INSIGHT
JANUARY 2021
The perfect storm When did current procurement practices fall out of favour, asks James Cash, and will clients and industry seize the opportunity to enact their transformation?
F
or shipwrecked mariners, the custom of the sea was the unwritten convention that starving survivors in a lifeboat might draw lots to determine who survives and who – by feeding their shipmates – were to die. For centuries, this grisly custom was both recognised and accepted in broader society, with the surviving mariners tacitly pardoned. All of this changed in 1884 following the case of R v Dudley and Stephens (two of four survivors from the shipwrecked yacht Mignonette who had killed and consumed a comatose shipmate), which found that necessity was no longer a defence of murder. This change in public and legal opinion seems just as relevant today as the construction industry continues to experience its own perfect storm of revelations, not least in relation to the survivalist model of procurement that has predominated in recent decades. Evidence that the procurement eco-system is distressed is compelling. Top-tier suppliers race to the bottom on price in order to win business to the detriment of those further down the supply chain, creating their own risks of insolvency. Profits and liquidity are consumed by over-competitive cost-cutting at every level as suppliers gnaw away at each other’s profits. And clients continue to incentivise these models of behaviour by overly relying on the cheapest option as an indicator of best value.
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ILLUSTRATION: SIMON PEMBERTON
BUILDING ENGINEER
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