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May 27 2008

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Egan: 10 years on (again)

It seems hardly a week goes by at the moment without someone talking about what has (or – more likely – hasn't) changed in the UK construction industry in the ten years since Sir John Egan produced his report, Rethinking Construction.

A couple of weeks ago, Building magazine produced a depressing feature, “Egan 10 years on”, and a leader article that conveyed a general gloom about how the industry has failed to live up to Egan’s targets (in the meantime, Constructing Excellence has marked the anniversary by restructuring itself and running a survey – see post). In the past week, Egan himself has marked the industry down and a writer in Building has suggested Egan was wrong to apply manufacturing thinking to the AEC sector.

While I am a strong believer in collaborative working, I haven't really got too involved with this 10-year review – mainly because the Egan report said nothing about how information and communication technologies (ICT) might be deployed to support better AEC industry processes. We had to wait a further four years, for the Egan follow-up report, Accelerating Change (2002), before we got an explicit endorsement of the impact that integrated ICT could have on supporting collaborative working (no doubt influenced by the emergence of construction collaboration platforms and other technologies during the 1999-2000 dot.com boom). Accelerating Change's vision talked about “Integrated teams, created at the optimal time in the process and using an integrated IT approach”, and, later in the report, ‘IT and e-business’ was identified as a cross-cutting issue:

7.8 IT and E-business, as enablers, have already radically transformed many operations in the construction sector and there is still a vast potential for more. IT can deliver significant benefits for designers, constructors and building operators…..

7.9 The widespread adoption of e-business and virtual prototyping requires the construction industry to transform its traditional methods of working and its business relationships. Key barriers to this transformation include organisational and cultural inertia, scale, awareness of the potential and knowledge of the benefits, skills, perceptions of cost and risk, legal issues and standards. Weighed against this, the potential benefits are:

  • Efficiencies and skills development from knowledge management
  • Economy and speed of construction;
  • Improved business relationships;
  • Product and process improvement; and
  • Technology and entrepreneurship.

"4 out of 10"

I was therefore interested to read a speech given by Sir John last week. Before giving the industry just 4 out of 10 "for trying", he talked about the clients' rationale that underpinned the report's recommendations:

We were buying projects worth four or five billion a year between us, and we were able to say productivity was low, costs were out of control, quality was poor and so on and so forth. It reminded me very much of the car industry of the 1950s and 60s, the revolution that we went through as an industry to compete with Japanese car companies, and the absolute change we had to bring to our new car programmes to actually attain competitive products.

So what we did in the taskforce was to mimic the new car programme in a huge project. And what did we suggest? Well 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. …

I think these remarks suggest that Egan was envisaging far more than simply enabling collaborative working; I think he expected the AEC industry to be embracing an all-inclusive, intimately connected, manufacturing-type approach more akin to what we now describe as building information modelling (BIM), and where – a few isolated examples apart (think: offsite fabrication perhaps) – the UK construction industry is still a distance from being able to adopt such an approach.

Blogger Martin Brown at iSite says the key is in the title: "Rethinking Construction", adding:

"… I think ever since I have used the
Einstein quotation of not being able to solve today's problems with the pattern of thought that created them. Those that have embraced new patterns of thought with in the industry
are those who see benefits in winning work, in profit and in working
conditions generally. Those who haven’t still fight for work in
competion on lowest cost, (ie on lowest profit) struggle to make
margins and profits and generally have a hard time of it."

This is similar to often-expressed view of the writer of the previous UK industry report, Constructing the Team (1994) Sir Michael Latham's view was that "if you always do what you always did you'll always get what you always got". So what do you do instead? Well, among other things, you could have a long hard look at your systems and data….

IT systems and data

While Egan was delivering his speech, Building was preparing to publish a comment piece from Ray Crotty (managing director of C3 Systems and a former IT director of Bovis). In System? What System? Ray says Egan was wrong to focus on the supposedly adversarial industry culture; instead, Ray says "it’s the way we manage projects that floors us", going on to say that the underlying problems specific to construction include a "bizarre disregard for good data – opinions matter more than facts" and "almost complete failure of construction firms to learn
systematically from their projects; the mind-boggling waste of
information involved".

Ray criticises Egan for his focus on manufacturing where "The key thing that enables these firms to
work so closely in harmony is precisely specified, real-time
information about the state of production in each of their
participating facilities." He goes on: "No such information exists in
construction".

A
complete overhaul of the basic mechanics of project management is a
necessary first step. The overall conceptual approach to projects, the
management techniques and, particularly, the information systems used,
all need rethinking.

I start with the data. Construction
projects generate huge amounts of it. Or, at least, lots of things
happen on projects that, if they were recorded in detail, would
generate huge amounts of data. The interesting things that happen are
events such as the erection of a steel beam, pouring of a concrete
floor panel and installation of a door set. Traditionally, individual
events such as these have been more or less ignored in construction –
they’re just part of background noise.

It's well worth reading the full article and I hope Ray's observations stimulates some industry responses.

Permanent link to this article: http://extranetevolution.com/2008/05/egan-10-years-on-again/

2 pings

  1. Construction and Web 2.0 | Extranet Evolution

    […] of the group were surprised that related issues (for example: Egan’s recent speech) and themes (technology, people and processes) were already being discussed on social media such as […]

  2. An open letter to the new Chief Construction Adviser | Extranet Evolution

    […] John Egan, in Accelerating Change (2002), highlighted the role of ICT, and wanted 50% of projects to be delivered by integrated teams by 2007 – a target the […]

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