If ever we needed more evidence and examples of the need for industry reform, this is it! Carillion is a good company with a long heritage but is the victim of an industry business model that doesn’t work. It was an accident waiting to happen.
Public sector procurement is part of the problem and the way they have sought to manage, share and transfer risk through the supply chain. For an industry that operates on wafer-thin margins, to take on more risk particularly for high-value contracts, was always a dangerous strategy. We need a more sustainable business model moving forward and the government needs to play a more active role in helping the industry to perform.
The construction industry is facing a lot of converging forces; the need for increased productivity, the uncertainty from Brexit, the opportunities around disruptive technologies, tackling the skills shortage – and now, the realisation of a broken business model. The failure of Carillion is a very sad day that brings uncertainty to a lot of people. The industry should look at this as an impetus to drive positive change, and firms like Ramboll and organisations like ACE will be there to play their part in ensuring our industry is fit for the future.
This blog originally appeared on the Ramboll website.