Don Ward, Chief Executive of Constructing Excellence, called on the construction industry to improve its current procurement practices in the article "How can we do it better?" published in June 2007.
Don Ward highlighted that widespread recognition of the need to promote integration and collaborative working is a necessity to ensure the future sustainability of the industry. To date, the pace of reform has been slow to penetrate the supply chain and change has at times been impeded by contractors who implement collaborative working with their clients but not their suppliers. Don Ward stressed that only when the industry procures throughout the supply chain for whole life value will the full vision of Latham and Egan be realised.
Tony Ryan, Asite CEO, addresses Don Ward's concerns in an exclusive interview.
Q: Do you think the industry could procure throughout the supply chain for whole life value and realise the full vision of Latham and Egan?
TR: Yes we will get there in time. Significant industry players are already leading by example and driving collaborative working in their supply chain.
Q: Do you see a growing recognition of the need for integration and collaborative working in our industry?
TR: Yes definitely! In 1998 top contractors began to express a growing need for tools enabling integrated and collaborative working. In the years that followed, these big players ensured that collaborative technology was used in every project they undertook. Shortly thereafter we saw demand emerging from a new group, major clients, such as Grosvenor Estates, BAA and the UK Government to name a few examples. The top tier of the supply chain has taken the initiative to ensure relevant solutions are put in place to enable integrated supply chains and true collaboration. The next step is for small and medium-sized construction companies to actively seek out collaborative and integrated working.
Q: In this case, why do you think the industry is still struggling with the development of truly integrated supply chains?
TR: As Sir John highlighted in his Rethinking construction report, the construction market is highly fragmented. We could divide the industry into 3 markets; the "large projects" which account for around 14% of the market measured by percentage of Construction GDP in the UK, "medium" projects representing 18% and the remaining 68% being made up of smaller projects and the companies which deliver them. The current trend of integrated working is driven only by the top 14% of the market. For the industry to achieve truly integrated supply chains, the medium and small size construction companies, which represent 86% of the market, need to seek true integration.
We interact with the industry on a day to day basis and work to understand the barriers to entry that have kept the bulk of the market from actively pursuing integrated working, despite widespread agreement in the industry that integrated supply chains benefit all participants. We quickly realised that there is a growing need in the construction industry for entry-level solutions to enable supply chain integration in a pure Software as a Service (SaaS) model - Pay as you Go, if you like.
Medium and small sized construction companies need a platform where they can source, trade and collaborate electronically, without making a huge commitment or investing heavily in infrastructure and training. This 86% of the UK construction market needs an "all in one" solution that enables integrated working and is easily accessible.
Q: How would you envision an entry-level supply chain integration solution working in this market?
TR: Solutions need to be delivered via a software as a service model with a pay as you go pricing structure that is not prohibitive for the SMB market and they need to be focused on self-service and simplicity. Successful solutions will achieve this while at the same time being built on top of a platform that has been tested at the top-tier of the market and has proven capability to scale to meet the most demanding requirements.
Making solutions easily accessible creates an opportunity for the whole construction industry to use integrated sourcing, trading, document management and interaction in the supply chain. Vendors need to keep their solutions open so that data exchange within supply chains does not run into proprietary brick walls. Initiatives such as the NCCTP, the Hub Alliance, and BuildingSmart are essential for keeping the industry "honest" on this front.
Achieving truly easy access means that there is very little or no long-term commitment required to use the solution. Users need to be able to sign up and go and then stop whenever the want. Training requirements should be minimal and when needed should be delivered over the web. Solutions need to be about users managing their own data and accessing it when and where needed. Traditional collaboration offerings in our industry are very much project orientated. Users need to be able to use these tools outside of the project carrying their office in the palm of their hand; begin sharing data with a small group; and then when the project requires a full blown collaboration tool they should be able to simply flip a switch and enable a fully featured tool. We should be collaborating on everything we do and not just project specific data.
Following Tony Ryan's interview, Don Ward concluded "Integration and collaborative working are a pre-requisite for major improvement in the construction industry. However, whilst many larger businesses are aware of the benefits of collaborative contracts, smaller companies need clear leadership and best practice examples to help them adopt collaborative principles. The industry needs to promote learning tools and provide peer support to champion collaboration across the sector."
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