Contracts and Sub Contracts in the wake of the Carillion Collapse

Contracts and Sub Contracts in the wake of the Carillion Collapse

19 March 2018

It is known in business that you can not own or do everything. Contracts in construction regardless of the level of budget are always going to be subject to some sub-contracting activity. This is normally to facilitate resource deficiency and to ensure that deadlines are adhered to. It could be just an act of Taylorism to optimise and simplify tasks on a project to achieve a wider goal. Perhaps subbing in crews of specialists to get a project over a phase.

Scientific Management of Projects

Frederick Winslow Taylor studied the motivation of people and its connection with achieving goals, his book (Published in 1909) “The Principles of Scientific Management” proposes that the net result of optimising and simplifying tasks will result in higher and efficient productivity.

Those simple processes of optimising, simplifying process is a standard weapon in the modern business persons armoury. It certainly is the accountants aim to shave micro amounts from process to increase profit from an activity.

With construction and the industries which utilise sub-contracting, the simple act of Taylorism breaking tasks down into small steps, achieving goals by hitting milestones with transient resources manifests its own challenges. Some may say that projects if managed correctly will overcome these issues.

Who is responsible for the Milestones?

Those milestones have genuinely individual responsibility to their related goal – with overall project responsibility to the main contractor. This is where it gets messy – site HSE requirements, managing multiple teams, multiple tasks and permissions, who does what in what order and the requirements of the right tools and plant onsite at the right time can all become a bit messy.

“this is always how one of these projects scope out…isn’t it?”

Project managers normally have the reigns when it comes to this level of logistics (depending on the support of admin etc). Using BIM combined with a high-end project architecture project management suite will assist here. Multiple project managers can then collaborate on time and resource. Then the assets which are available can be fluidly deployed to control the project progress.

Once the actual ‘shovels’ are deployed and controlled the financial aspect of multiple tasks on a project – materials, equipment and plant hire need control and paying for. The latter are normally part of the contracting team. But is the kit fit for purpose – who arranges fuel, welfare and waste?

Micro and Macro Project Management

From the micro to the macro level of multiple construction projects it is easy to see how big companies can get lost down a rabbit hole of not being accountable for their contracts even when they think they are. External factors can affect the success of a single project, weather, materials and supply, security and welfare all play a game in a project success. If this affects one project and you are managing multiple contracts, then the realisation is that one problem can manifest into multiple issues over your range of projects.

Perhaps the contract was incorrectly specified in the first place, the bidding process became passé, “this is always how one of these projects scope out…isn’t it?” attitude is applied before the actual bid phase. Let’s copy and paste a bid from another tender – that will work. This can create additional issues.

Driven by targets and the need to continue feeding the corporate machine with revenue and business – When did having orders on the books appear to be the barometer of success to these large businesses? – when success really lies in the accomplished delivery of projects on time, on spec and on budget.

Objectives of the board

Board targets and corporate malaise can mean bidding on projects at a level that will marginalise the competition which is a good thing if you can deliver flawlessly and at a cost which limits project failure. Not doing so is a dangerous activity which can lead to not having enough in the tank to overcome issues when they arise – penalty clauses kill contract success. Not to mention sub-contractors often can smell opportunity when you are up against a timescale and this can reflect in cost.

Ultimately contracts costs spiral and value for money is reduced for the client and the worth of bidding in the first-place months prior has gone. This overall has a negative effect on the business and alas the wider economy.

How can you mitigate project issues?

Our team of account managers seamlessly look after the supply chain aspect of multiple projects all over the country. With a single point of billing and reference it is possible for PAL Hire to become a virtual inhouse (plant, welfare, generator, fuel, security and more) equipment supply team. With ISO9001 accreditation we are positioned to support your contracts and sub-contracts with integrated business intelligence and an eye on efficiency. For details call our team on: 0844 288 7265