Civil Engineering Reference
In-Depth Information
that is not the case in many contracts as adjudicators, arbitrators and,
increasingly, mediators will happily testify.
1.3.2
Fragmented
Fifty years ago, contractors employed a comprehensive workforce that
offered all trades and skills in-house. Over those 50 years and initially
motivated by the increasing cost of employing people compared with
the attraction of using cheaper self-employed people, the industry has
become fragmented. Even in 1995, 95% of construction businesses had
eight or fewer employees. Few, if any, contractors have more than just a
small core of staff, having become little more than managers of the con-
struction process. Craftsmen, even labourer gangs, have become sub-
contractors and sell their trade wherever it is needed, usually to the
highest bidder. It creates the opposite of a seamless process and often
progress on projects is controlled by the availability (or lack of avail-
ability) of relevant labour at the critical times. Not only is a seamless
process very difficult, but the passing of risk down the construction line
is almost impossible. The more fragmented the workforce, the smaller
their substance and the lower the chances of passing risk. In the end,
the main contractor has to take the risk whilst having very little control
over those who create that risk.
1.3.3
High failure rate
The fragmentation of the industry and its adversarial culture cause nu-
merous business failures each year. In 2005 the construction industry,
the sixth largest industry in the country, accounted for 5% of all com-
pany failures in the UK. It is a low-margin high-risk industry and the
chances of failure are high. And the fight for survival increases the like-
lihood of disputes, making the need for mediation even greater. After
all, a company fighting for survival will have little financial resource
to fund litigation or arbitration. Mediation is a quick and cost-effective
way of resolving even the most complex disputes.
1.3.4
Complexity
Construction is a complex process, not only involving many different,
and often small, sub-contractors but also a multitude of consultants,
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