Why lasting industry reform needs practical solutions

Nelson Ogunshakin
10 May 2018

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Only tangible ideas shared with a unified voice will deliver post-Carillion reform and a sustainable model for all, writes Nelson Ogunshakin.

In my most recent column, I shared my perspective on the demise of Carillion and its impact on our industry. As well as expressing my disappointment to see an iconic household name with a long and proud history collapse, I set out a vision for a major debate on the future direction for the industry. I received many positive comments following publication. My call for a reappraisal of our broken industry model seems to have resonated with many of ACE’s members and more broadly from a range of industry stakeholders. 

The magnitude of Carillion’s downfall is such that it must reframe our thinking and our engagement. Its fall impacts on the market, political landscape and as a business association, on ACE’s output and initiatives. As an industry we have to move beyond “business as usual” to a state of more proactive thinking, agile operations and industry-wide collaborative engagement.

The immediate aftermath has seen key public-sector clients such as the NHS, Highways England, Ministry of Defence, Network Rail, HS2 and Transport for London, to mention a few, stepping in to ensure disruption is kept to a minimum and on-going contracts are honoured. Sadly, we have also seen a number of redundancies across projects as budgets are reassessed. We still do not know, nor can we quantify the impact in the longer-term on the project pipeline, nor how government will engage with the industry on new infrastructure spending.

While the collapse of Carillion shone a brief media and political spotlight on issues such as exposure in the supply chain, appropriate levels of risk, contract retention clauses and protection of SMEs, we are yet to see any real change in approach. It is for this reason that ACE will be working with its members and clients to put forward ideas on an improved procurement process and will engage other industry bodies to reach cross-sector consensus. 

I strongly believe that providing the government with clear answers and ideas, coupled with greater understanding of the supply chain and procurement process, will help deliver a robust and sustainable business model for all. 

"I strongly believe that providing the government with clear answers and ideas, coupled with greater understanding of the supply chain and procurement process, will help deliver a robust and sustainable business model for all."

An enlightened approach to procurement calls for a quality-based tendering process, a reappraisal of the notion of “value for money”, as well as the adoption of new or emerging technologies such as digital design, BIM, artificial intelligence, offsite construction and blockchain. 

We need to also look at risk management and the unnecessary demand for inappropriate levels of professional indemnity, fitness-for-purpose, parent guarantees and the allocation of risk to companies that are poorly suited to deal with it. Finally, we need to have access to the right skills in our sector to turn this new innovative approach into reality. We must embrace this vanguard of change to secure a sustainable business sector.

These are topics that will no doubt come to the fore at ACE’s upcoming major events. The second European CIO Conference and our inaugural Skills Summit, both taking place in June 2018, will touch on these issues and provide an opportunity for the industry to discuss how technology and skills will both be vital to solving this industry conundrum and seeing the emergence of a healthier business model.

As the Brexit negotiations reach their conclusion over the coming months, we should be ready to re-engage government with clear calls to action, tangible proposals and a unified voice across project promoters, delivery agencies, professional consultancy and engineering companies, tier one and two contractors and product suppliers. 

ACE members pride themselves on designing and creating solutions in their day-to-day work for their clients. We need to make sure that our whole industry applies its considerable intellectual muscle to perhaps the biggest challenge of all - ensuring a sustainable business model for every stakeholder.

Dr Nelson Ogunshakin OBE is the chief executive of the Association for Consultancy and Engineering.