Knowledge and Information Management Through-Life (Grand Challenge)
Start Date: October 2005
End Date: March 2009
Project Status: Completed
Knowledge and Information Management web site
Introduction
The Grand Challenge is a £5.5M research project addressing the cross-sectoral shift to service provision. Other sectors covered, in addition to construction, include defence, mechanical engineering and civil aviation. The project involves 11 universities and in excess of 40 industry partners. The project will be three years in duration with a programmed start date of 1st October 2005.
Background
Leading firms within the UK construction sector are increasingly emphasising the shift from product delivery towards the satisfaction of clients’ needs through service provision. Several traditional construction contractors have in recent years re-listed themselves on the Stock Exchange as service companies. Such trends shadow similar shifts in the manufacturing sector. Within construction, the prime drivers for this trend include changing procurement policies in both the public and private sectors together with extensive market segmentation. The emergence of PFI/PPP has had a significant effect on the procurement of hospitals, prisons and schools and has resulted in a considerable degree of supply side consolidation and re-positioning. Serial contracting arrangements such as ‘prime contracting’ (and private-sector variants thereof) also provide the basis for evaluating competence on the basis of service provision. In theory, such procurement approaches encourage greater efficiency by improving the scope for supply-side innovation. The role and structure of output-based performance specifications has recently attracted significant international research attention. Such initiatives potentially provide the basis for an incentivisation structure that increases performance through collaborative working. One of the prime drivers behind the use of such integrated procurement approaches is their potential to overcome the process discontinuities of traditional procurement routes. They therefore present a significant opportunity to integrate design and construction with ongoing aspects of facilities management – hereafter labelled ‘FM integration’.
The challenge
Notwithstanding the potential for FM integration, there remain numerous concerns regarding value-for-money and design quality within PFI/PPP. Some critical sources suggest that such efficiency gains as have been achieved depend rather more on the downgrading of employment conditions rather than innovation in FM integration. Perhaps the greatest area of innovation to date lies within the sphere of creative financing arrangements. Many firms have realised significant returns through re-financing once the construction of the facility has been completed. Indeed, consortia are now obliged to share the benefits of re-financing with the public sector. Previous research also suggests that within PFI consortia, FM companies frequently struggle to influence the design decision-making process. In consequence, the decision-making process during design and construction invariably gives primacy to issues of narrow buildability rather than FM. Particular problems occur when contractors compete in the PFI/PPP market alongside traditional contracting. Firms often possess only a small core of personnel with an expertise in bidding for PFI/PPP contracts, with little transferability of knowledge to those involved in delivery. Indeed, many of the key personnel involved in PFI/PPP projects are on short-term secondment from the general contracting business, often with a minimum of awareness of the revised context within which they are operating. As a result decision-support mechanisms continue to focus on risk-avoidance and capital cost reduction. Collaborative working seldom seems to extend beyond the companies with a direct stake in the SPV.