overcome some of the difficulties. Don’t react Three natural reactions are to strike back, to give in or break off the negotiation. But remember your interests in the negotiation, remind yourself of the tactics for dealing with difficult people, and take time out to recover from conflicts. Step to their side Listen actively to what is being said and acknowledge the point that the other party is making. Understand why they are making it, so that you can agree but without conceding. Don’t reject the proposition, reframe it Ask problem-solving questions such as “How about …?” or “What if …?” that invite collaboration, rather than questions that seek concessions such as “Am I right?” or appear to challenge and contradict such as a blunt “Why?”

Make it easy to say “yes” Ask for opponents’ ideas and build on them. Offer them a choice: don’t overlook people’s basic human needs, and don’t assume there is a fixed outcome over which both parties must fight for their share. Make it hard to say “no” Ask what will happen if no agreement is reached. What do you think your side will do? Warn the other party about potential undesirable consequences, but do not threaten what your last resort will be. Use third parties to help or limit what your side will be able to do. And finally, seek mutual satisfaction, not victory.

Concluding negotiations As the negotiation progresses, it is helpful to record agreements made progressively, to narrow down the areas of disagreement. This will help both parties see the advances being made, and will form the heads of terms to help draft a settlement agreement if required. It is worth remembering that we are likely to have to deal with people with whom we disagree on a regular basis, so it is worth developing good negotiating skills and building collaborative solutions to preserve otherwise valuable relationships. Finally, reflect on RICS’ global professional and ethical standards (rics.org/ethicsprofessionalstandards): bb act with integrity bb always provide a high standard of service bb act in a way that promotes trust in the profession bb treat others with respect bb take responsibility. b

Chris Green is Group Commercial Director at J. Murphy & Sons Limited chrisgreen@murphygroup.co.uk

Related competencies include Communication and negotiation, Conflict avoidance and dispute resolution procedures, Contract practice, Data management; Managing people, Team working

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RICS CON ST RU CT I O N JO U RN A L

B I O GR A P H Y

Carrie de Silva tells the inspirational life story of Irene Barclay, the first woman to qualify as a chartered surveyor, who did pioneering work in social housing and slums

First among equals

rene Barclay was born Irene Turberville Martin to a socialist family in Hereford in 1894. Her father, Basil Martin, was a non-conformist minister whose memoirs, An Impossible Parson, set out the philosophy of public service, faith and wry sense of fun that informed her upbringing. She was the eldest of four, though her youngest brother died in childhood. Another brother, Kingsley, was occasional lecturer in politics at the LSE, a committed pacifist and editor of the New Statesman from 1930 to 1960, later publishing a memoir called Father Figures that gave further insight into the Martins’ background and family politics. Irene attended Hereford High School, which she loved, until 1911. She then boarded at Monmouth High for two years, where she was “miserable in the extreme”. Having grown up in reasonable comfort, the family moved to Finchley in 1913 in somewhat straitened circumstances, although the tertiary education that followed was a happier experience for all three surviving Martin children. She gained a BA (Hons) in history in 1916 followed by a diploma in social science in 1917, both from Bedford College, part of the University of London. In his memoir, her father notes that “it was a matter of no little pride to me and my wife that we succeeded in sending our three elder children to university in spite of our tiny income”.

slums; she also met Miss Maud Jeffery, who was a housing manager for the Crown Estate Commissioners and formerly secretary to social reformer Octavia Hill, one of the founders of the National Trust. Maud ensured that Irene became an early member of the Association of Women House Property Managers, and encouraged her to study for surveying exams. Irene also took evening classes alongside Evelyn Perry, the second woman to be admitted to the profession and they noted, with ill-concealed mischief, the embarrassment of their tutors at having women attending lectures on drainage and sanitation. She was employed throughout her training by the Crown Office on a salary that reached £140 per year – which she

found “stingy”, even by the standards of the time.

Her own practice On qualification, she spent six months working with Louis de Soissons, architect of the new Welwyn Garden City, but she soon set up on her own in Finsbury Square in London. She ran the practice, largely in partnership with Evelyn Perry, in Somers Town – the area around St Pancras, King’s Cross and Euston stations – for more than 50 years. Irene’s working life was spent improving social housing in the capital, and she was involved from the earliest days with the St Pancras Housing Association; she went on to become its secretary in 1925 and continued to hold the office for almost half a century.

Surveying exams Work experience she undertook during her diploma introduced her to London’s 2 2 F E B R U A R Y/ M A R C H 2 0 1 8

k The Barclay family (clockwise from left): youngest son Anthony; Irene; husband John; older son Michael Image from flyleaf of People Need Roots, Irene Barclay, 1976

RI CS CONST RU C TIO N JOUR NAL

Women in surveying We are 99 years on from the passing of the Sex Disqualification (Removal) Act 1919. This lifted the bar on women entering certain professions, largely following the social, political and economic fall-out of the 1914–18 war, but also due to considerable lobbying in the wake of Bebb v Law Society [1914] 1 Ch. 286, in which women were deemed not to be “persons” as defined by the Solicitors Act 1843. Membership of the legal and medical professions is now around 50% women or more, but in surveying the figure is still only 14%. This fact would, doubtless, surprise and disappoint Irene Barclay, née Martin, the first woman to qualify as a chartered surveyor, who joined the Valuation Division of the Surveyor’s Institution in 1922. While there are challenges to achieving a more diverse and inclusive profession, initiatives such as the RICS Diversity and Inclusion conference and the Inclusive Employer Quality Mark aim to redress the balance. But even the most optimistic forecasts predict that it will take at least two generations to achieve gender parity in surveying.

The society’s first project was to purchase and refurbish seven houses, though she herself later favoured demolition and redevelopment over refurbishment once the extent of damp, dry rot, poor structure and bedbug infestation became apparent. A key feature of housing association developments managed by Irene and Evelyn, which distinguished them from council programmes, was rehousing within communities to retain social bonds, an ethos reflected in the title of her 1976 book on her working and, to some extent, personal life, People Need Roots. Irene and her partners also achieved some of their success through shrewd financial management, for example, running an in-house workforce for general maintenance, only subcontracting large structural programmes and even then ensuring that all materials were purchased direct.

Supporting tenants Irene was active in fundraising and gave many talks where she bridled at

“ Irene said she would be sorry if no more

women surveyors followed her, “as it really is a job in which a woman may be very useful”

and countered perceptions of the slum population, describing these attitudes in a letter she wrote to the Spectator as “a libellous insult to the mass of poorer working-class people”. Along with the St Pancras work, Barclay’s firm helped establish and manage other housing associations, managed council estates, and undertook both private professional work and some voluntary activities. She also supported tenants in their struggles with landlords and loan sharks, which led to the establishment of a loan club and furniture shop. In addition, she worked to provide accommodation for the elderly as well as nurseries, play areas, seaside holidays and a children’s home in the country, near Ockley, Surrey, with her politics and her deep compassion always manifest in practical measures.

Slums In the decades of mass slum clearance, Irene and Evelyn broke new ground with their surveys, commissioned both privately and by local authorities; these were unique in the extent of their internal surveying and engagement with residents, as opposed to the more cursory, external surveys conducted for councils. This not only gained tenants’ support but provided depth to discussions of housing need. Irene was a prolific speaker, broadcaster and writer, often contributing to the left-leaning press such as the Fabian Quarterly or the New Statesman. Writing and speaking invitations increased considerably on the publication of the influential wartime report, Our Towns: A Close-Up, produced in 1943 by the Women’s Group on Public Welfare, of which she was a member. This report had been commissioned by the National Federation of Women’s Institutes when evacuation disclosed the poor hygiene, nutrition and behavioural standards of a small proportion of evacuees to be of concern. She also edited the annual journal House Happenings after the war. Irene lacked time in her early career to keep up with professional groups: the Soroptomists, the Society of Women Housing Managers (SWHM) and, of course the Surveyors’ Institution, which

would later become RICS. At the end of the war, however, she became chair of the SWHM, when she prompted the dropping of the “W” and the introduction of men. After the war, she continued to campaign for better housing and joined a number of public committees and boards, expressing the hope that she had been chosen on the strength of her skills as a surveyor and not as a token women. Unlike many career women in the first half of the 20th century, Irene married and had two sons (see image, below left). Her husband John Barclay was a committed pacifist and member of the Peace Pledge Union who was prosecuted during the Second World War for encouraging disaffection among the troops. In 1966 she was widowed, and in that year she also received an OBE for her work with housing associations. She retired in 1972 and died in Toronto in 1989, having moved to Canada a few years earlier to be near her younger son Anthony. She is commemorated among the faces on the Somers Town Mural on Polygon Road, London NW1, and also by name in Irene Barclay House in Eversholt Street, around the corner from the mural. In a letter to her old university tutor in 1925, she said she would be sorry “if no more women surveyors follow on, as it really is a job in which a woman may be very useful”. In later decades she voiced disappointment that, even though her practice had trained many women housing managers, relatively few went on to qualify as surveyors. She would still, I venture, be shocked that in 2018, 86 in 100 chartered surveyors are men. b

Carrie de Silva is Principal Lecturer in Law and Taxation, Harper Adams University, and a trainer at surveying training provider BlueBox Partners cdesilva@harper-adams.ac.uk

Extended digital and print versions of this short biography are available for £5 from Carrie de Silva; please email her at the address above for ordering details

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RICS CON ST RU CT I O N JO U RN A L

A DV E RTI S I N G

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LEG A L

RI CS CONST RU C TIO N JOUR NAL

Shy Jackson reviews a 150-year old ruling on nuisance, highlighting its applicability to modern land and construction cases

Escape notice

ICS was founded in 1868 and has been developing ever since. Land and construction law has likewise changed in that time, although one important survivor from those days is the House of Lords’ judgment in Rylands v Fletcher [1866] L.R. 1 Exch. 265. This holds that the occupier of land who brings and keeps any substance there likely to do damage if it escapes is bound to prevent its escape and is liable for the consequences should it do so, even if there has been no negligence. That liability in such cases will be for private nuisance, which is an unlawful interference with a person’s use or enjoyment of land. In that case, the defendants constructed a reservoir and, unknown to them, the land contained mines that connected to a colliery operated by the owner of neighbouring land. It was held there was no negligence but that the defendants were liable when, on the reservoir being filled, the water flowed through the old mines into the neighbouring land. The Rylands rule has developed since 1866, but it is still relevant and applicable; though, as the following cases show, careful consideration of the facts in each case is needed.

Use of land and escape In order for liability to arise, the use has to be unnatural, and the substance has to escape from one land to the other. In Transco v Stockport Metropolitan Borough Council [2003] UKHL 61, water escaped from a pipe carrying it from mains to storage tanks in a block of flats belonging to the local authority, causing the collapse of an embankment supporting a gas main. It was held that the rule did not apply in this case, as it was impossible to regard the supply of water by the council to the block of flats as anything other than a natural or ordinary use.

Liable parties Liability is not limited to the owner of the land – it extends to the person who controls or manages the dangerous substance, and it could therefore make a contractor liable for the escape of, for example, building materials or fuel kept for its plant. There are some defences that can be raised, including where the injured party caused the escape, or where the escape was due to an act of god or a third party. Image © iStock

Unforeseen circumstances In order to make a claim for damages, the harm must also be foreseeable. In Cambridge Water v Eastern Counties Leather [1994] 2 AC 264, water in a borehole was contaminated by solvent seeping into the ground from a tannery that was located 2km away. It was held that the use of land was unnatural, but that the harm caused could not be regarded as foreseeable. A more recent example is the decision reached in Northumbrian Water Ltd v Sir Robert McAlpine Ltd [2013] EWHC 1940 (TCC), when the statutory sewerage undertaker sued a contractor after concrete that had been poured as part of the piling works got into private drains and caused a blockage in a neighbouring property. Neither party was aware of the private drain until an inspection of a 1908 plan of the connection, which was found in the drainage archives at the Newcastle Discovery Museum. The judge decided that as the contractor was not negligent, it had not been established that the existence of the drain was reasonably foreseeable and, therefore, neither was the damage to the sewer.

Conclusion As can be seen, liability under the rule in Rylands is not easy to establish, but any liability that may arise cannot be ignored. The rule can impose a liability on contractors and owners of land and construction practitioners, and while the law has developed substantially over the past 150 years, there are still circumstances in which it might apply as part of the general tort of nuisance. b

Shy Jackson is Partner at Pinsent Masons shy.jackson@pinsentmasons.com

Related competencies include Contract practice, Project administration

F E B R U A R Y/ M A R C H 2 0 1 8 2 5

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