Carillion report comment: Mike Hughes, UK&I President, Schneider Electric

Today, Work and Pensions and BEIS Committees published their final report on Carillion, establishing that “the collapse of Carillion has tested the adequacy of the system of checks and balances on corporate conduct” and that that the collapse has happened, in part, due to “a business environment and pursued a model of service delivery which made such a collapse, if not inevitable, then at least a distinct possibility” as “the cheapest bid is not always the best”. “Yet companies have danced to the Government’s tune, focussing on delivering on price, not service; volume not value,” it read.

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Commenting on the report’s findings, Mike Hughes, Zone President, Schneider Electric UK & Ireland, said:

 

“The final Carillion report brings to life the fact that construction and project management is clearly a risky business where many things can go wrong. The current system, unfortunately, inherently forces contractors to be the lowest bidder if they want to win, which dramatically increases the risk they are taking on, leaving no margin for error. As we look to re-build the confidence in the UK construction industry today, we must all come together and see this as an opportunity to make construction smarter, safer, faster and more sustainable. We need to move towards a more mature procurement system that helps to move the decision-making process away from the cheapest price contract wins to a system where the overall best value of projects is being considered. 

 

“If we go for the lowest construction cost, the likelihood is that we will have brand new buildings with 20-year-old technology inside. Creating new buildings that are neither ‘smart’ nor energy efficient. Yet, we know that over a building’s lifetime, 75% of its costs go to maintenance and operating expenses, which are inevitably going to be higher for inefficient buildings. At least 30% of energy used in buildings is wasted because of inefficient building management systems.

 

“The industry value-add will come from an acceleration in digitalising construction to drive immediate gains in efficiency. There are several cutting-edge solutions that help mitigate construction risks, including robotics and augmented reality tools. There is smart technology that goes into buildings to make them sustainable and energy efficient. At Schneider Electric, we are constantly developing expertise and solutions to drive new possibilities for efficiency, sustainability and savings. We are committed to helping increase the efficiency, reliability and safety of the construction industry.”