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Tier ones: Will the next decade belong to subcontractors?

The future roles of main contractors and subcontractors is an interesting question, one I will be discussing at the CN Summit alongside other experts, and one I have been debating in my role on the Construction Leadership Council (CLC).

We know that change is coming to the industry. We know that the procurement process must become more relevant to what clients and end-users want to achieve. And we know that this shift means the roles of suppliers will change too. 

The CLC’s Procuring for Value report, produced by the Business Models and Supply Chains workstream that I lead, considered these points. It also looked at how seismic events such as Grenfell and Carillion have brought a further spotlight on the industry.

At the CLC we are issuing a rallying cry to realise change across four key themes:

  • Value model – what is of real value to clients?
  • Outcome predictability – how much reliance can clients place on forecasts?
  • Procurement behaviours – are we inadvertently hindering improvement?
  • The impact of digital technologies – how will this affect procurement?

Real-life value

How we change our industry to improve productivity, risk and accountability is crucial. There is no doubt that the earlier risk, accountability and end-user / client outcomes are considered in the construction process, the more productive it will be and the better the end result.

A useful tool to this end is the value model CLC is developing. This allows clients, designers and all tiers of constructors to consider the real cost / value / risk balance between different outcomes.

Outcome predictability

We need to work much harder to ensure clients understand how their built asset will perform. Put simply, they need to get what they expect to get.

To do this effectively, the design, construction and performance of the built asset must be considered as a continuum – the best outcomes determined by the most appropriate party. This approach demands a totally different relationship between the client and the supply chain, and will test the willingness of designers, tier ones and subcontractors to change from historical, highly contractual relationships to more performance-based arrangements.

Procurement behaviour

For this homogenous approach to actually happen, it’s not just clients that need to change. There needs to be a wholesale shift in procurement behaviour – particularly from those advising on the process. Advisers will need to give clients more agile ways of procuring that still address clients’ commercial requirements.

Procurement should allow specialists to really contribute to the design and specification of outcomes – and to be properly recompensed for their advice. Procurement done properly can align the vested interests of a supply chain – rather than setting up adversarial relationships. 

There are plenty of procurement models out there – including integrated project insurance, cost-led procurement, two-stage open-book and various alliancing models – so why aren’t we using them more widely?

Hear more at the CN Summit

Leaders from the industry’s biggest clients and contractors will be attending the CN Summit next month – book your place today to hear business-critical insight from our incredible speaker line-up, including Ann Bentley joining a debate on the future of tier ones.

Digitalisation

And of course, digitalisation will enable these processes run seamlessly, while post-occupancy data will enable clients to understand how their assets perform.

From initial brief through to end-use, we can create digital responsibility – or as Dame Hackitt describes it in her review of Building Regulations and fire safety, the “golden thread […] so that the original design intent, and any subsequent changes or refurbishment, are recorded and properly reviewed”.

Tier one as an enabler

So what about the role of the main contractor? If value-based procurement and outcome predictability gain momentum, who is best placed to enable them?

My take is that main contractors are very well placed to do this – but their role will be that of well-organised, health and safety-conscious enablers that ensure this integrated approach takes place. They are not the only ones that could do this, but they are in a good position to sew the ‘golden thread’.

The way we approach built assets is already changing. As we enter this new world, success will come to those companies capable of defining value, predicting outcomes and taking accountability. This will not be a matter of size, but of competence and attitude.

Ann Bentley is global board director at Rider Levett Bucknall and will join dozens of leading contractors and clients at this year’s CN Summit, 20-21 November, where she will be debating the future of the tier one model

Readers' comments (1)

  • In the first place it might be a good idea if the main contractors got their sums right in the first place instead of suicide bidding and stupid unrealistic programmes. If any of us small specialist companies acted in the disgraceful way Carillion did we would have the book thrown at us.
    Sure many of their unpaid victims are waiting to see what action if any is taken against the directors but don't hold your breath......................

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