Carillion’s demise heralded many comments from readers. Here’s a selection.
“As a founder and managing director of an SME, Carillion’s collapse makes working for the “big” contractors frightening.
I know a supplier who refused to quote for Carillion because their payment terms are 120 days. I also have a friend who joined them in December and this week was made redundant.
This year we saw the passing of Sir Brian Hill. All the old family businesses have just about gone and now we see conglomerates chasing the stock market, led by the government. The personality and pride has gone out of the industry which is why quality is suffering and training is poor.”
Mike Smith, managing director, Corniche Builders (Member of CM reader panel)
“With costs rising across the board, not just in construction, client budgets are tightening and expectations aren’t falling. Other sectors such as finance have responded with increasing automation and digitisation to protect profit margins, construction firms have broadly failed to do this and now this failure is showing itself.
For some years now there has been an acknowledgement that those contractors who digitise most successfully will realise a significant business advantage over those who don’t. But instead of a genuine and competitive R&D race to be the best we’ve seen a somewhat cynical approach to digitisation where saying the right thing is, unfortunately, more important than actually doing the right thing.
Carillion has some truly excellent individuals from the digital construction scene at their disposal, but it seems the top table didn’t commit to finding digital efficiencies quickly enough as part of their strategy to keep profits ahead of costs.
Among the scant silver linings of this catastrophe, perhaps a renewed vigour for digitisation to create the 21st-century contractors our country needs might just emerge.”
John Adams, Director, BIM Strategy (member of CM reader panel)
“The win contracts ‘at all cost’ mentality leads to an outcome that is to everyone’s cost.
Jeff Edgar
“Recent events such as Grenfell Tower and now the Carillion collapse highlight that private sector outsourcing is not working, either in value for money or quality.”
Tony Butcher
“My company was in Carillion’s supply chain for 15 years before deciding to stop working for them in 2010. At that time they were insisting on payment terms of 90 days plus, but they never made payment in less than 120 days.
To work with Carillion on one of their frameworks required significant investment and we spent thousands of pounds annually to retain access to that opportunity – but despite always meeting ever shortening tender periods and submitting fully compliant bids, we were frequently passed over for one of the top five consultancies.
We decided they were a poor client, and it is of no surprise that ‘over trading’ and the disconnect between executive and operational management has led to their demise. The only real surprise is that this didn’t occur earlier.”
Brian Impey, director of the Acorn Multi Academy Trust (Member of CM reader panel)
“It is devastating for the many SMEs caught up in this. The building industry is riddled with these collapses, though not on this scale, and suppliers are caught up in company failures due to the payment mechanism employed by the main contractors.
Clients need to become accountable for the supply chain they employ both directly and indirectly, including more transparent and prompt payment.”
Duncan Town, director, Alexander Consulting (Member of CM reader panel)
“Procurement professionals have concentrated on bundling work into larger packages for longer periods that effectively exclude most smaller businesses. This has allowed the likes of Carillion to dominate the market, and now led to this catastrophic collapse.”
Brian Jukes
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Why is it now that everyone start to come out to make comment about Carillon shortcomings. What happened to the brave men and women with guts to come out earlier rather than waiting for an inevitable catastrophe as this?
I think that the UK has lost its edge in the international construction arena. It is a huge shame. The UK should be building and leading the world – especially the developing world.
Kola Roberts, SME Director
It is utterly absurd to argue that direct labour is better than outsourcing and vice versa. In the absence of close control either the workforce or the contractor runs riot doing pretty much what they want, how they want.
I took over an estate of 300 public properties in 1979, where contractors had been unsupervised for five years. Some clever fellow in management services said it was only necessary to inspect one job in 10 because the cost of supervision exceeded the cost of the work. This gave the operatives as much as the contractors license to do whatever they wanted because there was a 90% chance of getting away with it. That was why repairs to flat roofs consisted of tipping bucket of bitumen in the general area spreading it with a yard brush and sending an invoice for £400 – in 1979.
We managed to introduce drastic change within six months. I simply divided the authority into districts and gave property inspectors power to do whatever was necessary on their patch up to £1,500. Even before we had computers we monitored what was being done in each trade in each district and the inspectors knew they were being continually monitored.
18 years later I was supervising the maintenance of social housing by direct labour and the work was truly the most appalling I have seen in my career. Nowhere else have I seen a 50 mm timber gatepost fixed to a wall with a 75 mm fastening. Thanks to strong unions, a complex disciplinary system and sympathetic politicians it was virtually impossible to sack an operative. One hero of labour and actually collected a total of seven final written warnings. There was a maximum bonus system which could be manipulated with ease allowing the operatives obtain (I have purposely not said earn) a good wage in just four hours a day.
In another authority I actually calculated it would be possible preserve the jobs of the directly employed labour force while allowing them stay at home on basic pay. We could then employ tightly supervised contractors and still save the authority £250,000 pa. I was made redundant for pointing that out.
So it is simply not an either or situation the answer is to ditch both left and right wing dogma and do what is necessary. The military say that no plan survives the first five minutes contact with the enemy and changing circumstances require the maximum flexibility. The answer has got to be not a one-size-fits-all management plan, but systems appropriate to the task and competent managers with the power change and adjust as necessary.