Carillion: Not Construction Best Practice

Carillion has dominated the headlines in the mainstream and trade media, but what does it mean for you and what next for the construction industry.

The news about Carillion and the build up to it has given the whole construction industry something to ponder. Not least the fate of thousands of employees and organisations within the Carillion supply chain. Our sympathies go out to everyone affected by the collapse of this major industry player. But it is also important to learn what we can from the situation.

First off, it is important to put this into a construction industry context and not to take to heart too much of the editorials in the mainstream media and comment on programmes such as BBC R4's Today programme. Construction itself is not at fault. The way some decisions are made within our industry is where the problem lies.

There were specific management decisions made by the senior Carillion team and a set of clear defined behaviours. Carillion has long been regarded as a business that did not pander to any of the arguments put forward by Constructing Excellence. It's recent record regarding the pricing and operation of contracts, payment terms (all well documented by industry commentators) is evidence of an organisation that turned its back on reforms advocated by Egan, Latham and more recently, Mark Farmer. This is a symptom of management decisions by the business – not our industry.

However, the industry is not blameless. There are still things wrong with how construction operates, some of which almost provided an excuse for some of the things leading to the collapse of such a major industry player. So, the demise of Carillion should be a rallying call for anyone committed to positive change in construction.

As Paul Wilkinson has said as chair of the Chartered institute of PR (CIPR) it, "...has implications for government oversight, with major public-sector contracts being given to an organisation with a culture of adversarial practices and poor supplier management. Carillion, despite struggling when major construction contracts hit overruns, changed bonus rules in 2016 to give more benefits to senior managers. It is also under investigation by the Financial Conduct Authority over the 'timeliness and content of announcements' made between December 2016 and July 2017. Searching questions should be asked about Government oversight, when contracts worth billions were given to the firm in the same six months as it issued three profit warnings."

These are management behaviours. As an industry we need to look at governance. We need to look at our values. Are we committed to seeking to improve the business performance of our own organisations and our industry by advocating collaboration, integrated teams and a broader respect for people and a commitment to value over price? Adhering to these values will create a better built environment and establish stronger, more sustainable organisations up and down the supply chain. We cannot allow the failure of Carillion to skew any perceptions of construction as a great economic sector, vital to national interests. We need to champion best practice now more than ever to educate government, public sector, influential decision makers and the wider supply chain that we can deliver.

Construction and support services are best delivered as a team. Everyone must play a part. Clients are responsible for managing their contractors and the whole supply chain must be engaged, respected and treated fairly. That is how best practice works. That is how we will establish a built environment for future generations.