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What did construction learn from the Latham Report?

It has been 23 years since Sir Michael Latham published his Constructing the Team report and, despite it leading to positive change in the sector, many of the issues he identified remain prevalent today.

In his report, Sir Michael laid out plans for the government to implement a modern construction industry and his recommendations gave rise to the Construction Act in 1996.

The Latham report had the relationship between clients and contractors, the nature of contracts and the role of the public sector in procurement at its heart.

Sir Michael set out 13 requirements for the modern contract, which included separation of roles, risk allocation and assessment of payments and how those requirements would implement wider change in the sector over time.

When it came to payment, his recommendations ring as true today as they did in 1994.

Payment disputes continues to have a negative effect on the construction supply chain, with Lakesmere Group’s recent collapse and a dispute involving Galliford Try the most recent examples.

The former Willmott Dixon chairman stated in his review that contracts should be “clearly setting out the period within which interim payments must be made to all participants in the process, failing which they will have an automatic right to compensation, involving payment of interest at a sufficiently heavy rate to deter slow payment”.

The Construction Act 1996 laid the foundations for new payment terms and Sir Michael recommended that adjudication be the normal form of dispute resolution. Despite this, the same problems befall the industry today.

Mark Farmer’s Modernise or Die review of the construction industry cited payment issues, including abuse of retentions, as one key issue the sector needed to address. Only this week Construction News reported on how late payments continue to stymie the growth of construction SMEs.

It begs the question: did his recommendations get enough attention or is construction still learning the same lessons it was two decades ago?

Productivity is another scourge of the construction sector that the former MP had in his sights by recommending a productivity target of 30 per cent real cost reduction by the year 2000. It proved to be too great an ambition for the industry to match.

Indeed, a McKinsey report in February found UK construction productivity had remained relatively flat since 1995. The report also notes that the government’s role as a client is still fragmented despite the clear evidence of what a joined-up approach can achieve.

The Latham report also recommended the use of co-ordinated project information to be implemented as a contractual requirement.

Considering that the review was published at a time when the UK still had only four terrestrial TV channels, CDs were just replacing vinyl and email was a rarity, foreseeing the need for information management was ahead of its time.

This project information approach could be considered a forerunner to BIM in its present form and, though there is a long way to go on this front, progress has been made.

In 1994, in a line which sounds all too familiar, Sir Michael noted: “We also notice individual government departments operating different procurement practices and that this has become more pronounced since the demise of the Property Services Agency”.

Successive governments have worked to reduce the fragmentation within public sector procurement. However, the National BIM Service earlier this year said over half of firms in the public sector that it surveyed believed government itself doesn’t enforce it’s own BIM mandate.

The legacy of the Latham report is clear, and the outpouring of affection speaks volumes for the man.

Construction could do with dusting off the review once more and redoubling its efforts to change.

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