Oi! The whale sat on nails because they had to . . . risk and procurement
I have read this book a few times. The frog who goes from being squashed by a dog to sitting on a sun lounger got the better outcome that day.
I’m drawn to the whale though. It makes me think. Was whale accepting and aware of that moment of pain? Did it come with an appropriate gain? It brings out my empathetic side. ‘Poor whale, who made them do that?’. Am I judging from the wrong perspective? It would hurt me, but with that much blubber maybe for whale it’s not such a big deal.
How do my whale scenario ponderings relate to construction risk and procurement?
It doesn’t feel nice, but let’s say each contract you enter is a chance to walk across a bed of nails. With the experience and protections you have you can normally do this comfortably enough, all is well and you get paid and make near enough the intended margin. Some crossings don’t go so well for you and you end up facing the contractual consequences; Doing the work again at your cost, paying damages because you didn’t do it in time, doing work you didn’t price for, time and money paying people to resolve disputes. Let’s say you ended up ‘sitting on nails’. You had to, and it was painful.
In my experience the nature of risks held is that sometimes you just have to accept sitting on the nails. A lot of risk held at site level during a build has been ‘acquired and accepted’ during the procurement phase. The output of the industry rellies on people and process for assessing risk. The condition of being human and looking into a ‘crystal ball with smart glasses on’ under commercial pressure is not foolproof. I have worked for two reputable and experienced construction businesses who have liquidated. Ultimately ‘sitting on nails’ has been too much pain for some to carry*. It does not paint a pretty picture for the construction industry.
My brief anecdotal commentary and opinion is given some weight by the establishment of the Construction Accord in April 2019 and their evolution. Following government funded research ‘Risk and Procurement’ is a heading in their Transformation Plan (1).
I could write a lot more on risk and procurement from a contractors perspective but I think sharing this video says it all. Rick Herd – I think you nailed it. Key points I took from this valuable webinar, which I like to think mirrored my existing perspective on the same:
Good procurement takes time and proper attention.
The procurement phase is when you must capture, understand and plan to resolve project risks as best possible.
The procurement phase is your best opportunity to truly understand the expectations on you, and the rightful expectations you can have of others.
Procurement should conclude with proper capture of risk and expectation in a mutually acceptable contract.
The time for procurement can be rushed and the ‘gain’ of landing the job is a lure to the wide eyes of the keen contractor. Commercial pressures are real but ultimately no business wants the pain of sitting on the nails to be a breaking point. Asking if your business can withstand the pain of sitting on the nails if you fail to manage your responsibilities shouldn’t be ignored.
In construction most would say sitting on some nails is inevitable. I’d agree it is. Good procurement reduces the frequency and severity of the pain. I advocate for supporting the efforts of the Construction Accord. Let’s hope we can alleviate the industry of severe pain and seek for all to fairly have more days on the sun lounger at the end of a project.
It has been hard keeping this to a readable length. ‘Procurement and Risk’ encompasses a lot and so much more could be said.
*this is not a detailed analysis and other factors will have compounded but the nails will have played their part.
This article is published with the approval of Rick Herd.
(1) https://www.constructionaccord.nz/transformation-plan/procurement-and-risk/