WHY CONSTRUCTION NEEDS TO STOP FIGHTINH WITH ITSELF

With profit margins tight and some projects not receiving any contractor bids, something needs to change. CICA’s Philippe Dessoy and Juan Armando Vicuna tell Andy Brown that a different approach is needed

The event was held round the corner from the Champs-Élysées

IMAGE: ADOBE STOCK

The Burj Khalifa, stretching 828m up to seemingly touch the sky, the worldfamous curves and points of the Sydney Opera House sitting nestled against clear blue water, and the Sphere on the Las Vegas Strip, being illuminated in a galaxy of changing colours and lights. These iconic projects were created by construction contractors, but the reality of a contractor’s day-to-day life is far from glamorous.

At a recent contractors’ event in Paris, France, a theme that emerged was how much contractors have to fight at every aspect of their projects: with the client on cost and timescales and disputes over the work, with governments and cities over different regulations and with subcontractors about the work they have done.

Philippe Dessoy, Andy Brown, Juan Armando Vicuna

IMAGE: KHL

The contractor chooses the client they want to work for more than they did before

For an industry that has famously thin profit margins, all this fighting costs contractors time and money, something they can ill-afford.

At the event in Paris, which was organised by CICA (Confederation of International Contractors’ Association) and the EIC (European International Contractors), the view was put across that this way of operating is not sustainable and needs to change.

“An issue in construction is that the contracts are not very friendly. If you want to attract contractors then at least you have to be fair. We try to have fair contract conditions,” says Philippe Dessoy, the outgoing President of CICA and general manager at Besix.

“I would say the contractor chooses the client they want to work for more than they did before. Sometimes it’s not pleasant to hear, but the clients who are not fair enough, we prefer to not to touch. We need to sleep well without problems,” he finishes with a wry laugh. Linked to this issue of fighting and disputes is that it is the contractor that bids the lowest that is frequently chosen as the winning bid for a project. This is also something that Dessoy and Juan Armando Vicuna, the incoming CICA President, say is not sustainable and is a practice that often leads to more disputes.

“If you’re the lowest, it means you made a mistake or you undercut something to be the lowest,” says Dessoy.

“We try to promote procurement methodology. One of these methodologies is to have some criteria where the price is, let’s say, 60-70% of the decision factor. And then you have some other factors like sustainability of the contractor, health and safety, technology, procurement, local contractor involvement.”

Collaborative contracts

The theme of the event, which was held just down the road from the imposing Arc de Triomphe on the Champs-Élysées, was of collaborative contracts; the importance of contractors being involved in the process early.

“The other methodology we try to promote is a collaborative approach. Instead of having a contractor fighting his client, we try to work together towards a budget, which the client can allow from his business plan. And then to see where we can improve some part of the project.

“Whatever the reason – cost, complicated regulations, or lack of time – developers now spend less and less money to prepare the project. By taking a contractor earlier on board, we can work together to develop this project more efficiently and according to the regulation as, usually, local contractors know better the regulation than an investor from abroad.”

Juan Armando Vicuna, the new President of CICA, agrees with this statement, adding, “Getting the contractor involved early is key because you can see the plans and you can see the specialists, and you can prepare more. You earn more money. Your time is reduced as you reduce the surprises. I think this is a key, for projects both big and small.”

Looking to to the future

Vicuna, who is from Chile, and Dessoy from Belgium have both been in the industry a long time and are keen to point out the progress that has been made in numerous ways, such as sustainability, health and safety and the industry being more inclusive.

“In terms of health and safety the improvement is black to white,” says Vicuna. “Another very good change is that there are more and more women in the industry. And not in the office, in construction sites. Women often pay more attention to details and do the job better,” he says.

At its core, the point of collaborative contracts is to make projects more profitable and more likely to finish on time. Contractors face enough challenges – such as inflation, government regulations – without fighting those they are working on the project with.

Another challenge is the skills shortage. Vicuna talks about the difficulty of recruiting young workers into the industry and suggests that new technology is something that the sector needs to harness to help with this.

Despite the undoubted challenges that construction faces, the mood at the event was positive, with the contractors in attendance feeling bullish about the future.

Construction is an essential industry and, in many cases, demand has never been higher. Estimates report that, just to provide basic infrastructure for all people over the course of the next two decades, every year the world would need to spend around US$1 trillion more than the previous year on infrastructure.

“Every time when you wake up in the morning you have to fight against your client, and you have to fight with subcontractors. It’s a bit of a tiring industry for that,” says Dessoy. If this issue can be addressed – possibly through collaborative contracts – then the sector will become more profitable and efficient.

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