Construction Industry: Why collaboration needs to be a focus (Part 1)

Step out of silos and take in the bigger picture


One of the biggest issues facing the construction industry is the fragmentation of communication between contractors. Trade contractors often work in silos, and communication between head and trade contractors are often strained. The current state of collaboration in the market is due to the ever-shrinking profit margins and increased market pressure; and this lack of collaboration is holding the industry back.

Why is the construction industry behind in collaboration?


In a climate of stiff competition, most companies keep their eye on short-term goals. A lack of communication means contractors are not regarded as equal partners, so they are understandably reluctant to consider anything beyond their own jobs. This whittles away trust between trades and other team members and prevents companies from taking on board new best practice or innovations of materials and products.

Contracts are often delivered as ‘design-bid-build’, defining the work in segments without letting each trade know how their job fits into the whole. With no understanding of the project’s bigger vision, contractors have little motivation to do anything more than their ‘job’, delivering the bare minimum, in as short a time as possible. Heather Gadonniex, head of the building and construction team at PE International, a consultancy that specialises in life cycle assessment, told the Guardian:

"A lot of the siloed nature of the industry goes with the fear of losing one's territory and not accepting the benefits of this type of collaboration, particularly when it comes to saving time and money."

Opportunities to improve efficiency, performance and timelines are missed and poor communication leads to wasted time and materials, and increases risk for everyone. Teams attempt to drive efficiency by cost cutting, putting pressure on timelines, or screwing suppliers down even further. Inevitably, things fall through the gaps. Work done in a rush can create delays for other contractors and extra costs for management when it has to be reworked.

"It's not just about particular products – it's about the entire design process," says Gadonniex. "If you want to build a net-zero building or just a beautiful and functional building, you have to have the contractors interacting with the mechanical contractors interacting with the designers and the architects. In the past, everyone worked in their own little bubbles and that separation made it a challenge to meet common goals."

The project to build a third reactor at Olkiluoto 3 Nuclear Power Plant in Finland began in 2005 – it’s not expected to be completed until next year in 2019, ten years after the proposed start date. With the delays and enormous cost overrun (from 3 billion-euros to more than 8 billion) attributed to legal disputes between the project owner and suppliers, it’s safe to say that this is not a project with collaboration at its heart.

As illustrated by the Olkiluoto case, a lack of collaboration is the best way to underdeliver, blow budgets and overrun deadlines – and create a lot of expensive conflict.

A study of litigation trends in the UK and US showed that 53% of those engineering and construction companies surveyed had commenced one or more arbitrations the year before. A contractor for the notorious Wembley National Stadium build won a court claim, but lost 2 million in the costs in the process.

So what can be done to pull people together?

Finding a better way to work


According to an global study fromProject Management Institute (PMI), poor communications account for more than half of the money at risk on any given project. Companies risk $135 millionfor every $1 billion spent on a project$75 million of that at-risk figure is down to poor communication. Put another way, better collaboration would potentially save $75million for every billion spent on a project. The study also mentions that poor collaboration was the main cause of project failure, at least a third of the time, and negatively impacted project successes more than half the time.

While these figures are more directly related to enterprise level projects, the lessons are transferable – for better quality work to be brought in on time and under budget, construction companies need to change old methods of working, and learn to communicate and collaborate.

What does that look like?

Doing your bit is the first step, but you’ll only achieve true collaboration when all teams and individuals involved in a project bring their skills and energy together for the complex and demanding tasks required. There are specific aspects to this collaboration:

For those working in today’s competitive industry, that list will, understandably, feel like an unachievable utopia, but there are real, practical ways you can begin to make change.

Stay tuned for part 2 next week, where we share how technology can help on-site collaboration.

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