Construction sector deal will address industry issues following Carillion crash

Industry improvement body, the Construction Leadership Council (CLC), says that the government’s sector deal for construction will address many of the specific challenges facing the industry that have been placed into sharp focus following the demise of Carillion.

Carillion’s collapse has put construction’s business models and payment practices under the spotlight, with many stakeholders, both inside and outside of the industry, now calling for many change. With many firms now set to lose millions as a result of Carillion’s liquidation, a spokesman for the CLC, which helped to draft the sector deal, said that the contractor’s collapse showed the unsustainable nature of the industry’s business models.

At a scheduled meeting of the CLC on 18 January, the issues associated with the collapse of Carillion were discussed.  Following the meeting a CLC spokesperson said: “We are clear that this failure highlights many of the weaknesses in the construction industry business model, and that collective change is needed to reduce the risk of future failures and improve industry performance, productivity and profitability.

“CLC believes that the sector deal, which will be published imminently, is structured to make this transition - focusing on digital, manufacture and performance as catalysts for the changes necessary to put our industry on a more sustainable footing.  We have also taken steps to make sure that the sector deal addresses many of the procurement, payment and risk transfer issues which contribute to many of the difficulties faced by construction firms and their workforce.”

The £170m sector deal was due to be published this month, with construction one of four industries to be given a deal under the government’s industrial strategy. Following Carillion’s collapse however, it is believed that the launch of the deal has been delayed so that it can be amended to address many of the issues highlighted by the failure of the company.

The Department for Business, Energy and Industrial Strategy is said to be still working on the content of the deal but the final deal will reflect the current construction sector environment and include actions associated with payment.