It is reported that in 2019 a contractor entered into major administration almost once every fortnight. Scunthorpe-based contractor Clugston, the £100m-turnover Simons Group, and Bardsley Construction are just a few of the 22 businesses which became insolvent, leaving supply chains in disarray and owing at least £367m to unsecured creditors. But as well as leaving supply chains in financial chaos, insolvency also causes significant data loss, rupturing the all-important Dame Judith Hackitt’s Golden Thread of information. With this in mind, which solutions can be adopted to ensure data can be easily retrievable in even the most unfortunate of circumstances?
Although it might seem that some businesses are untouchable, the collapse of industry giant Carillion in 2017 is a chilling reminder that no company is exempt from going under. If preventable measures are unheeded, then businesses regardless of size and legacy will continue to hang in jeopardy.
Seeing the construction industry’s fragility in such a clear light is, undoubtedly, unsettling news for so soon into 2020. However, in order to see where we can improve and what we can do to ensure every business performs better, it is essential we face our issues head-on, make a change and consider alternative models which will enhance business resilience.
Job and financial losses, legal action; the results of a business falling into administration are clear to see. But as well as having a direct impact on a company, insolvency has all manner of repercussions throughout the supply chain. Post-liquidation, Carillion is said to have owed on average £141,000-£236,000 to SMEs and over £15m to larger businesses, according to BBC investigations. Marring the industry, Carillion’s collapse left gaping chasms within its supply chains, compromising businesses across its spectrum.
The hidden loss
As well as leaving its suppliers in financial limbo, Carillion and its supply chain also lost unconscionable amounts of valuable data on both finished and uncompleted public and private sector projects.
If a company in the supply chain or a Tier 1 organisation such as Carillion goes into administration, all the precious information about hundreds of various contracts is catapulted out into the ether. Even though a company such as Carillion is at fault when this happens, the onus is on the asset owner (client), and not the contractor, to retrieve and re-procure thousands of datasets from different parties involved in a project. In most cases, the building has to be re-surveyed to find the information again, and this is another cost. The asset owner will have to contact the project architect to find information on the specified products, and call numerous subcontractors to try and fathom what has been installed and completed and what hasn’t. This heavily time-consuming, headache-of-a-process is of course under the proviso that each party has immediate access to the data the asset owner requires.
The cost and burden of this task is a difficult one to bear, which is why alternative avenues must be uncovered. Wouldn’t it be better for the asset owner to own information rather than relying on siloed information from its architect, engineer and contractor? Moreover, wouldn’t it alleviate these pressures on the supply chain to control information that doesn’t need to belong to them?
Taking these questions into consideration, we need to take a look at the alternatives. A project information management system or common data environment (CDE), for instance, enables information to be accessed and shared by all parties throughout a project’s lifecycle, and is an efficient tool which gets the supply chain singing from the same hymn sheet.
Systems such as these are proving their worth in a construction industry which desperately needs data to be easily accessed and safely stored. However, on project completion, it is fundamental that this information is handed over to the asset owner, who in theory should have access throughout the project anyway. For it to be effectively utilised, the asset owners must own and manage this information; if not they will only have the project data for ‘as built’ which does not endure the building’s lifecycle, incorporating changes, adaptations and improvements.
Yet, with an asset information management system owned by the building owner, there will never be a missing link in the chain. With a clear audit trail of all building information, data can be tracked. It can be retrievable if a project is momentarily suspended and if a business involved in the delivery collapses.
This need becomes all the more essential when we bear in mind the catastrophe that is Grenfell, which as well as bringing into debate quality control also brought Dame Judith Hackitt’s Golden Thread into the limelight. The second phase of the inquiry into the tragic event has meant that up to 200,000 contractor documents had to be identified and analysed, in order to ascertain which products were used and who supplied them. To prevent history from repeating itself, the Golden Thread is now being championed across the industry, and its adoption will mitigate risk, improve building quality and ensure information can be identified. The implementation of a CDE, owned by the asset owner, will complement the Golden Thread of information, creating an unbreakable chain where every piece of data regarding a built asset can be acquired at any time. Surely this is the cure to one of the industry’s biggest problems?