In the report the Confederation of British Industry (CBI) Construction Council has looked at the role that risk management plays in the fortunes of UK construction. Poor risk allocation between clients and contractors prevents construction projects from being procured and delivered successfully, and the prevailing industry structure leaves major contractors and their subcontractors especially vulnerable to risk. “Clients must use their purchasing power as a catalyst for change in approaches to risk,” it says in one section and offers recommendations for client-led change. In another section it says the “lack of commercial and technical understanding could be improved by making procurement routes simpler and more consistent,” and recommends design and build procurements engage contractors early enough to influence project design before it is signed off and the use of single-stage procurements should be discouraged in major construction projects above a specific value.
For businesses it recommends they should be prepared to challenge or walk away from contracts when bidding and where clients and contractors cannot agree on a risk sharing position during early engagement, they should utilise a gain/pain share approach to incentivise appropriate allocation of risk between parties. For government it recommends considering making the Outsourcing Playbook mandatory for public sector building and civil engineering projects above a specific value and provide further financial support and resources to the Construction Leadership Council so that efforts to create an industry-wide definition of value, and performance benchmarking tools to measure it, can be accelerated.
This is just a snapshot – read the full report here.