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Egan’s thoughts 10 years on

by mel starrs on May 22, 2008

in Uncategorized

Building have the full transcript of Egan’s speech at the Common’s reception here, and I would urge everyone to read the full thing, but I’ve pulled out my favourite bits below. The press have jumped on his comments about the housebuilders (probably because they make the best headlines) but there is some other juicy stuff in there.

It is a two edged sword.  For those days when you’re hitting your head against a brick wall, thinking “Am I mad? Why do I bother? Is it me?”, Egan’s comments assure you that, so, it’s not you, it is the industry and it’s a bit poorly.  Not quite broken, but not too healthy either.  On the other hand, he said all this 10 years ago and very little has changed.

On the importance of teamwork and supply chains:

…first of all, you have to work as a team. If you don’t work as a team you simply are going to fail. You’re not going to achieve all it is that you have to do. Secondly, you design the whole project on a computer versus a target that you’re trying to achieve, and why not try to be really good and use the world-best? Search for improvement within your supply chain, release the value that they’ve got in their supply chain and build it into your project.

On the lunacy of lowest cost tendering:

I think lowest cost tendering (and I think the government is absolutely the culprit here, they were very bad as the main buyer of projects, still buying the education department with lower cost tendering) is absolutely ridiculous.

You see, the problem is that until you’ve designed the project you don’t know what it’s cost, and it costs you 10% to design it. How can you get a rational tender? How can you get a number that means anything? It doesn’t mean anything. It means very little. It seems impossible if the government is buying 40 or 50% of all the projects, all the construction in the country, and they just simply aren’t trying to be a good client. I don’t see how the industry will ever become fully competitive.

And pulling those two strands together:

And the point to remember is that it’s a team that does it – a designer, a construction team a supply chain and so on. Working hard together they can produce a good cost. But they can’t do it if they work separately. And lowest cost tendering starts them off as separate groups.

Developers are as much to blame as the government:

It isn’t just the government that is a bad buyer, developers are too. They’re so anxious to dump all of the risk onto the industry that they don’t actually grasp what the enormous cost improvement could be if they shared the cost of the 10% design, and they shared the risk.

Egan suggests the industry goes back and rereads Rethinking Construction.  It is available (after registration) from the Constructing Excellence website.