Partnering – improving money and trust
Partnering benefits business as well as projects – Donald Leeper.
The benefits of partnering come more from relationships than from business processes argues DONALD LEEPER.Some 10 years ago Sir Michael Latham published his interim report titled ‘Trust and money’. A decade on, these two interlinked issues still bedevil much of our industry. Rreal partnering, in relationships as well as in processes, has — with some honourable exceptions — not achieved anything like the potential benefits that so many have hoped for. If it had, surely market competition would have compelled others to follow more closely the real principles of partnering. Unhappy conclusion
Evidence for this unhappy conclusion has come from informal exchanges across the industry and includes the following. • ‘Partnering’ contract clauses becoming even more onerous. • Responsibility boundaries becoming more blurred, when joint and several liability for the whole project is required of each key supply chain member. • Risk dumping, where the risk is quite beyond the influence of the supply partner to manage. • Continued insistence on retentions. • Designers, both architects and engineers, find themselves playing an elaborate game of musical chairs as they continue to be sought after for their specialist skills, but often by different leading contractors/ consortia. • Profit margins remain very low for much of the supply chain. Why does this remain the case? Central and local-government authorities, through public-sector procurement, are by a big margin the largest and most influential participants in the construction industry. To their credit, they have introduced a variety of initiatives to encourage more integrated supply-side processes through PPP, PFI, Procure 21, Term Appointments — the list is extensive. So why has this not been more successful? Last July, Sir Evelyn de Rothschild wrote an influential article ‘Capitalism may be under threat from itself’ quoting recent cases of market abuse ranging from skimming off small amounts from many accounts through to the failures and alleged fraud in companies the size of Enron. Whilst we may not have faced the construction equivalent of these collapses, many of us have experienced a gap between what those at board level may actively believe is the strategic intention of their company and the pressures that are experienced by the negotiators and managers assigned to individual projects. Industry leaders increasingly aspire to Latham/Egan objectives — whilst their middle-ranking managers believe that they will be judged (and rewarded) directly on the results of their current project. This so often means squeezing that extra margin out of the current supply-side partners — the pressures on short-term results acting to undermine long-term good relationships, which form the essence of trust. It is difficult to avoid the conclusion that many organisations have not yet fully realised that developing trust is potentially a powerful source of competitive advantage and that being unreasonably tough with suppliers and partners consumes more resources for less benefit than taking a proactive commercial approach based on trust. To be trusted we need to demonstrate both our competence and our character, that we are worthy of trust, that our actions support our words. A survey reported last year* rated a wide range of desirable attributes in deciding whether or not to trust someone. The 10 most frequently looked for attributes were: • Fairness; • Dependability; • Respect; • Openness; • Courage; • Unselfishness; • Competence; • Supportiveness; • Empathy; • Compassion. Nine of these fall into the category of character qualities, with only one (competence) being directly concerned with technical and creative skills and expertise. When asked to indicate how close the attributes we want are to the attributes we experience in reality, only competence scored highly. On all nine of the character attributes, the gap between what we want and what we find in practice was much greater. Distinction
This correlates closely with the points made in Sir Robert Malpas’s report ‘The universe of engineering’, where he draws a distinction between engineering knowledge, the ‘know-what’ and engineering process, the ‘know-how’. The first relates to the possession of a growing body of facts, experience and skills. The second relates to the creative process that applies knowledge, experience and resources — usually of a number of disciplines (the supply chain) to exercise informed judgment to best meet the customer’s needs. In other words, our individual competencies are far less of a problem than our ability to work effectively together to deliver to our ultimate client. So how do we address these issues? For each tenderer, public-sector clients might be encouraged to look more closely at their successfully completed projects, what further improvements are envisaged and how many of the key supply partners have been retained. Lead contractors/consortia (and indeed every company) might look at how closely their longer-term objectives align with short-term pressures on their middle ranking negotiators and managers. Above all, we in the services sector might reflect that if we believe being adversarial with suppliers and partners consumes more resources for less benefit, then we have not been very successful at convincing our partners higher up the chain of this Improve
Whilst it is relatively easy to suggest improvements for others, what can we personally do to improve confidence and trust? There is a variety of ways by which we could tackle these issues. One is to demonstrate to potential partners further improvements directly arising from the last project together. Another is to suggest ways of working together to improve sales. We could also show how we might together adapt to marketplace changes. Should we do more together to develop the expertise and skills of our people? Should we also put more effort into getting to know better the managers of each current project so that we help them to share their concerns and mitigate the problems which are likely otherwise to lead them to pursue more adversarial actions as the job nears completion? Trust and money are interdependent. More trust means increasing profitability, as well as increasing customer satisfaction — bringing confidence and renewed pleasure in our work For each of us, of course, there is only one person we can really change…and that’s not a bad place to start. Donald Leeper is president-elect of the Chartered Institution of Building Services Engineers and a consultant with Zisman Bowyer & Partners.
* ‘Trust matters’ by Sally Bibb and Jeremy Kourdi.