Partnering and Collaborative Working

Rona Westgate, David Jones, David Savage, Rona Westgate, David Jones, David Savage

• Publisher: Informa Law from Routledge
• Year: 2020
• ISBN:
  9781000289923
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho urbanístico

Partnering and Collaborative Working: Legal and Industry Practice brings together leading construction industry and legal experts to discuss key elements of the partnering process and how they can be implemented.

CHAPTER 1

THE STORY SO FAR

Don Ward and Alan Crane, CBE¹

THE HISTORY OF PARTNERING

CONTRIBUTED BY DON WARD

“There is nothing new in partnering, it’s how we have always done things in our firm.”

This is a frequently expressed view amongst construction industry practitioners. There is one common variation on this theme: “it’s how we always did things in our firm in the 1960s.”

These statements are undoubtedly founded on some element of truth, as we shall see, but only because they reveal a fundamental problem – every person has a different understanding of what they mean by partnering. So this review of the history inevitably intertwines consideration of the definition of partnering with the history of the elements that contribute to that definition. It also focuses on key reports and guidance documents as the routemap to that history.

Partnering has long been advocated as a procurement strategy to help cure some of the problems of the construction industry. These problems have been well documented and include such matters as fragmentation by using a sequential procurement process, lack of integration, and its adversarial culture. The belief of those promoting partnering is and was that the adoption of a more joined-up and collaborative approach would result in the achievement of a continuous and sustained improvement in construction procurement, which in turn would result in cost savings and eliminate waste and poor quality.

1. This chapter provides insights into the partnering process by two individuals who have had a particularly close involvement in the promotion of partnering as one of the solutions to the construction industry’s problems. In the first section of the chapter, Don Ward provides an overview on the history of partnering and will trace how this form of procurement has been brought across from other industries into construction.

Don is the Chief Executive of Collaborating for the Built Environment, known as Be, the leading UK supply chain body for property and construction and a Director of CWC Ltd, the Collaborative Working Centre of Be. He was formerly Chief Executive of the Construction Industry Board for its five-year life from 1996-2001.

In the second section of the chapter, Alan Crane, CBE looks at some of the challenges that are presented to contract management if the parties opt to take partnering on board. Alan is the Chair of Rethinking Construction and a member of the Strategic Forum for Construction.

Although the main impetus for change in the UK context is considered to be the Latham Report (and that is also the main starting point for this chapter), that is not to ignore the numerous reports about partnering that pre-date Latham – Emmerson (1962), Bowley (1963), Banwell (1964), Higgins & Jessop (1965), Bishop (1972), NEDO (1978), Munday (1979), Ball (1980), Allen (1983), NEDO 1983.

Many of these reports which comment on the need to improve costs, time, quality and fitness for the end user are listed in Appendix 4 of the National Audit Office Report Modernising Construction, 11 January 2001, which is referred to below. These reports were driven by client concerns about the impact on their commercial performance by the inefficiencies and waste that were so prevalent in the construction industry.

Common themes running throughout these reports are the need to improve trust, foster a collaborative culture, and eliminate adversarial relationships. These aims provide many challenges to the management of organisations, not only in terms of developing trust between business organisations, but also at the level of individual behaviour on a project. Some of these are discussed in the second part of this chapter.

In terms of setting the background context, it is also important to understand that partnering, per se, is not construction, or construction industry, specific. Several other industries in the UK adopted partnering techniques before construction spotted the opportunity, notably the oil and gas sector (see the discussion about CRINE below), the car manufacturing industry (including Rover) and the retail industry (J. Sainsbury, Dixons, BAA). The experience in these other business sectors is not commented on in detail in this book, but these industries’ experiences have influenced the adoption of partnering techniques in the construction industry, and have provided lessons for construction to learn so as to avoid some of the early pitfalls they experienced. These industries also played a key role in transferring partnering practices from their core businesses to the procurement of built facilities to enable and enhance those core businesses. For example, supermarket retailers were some of the earliest clients of the construction industry to adopt partnering techniques, and have been amongst the most successful in their implementation.

No particular distinction is made here between “project specific” partnering and “strategic” partnering (or “alliancing”) in this historical section. Project specific partnering, as its name suggests, is about partnering on individual projects. Strategic partnering is about long-term relations between parties who are prepared to work together over long periods of time. Strategic partnering requires a more thorough and detailed knowledge and understanding of each parties’ business, so maximising the effectiveness of each other’s business. However, it should be noted that strategic partnering is the option preferred by the Accelerating Change Report referred to below, under the guise of supply chain integration.

Latham

The widespread growth of interest in partnering in the construction industry can be traced to the 1994 Latham Report Constructing the Team:

“Partnering includes the concepts of teamwork between supplier and client, and of total continuous improvement. It requires openness between the parties, ready acceptance of new ideas, trust and perceived mutual benefit …. We are confident that partnering can bring significant benefits by improving quality and timeliness of completion whilst reducing costs.”

Sir Michael Latham, Constructing the Team, 1994, quoting the Chartered Institute of Purchasing and Supply

“Partnering arrangements are also beneficial between firms… Such arrangements should have the principal objective of improving performance and reducing costs for clients. They should not become “cosy”. The construction process exists to satisfy the client. Good relationships based on mutual trust benefit clients.”

Sir Michael Latham, Constructing the Team, 1994.

Following the Latham Report, the Construction Industry Board (“CIB”) was set up to oversee the implementation of Latham’s 53 recommendations and to deliver his headline target that a 30% real cost saving ought to be achievable within five years. In July 1995 the Construction Industry Board set up a working group at the request of the then Construction Clients Forum, which a year later published a report seeking to develop and illustrate Latham’s views of partnering whilst setting out to quash a few myths about the subject.

In 1996 the CIB Report Partnering in the Team defined partnering as follows (emphasis added):

“Partnering is a structured management approach to facilitate teamworking across contractual boundaries. Its fundamental components are formalised mutual objectives, agreed problem resolution methods, and an active search for continuous measurable improvements.”

It is suggested that the emphasised principles distinguish true partnering from other forms of co-operative working practices. These involve levels of management rigour that have rarely, if ever, been evident in the construction industry – at least until the 1990s.

The CIB Report went on to explain that partnering:

“… should not be confused with other good project management practice, or with long-standing relationships, negotiated contracts or preferred supplier arrangements, all of which lack the structure and objective measures that must support a partnering relationship.”

It is the history of these clear distinctions that are considered below.

It follows from the above that there is no need to go any further back than the late 1980s in tracing the history of partnering as a formalised approach in the UK construction industry. One could have chosen to quote Alfred Bossom, a practising architect between the wars, as some have done. Equally, as Latham did in his interim Report Trust and Money, one could have quoted the plethora of government-led industry reports after the Second World War, such as Emmerson (1962) and Banwell (1964). But the explosion of interest in the application of partnering to the construction industry can be traced to the late 1980s / early 1990s, following major successes in other industries and other countries.

Lean thinking

Much of modern partnering can be traced to the revolution in manufacturing led by the Japanese which became evident once their products were allowed into Western markets. In 1990, Womack, Jones & Roos brilliantly chronicled the benefits of lean production in the automotive industry as epitomised by the Toyota Production System compared with the old (Western) mass production systems in their seminal work, The Machine that Changed the World. This described how Toyota spread lean production through its supply base in the 1970s and its distribution and sales operations in the 1980s.

Jones and Womack’s second book on the subject, Lean Thinking, made generic the approach, whose starting point was to clearly define value from the end customer’s perspective, to then target all the wasteful activities throughout the entire chain of firms involved in jointly delivering the product (the ‘lean enterprise’), hence allowing better value to flow.

CRINE – Cost Reduction Initiative for the New Era

The first UK business sector, with major similarities to the construction sector, to embrace partnering was the offshore oil and gas sector. In the late 1980s this sector was faced with an industry threatening crisis – the UK continental shelf had become uneconomic to exploit unless major cost savings (30% or more) in the total cost of drilling could be delivered.

These pressures for the background to the evolution of the CRINE initiative in 1993. This was led by oil company project managers and concluded that changes needed to be made in the way the industry interacted on the broadest basis (across oil companies, government, contractors and suppliers) to increase mutual trust and confidence and move away from adversarial relationships. Amongst the most startling achievements was that of the BP Andrew oil field development and exploitation.

ACTIVE – Achieving Competitiveness through Innovation and Value Engineering

ACTIVE was launched in June 1996 and ran for five years with the support of the DTI and the European Construction Institute (ECI). It was driven by a desire by Government for the UK to be the preferred base for investment by international companies within the process plant industry where there is a choice of location within Europe. Partnering was once again seen as the key to success, and a target of reducing total project costs by 30% was set.

Reading Construction Forum

In 1995 the Reading Construction Forum (RCF) published Trusting the Team – the Best Practice Guide to Partnering in Construction by Professor John Bennett and Dr Sarah Jayes of Reading University. This remains arguably the best introductory text on the subject, and drew the key distinction between project partnering (as applied to one-off schemes or teams) and strategic partnering (as applied to a series of projects, and often also referred to as “alliancing” or “strategic alliancing”). RCF suggested typical cost savings from adoption of partnering principles of between 2 and 10%, and as much as 30% in some cases.

The case studies of successful strateg...