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Last edited 14 Jun 2018

Latham Report

[edit] Background Information

The construction industry in the UK has consistently performed in a way that is thought to be wasteful compared to other industries. There is a general impression that it does not deliver good value for its customers. In part this is due to the unusual nature of the industry, where, unlike a production line, each building is a one off. But in addition, the nature of contracting arrangements means that it can be an adversarial industry with significant potential for disputes.

A succession of reports had considered how to tackle these issues, including; ‘Reaching for the Skies’ in 1934, the Simon Report in 1944 and the Barnwell report in 1967. However, their recommendations largely failed to gain traction within the industry. [edit] Recommendations

There were a great number of detailed recommendations within the report, some of which are set out below:

The Latham report refers to 'partnering' and includes the concept of teamwork between supplier and client, in a process of total continuous improvement. It required openness between the parties, ready acceptance of new ideas, trust and perceived mutual benefit.

Latham suggested that if the full range of measures described in the report were adopted, savings of 30% could be achieved over five years.

[edit] Risk

Increasing numbers of construction projects are using risk management to cut costs and reduce errors. The Latham Report recommended that the most effective form of contract should include a 'choice of allocation of risks, to be decided as appropriate to each project but then allocated to the party best able to manage, estimate and carry the risk'. There are four common methods of dealing with risk: avoidance, abatement, retention and transfer.

[edit] Consequences

The Latham report led to the creation of the Construction Industry Board (CIB) in 1995 to oversee implementation of its recommendations (the CIB was replaced by the Strategic Forum for Construction in 2001, chaired by Sir John Egan, author of the Egan Report 'Rethinking Construction').

A number of other organisations were established following the Latham report and the subsequent Egan Report:

These organisation united to become Constructing Excellence in 2003.

Some of the recommendations of the Latham Report were implemented by the Housing Grants Construction and Regeneration Act (the Construction Act) which amongst other things, set out fair payment practices and regulated ‘set off’. In addition, the Scheme for Construction Contracts, which applies when construction contracts do not comply with the Housing Grants, Construction and Regeneration Act established the right to adjudication.

The Report also led to the creation of the Considerate Constructors Scheme intended to help improve the image of the construction industry.

More recently, there have been significant moves in government procurement to encourage collaborative working and foster partnering, and the government has abandoned GC Works contracts in favour of NEC3.

[edit] Subsequent reports

The Latham report has been followed by a number of subsequent reports, with similar aims:

Several of these reports have made similar projections of substantial savings within the industry if their recommendations were adopted. Notably, the Government Construction Strategy states an intention to achieve savings of 15 to 20%.

Given that despite all of these reports, the perception of the industry as wasteful and adversarial remains, and that significant savings continue to be projected if the industry reforms, it might be inferred either that; under the circumstances the industry operates more effectively than it appears from the outside; or that expectations are unrealistic; or that recommendations have been consistently poorly implemented. See List of construction industry reports since 1944 for more information.

It is worth noting that criticism of construction is not peculiar to the UK, and that for example similar assessments have been made in the USA (ref Constructing the team: A US Perspective, King 1996).

[edit] Sir Michael Latham Sir Michael died on 2 November 2017, aged 74.

Born in Southport, he was MP for Melton between 1974 and 1983, when the constituency changed to Rutland and Melton. He stood down in 1992. He was married to Caroline, and had two sons, Richard and James.

He was chairman of the Construction Industry Training Board (CITB) for eight years. 2017 CITB chairman James Wates said; "His commitment to and passion for the industry was clear to all of us who worked with him."

He was also ConstructionSkills chairman until 2010 and chairman and deputy chairman of Willmott Dixon until 2009.

Julia Evans, Chief Executive at BSRIA, said; "...Sir Michael’s contribution to the industry is remarkable. And he has undoubtedly left the industry in an enhanced place.”

Recalling the impact of the Latham Report, Sir Michael's son Richard said; “Dad got lots of honorary degrees from universities because of his work in construction. My brother and I used to giggle because he could barely rewire a plug at home.”



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