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Constructing the Team: The Latham Report (1994)
Abstract
Background to the study: the economic, political and social climateThe Constructing the Team reportPost-Latham developmentsFinal thoughts
... Poor performance in the construction industry has been a stubborn problem for many years. Projects not on time, not on budget and with poor customer satisfaction have been a problem for the last twenty years (Berstein 2009, British Property Federation 1997, Cahill & Puybaraud 1994, CFMA 2006, Davis & Sebastian 2009a, 2009b, Doree 2004, Egan 1998, Georgy Luh-Maan & Lei 2005, Glancy 2008, Imtiaz & Ibrahim 2005, Ibrahim et. al. 2010, Langlinais 2011, Lepatner & Barry 2007, Murphy 2012, Rijt 2009, Rwelaimila et al. 2000, Simonson 2006, Tucker 2003, Wang 2009, Wearden 2008). ...
... The economic downturn in the early 2000s has made the focus on competition and lower prices. This led to overregulation by the owners resulting in inefficient practices, contractor collusion, poor performance and low contractor profit margins (British Property Federation 1997, CFMA 2006, Cahill & Puybaraud 1994, Doree 2004, Egan 1998, Glancy 2008, Langlinais 2011, Murphy 2012, Rijt 2009, Rwelaimila et al. 2000, Tucker 2003, Wearden 2008). The culture of the traditional owner controlled, directed and managed approach has overridden the meaningful impact of almost all innovative delivery systems (Gransberg 2008, Hale et. ...
The construction industry performance has been analyzed for the past 20 years. There has been no simple answer to the source of the construction industry problems. In 1991, the Construction Industry Structure (CIS) was formulated, and identified that the price based environment was more inefficient than the best value environment. Over the past 18 years, the analysis of the CIS has led to the hypothesis that the price based sector is inefficient because the buyer controls it. The hypothesis has been tested through case studies, and test results show that the owner is the biggest source of project risk and deviations. The dominant information was formed through repeated testing by moving the control to the vendor, and documenting all sources of project deviation. The studies have shown that the use of decision making, management, direction and control of the contractor by the owner increases the project risk. Two longitudinal studies are used to confirm the potential accuracy of the deductive logic.
... There are two factors which contribute to the continuation of the status quo and poor construction performance: first, academic research does not have a structure which can introduce change, and secondly, no one has identified what is the solution to the construction industry problems. Academic research has had minimal impact in assisting the construction industry improve its performance (Kashiwagi et al., 2008; Adeyemi et al., 2009; Egan, 1998; Cahill, 1994; Cox, 2003.) Some of the reasons include: 1. Academic research is funded by government grant agencies that are not accountable for producing dominant results. ...
... Based on documented construction industry performance, this risk management model is very unsuccessful (Kashiwagi et al., 2008; Adeyemi et al., 2009; Egan, 1998; Cahill, 1994; Lepatner, 2007; CFMA, 2006; Simonson, 2006; Flores and Chase, 2005; Adrian, 2001; Post, 2000). The performance of being on time, minimized change orders, and meeting the client " s expectations does not relate to the years of construction industry activity. ...
Misunderstanding of how the construction industry structure works can lead to unseen costs, inefficiencies, higher construction costs, poor results from training programs, and lower value. A deductive based Construction Industry Structure (CIS) analysis was first introduced in 1992. Continual testing of the model in the best value environment and past industry performance in the low bid environment has given deductive validation of the CIS model. Misunderstanding of the CIS may have led to the failure of construction management (CM) research to correct industry issues. CM education/research has become isolated from the construction industry. CM proposes solutions that are management based (control, direction, and inspection.) The deductive logic of the CIS identifies the traditional management approach as reactive, inefficient and ineffective in the more developed manufacturing sectors. Traditional CM claims the construction industry is different from all other industries in complexity and uniqueness of construction projects. The assumption is based on observation and inductive logic, and is almost impossible to validate through inductive testing. The traditional inductive logic/testing procedure of validating a theory from observations through testing has not been accomplished. The authors propose that the inductive testing and data requirement is unsupportable by the industry. The authors propose that researchers go back to basic deductive logic, common sense, dominant simplistic models, and deductive testing to increase the efficiency of the construction industry. CIS identifies the construction industry problem as a structural misalignment and a systems issue, and not a unique technical issue. The authors use logic, deductive test results, and results from other industries to validate the proposal.
... Globally, several countries are now facing housing challenges of one form or another. The UK is no exception here, with unprecedented levels of demand outstripping supply [13,14]. One might say, the challenge, therefore, is simply to increase capacity. ...
Several countries have started to more purposefully apply advanced offsite delivery approaches to meet specific housing shortages. The United Kingdom (UK) is no exception. Whilst the concepts and benefits of Modern Methods of Construction are ‘typically’ well understood, it is generally accepted that there is a paucity of knowledge on the actual understanding of optimization per se, ergo, the interrelationships between processes, and the wider understanding of ‘pooling’ [resource management] to promote and maximize synergy - especially to target areas of lag or bottlenecks. In this respect, the research methodological approach adopted in this paper used a single case study to critically evaluate an offsite steel-frame solution for the offsite market to deliver social housing. This approach also evaluated the potential of Generative Design, Discrete Event Simulation, and Digital Twins. Findings of this ongoing research include new opportunities and strategies for these technology-driven solutions, culminating in the development of a new conceptual offsite hub-and-spoke model. These are presented for discussion. This model allows decision-makers to interact with data in order to optimise solutions in line with demand and resource requirements.
... Important industrial reports, including those of the Simon Committee in 1944 [19], Sir Harold Emmerson in 1962 [20], Banwell in 1964 [21], Wood in 1975 [22], the British Property Federation in 1983 [23], Latham in 1994 [24] and Egan in 1998 [25], uphold that the occurrence of role ambiguity, contrasting tasks for project actors and emerging network relationships amongst participating stakeholders leads to a persisting challenge for construction projects. It may also lead to dispute [26]. ...
... The last two decades of research has revealed a poor documentation of performance in the construction industry (Cahill and Puybaraud, 1994; CFMA, 2006; Flores and Chase, 2005; Egan, 1998; Davis et. al., 2009). ...
Warranties in the construction industry have become more prevalent in the last couple of decades. Moreover buyers in the construction industry rely heavily on the length of the warranties for the purchase of any product or service. The warranty is an agreement between the buyer and the manufacturer and has inclusions that if altered voids the warranty. Hence the length of the warranty has no correlation to the actual performance of the product or service being purchased. One of the manufacturers in the construction industry, in order to differentiate themselves from other manufacturers, approached the researchers to implement a system that can better assist and serve their end users beyond just providing a warranty. The purpose of this paper is to describe and analyse the warranty tracking program that tracks the installed roofing projects for the manufacturers providing an overall snapshot of the performance of all the installed projects. The warranty tracking program provides the manufacturer the risky projects (leaks, blisters, end-user dissatisfied) with the use of end-user customer satisfaction every year. The researchers also implemented the high performance roofing program and a performance-based licensure process to attract high performing applicators. Since the inception of the warranty tracking program the manufacturer has been able to resolve 69 out of 70 (98%) risky projects. In conclusion, the warranty tracking program provided the manufacturer a better way to assist and serve their end users through proactive resolution of risky projects.
... The last couple of decades have revealed a poor documentation of performance information in the construction industry (Cahill and Puybaraud, 1994; CFMA, 2006; Davis et. al., 2009, Egan, 1998, Flores & Chase, 2005). ...
A roofing manufacturer is motivated to increase accountability, minimize risk and differentiate themselves from other manufacturers to increase their sales. In order to achieve this, the manufacturer approached the research group to implement a warranty program that measures the performance information of their systems and applicators. The manufacturer submits a list of warranted jobs to the researchers, researchers perform a satisfaction check by calling the end users and report back to the manufacturer. Concepts utilized by the manufacturer include the use of warranty to ensure performance decreases risk, transparency is the best way to mitigate risk and risk can be mitigated before it happens. The research revealed that warranty program minimizes the risk for manufacturer and clients and helps differentiates the manufacturer by identifying end users that are not satisfied, applicators that are low performing, jobs that are leaking, customer retention rate and having a running log of satisfaction rating for every warranted job.
... The problem identified in Saudi Arabia where the construction management university based research and development programs have not been able to help improve the construction industry may be a common problem in every country. Academic research has had minimal impact in assisting the construction industry to improve its performance (Kashiwagi et al., 2008; Adeyemi et al., 2009; Egan, 1998; Cahill, 1994; Chan, A., 2004; Cox, 2003.). Research publications of construction industry performance have identified that other countries (developed, developing and underdeveloped) may have similar issues to Saudi Arabia: ...
The Saudi Arabian construction industry has had poor performance for the past thirty years. There have been many publications identifying the problem and potential causes. There have been no publications identifying what the source of the problem is, how to mitigate the problem, and actual testing to validate the proposed solution. This paper discusses why this problem exists, what is a potential solution, and an action plan that mirrors the most successful (construction management, risk management, project management and procurement delivery) research and development program in the world (22 years, $16M, +1750 tests, six different countries, 31 states in the U.S. and 98% customer satisfaction). The solution proposed in this paper is unique to the strengths and weaknesses of the research and development programs at universities in the Saudi Arabian kingdom.
... Academic and industry research has identified construction performance issues worldwide for the last 20 years. Every country has the same performance issues (Abdul Rahman et al. 2005, Abdul Rahman & Alidrisyi 1994, Berstein 2009, British Property Federation 1997, Cahill & Puybaraud 1994, CFMA 2006, Chan & Chan 2004, Davis & Sebastian 2009a, 2009b, Doree 2004, Egan 1998, Flores & Chase 2005, Georgy et al. 2005, Glancy 2008, Hamel 2007, Hamzah 2003, Imtiaz & Ibrahim 2005, Ibrahim et al. 2010, Langlinais 2011, Lepatner & Barry 2007, Murphy 2012, Post 2000, Rijt 2009, Rwelaimila et al. 2000, Simonson 2006, Tucker 2003, Wang 2009, Wearden 2008). This includes developed and developing countries. ...
For the last two years, researchers have been working with parties in Malaysia to implement best value practices. After two years of research work, the effort has many lessons learned. Lessons learned include a combination of factors that make the best value approach difficult in a developing country such as Malaysia. The different strata of economic levels give the upper levels (owners) a greater perceived ability to control the supply chain even though they may lack the expertise. This causes owners to attempt to deliver construction by controlling the vendors, both professionals and contractors. This increases the difficulty moving from a price based or owner directed system to a best value environment, which releases control to experts. The authors use deductive logic models which show decision making, direction, and control negatively impact accountability, proactive behavior, and the use of expertise. The two-year research program results in addressing the issue of how a buyer in a developing country can utilize the expertise of experts, and how the expert can change their function to get a controlling owner to use their expertise. The paradigm shift needs to take place among the elite and the visionary, before the overall environment can make the change. The product of this research project is to meet the requirements of a visionary group of quantity surveyors in Malaysia.
... The delivery of construction has been studied by construction management researchers for the past twenty years. The performance of the delivery of construction services has been identified as poor (Cahill and Puybaraud, 1994;Lepatner, 2007;CFMA, 2006;Simonson, 2006;Flores and Chase, 2005;Adrian, 2001;Hamel, 2007;Post, 2000;Egan, 1998;Davis et. al., 2009). ...
... The delivery of construction has been studied by construction management researchers for the past twenty years. The performance of the delivery of construction services has been identified as poor (Cahill and Puybaraud, 1994; Lepatner, 2007; CFMA, 2006; Simonson, 2006; Flores and Chase, 2005; Adrian, 2001; Hamel, 2007; Post, 2000; Egan, 1998; Davis et. al., 2009). ...
The identification of the source of project risk has been a troubling issue in construction management. A new risk management model has been developed. Analysis of the risk in the IT industry, construction industry, and also industry structure and supply chain delivery has resulted in the identification of the major source of risk: the major source of risk is the buyer. The buyer's attempt to transfer this risk to the contractor causes confusion and an increase of risk. The owner's lack of expertise and accountability, their use of management, direction and control to minimize risk, their inability to listen to the expert contractors who have no risk and the owner's decision making and expectations has resulted in increased project risk. This study uses deductive logic to design the new risk model. The new risk model is used by the expert contractor to minimize the risk they do not control. The new model identifies risk, mitigates risk by use of transparency and dominant information. The new model has been tested and the results have been documented. The preliminary test results are encouraging.
... PROBLEM Owners in the public arena have faced many problems with the typical procurement process in the last 20 years. Some of the difficulties have been as follows (Cahill and Puybaraud, 1994; Egan, 1998; Adrian, 2001; Chan, and Chan, 2004; Flores, and Chase, 2005; CFMA's, 2006; Lepatner, 2007; Grady, 2010; Lesca and Caron, 2008; Schneider, et. al., 2009; Al-Ahmad, Al-Fagih, et. ...
The State of Idaho, Division of Purchasing has identified the traditional procurement system as a source of risk to the State and their constituents. Using a new paradigm of treating the delivery of services as a supply chain, the State has embarked on the procurement of several large service projects, including a $36 Million Student Health Insurance Program and a $30 Million Division of Motor Vehicles Information Technology system. The new paradigm requires the State and their end users to minimize management, direction, and control of the vendors. The test of this new paradigm has identified the obstacles and challenges to successfully transfer risk and accountability to the vendors.
... In the face of shrinking construction demand, contractors exhibited an intensifying tendency to bid low to secure work first and make claims on variations later to stay profitable on the project. This 'bid low, claim high' approach degenerated the low-trust relation in the chain into a confrontational one (Cahill and Puybaraud, 2003). Against this backdrop, Sir Michael Latham conducted his famous inquiries into the thencurrent practices of the UK construction industry with particular regard to procurement and contractual arrangements as well as the performance of participants in the construction chain. ...
The construction industry has maintained a bias toward cost and time in its project execution over the years. Despite so much attention given to time and cost, both components have remained a problem to the industry. The resultant effect is cost and time overrun on projects. Poor planning and scheduling were identified as one of the significant causes of cost and time overrun. Exploring planning and scheduling arouse the need to evaluate procurement strategy and forms of contract. This is because both parameters are critical aspects of planning and scheduling, especially when time and cost are given priority. A Multi-methods qualitative research methodology involving attitudinal and exploratory approach was employed in data collection from a range of professionals in the UK construction industry. The study found that not all existing planning and scheduling approaches solve the problems of time and cost. Hence, the need for more action by the project team to mitigate delays to prevent cost and time overrun.
The construction industry is known for its underperformance. Globally, construction projects are often delayed and completed above-estimated budgets because of inferior works and contract variations. These in turn negatively affect the goals set by public sector client. Many studies aim to establish factors for successful construction projects that include public road construction projects. However, challenges remain. Using institutional theory, this research focusses on success factors for implementing public road construction projects in Uganda. Loss of funds in such projects significantly affects and stalls the implementation process. This study is cross-sectional and structured self-administered questionnaires are used with Partial Least Square-Structural Equation Modeling (PLS-SEM) data analysis by Smart-PLS3 subsequently conducted. The findings reveal that professionalism, monitoring activities, familiarity with regulatory framework; perceived inefficiency of regulatory framework and compliance with these frameworks significantly enhances successful implementation of public road construction projects. However, sanctions on staff and contractors' resistance to non-compliance are insignificant predictors. Governments should emphasize and embark on improving monitoring mechanisms and staff familiarity with public procurement regulatory frameworks to avoid manipulations by unethical project stake-holders especially on contract cost variation during implementation. These regulatory frameworks should be written in a less technical language that is easily interpreted by stakeholders. Recruitment of qualified staff is paramount.
A cold storage facility had been reroofed in 2003 (investment of $600,000) that required the removal of existing insulated roof and replaced with a 20 year modified bitumen roof. After six years, the facility posed a safety hazard due to the ice formations inside the cold storage facility. The source of the problem was not known. The traditional process of using a professional designer, a certified contractor, receiving a manufacturer's warranty, and having the roof inspected by the local government inspector could not assist the owner and the FM resolve the complex problem. The facility manager (FM) decided to utilize a non-traditional Best Value (BV) Performance Information Procurement System (PIPS) to identify and resolve the problem. The main difference of the system is that the best value vendor and not the owner determines the final scope. This paper documents the BV PIPS approach and the resulting performance. An inspection five years later verified the performance of the Best Value approach and showed the value of the installed sprayed polyurethane (SPF) roofing system.
Attempts to drive change and reform of the UK construction industry have been an ongoing concern for numerous stakeholders, both in government and across industry, for years. The issue is a seemingly perennially topical one which shows little sign of abating. Scholarly analyses of the reform agenda have tended to adopt a Critical Theory perspective. Such an approach, however, lacks a certain nuance and perhaps only reveals one layer of social reality. What is arguably lacking is a more fundamental exposition concerning the historical, social and cultural explanatory forces at play. While it is illuminating to expose vested interests, ideology and power, what has led to the development of various views? How have they come to achieve such high accord in discussions? Drawing on the works of Max Weber, Georg Simmel and Barbara Adam, this paper seeks to develop a broader theoretical lens. It considers the wider socio-cultural structures and forces that influence behaviour, shape and constrain these views. This approach will contribute to a much needed broader philosophical and theoretical debate within the construction management community (and beyond) on the need to better engage with, and understand, the sources influencing the issue of policy formulation and diffusion.
Attempts to drive change and reform of the UK construction industry have been an on-going concern for numerous stakeholders, both in government and across industry, for years. The issue is a seemingly perennially topical one which shows little sign of abating. The current UK coalition government has recently ordered a wide ranging review of building standards and regulations, including health and safety and energy efficiency, in an attempt to cut 'red-tape', reduce costs, get industry moving and provide a boost to the flagging economy. Scholarly analyses of the reform agenda have tended to adopt a Critical Theory perspective. Such an approach, however, lacks a certain nuance and perhaps only reveals one layer of social reality. That various social actors in competition for scarce resources vie with each other for power and control reveals only a partial insight. What is arguably lacking is a more fundamental exposition concerning the historical, social and cultural explanatory forces at play. Whilst it is illuminating to expose vested interests, ideology and power, what has led to the development of various views? How have they come to achieve such high accord in discussions? Drawing on the works of Max Weber, Georg Simmel and Barbara Adam, this paper seeks to develop a broader theoretical lens in order to gain an appreciation of the forces influencing the development of the motivations and normative views of key stakeholders of the policy-making process. It considers the wider socio-cultural structures and forces that influence behaviour, shape and constrain these views. This approach will contribute to a much needed broader philosophical and theoretical debate within the construction management community (and beyond) on the need to better engage with and understand the cultural sources influencing the perennial issue of policy formulation and diffusion in the built environment that consistently fails to deliver expected reforms.
List of Figures - List of Tables - Foreword - Acknowledgements - Abbreviations and Acronyms - Introduction - PART 1: THE INDUSTRY - The Construction Industry and its Environment - Financial Aspects of Large Construction Companies - PART 2: THE CONTRACTORS AND THEIR STRATEGIES - Financial Considerations - Markets and Marketing - Marketing Contracting Services - Structure, Management Methods and Planning - The Management Resource - Review of the Survey - PART 3: PRACTICAL AND THEORETICAL IMPLICATIONS - Contractors' Concerns for the Future of the Industry - Towards the Redevelopment of Theory - Appendix 1: Changes in Accounting Rules Exceptional Items Extraordinary Items - Appendix 2: Location of Discussion of Topics in the Three Books Contents of Companion Volume, The Management of Construction Firms: Aspects of Theory Contents of Companion Volume, The Modern Construction Firm - Subject Index - Index of Names
This paper discusses clarity and style of drafting in construction contracts based on research carried out by the Project and Construction Management Group at the University of Birmingham into the efficacy of the New Engineering Contract. One of the three principle objectives of the NEC was the achievement of greater clarity. The first section of the paper asks whether existing conditions of contract achieve clarity, deduces that they do not and investigates why not. The second section reviews the original aims of the authors' of the New Engineering Contract (NEC), before presenting the findings of research to date on whether the contract fulfils both the needs of the construction industry and the self-stated aims of the authors of the NEC. It then briefly considers some general legal criticisms of it and the changes made to the second edition, the Engineering and Construction Contract (ECC). The paper then outlines the benefits of clarity to effective project management and concludes that while ECC is not perfect, it is a significant improvement on other forms of contract in terms of clarity.
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Report of the Construction Task Force to the Deputy Prime Minister John Prescott on the scope for improving the quality and efficiency of UK construction
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