Building with Integrity: Ethical Delivery in Construction

If you were to ask a construction professional what they mean by ethical procurement, you would likely get a myriad of answers.  They may cite local spend and keeping economic activity in the area to stimulate the local economy, or perhaps it’s about designing buildings with low environmental impact.  Helping small businesses to grow by giving them business opportunities, training and developing new skills in staff and encouraging them to participate in community initiatives may also feature.

So, where do we look to guide us in knowing how to prioritise any and all of the above?  What are demonstrable social, economic, and environmental benefits, and crucially is the industry established enough to deliver these as ‘business as usual’?  We must factor that there will be different priorities for every organisation with varying corporate policies, and therefore no one-size-fits-all approach.

We also must be careful that addressing one area doesn’t translate into unethical practice elsewhere.  For example, a report by the Clean Energy Council, representing renewable energy companies and solar installers, called for more local renewable energy production and manufacturing and a “certificate of origin” scheme to counter concerns about slave labour in mineral extraction and manufacturing in China, Africa and South America.

There is an argument that in order to benchmark ethical delivery, we could benefit from an industry standard value calculator, but this does beg the question of whether it is right that a business can profit from deciding the monetary value of ethical conduct.  Similarly, it could be argued that asking a third-party business to judge what’s more valuable to society is just outsourcing the responsibility.

Adam Sanford

Adam Sanford

SCF Operations Lead (South East & London)

Back to basics

Whilst initiatives like these are undoubtedly a positive step forward, does any of this matter if the project is of poor quality, late or over budget? Does poor treatment of the supply chain cancel out these ‘nice to have’ initiatives? Experience shows that when projects are in distress, everyone loses.

Construction accounted for nearly 17% of all insolvencies in England and Wales last November, an increase of 7% from the previous year, and 36% up on the year before. Add to this the continuing issues of insecure employment, long hours, and occupational sickness and we all feel the perfect storm that leads to failed projects and insecure supply chain.

Getting the basics right can make a huge difference not only to the outcome of the project, but also the wellbeing and productivity of the workforce.

But, our industry remains fragmented and adversarial, despite the Latham and Egan reports recommending a more integrated approach with greater partnering and teamwork and learning from other industries on efficiencies. Have lessons really been learned?

There have been many attempts to improve the way projects are structured, and NACF and its founder members have been at the forefront of this for many years now, but industry has been slow to implement the recommendations of these reports, and a culture of risk shedding still prevails in a large section of our industry.

Forecasting for success

When it gets to the stage of budget forecasting, the key is transparency, so you know what you are paying for.

Often projects are over budget and look to reduce cost by reducing scope, (under the banner of “value engineering”) whilst concurrently designers are still defining more items and adding cost back in, even with the best of intentions.  Incentivising favourable payment terms, shared goals and outcomes is a way to mitigate the complexities of budget forecasting when real world costs continue to fluctuate.   Suppliers are more likely to bid competitively when invested in outcomes and when they have more lead time and certainty to plan.

Two-stage open book procurement means you can reassess budgets at key points in the build to avoid rising costs.  It also means you can bring your supply chain in early to avoid failure.  Early consultation means that the design is well understood and that there is good buy-in. Two-stage allows you to re-risk the design and security of supply in order to make practical material choices to increase buildability.

The right principles

Good practice in ethical delivery starts with getting the basic principles of a good build right, first time. Any value-add ethical focused initiatives will be redundant and can put a project out of pocket without the foundations set.  Unless you get the basic cost and time predictability right, any social/economic/environmental benefits are inevitably wiped out.

This means that good ethical practice needs to be led by paying attention to how workers are treated with fair payment, secure employment and sustainable profit margins. Supply chains need to be supported in holding appropriate levels of risk to their business, their livelihood and wellbeing.

The Building the Future commission report (January 2024) is calling for the reinstatement of the position of Chief Construction Advisor, and for government to lead reform of construction procurement.  In truth many of the answers to the challenges outlined in the document exist already and can be minimised by getting the basics right first.

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