EP 158

The death of D & B and Traditional Contracting: a new procurement route for the 21st Century (EP 158)



This week, Paul is joined by his close friend and QS, Chris Barber. Chris is the Chief Visionary Officer (CVO) at C-Link and Prosper and a passionate advocate for subcontractors on his YouTube channel, School of Sub.

This week's conversation centres on an article about construction procurement routes. Main Contracting, as we know it, had its origins in the 19th century, and aside from the introduction of D & B Contracts in the 1980s, not much has changed.

In this episode, Paul and Chris explore why that is, what could change and how clients can create a better project environment for all involved.

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I’ve shared a link to the article here: A New World for Main Contractors


Paul Heming: Hello and welcome to episode 158 of the Own the Build Podcast with me, Paul Heming. I should probably start saying with me Paul Heming and Chris Barber at this rate because we are returning to the future of contracting series today. And as always, I’m sat here with good mate of mine, Chris Barber, Chief Visionary Officer, CVO at C-Link. If you are wondering what CVO is, I’m going to mention that probably quite a lot. That is our Chief Visionary officer at C-Link, QSX subcontract, QSX main contract, QS, QS Porfirio, let’s call him. So as always, future contracting series today Chris has published an article that is in the show notes. It’s focused on procurement routes. We’re going to talk all about procurement routes today. So strap in. This is going to be exciting. Chris, how’s it going? Welcome back mate.

Chris Barber: Nice to be here again. Paul, thanks for the tip of the hat. You finally acknowledge me after all these years.

Paul Heming: Just about me. I wouldn’t say acknowledging you, but we’ll go with whatever makes you feel alright, mate. So let’s talk, I want to dive straight into this. Let’s talk about this article. So you wrote an article, it’s all about procurement route. And you said to me when we last walked away from the studio, you said, I know exactly what I want to talk about next. And I was like, here we go. It’s going to be QS, KPIs or something mental, but procurement route is what you chose. And like I said, everyone should go and read that article and we’re going to talk about it now. At the center of that article or at the start of your writing and your thinking was a piece about a kitchen package that you were procuring on a high-end residential job. First, let’s talk about that. Because I think it actually then grounds the rest of the conversation.

Chris Barber: I didn’t say I procured, I just gave an example. We might look like I might have procured that package. But let’s say theoretically I did procure this kitchen package and when I wrote the article, it got me thinking about like what are the forces at play here and like time, cost and quality. TCQ is huge…

Paul Heming: But we’re going to roll with time, cost and quality and we’re not TCQ.

Chris Barber: Yeah. Something like that. Well, what really, it made me think about this package that I may or may not have procured. This kitchen package and how those three things were kind of at play with the package between all the stakeholders. So what I did was I kind of broke it down. Who were the stakeholders? So I explained the problem. So the client has already on boarded this kitchen contractor.

Paul Heming: First, first, first, just before we jump into that.

Chris Barber: Okay.

Paul Heming: Paint the picture of what the project is. Where is the project, what’s the package? And who are the clients?

Chris Barber: I can’t give too many details away, but what I’ll say is it is a high end project somewhere in North London, perhaps. And basement conversion, high-end fit out for a high net worth individual. So we’re on this project and you know, we come to the kitchen package and to break it down, right, the stakeholders at play here are the client, the architect, the contractor, and the subcontractor who was the kitchen.

Paul Heming: And you are the contractor.

Chris Barber: And I’m the contractor in this case. Yeah. So I was thinking about what were the problems with this package? Because it should be relatively straightforward. You would think kitchen, it’s they design it, they come and install it should be straightforward. But the thing that we’re at play here, so if we take the client right, they know the kitchen that they want. They’ve been speaking to these guys for two years and they’ve been heavily designing it and vying it and getting it to…

Paul Heming: Getting it perfect.

Chris Barber: Getting it perfect exactly how they want it. That this means that the subcontractor, the kitchen contractors way on boarded into the project far in advance that even the main contractor is, or maybe even the architect for example. So they’ve got this like really strong relationship with…

Paul Heming: With the client though.

Chris Barber: With the client, but the client’s not employing them. It’s the main contractor who’s employing them.

Paul Heming: We’re getting to procurement room. Are we?

Chris Barber: It was getting to the procurement. So then comes in the architect. So this is not something that’s really designed by the architect has probably limited involvement in them in the actual package itself. From a design perspective, they may have a bit of involve…

Paul Heming: So feels less responsibility as well.

Chris Barber: It feels like it’s out of their hands. The kitchen guys’s going to come in and do all the work. So they feel a bit disconnected from that package in itself. So what they’re thinking, so the client is really obsessed about Q, equals quality. They’re really obsessed about the quality. So you’ve got one stakeholder who’s obsessed about the quality. Now the architect is coming in, he’s just got to make that package work and fit within his plans. So he’s more probably worried about like the timing of it. So…

Paul Heming: Really? When I read that and you know, if you think about time, cost and quality, and this is being a generalizing here as you do in construction. And you’d usually say QS definitely focused on costs. And the architect definitely focused on quality and therefore constantly, that’s why you have the age old argument of QS and the architect falling out. But when you said that in this case the architect was focused on time, I was interested. Just talk about that a bit more.

Chris Barber: Yeah. So they haven’t had much input on the quality of what the finish is because that’s really dictated by the client. The client’s like, I want this marble top, I want these type of appliances. The architecture’s the passenger in that, they’re not really having an impact in that area as much. And because they were, the client was so like kind of strong on the finish side. The architects kind of just, well, I’ll do whatever you want kind of thing. I was speaking on their behalf. But yeah, it’s kind of the thing I got after a few beers with them, then comes in the contractor. So the kitchen guy, the client and the architect have had discussions for months and months, years perhaps in advance of this project. Then comes in the contractor and the client’s not quite decided yet what this package is going to be.

Paul Heming: And so when you get this at tender stage, right? You are the contractor and you price the whole thing. Its x million for this job. And how was it presented to you in your tender and like in your contract?

Chris Barber: So it was a provisional sum. So, again, they’re still tweaking it, they’re still not sure on a couple of bits and pieces. So they’re still tweaking this kitchen and it’s a provisional sum. So it’s an extra admin for the QS to kind of expend because he’s got to procure it. He’s got to ask for an instruction to admit the provisional sermon and to add it back in, go through that whole process. And let’s be honest, right? When you are negotiating a competitive tender, your rates are competitive. So you’ve gotten zero advantage to make any money on this package itself. And some people will be thinking, yeah, well you’re only handling it, but you’re doing a lot more than just handling it. You’re placing the order, you’re taking the risk, right? Because they’re not a nominated contractor there, they’re named essentially. So then, so you are taking all the risk, if they don’t perform, they could cost you thousands of pounds if not more. So you’re taking loads of risk for very little reward. It doesn’t really add up. And then you’ve got to coordinate them. So there’s so much at play here for the contractor on a very small margin and they’ve got to protect this package as best as they can. So, we’ve got the client who’s interested, whose focus is on the quality. Architect on the time and why said time is, he’s completely disconnected to a certain degree on the quality. So what they want is making sure that any designs that come through that he needs, they need to coordinate. They do that on time. So they’re just hoping that efficiency flow comes through from the subcontractor to the architect to make sure that designs coordinated. Then you’ve got the contractor who’s like, oh my God, I’ve got to protect this really tiny margin. Make sure it goes well. And then you’ve got the subcontractor coming in, now who’s been building a relationship way before probably all of those stakeholders. And now it comes to the main contractor and the subcontractor who’ve got this relationship based on has no grounding. It is just basically so and so is going to place an order with you and the main contractor is just the mechanism to make the payment work.

Paul Heming: Yeah. That is so true, isn’t it?

Chris Barber: Yeah. And there’s no relationship there and it’s just such a disconnect between the whole team. And that’s what made me think about what can we do differently. And it’s lacking collaboration and it’s a big undertone from everything I write about in the article.

Paul Heming: So I’m guessing, maybe I’m wrong, this kitchen package didn’t go too well.

Chris Barber: It did. You know what? It went fine. I can’t, I don’t want to tell too much about it. But let’s just say like no one was given anyone favors, which we could have done if the relationships were built way in advance.

Paul Heming: And so usually like procurement from the outset is almost always like a balance between time, cost and quality, right? Whereas a single point, when you are procuring, you are kind of, you are hedging your bets against each. And one project quality might be the thing in there, therefore it’s going to take a bit longer, it’s going to cost a bit more, et cetera, et cetera. What you are saying on this example here is, this is a prime example of how procurement routes in construction are kind of like…

Chris Barber: Fragmented.

Paul Heming: Fragmented, foolish. Like you were almost not, I think you described it really well, in that you’re saying main contractor in this case just a payment mechanism. You’re almost just the bank, like the way of doing this and a bit of contract risk. So what could be different about that approach?

Chris Barber: So that one in particular when I start talking about like the solutions of what the future for main contracting could look like is early contract involvement. ECI as some people might refer to it. Now…

Paul Heming: You, because you love an acronym. Yeah.

Chris Barber: Yes. Makes everything more efficient, right? So with ECI, it works really well in two stage process. That’s basically what two stage is really. Should be born from. We’re going to bring the contractor on board, get them to help with the design, improve the build ability, value engineer things together and have a more accurate cost and hopefully program as well of works. You know, two stage is a longer process but it’s more accurate and probably more, it is probably the best way of doing complex projects, particularly D&B. But there’s contractors embedded in, they’ve agreed a fee, they’ve agreed the prelims, it’s pretty straightforward how they should execute the works. Then from that point onwards, when you come to like a traditional contract, the perception would be if they’ve embedded the contract to a design stage.

Paul Heming: In this circumstance.

Chris Barber: Yeah. They’ve won the job effectively because you know they’ve got skin in the game versus if you would try to then competitively tender after you’ve embedded some, a contractor in, someone’s going to look at it and go.

Paul Heming: Well I’m guessing you wouldn’t have been allowed. Right. You were the QS on that job. You got given a provisional sum and you’d have said from the outset in design meeting one or whenever it would’ve been, okay, so this is a kitchen package, do you want me to go out to market on this? And I guess the client would’ve said to you, no, we’re going with subcontractor X.

Chris Barber: Yeah, they probably would’ve. And yeah, it’s kind of in the flow of the project. You’re juggling a lot of things at this stage. You’ve got your own valuations variations that you need to discuss and get managed through to the client. You’re also managing your own supply chain and their application’s coming into you. And there’s a lot more, there’s a lot of things moving parts when you’re at the project stage when you’re delivering, how I see like ECI working is with, by bringing like a main contractor on board or an experienced contractor is actually paying them a fee to do a design process. So it’s not like they’re doing it for free or anything like that to kind of get themselves underneath the project. You’re actually paying them to improve the project. So you could bring them on board and look, say, look, we’re going to competitively tender it, but we want, we like who you are and how you work. We want to go with you, but we’re going to pay you for like a four eight week design review period. And we can help evolve the design through like an RFI process, speak to sub supply chain. So they would embed them into the project. But you could still have that caveat look, we are going to competitively tender it, just so you know. It does the, it keeps the competition alive, let’s just say.

Paul Heming: For the client.

Chris Barber: For the client. So they aren’t getting impacted as much from inflated costs. It’s a difficult one to balance, but you think what the end product would be if you had someone embedded so early doing a very vigorous RFI process, making sure that design is like complete and it’s just so comprehensive that when they go out to tender with their supply chain, they’re getting accurate quotes back. They can act fast. The whole project just moves a lot quicker.

Paul Heming: Yeah, it’s funny isn’t it? Early contractor involvement, ECI as you are framing it. Now when you say that out loud and I’m sure people listening, my instant reaction is yeah, that makes sense. I’ve been on projects where I’ve been the subcontractor I’m involved there, they’ve been on projects where I’ve sub subcontracted and brought people in early. So that early engagement is amazing. But the question, like, it’s quite difficult, isn’t it? Because a lot of main contractors, a lot of subcontractors will say, yeah, I want to be negotiating a tender and if I’m negotiating a tender, I’m going to be keener. The client is actually going to get a better program, better spec, everything is going to be better, right? Because I’m fixed into it. But it almost feels like there’s no numbers around like proving that that’s better. Right? Because it’s interesting that you say bring in the contractor early and pay for the design, but still do a competitive tender. A lot of contractors might think, I don’t want to do that because like even though you’re getting paid and I hear what you’re saying, it would be nice if there was a way for us to say early contracting involvement, ECI, isn’t just nice. It isn’t just like that anecdotal thing in your mind where yeah, I know in past that’s worked. Like it was like 7%, is like the average. Do you know what I mean? If there was actually a way that as an industry we could frame it saves this much or you get an average of three weeks project saving or whatever it was. But because there isn’t, I think there’s still always that inkling of from the client or even from the main contractor when they’re subcontracting you kind of think, I still want to do a competitive tender. I don’t know why that is. Why do you agree?

Chris Barber: Yeah, I think it’s because people are fearful of being ripped off. Like in general in life. Like not just in construction, but what the need to see what the benefits would be. I’ve been on projects where if we’d been involved a bit earlier and help with the design and they pay for that period for you to help evolve it, we could have not had extension of times because of late consultant information. Like this is a genuine thing. It always happens. We could have said, look, you know what, you should do another survey here on the ground because I know you’ve done it there and there, but we are building in this part as well and if something crops up there, let’s manage it. Let’s allow for it and you can properly manage it. A process there. I think the net gain from being on these complicated projects that have been traditionally tendered could really benefit from it from just the experience that the contractor can bring to the table to help make sure that the delivery phase is much more efficient.

Paul Heming: So what specifically are you advocating for?

Chris Barber: I would advocate, so in my ideation let’s call it, would be you’ve got a traditional tender opportunity is, if I was the client, I’d be looking at the merits of the tender list. Two of these people, meeting three contractors saying look, it’s a traditional contract but I want to bring you on board for X number of weeks. Show me what you could deliver in this period on the, like almost like a mini program as such like almost like this like little design period where they say, look, in eight weeks we’re going to do this and this for you. And then you can go, it’s almost like a semi two stage approach, but you’re just thinking about what the outcome’s going to be if people adopted that route. Because a lot of clients, particularly non-construction clients, they won’t realize the potential of projects that don’t have early contractor involvement and what the design team may be missing. Let’s just say.

Paul Heming: It’s funny going back to procurement route. And going back, I remember, for some reason when we started part-time university together, right? We were both a year or two into our careers and I remember with Dun White sticks out to me like learning about procurement routes being told for a design and build project, on this kind of project the client would choose design and build because there’s this risk and this risk. On this kind of project, they’d choose construction management. On this type of project they would use traditional contracting two stage tendering, right? There’s X number of procurement routes. And it was almost like this one fits this, this one fits this. And my experience both on huge projects that I was working on was that more often than not, a client chose almost like the wrong procurement route because they were, so for instance, a D&B contract is what I worked on a huge amount of times. But with like a 10,000 page spec, which is almost not a D&B contract, it’s almost like a traditional, right? It’s just like you’re just crossing wires. And then, so that was on the bigger ones and then on the smaller projects, so often I see, and we’ve talked about it on this show, funders forcing developers to do a D&B contract when they don’t want a D&B contract because they want to have real control over the end product, et cetera, et cetera. And so it’s almost like I feel on a lot of projects across various sectors when a client is starting the project, they’re almost choosing the wrong procurement route in many cases. I don’t know what your reflection on that is.

Chris Barber: Yeah, I agree. I mean that’s probably why we’ve got such big PI issues in the industry. When I was doing some research just have, like looking at the procurement routes, now they’ve changed like traditional was a dominant one. There’s different reports out there, but you can see like there’s such a gap closing between D&B and in one report it was suggesting that D&B was the most popular choice. And the thing is with D&B, if it’s embraced for its true reasons, it can work really well. Yeah, I agree. It is supposed to be a more collaborative approach and that I’m kind of talking about here with this ideation and move the risk to one contractor. But in a single stage competitive D&B, I think is problematic because there’s too much risk being taken by the contractor too early and it only compromises because they’re then in, the only incentive they’ve got as a business is cost, cost, cost, cost, right? To manage cost. And we know that when we make concessions on product choices, it can have catastrophic effects. So in theory it could work well and it’s great risk with one contractor, we just move an insurance claim to insurance claim, but we are not going to get the end product that we desired if we adopt that route in that strategy.

Paul Heming: I completely agree with you and there’s a lot more to discuss on this and let’s do that after this break.
So what I want to talk to you about now, Chris, and we talk about this a lot and I think this is where you have a very unique perspective. You’ve sat subcontractor, you sat main contractor. When we first started, when we first got to know each other, when we were doing part-time study at university, you were subcontractor, we were working very similar types of companies, similar types of projects, and you then went on to become a main contractor. Just going back to the procurement routes that you’ve worked on, which I’m guessing are two stage D&B and traditional. First, from a subcontract perspective, can you just talk about your experience and which ones you worked on and which ones you liked the most?

Chris Barber: Yeah, so when I was subcontracting, we were a D&B subcontractor in the main. We did some…

Paul Heming: Guess it was D&B then.

Chris Barber: Yeah. So we did do some traditional kind of work, but as our highly skilled installers would do some complicated schemes for people. But our bread and butter was the D&B stuff. And it was really, really good because the quality of our, like the team that we had and just the knowledge that we could bring to these organizations and everything was in our control. That was one of the sides that I just, it just ran like seamlessly as well at some of the projects. Particularly the cross wall projects that we had a lot of control over doing the main build. It was like, here’s some ground guys go and build. And that was a great thing. But I remember being in a meeting with a main contractor and there was a clause in the contract.

Paul Heming: Yeah, here we go.

Chris Barber: You remember it vividly and it was basically saying you accept the risk if this is sized incorrectly and it was the stair call. And I said, that’s not fair. Yeah. You’ve given us the employee’s requirements. This is how big it is. We are not taking responsibility for it. And you know, we pushed back on that and we got it changed. There was nothing, there was nothing wrong with it in the end, but we got rid of the clause because it was just totally unfair. And it was funny when I was reading backup on D&B just refreshing my memory with things. Yeah. And like in accessibility example came up and I thought that is exactly what was trying to get pushed onto us as a subcontractor. And the fundamentals of D&B can work really well, but we’re trying to push stupid risk onto people and that’s I think is unfair.

Paul Heming: So yeah. I mean no matter the procurement route, no matter the contract, someone’s silly somewhere is going to try and put stupid amount of risk on you, aren’t they?

Chris Barber: Yeah.

Paul Heming: But so I guess your experience in the first half of your career was so roughly five or six years, subcontractor roughly five or six years making a tractor. Right? So your experience was D&B pretty much, you worked for a D&B subcontractor. I’m guessing that then when you arrived to main contracts, and I know that you didn’t work on D&B very much there, was it a shock to the system? Do you think God D&B is better than this? Or did you think, oh, thank God, we’re not doing D&B anymore?

Chris Barber: Well I mean there’s a significant jump in levels of procurement for, when I moved from subcontract to main contract. So there it was a massive change for me. What I did like was the kind of design certainty, you would get on some of these traditional contracts like…

Paul Heming: That you were given the design. That’s what you got to procure. Go and do it. There’s a spec, there’s a design crack on.

Chris Barber: Yeah. As a QS procuring external packages like that, it felt like it, I wasn’t in control of the design. I can go ahead and get it procured with the set of parameters that are put together by a professional architect, et cetera. I can go and get that done there. There’s pros and cons to it all.

Paul Heming: Yeah. I think, you know, actually just to interrupt you there, this is jogging my memory now. And I was just almost critiquing or criticizing the way that clients sometimes go choose their own procurement room or its they end up on D&B or whatever else. But actually thinking about my experience. So often, I didn’t think about the procurement room. We were a huge subcontractor and I even ended up, because I’m a sad man, ended up doing an in-house training to the rest of our company about what D&B contracts were. Because 90% of what we were on was D&B. And actually as QS is, whether its sub or main contractor, it’s critical to really think about what procurement route you’re on. And if you’re on a D&B or you’re on traditional, I might be sounding like I’m standing the obvious here, but how often do you actually think about it? And my experience as a subcontractor actually, we would, if you are a subcontractor on D&B, you have as much responsibility in terms of the design as the architect. You have the same insurance levels, et cetera, et cetera. And you have the same responsibilities. And almost from a subcontract perspective, we were like not ever thinking about the fact that that was the case. We were always like, please architect, tell us how to do it. You are the boss of this. Whereas actually on D&B we were level. So I guess the point I’m trying to make in a roundabout way is that for everyone, the procurement route matters and it goes back almost and I don’t know why it sticks in my head so much. To that I remember opening the book and procurement route was the first thing there and these are the reasons why you go on different procurement route. But how often do you actually think about it when you’re actually on a job?

Chris Barber: Yeah. I don’t think I did over, overly think about it. What I would say is when it came to the CDP packages, so the contractor’s design portion, which are like a mini design and build, I would treat them differently and make the most of them because it’s within your gift to do so with a subcontractor and value engineer it together to make the best solution for you both. I would, when you’re on those like hybrid almost contracts, you have to do change your thinking. But I remember reading one of your pieces about how you used to explain it to your team about no, this is what happens if this is an employment requirement change, this is how it works. It’s a really great document. I think you might have even produced it for C-Link in the early days. Right? So you do have to change your thinking and make sure your team are up scaled around that or else something that’s a genuine variation could get just eaten up in design development.

Paul Heming: Yeah, exactly. I mean these things are all important and so often, you’re not thinking about I’m on this project and this is the procurement route. Well at least I certainly wasn’t in my experience as a subcontractor and we weren’t as a business thinking about the dynamic shift between traditional and D&B as a simple example. There’s something that’s so, so critical to think about. But we’re talking now about the future of contracting. And the future of procurement routes. And you’ve talked about ECI early contractor involvement. I’m getting in with your acronyms now. Let’s talk about that article that you’ve written has a lot to say about PQSs and BQs. Look at all these acronyms flying around. You must be loving this. How do you actually see the role of both in your future of procurement?

Chris Barber: Well, the PQS, the professional quantity surveyor is.

Paul Heming: I don’t think you need to explain that acronym for all the QSs listening, but go on.

Chris Barber: They are seen as like a nice to have or they might provide a bit of cost advice, but they’re not engaged.

Paul Heming: There’s a lot of PQS is very angry with that line. I’m not nice to have.

Chris Barber: They’re seen as a nice to have by clients and not a necessity. So they might say to the architect, God, give me a bit of a budget for this. And the architect might say it’s approximately this and they’ll, the client will stick with that having like a detailed cost plan and more essentially a BOQ, bill of quantities. And I see bill of quantities as an essential document in traditional contracts. Because there’s loads of benefits. In their very nature they are a collaborative document for everybody to work out of. They’re a central source of truth. There’ll be people going, ah, they’re not accurate or whatever, but they’re a central source of truth that everybody to work out of. And if you have engaged a PQS, they will be adept to putting these detailed documents together that are translating their drawings and information into a process able format and they will pick up that the client hasn’t, or the design team haven’t evolved this bit of the design, there’s a provisional sum here, but I haven’t got enough information here so that they’ll naturally evolve the design process for the client. So it’s a big missing piece of the puzzle. I think that there’s not enough of them. And I think, I remember reading one report, traditional with no quantities was like 36%. And with quantities was something like 16%. So it was like…

Paul Heming: Really?

Chris Barber: Of the traditional route, like two thirds at least don’t have BOQs. And I think it’s a massive failing in the industry.

Paul Heming: Why? So did you ever work on a project where there was no BOQ?

Chris Barber: Yeah, I worked on both. Yeah. They’re great, amazing documents to have.

Paul Heming: So what was the difference? Why is it so critical for you? Like you’re the main contractor. What was the difference in terms of your experience going without quantities?

Chris Barber: So without quantities it’s a lot more vague in terms of responsibility and if there’s changes or you should have allowed for that. And just tracking the changes is much more difficult. You haven’t got pre-agreed rates necessarily. It depends. It depends on the detail of your quote and what gets put into the order. So if you’ve got a really detailed quote, it’s easy to demonstrate changes potentially. But there’s still many, so many gray areas not having a coordinated pricing document in my opinion.

Paul Heming: And so what is your, because we’re talking about the future of main contracting here and you, it’s almost like the future of clients. This isn’t it.

Chris Barber: Well, it impact, yeah, there’s a lot of pushing back. I think the industry needs to do particularly making contractors and say, look, I’m not happy to take this risk or you need to do this to get it, this much more information I need to get off the ground before I even start looking at it. Or pay me to do these design periods with ECI. Right? My ideation of BOQs is they should be essential documents that must be included on traditional contracts without, unless there’s a good reason not to have one.

Paul Heming: It goes back to, we talk about pushing back the last time we were sat here, you talked about positioning, right? This is as main contractors, this is what makes us special. We want these types of projects. We’re going to go out and attack those types of projects as opposed to race to the bottom and easier said than done as we talked about last time round before everyone starts rolling their eyes. But it ties in with a similar experience, doesn’t it? And I know obviously there’s two different procurements. One is with, one is without quantities for good reason. But what we’re actually saying is that without creates or created in your experience, a lot more ambiguity, a lot more difficulty. And a guest detracted your focus from what really mattered on the project. So it’s almost that you’re saying, and we hear it so much and we are working with clients big and small and definitely on the smaller sub 10, sub 20 million pound projects, you do hear people’s, like there’s no pricing document. There’s never been a measure. And if you want a tender for this project, Mr. Main contractor, go and put together a BOQ. And I do find that almost a bit despicable to be honest with you as a process, as a mentality.

Chris Barber: Yeah. I completely agree. It frustrates me thinking about it to be honest. But they basically, the client’s like goes, well, the contractor put it together themselves.

Paul Heming: You’ve got four weeks to turn around this tender, specking drawings, get it sorted, but take you a couple of weeks to do the BOQ and then what you turn around or you sub price and everything like that. But that’s the state of play, isn’t it? So it’s not, again, we’re generalizing that this isn’t the case for everyone, but we know people that this is happening to all the time. So how do we, we’ve talked about how subcontractors can push back on main contractors and we’ve talked about how main contractors can push back on clients, but actually it’s like a collective thing is now, I guess that’s, we’re getting to the point of what we’re talking about here for sub, like what is the future of construction and how can we all collectively push back so that main contractors aren’t on margins of 2% and then that leads to all the other issues, et cetera.

Chris Barber: Yeah. I mean the competitive tender under traditional should come with like, I’d almost make it a mandatory thing in my ideation that BOQ has to come with it. Like if it doesn’t, then we shouldn’t be doing the project or even looking at it because you’re wasting so much time and resource just estimating, doing all the quantities, et cetera. It’s an unfair risk distribution for a traditional contract.

Paul Heming: Yeah. And if you’re a client listening to this and there are some I know who speak to you. Really the benefits of putting together that BOQ pricing document, doing that measure will give you the opportunity to get more tender returns. If you want a competitive tender, you’re going to get many more back. If you have a pricing document and you’re then going to be able to use it for valuation, variation, et cetera, et cetera, throughout the lifecycle of the project, it is that centerpiece, it’s the fulcrum Chris. So it’s really, really important. But you’re also arguing for early contractor involvement. So we’ve got ECI, we’ve got BOQs. And the last thing really that stood out to me in your article was more carrots and less stick. Now this is a man coming from, who’s been involved in subcontracting, so he doesn’t want any more sticks, but you’ve also been involved in main contracting. So what do you mean by more carrots and less stick in the context of procurement route and changing the way we operate?

Chris Barber: Well.

Paul Heming: There we go. Big breath.

Chris Barber: The thing is right with contracts, how they’re set up, there’s so many heavily amended contracts with condition precedents in them that are setting up traps, commercial traps.

Paul Heming: Like you are responsible for the stair call.

Chris Barber: Yeah. For like they’re just are necessary. Now I understand some of the conditions precedent are trying to help improve like workflows and making sure applications get submitted in the right format and variations, et cetera. But I remember seeing one post on LinkedIn, the other day about someone had said that it, the conditions precedent was they had to turn around a variation within one day and provide cost advice or else it’s not accepted. And that sort of condition precedent is just unacceptable and you’re not incentivizing the right behaviors in these contracts. And I remember working on a contract, a partnering contract I think it was, and we were incentivized for like timely finish and things like that. And the company got a bonus but also the people directly employed on that project got a bonus.

Paul Heming: Yeah, I remember you telling me at the time and I was quite jealous.

Chris Barber: Yeah. It was quite funny because the QS left and I took his role on the job and I took all his bonuses. So it was quite good. But other than that it’s incentivizing the right behaviors. The contracts are set, we set up today aren’t setting up it or incentivizing the right behavior. And what…

Paul Heming: It’s… Yeah, go on.

Chris Barber: No, no, you go.

Paul Heming: I was going to say it is the margin as well, right?

Chris Barber: Yeah.

Paul Heming: Because if you are on 2% margin, or even if you’re a subie and you’re on 10-15, right, as a main track, you look at the sub and you think, oh, they’re on 10 to 20%. Amazing. Sometimes 25%. Yeah. You’ve got a lot more room for maneuver, it’s still not masses. If you look at other sectors, other industries, their margins, they would laugh at us. They do laugh at us. So it’s no wonder that if a main contractor is on between minus five and 5% margin, I’ve recently spoken to someone who’s veering towards zero. If you’re doing that, what does that mean? You’re going to do, you’re going to say the stair calls your responsibility, you’re going to say here’s a condition pressing, you’re going to say X, Y, and Z. So I completely hear you, I completely agree with you, but I think the heart of the problem is margin and it’s that pushing back as a sector and saying we’re not doing it anymore.

Chris Barber: Yeah. I mean I completely agree with that. Margin needs to be addressed and for the traditional contracts that have got a BOQ that are easy digestible and price able format, you can work with that to help, I think it will help address margin. There is some pushing back that clients would need to, that main contractors would need to do to make sure that they’re protected. But there is a level of comfort. So if you took a BOQ project with a standard set of clauses, it’s going to be a lot less risky for your company to undertake, then you’ve off throw in the same kind of project, but it’s a D&B, not much design information and it’s competitive single stage tender. It’s problematic, isn’t it? You’re going to take on loads of risk and it could end up badly for everybody involved. And I also think that if we do the D&B process, it needs to be two stage. Like with a two stage approach, you can allow the teams to work collaboratively together and you have fixed fees, fixed prelims and it would just be much more efficient process.

Paul Heming: You’d love two stage, like the takeaway from this is you’d love two stage.

Chris Barber: Yeah. I just think it works well for risky projects. I don’t know why people wouldn’t adopt that route. Everyone’s trying to get projects to start fast and push risk onto each other. It’s this completely backwards approach

Paul Heming: As opposed to understand risk, allocate risk. And it’s almost, yeah, it’s cheesy, isn’t it? A collaboration thing, but there is a distinct lack of it. And we said this before if the automotive industry understood how our billion pound companies operate with their supply chain not really understanding what projects they’re on, like their capacity, they’d laugh at us. It’s so hard to explain construction to anyone who isn’t in construction, right? We all have a laugh about the stupid stake or example, right? Or stupid contract terms like one day to return of variation. If other sectors really looked at what we did in terms of the margin and the approach, they would be gob smacked and we should all be gob smacked. But we’ve normalized it, haven’t we? We’ve got to this point where it’s normal. And so this conversation’s been really interesting because it’s trying to shake up that norm. And do you want to wrap up and finish with any final thoughts on it?

Chris Barber: Yeah, I think my ideation or the vision for it, is like an industry that is really truly embracing collaboration and that’s from the client all the way through and how they set up their procurement and from the outset. So you taking the ECI or two stage tender, however you want to do it, it making sure you get the right documents, like a bit of quantities because that’s going to build trust with the main contractor. Imagine you are a client, you’ve got a project with a BOQ, the client’s going to go, wow, I trust this guy. Or another client next door is like, yeah, no I haven’t got anything but you price that. You’re not going to trust that the second…

Paul Heming: We don’t want do it? We always say it for main contractor to subcontractor the tender return rate through our platform and through so much more is so heightened if you create a quality tender, BOQ, et cetera, et cetera. It’s exactly the same for client to main contractor. The main contractor’s going to pick it up and go, wow, I want to work with these guys as opposed to…

Chris Barber: Not number one.

Paul Heming: Yeah.

Chris Barber: Yeah, exactly. A rolling of the eyes and you’ve got disgruntled estimators, you’ve got to take off the whole project.

Paul Heming: Four weeks to do it. And it drives me absolutely mad. We can talk about this phrase. Like, then the client gets returned if they’re lucky for BOQs that are all wholly different, right? And that we are going to talk, next time we sit down Chris, we’re going to talk about tender analysis and why tender equalization, why this stuff is so important. But just do a BOQ, I mean we’re going all over the place here, but just do that pricing document process is absolutely critical. So in summary, new way to do procurement, early contractor involvement, BOQ and also…

Chris Barber: Less complicated contracts.

Paul Heming: Less complicated contracts.

Chris Barber: Incentivized.

Paul Heming: Less carrot, more stick incentivized. Yeah, I mean I feel like we’re re-litigating problems that are out there and people know about, but I think that what we are trying to do with this show is actually just give everyone a bit of shape. We’ve got to change and that’s what we’re trying to do here. And so thanks very much for your article and I’ll share it in the notes. Guys, this is future contracting series. Hope you’re enjoying it. We certainly are. If there are any questions or any topics that you think we should cover, it’d be great to hear from you and Chris, I’ll see you in four weeks, you’ll be welcome back and yeah, thanks for your time, mate.

Chris Barber: Thank you. Looking forward to it. Speak soon.

Paul Heming: Cheers mate.

Chris Barber: Cheers.

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