Carillion demise may be the precipice that the Industry needed to jump....

January 22, 2018

 

Having engaged, like many others in in our industry, in discussions about the demise of Carillion, it strikes me that this may just be the shove that people need to take a leap of faith.  The IPI model is often spoken of as being the most radical of the three new procurement routes sitting recommended in The Government Construction Strategy. We need more takers to trial the IPI Model of Insurance Backed Alliancing. As a change agent for the last 20 or so years I know how hard change is for some but surely now we are at a precipice, it is time to jump!!

 

Relationships between supply chain and main contractors is often driven by the need for turnover and many surveys I have personally managed in the supply chain, show that suppliers would not work for many Main Contractors "if they had the choice" and payment and fair pay are 9 times out of 10 quoted as the reason.

 

It is time to ensure that main contractors & designers make a decent profit and that key supply chain working on a project are paid at the same time as Tier 1. A Project Bank Account (PBA) should be the minimum requirement to pay the key supply chain parties who constitute 80% the cost on any major project. Equally, bringing the whole team in to buy into the client's needs and deliver a product together sounds like common sense but it is, depressingly, still so far away from where a huge proportion of the industry sit.

 

At IPInitiatives we have heard it all! At every hurdle we are given reasons why certain things can't be done or achieved; not always from our own industry but from others associated like legal, banking and insurance etc. (Although our partners at G&A are also trying to change their industry with ours!) Thank goodness it hasn't perturbed us all from what we believe to be the right path. Slowly but very surely we are proving our case.

 

It is a shame that the IPI model's method of de-risking a project and ensuring a true no blame culture (and hence true collaboration) backed by both the form of contract and insurance is not understood and hence rebuffed as "a risk" due to being "new" or not having anyone to sue. This despite the foundation being based on sound and well known successes across the industry and abroad.

 

Arrrggghhhh! (I know that's not a technical term) Come on all you serial Construction Clients - don't call the Contractors and Designers for everything, they are often forced down the routes they take by poor procurement methods, contracts and insurances that mean they have to self protect or hang on to other people's money to stay in business. 

 

Mend the procurement methods, implement alliances and ensure everyone is responding to the client's needs not just the few. Then maybe, just maybe, we'll have an industry that doesn't perpetually deliver over cost and time and we'll have a supply chain who are fully engaged and are not adding cost to cover financing. We really can work more efficiently and with less risk!  The IPI model is a solution that already exists!

 

 

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