In response to an article by Martin Davis, IPI mentor for the Cabinet Office, ‘Dysfunctional market in dire need of reform’ dated 22nd January 2018 in The Times.
By Andy Robinson, Group CEO.
Well done Martin on your article in The Times exposing the dysfunctional construction industry and calling for reform. In addition to your role advising the government, I would also like to applaud you on your efforts for innovation and progress with Dudley College and the success of its IPI project.
As CEO of a main contractor and governor of Dudley College, witnessing the project team working cohesively to identify and overcome problems was a breath of fresh air. Whilst not a perfect solution to construction’s woes, IPI assisted in bringing everyone involved together to deliver within programme and budget.
Now is the time for construction to take a serious look at itself. We recently called on other contractors to support their suppliers affected by the Carillion collapse by offering early payment. We simply can’t afford to lose quality supply chain and skilled trades to an antiquated procurement system that saw many of its suppliers on 120-day payment terms.
The industry can’t continue working this way. We want to challenge it to improve processes and move away from a ‘risk-dumping’ culture and toward an integrated, collaborative and non-adversarial approach.
Originally part of the government’s 2011 construction strategy, aiming to save 20% in construction spend, IPI is an insurance policy covering all parties for All Risk, Public Liability, cost overrun and also Latent Defects for 12 years. The policy allows for a no-blame, no-claim structure where the percentage share taken of the gain is equal to that of the pain.
This now begs the question: is it now time to adapt IPI for the private sector? Could this be part of the solution to drive the industry forward?
Colmore Tang is exploring how IPI can be brought into the private market. We’re currently working alongside a large insurer to investigate whether such a product can be applied to our projects, thus benefitting ourselves, our subcontractors, our supply chain and our clients.
The IPI model can encourage higher performance across the industry, seeing suppliers and subcontractors working more in tune with clients’ aims. It ensures collaboration, rather than the adversarial contracts that are typical in the sector. With all parties involved in the process there’s a much higher chance of controlling cost and programme, beneficial to all participants, especially the client.
Surely, if the end result is a more stable transactional environment for all parties then that can only be a good thing?
Given the impact from the collapse of Carillion, now is the time for the industry to take stock and look at how it can utilise innovative processes such as IPI to ensure these failures do not continue.