Ten years on

When Sir Michael Latham was commissioned to compile his report on the construction industry over ten years ago, he saw an industry facing many problems: "I saw an industry in which no one was happy. It was a claims culture. There was much lobbying of MPs by subcontractors over issues such as contract clause abuse, retentions abuse and so on. The review I was asked to undertake was in response to this lobbying."

After much careful studying of the issues to get to the heart of the matter, Latham says that he saw two aims as key to a better construction industry: "We had to reduce conflict and litigation; and improve productivity and competitiveness. And we needed to do both together, simultaneously."

Two aspects of Latham's report were considered controversial by many in construction. Firstly, was his call for the client to be "at the heart of the matter". Secondly, he wanted to see a defects-free culture within five years of the report's publication. "Again, this was considered controversial and unachievable. But I asked then, and now, who wants to fly in a plane which is not built to defect-free standards?"

Barriers to change
Latham quickly became familiar with the arguments why his report couldn't, or shouldn't be put into action.

"Many people asked why the construction industry should change. Comments I heard were 'what's wrong with the old ways, we do okay'. But we didn't do okay, and if we did it was because someone else in the supply chain got kicked," said Latham. "There are four types of people who don't believe in partnering. Those who have been 25 years in the job and don't want to change. Others who have been 25 years in the job; want to find out more but are worried that while they are learning a younger person will usurp their role. Then there is the person who says 'we have no problems; we don't get complaints; no one sues'. And finally there are the site managers who say 'I run this site, not the governor'."

But as Latham pointed out in his Strategic Alliance Partnership (see BSj 02/04) conference keynote speech, at the time of writing his report the construction industry spent seven times more on lawyers and claims than it did on research and development. This was certainly an industry in dire need of a better way of doing things.

While he is a strong advocate of the partnering approach, Latham concedes that it is not easy. "This is not a soft option, a quick fix or a marketing buzzword." When examining the partnering method, Latham offers four key points to note: partnering must start at the top; there must be a major change; the whole company must change; and training is required He also says that there are four questions clients should ask a main contractor who wants to work in the partnering format.

• Who are you? The client must meet with the people who will actually do the work.

• What have you done to get all your staff engaged in partnering. For example a video, organisation communications, is there a lead from the board?

• What have you done to partner with sub-contractors? Latham warns that clients should ask for specific actions taken.

• Have you done it before, and when? Don't penalise someone if it is their first time, but if they claim to be expert find out more.

There are of course downsides to partnering, which Latham points out. "Overhead recovery may take longer. Some staff won't or can't change and they need to be dealt with. Some teams collapse in the face of problems. Also, organisations in partnering arrangements may find that their margins may be less 'good', though they will be more certain, and better than the 'bad' jobs."

Changing an industry which is so embedded in a particular way of working is hugely difficult. Latham is realistic in his expectations. But he emphasises that change does need to happen if construction is to survive and prosper: "If you always do what you always did, you will always get what you always got."