Constraints to ‘Costing Collaboratively’ (CC)

There are several factors preventing stakeholders to collaborate over costing in practice, as identified in the literature. These include poor planning and communication, inconsistency in costing approach, client’s erratic decisions in design, and lack of integration among others (Hastak, 1998; Kern & Formoso, 2004; Elfving et al., 2005; Dallas, 2006; Flyvbjerg, 2008; Ashworth, 2010; Hanid et al., 2011). Nonetheless, this study discovered other constraints that also affects CW and costing practices. Figure 5-2 indicates some of the barriers found within the UK construction industry as discovered from the interview analysis. These barriers are discussed in relation to previous studies in the section below:

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Page 153 Poor Erroneous Assumptions & Orientation

The study finding revealed that activities that led to the budget setting & development i.e., cost planning, and cost estimation in construction are based on probable cost of past projects that often inherit wasteful elements. A Senior QS explained this saying, although they sometimes received input from contractors during cost planning, but further confirmed that these activities are inconsistent implying that:

‘’This is where I think we failed to progress in this process, as we get our work information basically drawings and the scope next to that and then we simply price it..., As such, there is simply no room for working together to understand the cost complexities or deliberate over it’’ [SQs01].

Another similar response from one of the respondent observed saying:

‘’It’s worth noting that this process is totally driven by client’s interest i.e., much focus on price and not necessarily concerned with formulating teams to determine the accuracy of cost or any optimum solution in the process’’. [MC02]. This confirms what Flyvbjerg (2008) and Elfving et al., (2005) described that costing is subsumed with erroneous assumptions and normally carried out under pressure, cost consultants protect their role through ‘secrecy’ with budgets fixed even when too little information is available at the outset. This creates ‘guess-work’ and inconsistent decisions in the process, which is often carried out through risk contingency pot. This continued to conceal waste rather than reveal it in the process.

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Page 154 Figure 5-2 : Constraints & Barriers to Collaboration & Costing Approach Separation of Costing & Design Activities

Majority of the respondents agreed that cost estimates are usually developed in project either by cost consultants (QSs) alone or by designers in isolation without much information sharing and feedback. One of the interview respondents captured this:

“Designs are usually developed before detailed estimates are available; this results into large cost expansions i.e., design-estimate-redesign cycle. In addition, the overall strategy of establishing the scheme budget, its buildability and other project constraints are carried out un-collaboratively”. [CD02]. This means that stakeholders responsible for costing and design functions are not assembled early enough i.e., (QSs, designers, estimators) and when they are involved - they work in isolation. This confirmed with what (Zimina et al., 2012) explained, that the current costing practice needs collaborative understanding, given that the prevailing approach is based on the RIBA plan of work, which is discrete, sequential and favours competitive tendering. These drive stakeholders within a narrow view that consider costing and design activities as separate functions. The implication of this is that it restrains value flow within the process, and prevent stakeholders providing constructive feedbacks during costing and design exercise, inevitably; this transfers waste into production processes (Kern & Formoso, 2004).

Lack of Cross-functional Integration

The interview findings revealed that traditionally, commercial actors and contractors are not involved early (pre-contractual stages) during costing and design development. Senior QS observed that:

‘’A lot of the times QSs and contractors are brought into the process late and at different times, where everyone wants to defend their turfs with high tension going on, consequently impairing their inputs in the process’’ [SQs02].

This statement indicates the lack of upfront investment and early team integration, which is needed for stakeholders to collaborate over costing. This means that the accustomed partial integration is not effective, especially when one considers the significance of commercial and supply chain groups during these interactions. Laryea & Watermeyer, 2016) reported that this early integration is essential, because it stimulates innovation and

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Page 155 provide the opportunity to understand risk items through open interactions and alternative problem solving techniques. Arguably, with this arrangement in place, the expensive iterative cycle of ‘design-estimate-redesign’ could even be minimize, steering designs to the expected cost with fewer changes later.

However, because the norm still viewed costing and design activities separately (Kern & Formoso, 2004), this often led to a divorce between client organization and the contracting parties with both focusing on profit ahead of the overall project benefit, while architects continue to ignore production conditions in their designs (Seymour and Rooke, 2000).

Again, this shows that, the lack of collaboration and interaction among stakeholders is a general issue that consequently would create commercial friction in practice, where the attitude of mining for profit from contracting parties persevere (Pasquire et al., 2015). One of the respondent interviewed observed saying that:

‘’This lack of upfront investment has a customary gap with lots of waste starting with incomplete estimate, inaccurate designs, and disruptions caused by design changes with massive variations transferred into production process’’ [LP03]. This further illustrates the need for the industry to adopt integrated models to combat issues during early costing and design development to enhance value creation. Forgues and Koskela (2009) added that CW in this manner would help mitigate the socio- cognitive barriers and improve integrated design team performances. Equally, this could create opportunities for commercial actors to be more deeply included in collaborative working approaches thus removing a major barrier to the performance improvements demanded in successive UK Government reports.

Cultural Resistance

Although, this has been identified in previous studies with regards to radical change and industry modernization (Common et al., 2000; Alarcon et al., 2002; Johansen and Porter, 2003; Farmer, 2016). Unsurprisingly, many of the respondents in this study also acknowledged that ‘resistance to change’ and ‘cultural attitudes’ are part of the main issues to collaborative practices in the UK construction industry. These constraints are prevalent in both project and organizational environments. Some of the respondents observed saying that:

‘’I think people are busy and so entrench in what they’ve always been doing, so no one has time to think about doing something else’’. [SQs03].

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Page 156 ‘’Changing the way people work is difficult, in this environment everyone is trying to squeeze each other for profit/gain. Theoretically, we can agree on a profit margins but practically it’s in our nature thinking on how to gain a little advantage’’. [MC02,].

‘’It is just a historical thing I think; people are just comfortable and would like to stick to what has been working before’’ [SQs04].

The above statements paint a picture on how deep-seated cultural resistance issues are within the UK construction industry and the implication to industry reforms, hence the need to improve relational and collaborative cultures in practice. This might not be a new finding but still shows how deep-seated the cultural issues are which continued to impede CW in practice. More so, Sarhan and Fox (2013) opined that these attitudinal behaviours are the bottleneck to radical transformation in the UK construction industry.

Cost-Driven Environment

As discussed early in this study, target costing and risk management approach are not transparent, which continues to reveal varying perspectives from both client and the contracting parties. One of the main contractor lamented on this saying:

“In every 5% increase we lose 20% of our cost. In a TC of £120m, the client gets 80% of the cost spend, which means if we spend over we get punish heavily and if we spend under, we get little compensation. The contractor further adds that we share the pain but the gain isn’t equal, I would say somewhat 80-20 in favour of the client. On the current scheme, we’ve bid and negotiate on the TC, but the client later decides to cut 10% from the TC, after 3 months of negotiation we later agreed to proceed - but we know deep down that were going to find ways to claim the 10% back”. [MC02].

Evidently, this typifies why negative behaviour persist, which stems from the prevailing risk-averse environment and external influences (regulators, stakeholders etc.) in practice. As revealed from the participants, these influences exert pressure on project teams, which eventually spread across boundaries inciting all sort of opportunistic behaviours right from the start. This also confirms the old clichés in construction (risks are transferred to those who can best manage it), yet without proper incentives to spur innovation or support collaborative working relationships. Hence, the chances of projects finishing under target remain slender. In the same way, this indicates how narrow collaborative culture is, as the environment is incessantly driven by price. Moreover, collaborative relationships is

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Page 157 still overwhelm by certain contractual clauses, which further advance legality concerns among contractors and supply chain groups. Hence, the relentless opportunistic behaviours in practice.

Inflexible Roles of Consultants (QSs) & Estimators

Another issue discovered from the interviewees associated with costing, which has undue influence on collaboration is the role played by estimators/QSs during pre-contract cost planning and management. The roles of these professionals are perceived to be prescriptive and rigid, often confine to what they’re told to do. Some of the respondents lamented on this saying:

“During tender process, QSs point of view are generally to read, understand and confirm to the brief, this is also similar in their costing approach, as affirming on what they’re being told to do rather than challenging it or advising on what’s the best valuable option.” [CD03]. “The issue is that they are not seating closely in the project team to influence design, and they are not involved as they should be during conceptual stages thus, they wouldn’t have any details to comment on” [PM03].

This epitomise how QSs are employed, largely to inform intelligent clients, thus, reluctant to challenge their prescriptive roles, and this limits their input in collaborative relationships. More so, because consultants generally are assessed based on how they are utilised in projects instead of being valued according to their performance. Hence, their disinterested view in collaboration. This also feeds into how clients perceived the role of QSs, where they traditionally engage them to settle commercial disputes. Regardless of the environment, they still conform to the conventional protocols, custom and practice, maximising their positions and fees. Arguably, the upfront investment (platform for collaborative dialogue with clients and other stakeholders) could equip them with the necessary skill to be able to have that conversation prior to contract formulation. Perhaps, even enable these groups to become more constructive in collaborative practices.